Travelers Insurance recently passed Liberty Mutual to be the largest workers compensation insurance carrier in the United States. Coming from the length and breadth of knowledge and experience that comes from years of handling comp claims, Travelers published their list of 5 common workers comp myths from a small employer's perspective:
1. “I only have a few employees so I don't need comp insurance.” 2. “My employees won't sue me.” 3. “Comp insurance is too expensive so I'll just pay out of my pocket if an injury occurs.” 4. “I provide a safe workplace so my employee's won't get injured." 5. "Medical costs in the workers comp system are just too high."
While these myths do exist and are quite prevalent, I often see an additional five myths from my perspective as a workers comp defense attorney:
1. Every Injured worker needs an attorney.
While it is true that many injured workers do need to hire an attorney, there is certainly no need for most to obtain counsel. Most states have systems in place to resolve the claim directly with the injured worker without the time and expense associated with the claimant hiring an attorney and filing a formal claim.
The complaint against injured workers representing themselves is what gave rise to that old joke: “A person who acts as his own attorney has a fool for a client.” I agree that most claimant's don't know as much comp law as does the average claimant's attorney. That shouldn't come as a shock to anyone. But that doesn't mean that every injured worker needs an attorney.
Most comp claims are compensable (if you don't agree…sent Myth 5 herein). As such, the only issue in most claims is the nature and extent of impairment of disability. Does this mean that final settlement amount for an unrepresented claimant is always the same as in cases where the claimant has retained counsel? Obviously not, but that doesn't mean that the claimant gets less money.
Remember that in most jurisdictions, claimant's attorneys take between 20% - 33% of the final settlement as a fee. Add in a few thousand dollars for an IME report and discovery costs and you can see how the fees and expenses go up faster than the winnings on Wheel of Fortune.
If the claimant resolves the permanent partial disability portion of the claim on his own, he can afford to accept a lot less money for the final settlement amount and still take home nearly the same amount when compared to what he would actually receive if he had retained counsel and paid the fees and expenses out of his final settlement.
Additionally, there is also the time value of money consideration. Claims where the injured worker is represented often take years to resolve, not weeks or months. Which is better to receive - - $10,000 today or $12,000 three years from now? Most people would chose the former over the latter and by resolving claims directly with the insurance carrier without hiring an attorney, injured workers are virtually guaranteed to get their money faster than if they retain counsel.
2. Injured workers are entitled to compensation for any painful condition that arises during working hours.
While this may be somewhat true in a few states (New York, California, Illinois), in most states this is simply false.
There are various philosophical theories that underlie the workers compensation statutes of a particular state (like the “positional risk doctrine”, the “mutual benefit doctrine”, and the “scope and course of employment” doctrine among others). Nevertheless, in most states there must be some connection between the injury and the employment in order for a claim to be compensable. Merely feeling pain at work does not automatically equate with entitlement to workers comp benefits in the vast majority of jurisdictions.
It doesn't surprise me that many claimants believe that simply feeling pain at work creates the possibility of a valid workers compensation claim. However, what is surprising is how many small business owners believe this same myth.
I often talk to business owners who tell me stories that vary, but generally follow this path: “My employee says his arm hurts and he wants me to take care of it. That's all I know.” One doesn't have to be that sunglasses-wearing-guy from CSI: Miami to ask a few questions of the claimant like “How did you hurt your arm?”; “Did the pain start while you were doing something in particular?”, or “When exactly did the pain start?”
3. The jurisdiction for a comp claim is where the carrier wants it to be.
This is a myth that is pervasive among adjusters and safety directors. For example, if employee works in State A, but is in State B for a work-related purpose and is injured in State B, which state has jurisdiction over the claim? In most instances, the employee can choose to file his claim in either State A, State B, or even both! And yet, I have a conversation almost weekly with claims professionals who tell me: "Brad, I want this claim to be in State A so please have the claim dismissed from State B."
If a state says it has jurisdiction over a claim, the basis for asking for a dismissal cannot be: “Judge, my adjuster simply doesn't want the claim to be here.” I would obviously have a more reasoned position upon which to base my request, but the end result is often the same.
4. Employers have workers comp insurance so they can let the carrier worry about their claims.
This is basically the same as believing that if I stick my head in the sand bad things can't happen to me. Employers should manage and monitor comp claims as if the money being paid to the claimant is their own money. Wanna know why? BECAUSE IT IS THEIR MONEY. Comp insurance works just like automobile insurance - - more claims always equates to increased premiums. Sure, an employer may have one or two claims that won't affect the amount of the premiums. However, with the cavalier attitude towards claims that underlies this myth, it's only a matter of time before the premiums get higher than a surfer locked in a medical marijuana facility.
5. Most workers comp claims are fraudulent.
For claims professionals who handle comp claims on a daily basis, it often seems as if most comp claims are fraudulent. However, statistics simply don't support this conclusion. A recent study from the University of Michigan concluded that only 2% of claims are fraudulent. I would think that the actual number is a bit higher than 2%, but certainly a far cry from 100%.
The danger in believing that most claims are fraudulent is that employers and carriers can face steep penalties for failing to provide legally-required comp benefits in the absence of a valid reason to deny the claim. Additionally, employers and/or carriers who develop a reputation for denying claims without a valid reason often face higher awards from Judges and Arbitrators who know this reputation all too well.
I like the approach used during the missile reduction talks with the Soviet Union during the 1980's: “Trust but verify”. If we treat most claims as compensable while always being on the lookout for evidence of fraud, it creates opportunities to prevail at trial rather than opportunities to reinforce an employer-stereotype as one that denies all claims.
About the Author
J. BRADLEY YOUNG is a partner with the St. Louis, Missouri law firm of Harris, Dowell, Fisher & Harris, where he is the manager of the Worker's Compensation Defense Group and represents self-insured companies and insurance carriers in the defense of workers' compensation claims in both Missouri and Illinois. Brad is a frequent Conference Speaker and can be regularly heard on KMOX radio in St. Louis discussing a wide variety of legal topics. You can email Brad at email@example.com .
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