Chapter 12 - Worker's Compensation Insurance

Coverage

A Workers' Compensation carrier is liable for compensation to an employee who is injured while in the course and scope of employment, regardless of fault or negligence, if the employee is subject to Workers' Compensation statutes. If the employee's injury is an occupational disease, the employer for whom the employee was working at the time of last injurious exposure to the hazards of the disease will be considered responsible. EXCEPTIONS A Workers' Compensation carrier is NOT liable for compensation if the employee's injury: Occurred while the employee was in a state of intoxication Was caused by a deliberate attempt by the employee to injure their self or to injure another person illegally Was the result of an intentionally caused injury by a third party directed at the employee for personal reasons not associated with employment Was the result of voluntary participation in a recreational, social, or athletic activity while not on-duty and that wasn't part of the employee's normal work-related duties Arose out of an act of God, unless the employee's work-related duties typically exposed them to a greater risk of injury from an act of God than applies to the general public Was caused by the employee's horseplay METHODS OF OBTAINING COVERAGE An employer may obtain Workers' Compensation insurance coverage through a licensed insurance company or through self-insurance as provided by law. An insurer cannot discriminate against an applicant based on race, sex, national origin, or religion. ELECTIVE COVERAGE In Texas, private employers, who otherwise are not subject to the requirements of this statute, may elect to obtain Workers' Compensation coverage. If coverage is elected, the employer becomes subject to Workers' Compensation laws. EXCLUSIVE REMEDY When covered by Workers' Compensation statute, an employee waives his/her right to sue under common law to recover damages for personal injuries or death sustained during employment, unless he/she elects, in writing, to waive coverage under the Workers' Compensation statute. If an employee wishes to retain the common-law right to sue an employer for injuries or death arising from the course and scope of employment, they must notify the employer in writing within 5 days of beginning employment or receiving written notice from the employer that Workers' Compensation coverage has been obtained (when it was not previously in place). An employer cannot require an employee, as a condition of employment, to retain common-law rights.

Temporary Income Benefits

An employee is entitled to temporary income benefits if they have a disability that has not yet attained maximum medical improvement. The benefit will end when the employee reaches maximum medical improvement. It is presumed that maxmium medical improvement has been reached based on the lack of medical improvement in the employee's condition. The amount of temporary income benefit amount is equal to: 70% of the amount computed by subtracting the employee's weekly earnings after the injury from the employee's average weekly wage For the first 26 weeks, 75% of the amount computed by subtracting the employee's weekly earnings after the injury from the employee's average weekly wage if the employee earns less than $10 an hour waiting period of 7 days

Medical Benefits

An employee who sustains a compensable injury is entitled to all health care reasonably required by the nature of the injury, when and as needed. Medical benefits for a compensable injury are unlimited. The employee is entitled to care that: Cures or relieves the injury's natural effects Promotes recovery Enhances the employee's ability to return to or retain employment Medical benefits are payable from the date of injury. An employee must receive medical treatment from a doctor chosen from a list of Division-approved physicians. Except in an emergency, all health care must be approved or recommended by the employee's treating doctor. The treating doctor is responsible for maintaining efficient utilization of health care. PHARMACEUTICAL SERVICES A physician providing care to an employee must prescribe any necessary prescription drugs, and order over-the-counter alternatives to prescription medications as clinically appropriate and applicable, in accordance with applicable state law.

Average Weekly Wage

An employee's average weekly wage is based on the wages paid during the 13 weeks immediately preceding an injury. The state average weekly wage is 88% of the average weekly wage in covered employment computed by the Texas Workforce Commission.

Payment of Benefits

An insurance carrier must initiate compensation no later than the 15th day after receiving written notice of an injury, or notify the division and the employee in writing of its refusal to pay. A carrier that indicates a refusal to pay must advise the employee of his/her right to request a benefit review conference, the means to obtain additional information from the division. If a carrier does not contest the compensability of an injury by the 60th day after the date after being notified of the injury, it waives its right to contest. An insurance carrier commits an administrative violation if it does not have reasonable grounds for a refusal to pay benefits, as determined by the commissioner. An insurance carrier must continue to pay benefits as they accrue without a final decision, order, or other action. Benefits must be paid solely to the order of the employee or their legal beneficiary. Failing to comply with this requirement is an administrative violation.

