Workers Compensation - Chapter 18

*(Workers Compensation - Chapter 18)* Classes of employees that are exempt from workers compensation laws:

- Certain farm and agricultural workers - Charitable Organizations Workers - Domestic employees and casual laborers - Newspaper vendors

*(Workers Compensation - Chapter 18)* (Types of Disability) The level of disability suffered by an injured worker is categorized into one of four types:

- Permanent Total - Permanent Partial - Temporary Total - Temporary Partial

*(Workers Compensation - Chapter 18)* Part Four-Your Duties if Injury Occurs

Addresses the insured's obligations when an injury occurs for which there may be coverage. The insured must provide medical services required for the injured party, report the injury to the insurer in the investigation and settlement of the claim.

*(Workers Compensation - Chapter 18)* Funding

Because workers' compensation benefits often are extended to employees over long periods of time, it is important that measures be taken to guarantee that the company will have the funds to pay benefits required under the law. There are five basic methods for funding these benefits. Each state requires that employers provide security through at least one of the following methods: - Private Insurer - Monopolistic State Funds - Competitive State Funds - Self-Insurance Method - Groups

*(Workers Compensation - Chapter 18)* General Section

Contains definitions and conditions that apply to the policy as a whole.

*(Workers Compensation - Chapter 18)* Part Five-Premium

Explains how the cost of the policy is determined

*(Workers Compensation - Chapter 18)* To obtain benefits under workers compensation, the injured employee must prove that the employer was negligent for the injury.

False

*(Workers Compensation - Chapter 18)* Jones Act

Federal law that allows members of ships' crews to sue the employer/shipowner at common law for injuries caused by the employers/shipowner's negligence.

*(Workers Compensation - Chapter 18)* Experience Modification Factor

If the insured has a loss history that is better than average, this will be applied to reduce the premium. If the loss history is worse than average, a surcharge will be applied to increase the premium.

*(Workers Compensation - Chapter 18)* Federal Employers Liability Act (FELA)

In most states, interstate railroad workers are covered under this act instead of workers' compensation laws. This act allows the injured worker or a representative of a deceased worker to sue the employer for negligence and eliminates two of the common law defenses: contributory negligence and assumption of risk. Awards provided under this act are often more substantial than those provided under state workers' compensation laws because this act does not limit an injured employees remedies to scheduled benefits.

*(Workers Compensation - Chapter 18)* Rehabilitation Benefits

Include medical rehabilitation, such as physical therapy designed to improve physical functioning, and vocational rehabilitation, such as retraining for a different occupation. Workers compensation rehabilitation benefits usually pay reasonably justifiable expenses for these purposes.

*(Workers Compensation - Chapter 18)* Experience Rating

Insureds that have premiums above a certain amount are eligible for this. Premiums are paid and losses incurred over the three years immediately preceding the policy period are evaluated.

*(Workers Compensation - Chapter 18)* Groups (Funding Method)

Many states allow individual employers to form these to insure the group members' workers' compensation exposure in a particular state. Eligibility requirements vary from state to state. For example, in some states the group members must be involved in the same type of business; in others, the members must have minimum amount of workers' compensation premium.

*(Workers Compensation - Chapter 18)* Part Three-Other States Insurance

May be used to provide coverage for states that are not specifically listed in the information page for part one coverage. The state must be listed in the information page for other states coverage, and the insured must provide notice to the insurer as soon as work begins in a new state.

*(Workers Compensation - Chapter 18)* (Types of Disability) Permanent Disability

One that will affect the worker for the rest of the worker's life.

*(Workers Compensation - Chapter 18)* Medical Benefits

Pay for the cost of various types of medical services required because of an employment-related injury. Nearly any type of related medical expense is covered with neither an upper dollar limit nor a limit on the period of time for which expenses will be paid.

*(Workers Compensation - Chapter 18)* Part One-Workers' Compensation

Promises to pay all compensation and other benefits required of the insured by the workers' compensation law in the state or states where the insured's business operates (which are listed in the Information Page). No dollar limit applies, except for those that are apart of the law. Coverage applies to any work related accident occurring during the policy period.

*(Workers Compensation - Chapter 18)* Part Two-Employers Liability

Provides coverage to the insured for sums the insured becomes legally obligated to pay under common law because of a work-related injury or occupational disease. Three separate limits apply with a workers' compensation policy. These limits are: - per accident: for all bodily injury arising from a single accident (regardless of the number of employees injured); - policy limit: for all bodily injury by disease during the policy term (regardless of the number of employees injured by disease); and - per employee: for each employee injured by disease during the policy term.

*(Workers Compensation - Chapter 18)* Part Six-Conditions

Sets forth the conditions that apply to the policy, such as cancellation procedures, subrogation, and the insurer's right to inspect the insureds workplace.

