Experts caution that gradual but dramatic shifts may be taking place in the various state systems.
If you watch the headlines closely, you'll see signs that suggest the workers' compensation system is undergoing a gradual change-one that employers might argue is actually a step backward.
For example, some experts say that workers' comp programs are being stretched to provide broader coverage. Others believe issues relating to ergonomics and mental stress claims could have serious repercussions for workers' comp-including undermining the authority of the states to administer these programs.
Given that workers' comp programs vary by state, broad trends can be difficult to identify. With that caveat, here are some factors affecting current workers' comp programs.
Is Coverage Being Broadened?
Many observers claim that the courts, and sometimes the legislatures, are broadening the coverage of workers' comp. Yet, this trend is not universal.
For example, Bob Gibson, vice president of loss prevention for Missouri Employers Mutual Insurance in Columbia, Mo., and a member of the Society for Human Resource Management (SHRM) Workplace Health and Safety Committee, sees areas where coverage actually is being tightened.
"In Missouri and some of the surrounding states where we provide coverage, we have seen the courts becoming conservative where drugs and alcohol are involved," he reports. "They either reduce or deny benefits if drugs or alcohol were involved in work-related accidents."
But such tightening of workers' comp appears to be the exception, rather than the rule.
Dr. Jeffrey A. Berkman, chairman and CEO of Industrial Health Care in Windsor, Conn., an organization that helps employers manage workers' comp costs through prevention, treatment and rehabilitation programs, sees a definite increase in the types of injuries and illnesses being covered under workers' comp compared to a decade ago.
Similarly, Gibson believes the courts are becoming quite liberal in their interpretation of what activities occur in the scope of employment. (Only activities that occur within the scope of employment are covered by workers' comp). Gibson notes that under workers' comp, "Courts are ruling that accidents taking place during employees' lunch hours and in public parking lots near employers' places of business are now compensable."
Gibson also sees "a liberalization taking place in most states in terms of provider options, allowing employees more choices in selecting their medical providers."
The scope of workers' comp also appears to be widening in occupational exposures. Berkman points out an example in a ruling of the Supreme Court of Connecticut, which allowed employees exposed to contaminated blood or other bodily fluids to be compensated — even if they did not contract a disease as a result of the exposure. "The court ruled that the exposure itself was a work-related compensable injury," he says.
Claims for other occupational exposures are also being covered today that would not have been covered a few years ago, says Berkman. "Years ago, medical research could not substantiate that certain skin rashes, lung conditions, liver diseases, etc., were definitely work-related," he notes. "Now that this knowledge is available, these conditions are being covered by workers' comp." Carol Johnson Perkins, Esq., editor of the Boston-based Workers' Compensation Law Bulletin (Quinlan Publishing; www.workerscompinfo.com), agrees with Berkman on the broadening of coverage for occupational illnesses. Perkins, who monitors workers' compensation appellate decisions throughout the nation, has seen coverage for conditions that cannot be definitely traced to a workplace event. In many of these cases, she says, "There is simply no objective testing yet available; yet employees are being covered."
While Perkins sees broader coverage for occupational illnesses, she does not see a general broadening of workers' comp coverage. What is making a difference, she believes, is the composition of individual courts.
"Some courts make their decisions based on strict interpretation of state laws, many of which were revised in the early 1990s to tighten coverage," Perkins says. "Other courts, though, tend to interpret in favor of employees as often as possible. Here, you can see some really surprising results when compared to the actual language of the law."
Berkman also sees coverage of workers' comp expanding into issues concerning ergonomics and emotional stress.
Ergonomics Claims On a National Scale
Ergonomics claims have jumped to center stage in workers' comp systems and are now drawing significant attention from employers and insurance companies. One reason: "Ergonomics claims have been increasing in recent years as a result of broadening rights from legislatures and courts," says Kathy Langner, vice president for Chubb & Son, a commercial insurance company in Warren, N.J.
Gibson agrees. "We are seeing an increase in the number of ergonomics claims, and we don't expect a slowdown in the future," he says.
The nebulous nature of these claims concerns Gibson and others. "If it is clear that the ergonomics injuries and illnesses are definitely work-related, then I don't think anyone would argue against their being covered," he notes. "The problem with ergonomics claims is that you don't know about pre-existing conditions or how much of the problems developed away from work," Gibson says.
