How to Handle a Workers' Compensation Incident
Author: Michael C. Jacobson, XpertHR Legal Editor
Workplace injuries suffered by employees are extremely common and are typically governed by state workers' compensation programs. Unfortunately, in today's litigious atmosphere, lawsuits and disputes resulting from these injuries are also common, despite the workers' compensation system.
To avoid unnecessary litigation, employers should ensure that they have robust policies and procedures to inform employees of their rights and obligations when it comes to workers' compensation and that they respond to workplace injuries in a timely and thorough manner while operating within the constraints of the workers' compensation system. To that end, employers should be aware of common exceptions and limitations to workers' compensation claims, together with the options at their disposal to dispute invalid or frivolous claims.
If a valid claim is made, an employer is still obligated to stay in touch with the employee during the course of their medical treatment and to provide equal or similar employment when they are ready to return to work. If an employee remains physically limited but otherwise able to return to work, the employer may be obligated to offer a reduced-capacity job to a disabled employee.
Step 1: Contact the Employer's Insurance Carrier
The very first thing an employer must do when notified of a workplace injury is contact the employer's workers' compensation insurance carrier. Many, if not all of these carriers will have "notice provisions" in the policies they provide to employers, requiring employers to notify the carriers within a certain period of time following the incident.
If employers do not comply with those notice provisions, they run the risk of insurance carriers "dis-claiming" the policy, the result of which would be to make the employer directly liable for all of the benefits that would typically be covered by workers' compensation insurance including replacement wages and medical benefits. Considering how costly that could become for employers, notifying the workers' compensation insurance carrier of a potential claim, even if it doesn't ultimately become a full-fledged claim, is the single most urgent and important thing to do after an injury has occurred.
Step 2: Determine Whether to Contact the State Workers' Compensation Board
After taking measures to ensure the employer has complied with the notice provision in its workers' compensation insurance policy (if any), the next most crucial step is to determine if state law requires the employer to contact the state workers' compensation board, and if so, how soon the employer must notify the board after becoming aware of the incident.
In New York, for example, employers are obligated to contact the New York State Insurance Fund (NYSIF) and the Workers' Compensation Board (WCB) "immediately upon becoming aware of a work-related injury and no later than 10 days after the employer's knowledge of a work-related injury" if one of two conditions are met:
- The injured employee will miss more than one normal work day or shift after the day or shift when the incident occurred; or
- The injured employee required medical treatment beyond ordinary first aid, or more than two treatments from an individual administering first aid.
Other states may have different reporting requirements and notification thresholds, so it is important for employers to be aware of state law requirements and take steps to comply with those provisions at all times.
Step 3: Prepare an Incident Report
Next, the employer should create a contemporaneous record of the incident, including as much information as possible.
Specifically, these reports should include the employer's name and contact information, the insurance company's name, contact information and policy information, as well as the employee's personal information including name, contact information and other identifying information like date of birth.
The report should also include a description of how the injury occurred, a description of the injury itself, information as to when and where it occurred, the names of any witnesses to the incident and whether the employee was provided with documentation concerning workers' compensation disclosures, rights and benefits information.
The report should also include a section detailing the medical treatment that was initially provided to the employee (if any), including the names of any individuals who provided first aid, the name and contact information of any medical facilities that the employee presented to and what the initial prognosis was at the time of the initial examination.
Importantly, some states have specific forms that employers are required to execute as part of this process, meaning some employers can simply use the forms provided by the state in lieu of their own internal accident or incident report forms.
Step 4: Determine Whether to Conduct an Investigation
If the incident seems straightforward in terms of how it happened, who was involved and who, if anyone, was at fault, then an investigation may not be necessary. But in some cases, investigations are legally required or may be the most prudent course of business for employers looking to prevent future disputes.
If the incident could be governed by the Occupational Safety and Health Administration (OSHA), then employers could be legally obligated to investigate. OSHA compliance typically applies to larger companies that work with hazardous materials or on or around hazardous locations.
If OSHA regulations do not apply, then the employer should determine whether an investigation is the most prudent course of action. The employer should consider things like the description of how the incident occurred, the employee's injury or incident history, if any, the severity of the resulting injury, whether the employee is likely to miss work and whether the employee is likely to start a dispute with the employer or its insurance carrier regarding lost pay or medical benefits.
If the employer decides to investigate, it should be sure to follow a proper course in conducting the internal investigation.
Step 5: Determine Whether the Employee is Exempt from Workers' Compensation Benefits Coverage
While the workers' compensation scheme covers the vast majority of workplace injuries suffered by employees, some employees are not eligible for workers' compensation benefits, depending on their classification, state law considerations and even what they were doing at the time of the injury.
This determination is likely to be made by the insurance carrier that holds the employer's workers' compensation policy, but it is a good idea for employers to be involved in this determination considering its intimate knowledge of the employee. Also, if the employer determines that the employee is likely not to be eligible for benefits, then it can begin preparing itself for potential litigation resulting from the incident and work with the employee to avoid litigation altogether.
For example, independent contractors are typically ineligible for workers' compensation benefits. The determination of independent contractor status derives from state law so it is important for employers to familiarize themselves with state law provisions concerning the identification of independent contractors. Other common regulations disqualify employees from workers' compensation benefits coverage if they were intoxicated at the time of the incident or if they were engaged in "horseplay" or a non-mandatory social or sporting function that is not a required aspect of the employee's job.
