Workers Compensation, Insurance, and COVID-19

18.03.20 10:21 AM By Managing Partner

Workers’ compensation provides the exclusive remedy for injuries and illness that employees suffer arising out of and within the course of their employment.  In the early stages of this pandemic, work-related travel to high impact countries or work-related exposure in a case that was being tracked by public health authorities provided support for work-related exposure.  In healthcare settings, work-related exposure will likely be established when exposure to infected patients occurs.  But in other settings and as the diseases spreads in the United States, the analysis about whether an illness is covered by workers’ compensation will be more difficult.

Workers’ Compensation and “Ordinary Diseases of Life”: Many states do not authorize workers’ compensation coverage for “ordinary diseases of life.”  Employers should review their own state workers’ compensation laws closely, but an ordinary disease of life is generally defined as an illness to which the general public is equally exposed, and is not a result of the peculiar or unique nature of an employee’s job.  At this stage of the pandemic within the United States, it is possible that state workers’ compensation commissions may view COVID-19 as an ordinary disease of life because untraced community infection is widespread.  In that case, an employee would not qualify for workers’ compensation, and the employer’s workers’ compensation insurance might not apply.

When workers’ compensation does not apply, obviously the exclusive remedy provision does not apply, and employees may sue their employers in tort.  Employees also can sue even if workers’ compensation does apply to their illness if they can claim that the exposure was caused by the willful act or omission of their employer.  The definition of “willful” for workers’ compensation purposes differs from state to state.

Employers are working diligently to put protocols in place to mitigate occupational exposure to COVID-19.  If an employer follows a protocol that considers available public information from the WHO and the CDC and/or state and local health departments, and makes decisions that reflect the best available information, they should have good defenses to any tort suit.

Insurance: In addition to implementing precautionary workplace policies and procedures, employers should also consider how their insurance applies to pay for losses associated with COVID-19.  Many employers already have Workers’ Compensation and Employers’ Liability Insurance which, as the title suggests, is designed to protect a business against two main liabilities.  The first is money that the company is required to pay an employee under a given state’s workers’ compensation laws.  This expressly includes liability for bodily injury by disease, so long as the disease is caused or aggravated by the conditions of employment.  If state law points to workers’ compensation as the exclusive remedy for any employee who may become infected by COVID-19, this coverage grant should squarely apply.

The second risk that this insurance covers is an employer’s liability for any bodily injury claims that fall beyond the scope of workers’ compensation laws.  Numerous policy exclusions may apply in such a scenario, however, and the facts must be considered on an individual basis. Employers may also have unique issues to address based on the locations covered by the policy and whether the infected employee is based domestically or internationally. All of these considerations must be taken into account in evaluating the potential applicability of workers’ compensation coverage.

Critically, workers’ compensation and employer liability insurance policies impose certain duties that must be met in order to preserve coverage.  These typically include:

(1) providing immediate medical and other services as required by the applicable workers’ compensation law;

(2) providing the insurer with the name and contact information of the injured employee;

(3) providing prompt notice of any demands or legal claims made; and

(4) cooperating with the insurer and assisting in the defense of any claim.

Finally, there may be situations in which other insurance may apply to liabilities arising out of COVID-19.  For example, depending on the facts alleged and causes of actions asserted, commercial general liability (“CGL”) insurance may apply, providing a duty to defend the policyholder and coverage for settlement or judgments (if any).

In the event an employee becomes infected by COVID-19, employers should consult their relevant insurance policies and provide notice to their insurers while being sensitive to privacy considerations.  Skilled labor and employment and coverage counsel should be consulted from the outset to ensure that any unique circumstances can be addressed at the claim’s inception.

© 2019 Mohamed Zain, LLP