*(Workers Compensation - Chapter 18)* A particular state gives employers the option of purchasing workers' compensation insurance from a state fund or a private company. This is an example of

a competitive state fund

*(Workers Compensation - Chapter 18)* Workers' compensation laws pay benefits in four categories:

- Disability/Loss of Income Benefits - Medical Benefits - Survivor/Death Benefits - Rehabilitation Benefits

*(Workers Compensation - Chapter 18)* Situations that are not covered by workers' compensation laws (why the insured needs employers liability):

- Exempt employments - Illegal Employments - Noncompensable Injuries An employee who is unable to collect workers' compensation under state law may still sure the employer for damages.

*(Workers Compensation - Chapter 18)* (Coverage) Nearly all states that allow PRIVATE INSURANCE companies to offer coverage use the standardized workers' compensation and employers liability policy filed by the National Council on Compensation Insurance (NCCI). A complete policy contains an information page (similar to the declarations used with other types of policies) and a policy form that contains the following sections:

- General Section - Part One-Workers' Compensation - Part Two-Employers Liability - Part Three-Other States Insurance - Part Four-Your Duties if Injury Occurs - Part Five-Premium - Part Six-Conditions

*(Workers Compensation - Chapter 18)* (Types of Disability) Determining the difference between between a total and a partial disability depends on what standard the state uses to determine the degree of disability. In different areas, the determination is made by deciding first whether the worker is:

- Industrially disabled, which refers to the individuals loss of earnings; or - Medically disabled, which refers to the physical condition that affects functioning.

*(Workers Compensation - Chapter 18)* Part Two-Employers Liability Exclusions:

- Liability assumed under contract - Punitive damages awarded because a worker was employed in violation of the law - Injury to a worker while employed in violation of the law with the insured's knowledge - Obligations imposed by any workers' compensation, occupational disease, unemployment compensation, or disability benefits law - Injury intentionally caused or aggravated by the insured - Injury that occurs outside the United States, its territories or possessions, or Canada (does not apply to residents of these areas who are temporarily outside these areas) - Damages arising out of violations of employment practices laws, such as discrimination or harassment - Injury that is covered under a federal workers' compensation law - Injury to the master or member of the crew of any vessel - Fines and penalties imposed for violations of federal or state law - Damages payable under the Migrant and Seasonal Agricultural Worker Protection Act and other federal laws awarding damages for violation of laws or regulations

*(Workers Compensation - Chapter 18)* Which of these statements regarding workers' compensation benefits are CORRECT?

- Survivor benefits pay a stipulated amount for funeral and burial expenses and a weekly benefit to surviving relatives. - Rehabilitation benefits cover both medical and vocational rehabilitation.

*(Workers Compensation - Chapter 18)* Work-related injuries must arise out of employment and during the course of employment to be compensated under workers' compensation laws. Three factors are used to determine if the injury arose in the course of employment:

- Time; - Place; and - Circumstance; Time is important because a compensable injury must occur during the time work is being performed for the purposes of employment. Place and circumstances are important because the injury must either occur at the place of employment or occur away from the place of employment while employment duties are being performed.

*(Workers Compensation - Chapter 18)* A disabled person can be capable of performing some type of gainful work is considered to be: _____________________ disabled in states that use the ______________________ disability standard.

- partially - industrial

*(Workers Compensation - Chapter 18)* The type of disability that does not last for a lifetime is known as a ______________________ disability. A disability that last a lifetime is called a _____________________ disability.

- temporary - permanent

*(Workers Compensation - Chapter 18)* Assumption of Risk

Allowed the employer to deny liability on the basis that the employee knew what the situation was before the employment and assumed all of the risk of injury.

*(Workers Compensation - Chapter 18)* Survivor/Death Benefits

Compensate a surviving spouse, children, or other relatives of an employee whose death results from a work related injury. In General, survivor benefits usually include a weekly benefit and a stipulated amount for funeral and burial expenses.

*(Workers Compensation - Chapter 18)* Disability/Loss of Income Benefits

Compensate employees who are unable to work as the result of a work related injury. These benefits are intended to replace a portion of lost income, but not all worth it

*(Workers Compensation - Chapter 18)* Compulsory Vs. Elective Workers' Compensation Law's

Even in elective states, there are certain occupations or groups for which workers' compensation is compulsory, such as government employees. And both elective and compulsory states often exclude certain classes of employees, such as farm workers or domestic servants.

*(Workers Compensation - Chapter 18)* Workers Compensation Laws

Give employees the right to collect from their employers for injury, disability, or death that occurs in the course of employment. Prior to the enactment of such laws, a worker had to sue an employer and prove the employer negligent to be reimbursed for a work-related injury. Employers proved successful at avoiding liability through the use of three common law defenses.