There may also be some limitations based on the type of injury or illness that the employee suffered, whether there was a preexisting condition, and whether the employee suffered strictly psychological damages as opposed to physical injuries.
Step 6: Determine Whether to Dispute the Validity of the Claim
Once the employer has collected detailed information regarding the incident and conducted an investigation (if necessary) it can then make a strategic decision (or recommendation to the insurance company) as to whether to dispute the validity of the claim. State law governs several exceptions to workers' compensation benefits that may disqualify employees from coverage, as described in Step #5.
Importantly, the decision to dispute the validity of a claim should be viewed from a broad, long-term perspective. To that end, the employer should consider several questions:
- If the employer disputes the validity of the claim and is victorious in the dispute, is the employee likely to bring a separate, civil action against the employer or its employees?
- Is the employer able to work out some type of settlement arrangement with the employee in exchange for a waiver of claims?
- Can the employer use another dispute resolution process like mediation or arbitration to prevent litigation?
- Are settlements subject to state law provisions that require written agreements to be approved by the workers' compensation board (WCB)?
- Is the employer willing to spend both the time and the money necessary to dispute the claim?
- What does the workers' compensation insurance carrier recommend in terms of responding to or disputing the claim?
- Does the state in which the incident occurred have a claims procedure that regulates the timing of claims disputes and claims disputes filings?
Step 7: Confer with Legal Counsel
In some cases, the insurance carrier that provides the workers' compensation insurance policy to the employer will nominate an attorney or a law firm to dispute the validity of claims. In other cases, depending on whether the employer insisted on using its own in-house attorney or preferred outside legal counsel, the employer may have more direct access to the attorney responsible for disputing claims.
In all cases, however, it is important for the employer to stay in touch with legal counsel regarding the proceedings of the case, and to run all of its strategies and potential responses to correspondence (from the employee, the employee's legal counsel, the Workers' Compensation Board, medical providers, etc.) by the attorney before sending them.
Step 8: Communicate with the Employee Regarding Medical Benefits Options
Depending on state-specific regulations (typically found in the state's workers' compensation statute), employers may be permitted to require employees to see a specific doctor or choose from a list of pre-approved doctors, for their initial treatment visit following an injury. If such regulations do exist and employers are able to exert some control over the initial treatment visit, it is highly advisable to take advantage of that opportunity from an employment perspective. Working with familiar, trustworthy physicians can be instrumental in keeping the costs of workers' compensation insurance low and affordable.
If such regulations do not exist, it remains important for the employer to be in touch with the injured employee regarding his or her medical care, injuries, therapies, prognoses and expected return-to-work date.
Remember, as detailed in Step #7, the employer should always confer with counsel prior to sending correspondence to the employee, the employee's legal counsel, the workers' compensation board or medical providers.
Step 9: Confer with Benefits Administrators
If an employee is eligible for benefits following a qualifying injury suffered while working, then the employer must be organized and diligent in providing the appropriate and legally-required benefits to the employee.
State regulations may control whether the employee remains entitled to certain fringe benefits (accrual of PTO days, for example) while not working and state law classifications may also control the classification of the employee's physical disability. The latter determination will be highly relevant to the employer when it comes to enabling the employee to return to work on a full-time basis and at full capacity, or determining that the employee will only be able to handle reduced hours or reduced responsibility based on physical limitations.
State law may also govern the manner in which the employee is due to receive wage replacement benefits and medical benefits, the timing of such payments and benefits dispersals and whether the employer is permitted to collect contributions from employees to offset the cost of providing benefits.
Step 10: Educate Employees and Supervisors Regarding Retaliation
Every state in the country, including the District of Columbia, prohibits retaliation against employees who pursue or obtain workers' compensation benefits in some way. Some states have specific statutes that prohibit retaliation, typically incorporated into a greater workers' compensation statute, while others simply prohibit retaliation as a violation of the state's public policy considerations, which would be an exception to the employment at-will doctrine in that state.
The bottom line for HR professionals and employers is that retaliation against employees who pursue or obtain workers' compensation benefits should be considered strictly prohibited in the workplace. Considering that retaliation can take many forms, HR professionals and employers should take steps to educate all employees including supervisors, about the illegality and the danger of retaliating against these employees.
At the very least, harassment, discrimination, suspension, demotion, reduction in pay or benefits, alienation and termination should be considered unlawful if those actions are connected to or caused by a workers' compensation incident. Employees who suffer retaliation may be able to obtain back wages and benefits and, in extreme situations, punitive damages (designed to punish the employer) if the employee can demonstrate that the employer acted willfully and with malice in retaliating against the employee due to his or her workers' compensation activity.
Step 11: Get the Employee Back to Work!
Some states have robust return-to-work programs that are designed to get injured or physically disabled employees back to work as soon as possible after their injuries or incidents. In California, for example, injured employees are provided with vouchers if they remain unable to work 60 days following the injury or incident in question. The value of these vouchers is calculated using the degree of the employee's disability and the employee can use the voucher toward vocational training or rehabilitation to speed up the recovery process. It goes without saying that employers who utilize these programs and communicate their importance to employees stand to benefit from their employees getting back to work as soon as possible.
In states where no such return-to-work schemes exist, employers must be diligent in staying in touch with the injured employee (and his or her attorney or medical providers) to solidify a recovery and return-to-work schedule. Certainly, if an employee refuses to return to work even after being medically cleared to return both by the Workers' Compensation Board and medical providers, then the employer has some leeway to take action. Employers should remain cautious and should run any so-called "adverse employment" actions by legal counsel before proceeding.