Workers Comp Insurance Policy

Covered Employment - indemnify employers against injuries of employees does not cover independent employers Covered Injuries - occurs at work, during designated hours, performing duties employed to do, must arise from risk related to employment... NOT covered intentional, intoxication, horseplay, natural disaster Occupational Disease - one that is caused by workplace conditions

Provisions specific to worker's comp

Duty to Defend Other Insurance Recovery from others (subrogation) Exclusions -willful misconduct, knowingly employing an employee violating law, not comply with safety laws, discriminating employee

Texas Worker's Compensation

Employee An employee is a person in the service of another under a contract of hire, whether express or implied, or oral or written. The term includes: A person employed in the employer's business who is directed to temporarily perform services outside the usual course and scope of the business A person, other than an independent contractor or the employee of an independent contractor, who is engaged in construction, remodeling, or repair work for the employer at the premises of the employer A person who is a trainee under the Texans Work program The term employee does not include: A seaman on a vessel engaged in interstate or foreign commerce A person whose employment is not in the usual course and scope of the employer's business A person employed as a domestic worker or a casual worker engaged in employment incidental to a personal residence A farm or ranch employee A person covered by a method of compensation established under federal law An employer may volunteer to obtain workers' compensation insurance coverage for an employee, or classification of employees, exempted from coverage. The employer accepts the rights and responsibilities of liability as of the effective date of coverage. An employer who does not obtain coverage retains the common-law defenses. Intoxication means a reduction in mental or physical faculties resulting from the voluntary introduction into the body of: An alcoholic beverage A controlled substance A dangerous drug An abusable glue or aerosol paint Any similar substance, the use of which is regulated under state law Intoxication does not include the loss of normal use of mental or physical faculties resulting from the introduction of a substance taken by prescription written by the employee's doctor, or by inhalation or absorption incidental to the employee's work.

Death Benefits

If an employee's death is caused by a compensable injury, the insurance carrier must pay death benefits to the legal beneficiary. The death benefit amount is 75% of the employee's average weekly wage, and entitlement to the death benefit begins on the day after the employee's death. Death benefits may be paid monthly only on the request of the legal beneficiary and agreed upon by the carrier. Death benefits may be paid through an annuity as long as it meets the annuity requirements set forth in the law and the insurance carrier ensures that the death benefits are paid out. Burial Benefits If the death of an employee results from a compensable injury, the person responsible for paying for the costs of burial will be paid the lesser of the actual cost incurred for reasonable burial expenses or $10,000. If the employee died away from their usual place of employment, the insurance carrier must pay the reasonable cost to transport the deceased employee's body. The maximum costs payable by the carrier are those that would be incurred to transport the body to the employee's usual place of employment.If a claim for death benefits is based on an occupational disease that an autopsy is necessary to determine the cause of death, the Commissioner may, after opportunity for a hearing, order the legal beneficiaries of a deceased employee to permit an autopsy. The beneficiary may have a representative present at an autopsy and the insurance carrier will be required to pay the costs of the procedure. If an employee dies while covered by Workers' Compensation statute and a legal beneficiary does not exist, the Workers' Compensation carrier will pay an amount equal to 364 weeks of death benefits to the Subsequent Injury Fund.

Common Law Defenses

In an action against an employer, by or on behalf of an employee who is not covered by Workers' Compensation insurance to recover damages for personal injuries or death sustained by an employee, the employer cannot use the following defenses: The employee was guilty of contributory negligence The employee assumed the risk of injury or death The injury or death was caused by the negligence of a fellow employee The employer may use the defense that the employee's injury was intentional or that the employee was intoxicated. If the employee (plaintiff) takes action against an employer, they must prove that the employer was negligent. For employees not covered under Workers' Compensation insurance, the right to take action (lawsuit) against an employer cannot be waived by the employee before the employee's injury or death. Any agreement to waive the right to sue BEFORE a injury or death occurs is void and unenforceable. The right to take action against an employer may not be waived by an employee AFTER the employee's injury UNLESS: The employee voluntarily enters into a waiver agreement with knowledge of the effect Waiver is entered into not earlier than the 10th business day after the date of the initial report of injury The employee has received a medical evaluation from a nonemergency care doctor before signing the waiver The waiver is in written so that the true intent of the parties is specifically stated The provisions of the waiver must be conspicuous and appear on the face of the agreement in a type larger than that contained in the body of the agreement or in contrasting colors.

Waiting Period

Income benefits may not be paid for an injury that does not result in disability for at least 7 work days. If the disability continues for longer than 7 work days, weekly income benefits begin to accrue on the 8th work day after the date of the injury. If the disability does not begin at once after the injury occurs or within 8 days of the occurrence but does result subsequently, weekly income benefits accrue on the 8th day after the date on which the disability began. If the disability continues for 14 work days or longer after it begins, compensation will be computed from the date the disability begins.

