Report: COVID-19 Presumptions May ‘Undermine the Grand Bargain’

Nancy Grover

Sarasota, FL ( – Lawsuits. Disparate treatment of workers. Companies relocating to other states. Job losses of U.S. workers to those in other countries. Higher prices for consumers. Those are among the unintended consequences of COVID-19 presumption mandates, according to two workers’ compensation thought leaders.

The increasing implementation of executive orders and state statutes to more easily enable certain workers who contract COVID-19 to access workers’ compensation benefits has potentially significant implications on both a micro- and macro-economic level. In a new report, Chris Mandel, SVP Strategic Solutions for Sedgwick and director of the Sedgwick Institute and David Langham, Deputy Chief Judge of the Florida Office of Workers’ Compensation and visiting fellow at the Sedgwick Institute lay out what may be the overlooked effects of presumptions.

“Stakeholders in the worker’s compensation systems would be wise to carefully consider the full ramifications of the continued expansion of the presumption tool before capitulating to its use without a clear, supportable basis for doing so,” the authors write. “The ‘Grand Bargain’ was designed to offer balance in industrial injury rights between employers and employees. Overuse, and under-debated, of the presumption risks is tipping that balance away from that original intent and increasingly toward inequity between these stakeholders.”


Workers’ compensation systems have clearly evolved during the 100+ years they have been in effect. Among the changes has been the inclusion of certain occupational diseases.

Conditions such as pneumoconiosis and black lung disease have been associated with specific work environments and are recognized as not being exposures outside of work. More recently, repetitive minor trauma has been included among compensable diagnoses.

Obtaining benefits for these conditions, as well as more apparent work-related injuries is now generally dependent on proof that they were indeed work related. The presumption, in most cases, is that the problem was not caused by work and the onus is on the worker seeking the benefits to show otherwise. Where this is not the case is where presumptions for certain workers and certain conditions have been adopted.

Many states now have presumptions that, for example, provide compensability to certain first responders who develop cardiovascular disease and certain cancers. Post Traumatic Stress Disorder has increasingly been included in compensable conditions for certain workers. These presumptions mean that instead of the worker having to prove work as the cause, the burden falls to the employer to show it was not.

“As these laws provide favorable treatment to select specified occupations or workers there is an imposition of disparate treatment by government,” the report says. “Some workers are thus treated better than others, with the implication that thus society values them or their service more than others.”

Costs & Ramifications

Some of the initial orders and statutes were implemented retroactively, meaning the coverage was required even though sufficient premiums had been collected. Going forward, that will need to be addressed.

“Regardless of whether executive or legislative action was taken, those who pay workers’ compensation benefits will likely be driven to adjust in the face of this unexpected expense,” the report explains. “Insurance companies will seek increases in rates; employers who self-insure will either adjust prices or elect methods to otherwise absorb costs.”

But estimating those costs is no easy task. In a majority of cases the expenses will likely be nominal; however, workers who experience long term hospitalizations and even deaths could incur costs in the millions.

“A 62-day hospital stay in a non-work associated situation yielded recent headlines of a $1.1 million-dollar hospital bill for a 70-year-old survivor of COVID-19,” the report says. “The disease has been present and studied for less than a year. Whether there are recurrent costs or significant risks of future complications and expense for patients remains unknown.”

Depending on the length of time the virus continues and the presumptions are in place, the more expensive resulting workers’ compensation claims could lead to litigation. An employer/payer, for example, might argue that COVID-19 was not the actual cause of a worker’s death, but instead was the result of potential pre-existing comorbidities, such as heart disease or diabetes.

There may also be litigation from organizations seeking to overturn the presumptions. An initial presumption in Illinois was recently the subject of a suit by the Illinois Manufacturers’ Association and the Illinois Retail Merchants association, along with more than two dozen business groups.

“It is groups like these that represent the employers who would see economic impact to their businesses from an increase in workers’ compensation premiums to finance such benefits outside the more historically normative and anticipated application of the statutes,” the report says.

That economic impact would likely lead to businesses increasing their prices. That may also cause businesses to close due to decreased profits or relocate to jurisdictions that do not have presumptions. The authors note that an analysis in the Chicago Tribune attributed company departures from Illinois to Indiana to taxes, regulation and Illinois’ workers’ compensation system.

“Thus, as states strive to shift the societal cost of COVID-19 onto employers in their states, those costs will either decrease profitability (if the business’ competitive posture will not allow price increase), which may spur departures, or those costs will be passed on to consumers in price increases where possible,” according to the report. “Even if the premiums increase significantly, that will not necessarily mean a commensurate or similar level of product price increase. However, increasing the cost of workers’ compensation insurance may have a significant impact on the price of any business’ products or services.”

Businesses may also turn to other countries for workers, where the cost of labor is less. Putting additional costs on business from COVID-19 may exacerbate that.

For the time being, some employers are paying employees who contract COVID-19. During a presentation for the Southern Association of Workers’ Compensation Administrators annual conference, several employers said they have continued to pay the salaries of ill employees to avoid claims. But the question is how long that may continue.

“This shifting of viral disease into workers’ compensation represents a potential significant cost and may lead to significant implications for workers’ compensation systems as a material departure from their previously intended construction and application,” the authors write. “The COVID-19 virus event has both expanded the use of presumption, state by state, and raised significant questions and concerns about how or if this expansion will undermine the grand bargain and the core principles that have consistently defined the guard rails of state systems for over 100 years.”

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