The concerns about current ergonomics claims, however, pale in comparison to what may be looming in the near future in the form of the ergonomics standards proposed by the Occupational Safety and Health Administration. The "meat" of the proposed standard has been hotly debated over the last year and will continue to be debated. But an element of the new regulation that seems to be going largely unnoticed appears to push for "nationalized" workers' compensation-at least in the area of ergonomics. The new regulation would do the following:
- Infringe on the decisions of state workers' comp administrators of whether an employee's injury or illness is work-related. The proposed regs would allow coverage in situations where the states might not, such as if an ergonomics problem is caused in part by factors outside of work.
- Require 100 percent wage replacement and benefits for ergonomics-related injuries. Such a provision "would utterly destroy return-to-work incentives and end up being very costly for employers," cautions Eric Oxfeld, president of UWC-Strategic Services on Unemployment & Workers' Compensation, a Washington, D.C.-based business association that lobbies on national workers' comp and unemployment insurance issues for employers and business associations.
- Create conflict in the area of prior conditions. For example, workers would be covered even if workplace conditions merely aggravated a condition that did not stem from a workplace incident. For example, if a worker hurts his back while gardening at home, then aggravates that injury while moving boxes on the job, his injury would be covered. Along the same lines, the proposed reg would prohibit health care providers from reporting the existence of prior injuries or injuries that occurred outside the workplace. This violates state workers' comp laws that require proof of medical causality. Taken to its extreme, health care providers that are prevented from reporting the existence of prior injuries or injuries incurred outside the workplace could be forced to commit workers' comp fraud.
- Require employers to prevent workplace exposures. This requirement could undermine the exclusive remedy provision of workers' comp. For example, say an employer had an ergonomic hazard in the workplace. Employees could argue that the employer has a duty to prevent future injuries attributable to that hazard, and that the failure to prevent future injuries could be considered an intentional act. Intentional acts by employers are not covered by the exclusive remedy provision of workers' compensation programs, which means employees can sue employers for these types of offenses.
"The proposed regulation would actually end up giving 'super status' to one certain type of workers' compensation claim," says Thomas M. Anderson, JD, SPHR, human resources and risk management director for Fort Bend County in Richmond, Texas. Anderson is also the chair of SHRM's Workplace Health and Safety Committee. "In essence, it would involve nationalizing workers' comp in a specific area...Workers' comp is a state program, and, as such, the proposed ergonomics standard, as currently written, exceeds the federal government's authority."
Gibson echoes Anderson's concerns. "For the first time, we would have someone other than the states dictating benefit levels and rehab levels for workers' compensation," he says.
Anderson adds, "The proposed ergonomics standard is very disturbing for workers' compensation. It would represent a very significant new direction if it comes to pass."
In addition, Oxfeld points out another move by the federal government that could have repercussions for workers' comp: In April, the Department of Energy (DOE) asked Congress to create a new compensation program for victims of radiation and other illnesses associated with federal power plants.
"The DOE is basing this request on its claim that workers' comp is an inadequate remedy," says Oxfeld. "Again, it lays the groundwork for an attempt by the federal government to take over workers' comp. If it is successful in this radiation program, other areas could be next."
Mental Disability Claims
Another area of concern to employers is that of mental disability claims, such as stress, depression, etc. Some experts see an increase in these claims, some see no increase and others see a rebalancing.
"These days, psychological claims seem to be much easier to prove than they once were," says Dallas Jones, an attorney with the Lincoln, Neb., law firm of Baylor, Evnen, which represents employers. In Nebraska, says Jones, the law covers only physical-mental claims-those in which a physical injury leads to a mental condition. "However, other states, either as a result of statute or case law, allow mental-physical claims and even mental-mental claims," he says.
"Stress claims have always been strong in California," says Berkman. "Now, it seems that most other states are looking toward accepting stress as a primary complication, as opposed to a secondary complication where a physical condition leads to a mental condition. In other words, if someone gets stressed at work, it is often compensable."
John Smoyer, SPHR, also has seen an increase in mental disability claims — and he expects to see more. The problem with these claims, says Smoyer — who is an HR consultant in Mesa, Ariz., retired personnel director for the city of Mesa and member of the SHRM Workplace Health and Safety Committee — is that "it is difficult to tie the claims directly to work, unless someone was obviously traumatized by a specific event at work. Otherwise, there is no empirical way to identify the source of the problem or measure it."
According to Jones, not only are mental claims being allowed, payments are increasing.
"In mental claims, there seems to be an erosion of defined benefits," he says. "This allows employees to break out of the statutory framework that provides defined benefits and make claims for substantial loss of earning capacity, which makes the value of the claims much greater than they otherwise would be. This seems to be a common theme around the country when I talk with other workers' comp defense practitioners."
