Workers

Compensation
Chapter 7
Accident Prevention
Manual: Administration &
Programs

The System
To ensure

that losses from

workplace injury are compensated.
A safety net to alleviate the
problems that workplace injuries can
cause, while providing employers
some relative predictability of the
costs.
In return for the protection, workers
cannot sue their employer for their
injury.

Economic Losses
1.

Loss of earnings.
2. Additional expenses.
Death- workers survivors would be
compensated for their providers
loss.
Total and Permanent Disability- may
be even greater costs than a death.

WC in the United States

Early

interest in the German (1893)

and British systems (1897).
1902- Maryland Cooperative
Accident Insurance Fund.
1908- FDR pushed for, and got
compensation for Federal
employees.

Early Laws
1909-

Montana law for miners and

laborers in coal. Declared
unconstitutional, but got other states
thinking about compensation for
workers.
1910- New York for certain hazardous
jobs.
None of the early laws included
occupational disease- injury by
accident.

Early Laws
Every

state (except Oregon) required

waiting periods of one to two weeks
before benefits were paid. Some
provided retroactive payments after
a prescribed period.
1911- Wisconsin WC law was the first
to remain effective and was soon
followed by Nevada, New Jersey,
California and Washington.

Early Laws
1916-

the United States Supreme

Court declared workers
compensation laws to be
constitutional.
Workers compensation was not
provided in every state until
Mississippi enacted its first law in
1948.

Compensation Legislation
All

50 states, DC, Guam and Puerto

Rico, plus Federal Employees
Compensation Act (FECA) and the
Longshoremans and Harbor Workers
Act.
While there have been increases in
benefits and scope, the basic
concepts have remained unchanged.

Objectives of WC
Six

basic objectives- Page 151.

Income Replacement.
Medical and vocational rehabilitation.
Incentives for both the company and
injured persons to get back to work
ASAP.
Accident prevention and Reduction?

Major Characteristics
Compulsory
Elective
If

you reject the act you would lose

the common law defenses:
Assumption of risk
Negligence of fellow employees
Contributory negligence

Major Characteristics
Most

jurisdictions require employers

to obtain insurance or prove financial
ability to carry their own risk.
Self-Insurers
Some states (13) permit employers to
purchase insurance from either a
competitive state fund or from a
private insurance company.

Covered Employment
Many

laws exempt employers having

fewer than a specified number of
employees-usually 3 or 4 in any one
location.
Other exemptions.
Federal Employers Liability Act.

Limitations on Coverage
Each

state act was the result of

political compromise.
These laws would introduce greater
certainty into the calculation and
payment of benefits- in contrast to
the common law system:
Could sue under common law
If you lost, you got zero

Limitations of Coverage
Two

factors usually prompt

compensation litigation:
1. Work relatedness- did the injury
arise out of the course of
employment?
2. Extent of the disability.

Exclusive Remedy
Quid

Pro Quo- employers accept

the responsibility for injuries without
regard to fault.
In exchange, employees give up the
right to sue for unlimited damages.
However, workers may bring suit for
negligent actions on their employer,
fellow workers, contractor, entity or
other individual.

Broadening Exclusive Remedy

The

expansion of Dual Capacity

Doctrine- if the injury was caused by
the employers product or a service
available to the public.
Intentional Tort.

Covered Injuries
Arising

out of and in the course of

employment.
Four Tests:
Personal injury
By accident
Arising out of
In the course of

Occupational Disease

Originally not part of WC.

Most states do not provide for ordinary
diseases of life. - See 1996 Virginia State
Supreme Court ruling on page 154.
Compensation for Occupational Disease is
the same, however, some states do not
provide permanent partial disability for
certain diseases.
Most states have extended periods for
reporting latent, slowly developing
diseases.

Work Related Impairment

Hearing
Black

Lung Disease

Work Related Impairment

In

the course of employment

means from the time they step on the
employers premises until the time
they leave it.
Not easy to define. What is meant by
premises?
Arising out of causal relationship
between the employment and the
injury. (ie, heart attack)

Work Related Impairment

Actual

Risk Doctrine- the hazard

resulting in injury be a risk be a risk
of the particular employment
regardless of whether it is a risk to
which the general public is exposed.
Positional Risk Doctrine- the but
for test. The employment places
the worker in a position where
he/she is injured.

Benefits
TYPES:

Loss income, medical

payments and rehabilitation.
70% for temporary total disability
Only 25% of such cases were for
cash benefits paid.
Benefits for permanent partial
disabilities accounted for 66% of
the total dollar amount.

Benefits
Benefits

are payable as a wagerelated benefit.

Varies by state. Between 66% and
100% of current wages.
Some can get less than two-thirds of
their pay because of ceilings.
Tax free.

Benefits
Maximum

time periods for receiving

benefits.
Waiting period, usually 3-7 daysapplies to only cash indemnity
payments.
Retroactive payment varies from
state to state.

Benefits
Will

vary depending on whether the

disability is temporary or permanent,
partial or fatal.
Dollar ceilings may mean individuals
are not fully compensated for lost
earnings.
Permanent total disability- prevent
any work in the labor market and are
of an indefinite duration.

Benefits
Permanent

Partial Disabilitycalculated on a relatively complex

basis:
Scheduled Injuries
% of average weekly wages
Paid for fixed period
Vary according to type and severity

Non-scheduled injuries
General nature, back and head injuries

Benefits
Death

benefits:

Income replacement for families

Burial benefits

Medical Benefits
Compromise

1/3 benefits:

First Aid
Physician services
Surgical and hospital services
Nursing and drugs
Prosthetic devices

Medical Benefits
Medical

benefits required in all states

States have the right to choose
physician.
Social Security benefits.
Private Disability Insurance

Rehabilitation
One

of the primary objectives of WC.

Restore workers to fullest economic
capacity.
Benefits are paid (sometimes in
addition) for training, education,
testing and services to get the
injured back to work.
Federal Vocational Rehabilitation Act

Administration
State

agencies handle cases and

ensure that all parties comply with
the law.
Worker rights under the law.

Handling Cases
Uncontested

Direct Payment
Agreement System
Contested

Cases:

Hearing by referee or hearing officer.

Appeals.

Rehabilitation
Medical

Rehabilitation:

Treat the impairment and restore lost

function.
Medical care.
Vocational

Rehabilitation:

Prepare for new occupation or

continuing in an old one.
Retraining.

Degree of Disability
Temporary

Total and Partial

Disability.
Permanent Partial Disability:
Whole Person Theory
Wage Loss Theory
Loss of Wage Earning Capacity Theory
Combinations

Degree of Disability
Permanent

Total Disability.
Insurance Incentives.
Safety Incentives.

Managing a WC Program
Hiring
First

Report of Accident
Doctors and Medical Institutions
Rehabilitation
Follow-up