*(Workers Compensation - Chapter 18)* Federal Workers' Compensation Laws

Most workers are protected under their states workers' compensation laws. However, there are some categories of employees that are covered under federal workers' compensation laws. These laws include: - Federal Employers Liability Act (FELA) - Jones Act

*(Workers Compensation - Chapter 18)* As punishment for illegally employing a 17 year old, the state fines Jack Hammer $5,000 in addition to the amount for which he was held liable because of the boy's work-related injuries. Will Part Two of Jack's workers' compensation and employers liability policy reimburse him for the $5,000 fine?

No

*(Workers Compensation - Chapter 18)* (Types of Disability) Temporary Disability

One that will go away

*(Workers Compensation - Chapter 18)* Private Insurer (Funding Method)

One way employers meet their workers' compensation obligations is through insurance purchased from _____________ _____________. The employer transfers compensation obligations to the insurance company from which the policy was purchased. Then, the insurance company pays benefits required by law.

*(Workers Compensation - Chapter 18)* Competitive State Funds (Funding Method)

Other states have created these types of funds, which give employers a choice between purchasing workers' compensation insurance from a state fund or a private insurance company. Thus, the state fund competes with private insurance.

*(Workers Compensation - Chapter 18)* Self-Insurance Method (Funding Method)

Some employers assume their own workers' compensation liability through this method. If this method is chosen, the employer will set up a fund to pay workers' compensation claims and file evidence of its existence with the state workers' compensation authority. The employer must handle benefits costs and claim expenses, as well as medical and legal services.

*(Workers Compensation - Chapter 18)* Monopolistic State Funds (Funding Method)

Some states have created these types of funds, which require employers to purchase workers' compensation insurance from them. Private insurance companies are not allowed to compete against these funds. To be insured against workers' compensation claims, the employer must buy coverage from the state fund.

*(Workers Compensation - Chapter 18)* Voluntary Compensation Endorsement

Some types of workers are not covered under a state's workers compensation laws, such as domestic employees and farm workers. An employer can provide coverage for excluded workers by adding this endorsement.

*(Workers Compensation - Chapter 18)* Compulsory Workers' Compensation Laws

State law (used in most states) that means the employer must accept and comply with all provisions of the law.

*(Workers Compensation - Chapter 18)* Elective Workers' Compensation Laws

State law that means the employer may choose not to subject to the law. However, an employer who does so is denied any rights provided under the law and loses the use of the pro-employer defenses against liability discussed earlier.

*(Workers Compensation - Chapter 18)* Longshore and Harbor Workers Compensation Act Coverage Endorsement

Under this act, specified benefits must be paid to maritime employees injured while working on navigable waters or shore-site areas of the United States and its territories. This act takes place over an state law that may cover the same workers.

*(Workers Compensation - Chapter 18)* Contributory Negligence

Used to deny liability on the basis that, no matter how negligent the employer was, the employee also had been negligent, and therefore the employee should be responsible for the consequences.

*(Workers Compensation - Chapter 18)* Fellow Servant Rule

Was used to deny liability on the basis that the injury was caused by a fellow employee and, therefore, the employer could not be held liable.

*(Workers Compensation - Chapter 18)* Exclusive Remedy

When workers' compensation laws were adopted, they were designed to provide a fair means of handling work-related injuries, including occupational diseases. They are based on the idea that the cost of most work-related injuries and occupational diseases should be charged directly to the employer, regardless of who is at fault, and without complex court proceedings. The cost, in turn, would be passed on to the consumer as a cost of production. In return, the benefits stipulated in workers' compensation laws are the only means, also known as the exclusive remedy, available to employees against employers for injuries covered by those laws. Employees cannot sue employers in court to obtain additional compensation.

*(Workers Compensation - Chapter 18)* Types of Disability

Where industrial disability is the standard, the difference between partial and total disability depends on whether the individual is able to earn at least some money by working or has completely lost the ability to work for a living. When medical disability is the standard, partial, or total disability depends on whether the individual has partial physical functioning after the injury or has sustained a complete loss of physical functioning.

*(Workers Compensation - Chapter 18)* Rating Workers' Compensation Coverage

Workers' compensation coverage is rated on the basis of the employers payroll. Published manuals contain listings of rate classifications based on the type of work employees perform and their relative exposures to work-related injuries. For any given employer, one or more of these classifications will be selected. For each classification, the manual provides a rate per $100 of payroll. The rate for each class is multiplied by each $100 of payroll applicable to the class. Rates for each class are totaled, and premium discount that varies with the amount of total premium is applied. Since the employer does not know at policy inception what its payroll will be at any given time of the year, payroll is estimated for the purpose of determining a deposit premium. Later, the final premium is calculated.

*(Workers Compensation - Chapter 18)* A certain state requires employers to purchase workers' compensation insurance from a state fund. This is an example of:

a monopolistic state fund