With Expanded WC Coverage: Who’s Footing the Bill?

Nancy Grover

Sarasota, FL (WorkersCompensation.com) – First responders, healthcare workers, and many other ‘essential workers’ are putting their lives on the lines to keep the country running as smoothly as possible. Those who contract COVID-19 because of their work should not have to worry about paying for their medical care and, to an extent, other expenses. On those two points, most everyone agrees. The problem is deciding exactly where the money will come from.

A number of states have put the financial burden on their workers’ compensation systems. By legislation or gubernatorial decrees, they have adopted temporary mandates that say ‘essential workers’ with COVID-19 should be presumed to have contracted the virus at work and, therefore, be covered for medical and indemnity benefits. The list of ‘essential workers’ varies by state and is expanding.

In addition to healthcare workers and first responders some states have included grocery clerks, food producers, postal employees and others. But payers have not planned for these claims.

“You don’t reserve any differently in terms of the process for traumatic injury or other occupational diseases,” said Michael I. Fish, a partner with Alabama-based Fish, Nelson & Holden. “The problem here is you do it based on your exposure based on other claims that are similar, and you don’t have that in this situation.”

The other challenge comes with the amount of money involved. The impact of COVID-19 varies greatly from person to person.

“In most cases it won’t be that big of a deal in terms of medical and indemnity [payments]. You hope your employee is affected very little. Reserving wouldn’t be terrible; the employee may be out of work a couple weeks. On the medical side, there is not a lot you can do for the ones that it doesn’t affect really seriously,” Fish said. “When they get better, it’s not like a back injury, where future medical treatment is a concern, like surgeries or pain management. You don’t have that.”

However, other patients with COVID-19 are put on ventilators, may have permanent damage to their lungs or other organs, and may even die. “It’s all or nothing,” Fish said. “You don’t know if this person is going to be on a ventilator or if it will be a death claim.”

In New York, the Metropolitan Transportation Authority announced it will pay a death benefit of $500,000 in a lump sum to the spouse, beneficiary or estate of any employee who has died presumably from COVID-19. The announcement said the money will come from the “MTA operating funds,” though it is not entirely clear whether that may have an impact on workers’ compensation funds. The announcement also said that accepting the money “does not prevent a line of duty death benefit claim under workers’ compensation …”

Paying these claims comes at a time when states are also looking to insurers to ease up on payment requirements from companies. California Insurance Commissioner Ricardo Lara ordered workers’ compensation insurers and those in other lines to refund premiums for at least March and April to provide “much needed relief” to businesses and consumers.

“… at a time of crisis where the same companies are being ordered to cover risk they did not assess premium for, it seems an idea that is ill advised,” wrote Robert Wilson, CEO/President of WorkerscCompensation.com in his Bob’s Cluttered Desk blog. “There is something perverse about the concept of refunding premiums at a time of heightened exposure.”

States may also be nudging workers’ compensation systems to accept and pay COVID-19 related claims rather than denying them and potentially facing more financial hardship. An Illinois executive order issued by the governor this week said essential workers who contract COVID-19 while working would automatically be covered by workers’ compensation.

The rule change refers specifically to “’any proceeding…before the commission…where the petitioner…’ this doesn’t apply to all employees, even in all classes. It only applies to the petitioner,” said Rich Lenkov, a Chicago-based attorney, during a webinar. “Not every injured worker becomes a petitioner. This rule applies to petitioners only.”

“The first thing that jumps out from this amendment is why is it so specific to this little provision when somebody becomes a petitioner,” added Rafael Gonzalez, a Florida-based attorney and industry veteran. “After speaking with defense attorneys and plaintiff’s attorneys, maybe there’s a hidden message here: ‘hey, really think about these comp claims, because if you accept them they’ll never become the ‘petitioner’ you’re talking about. But if you deny them, they will, and will enjoy the protections.’ So there may be a hidden message.”

One other option for paying COVID-19 related claims is the creation of a victims’ fund, much like the 9/11 Victim Compensation Fund. Set up after the terrorist attacks, the federal fund provides money for cancer victims sickened during their work related to the tragedy. A similar fund for COVID-19 has been suggested and endorsed by New York Gov. Andrew Cuomo. That state’s congressional delegation is said to be drafting the legislation.

For the time being, employers are advised to pull out all the stops to keep their workers safe; not only to prevent the spread of the virus but to show they have taken all available precautions if that becomes necessary. Also, stay up to date on what local, state and the federal governments are doing.

“Our workers’ compensation folks should be listening very carefully because it will ultimately matter,” Gonzalez said. “All of a sudden we’re going to get handed claims we never thought we’d be responsible for.”

News brought to you by WorkersCompensation.com