Disability Benefits (Income)

Income benefits must be paid weekly, as they accrue. Interest on accrued but unpaid benefits must be paid when the accrued benefits are paid. Income benefits may only be paid monthly at the employee's request, by agreement between employee and carrier, and in compliance with the Commissioner's requirements. Income benefits end when the employee dies; future income benefits do not survive after the employee's death. An employee's eligibility for income benefits terminates 401 weeks after the date of injury or, if the injury is an occupational disease, 401 weeks after the date benefits began to accrue. IMPAIRMENT INCOME BENEFITS (IIBS) When an employee's injury results in a permanent impairment, he/she becomes eligible for impairment income benefits (IIBs) based on the percentage of the total body impairment, as rated by a physician. Doctors may only assign impairment ratings after the worker has reached their best level of recovery, called maximum medical improvement (MMI). IIBs are allocated at the rate of 3 weeks of benefits for each percentage point of impairment. An injured employee rated at 25% impairment, for example, would be entitled to IIBs for 75 weeks. Once impairment income benefits are exhausted, an injured employee with an impairment rating of 15% or more may be entitled to supplemental income benefits (SIBs) for an additional 401 weeks. Employees with some injuries, such as loss of sight, or loss of a limb, are eligible for lifetime income benefits, which do not expire for the lifetime of the injured employee.

Part Six - Conditions

Inspection Transfer of the Insured's Rights and Duties -may not transfer without insured's written consent Cancellation - Insurer must give 10 days' notice Sole Representative - First Named Insured acts on behalf of all insureds

Part Five - Premium

Manual Rating Classifications Final Premium Audit - up to 3 years after policy period ends

Types of Benefits

Medical Disability Rehabilitation Death and Survivor - funeral/relative Supplemental Payments

Part Four - Duties of Insured

Provide for immediate medical services as required Give the insurer the names and addresses of the injured persons and any witnesses Promptly forward all notices, demands, and legal papers related to the injury to the insurer Cooperate with the insurer's investigation Do not interfere with the insurer's subrogation rights Do not voluntarily make any payments, assume obligations, or incur expenses

Disability (Income Benefits)

Temporary Total - expected to recover and return, no work while recovering Permanent Total - prevents from doing any work for life. benefits paid for life Temporary Partial - can do some work but prevent from earning usual wage. benefits are % of difference Permanent Partial - can do some work but will never fully recover (In Texas referred to as impairment benefits)

Hardship Advance

The Commissioner may grant an employee suffering financial hardship up to 3 advances, per injury, against benefit amount to which the employee is entitled. An advance cannot exceed 4 times the maximum weekly temporary income benefit.

Vocational Rehabilitation

The Division may determine that vocational rehabilitation or training may help an employee return to work at the same level he/she performed work duties prior to the injury. If the Division makes this determination, it will refer the employee, with a recommendation for appropriate services, to the Department of Assistive and Rehabilitative Services. Supplemental income benefits will discontinue if the insured does not cooperate with services provided by the Department of Assistive and Rehabilitative Services or a private provider of rehabilitation services.

Computation of Benefits

The maximum weekly benefit paid is as follows: For temporary income benefits, 100% of the state average weekly wage For impairment income benefits and supplemental income benefits, 70% of the state average weekly wage For death benefits and lifetime income benefits, 100% of the state average weekly wage The minimum weekly income benefit is 15% of the state average weekly wage. It is an administrative violation for an employer to fail to file a wage statement that shows the amount of all wages paid to an employee within 30 days after receiving notice of the employee's injury. An order to pay income or death benefits accrued but unpaid must also include interest, at a rate specified by statute, to be paid on the compensation due. Furthermore, the compensation and interest must be paid in a lump sum.

Exclusive Remedy

benefits cannot be used to sue employer, and cant refuse benefits in order to sue employer for larger reward

Employer's Liability Insurance

covers the gap between Workers Comp and the general liability policy Covers: third party claims arise out of covered injury a spouse's loss of services damages under doctrine of dual capacity consequential BI Exclusions: liability under contract, punitive damages, BI to employee violating law, legal obligation, Intentional BI, BI outside US, defamation damage, discrimination, criticism, Limits - 100,000 per accident for injuries, 100,000 per employee for disease, 500,000 aggregate for disease within policy period

elective WC

employer has choice to provide WC. Texas is an elective state

Compulsory WC

employers are required by law to provide Workers' comp

Part Three - Other States Insurance

must notify within 30 provides coverage for workers an employer covers in another state

Monopolistic Insurance

only available through state fund

Competitive Insurance

written by private insurers. Texas is competitive