Yet others see little or no increase. "Mental stress claims are not much of a factor in most states that I am aware of," says Anderson. "It is too difficult to prove that stress is work-related when there are so many other possible outside sources, such as children, marital problems, financial problems and so on."
Scott Meiklejohn, the immediate past president of the Denver-based Workplace Injury Litigation Group, an organization that acts as a clearinghouse of information for trial attorneys, believes mental stress claims are all but dead. "In the early 1990s, they were labeled as the claim of the next 20 years, but that never happened," he says. "The reason is that a lot of states passed legislation drastically reducing these claims by eliminating them completely, by creating so many factors to prove that it made it almost impossible to obtain benefits or by limiting the benefits paid for claims that are won."
Oxfeld notes, "California, which had major fraud problems as a result of mental stress claims in the early 1990s, has dealt with the problem legislatively." He adds that many states have completely excluded mental-mental claims from workers' comp. Still others see mental stress claims going through a rebalancing, based on unique circumstances and the views of individual courts and individual states.
"Such claims still seem to be an anomaly rather than generally accepted, but, if you get a liberal judge, an employee might be covered," notes Gibson.
"For several years, there was a tremendous fear that stress claims would take over the workers' comp system," observes Timothy S. Bland, SPHR, an attorney with Ford & Harrison LLP, in Memphis, Tenn. "To a large extent, this has not been realized. Some courts in some states do recognize stress-related claims under workers' comp, but the overall trend has been for the courts and legislatures to cut down on these claims. For most stress claims to succeed, something extraordinary must happen in the workplace, such as witnessing an act of workplace violence."
The reason such claims did not snowball, according to Bland, is that the states realized the potential for abuse. "This doesn't mean employers are off the hook, though," he cautions. "Last year in Tennessee, for example, there were a couple of cases where employees recovered where you might not have expected them to."
In one case, an employee was able to recover under a physical-mental claim. She injured her back and wrist and subsequently suffered chronic pain. As a result of the pain, she filed a claim for workers' comp, adding a claim for depression as a result of the pain. "The Tennessee Supreme Court held that, even though the depression did not arise directly out of work, it did result from a workplace injury. So, it was compensable," notes Bland.
In another case, an employee recovered benefits under a mental-mental claim. "Her supervisor had frequently made inappropriate comments to her like, 'I'll knock you down if you don't get out of my way,' and 'I'll knock you into the middle of next week,'" reports Bland. "The Tennessee Supreme Court held that the conduct was job-related and provided workers' comp benefits to the woman for post-traumatic stress disorder."
"I have seen quite a few of these claims, but I don't know that they are on the rise," adds Perkins. "It is just surprising to me how varied treatment is from state to state."
For example, in one case, two of a store's employees were having lunch in the store's public restaurant. The estranged husband of one of the employees showed up and stabbed her. Her co-worker helped stop the attack, then subsequently filed a claim for post-traumatic stress disorder.
"The claim was denied based on the fact that she was at lunch and not working at the time," reports Perkins. "I was surprised that this was not covered, but the statutory language read that coverage only applies when an injury is caused by an act of a third party when the employee is actually engaged in the furtherance of business or affairs of the employer. As such, the courts could not get around this statutory language."
According to Langner, "California and some other states had laws that made it fairly easy to prove mental stress claims; however, a number of reforms have been passed that require some bodily injury manifestation of stress-that is, mental-physical, or where some specific and defined event occurred."
Overall, according to Langner, mental-mental claims are much rarer today than they were five and 10 years ago. "However, some mental-mental claims have been allowed to come into the employer liability section of workers' comp policies, which has eroded the exclusive remedy approach to some extent," she adds.
In light of what seems to be a broadening and liberalizing of workers' comp coverage around the nation, here are some recommendations:
William Atkinson is a business writer based in Carterville, Ill. He specializes in safety, health and workers' compensation issues.
- "First and foremost, be sure you have a comprehensive and effective safety program designed to prevent injuries and illnesses in the first place," suggests Anderson.
- "I don't anticipate any conservative movement on the judicial side," reports Jones. "If any conservative movement is to take place, it will come from the legislative side. I recommend that you talk with your legislators."
- Get involved, says Oxfeld. "Labor, attorneys and the medical community are focusing on the workers' comp issue," he says. "Business also needs to focus on it. If you don't open your mouth today, you will have to open your wallet tomorrow."