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Workers Compensation. Chapter 7 Accident Prevention Manual: Administration & Programs. The System. To ensure that losses from workplace injury are compensated.
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Workers Compensation Chapter 7 Accident Prevention Manual: Administration & Programs
The System • To ensure that losses from workplace injury are compensated. • A “safety net” to alleviate the problems that workplace injuries can cause, while providing employers some relative predictability of the costs. • In return for the protection, workers cannot sue their employer for their injury.
Economic Losses • 1. Loss of earnings. • 2. Additional expenses. • Death- worker’s survivors would be compensated for their providers loss. • Total and Permanent Disability- may be even greater costs than a death.
WC in the United States • Early interest in the German (1893) and British systems (1897). • 1902- Maryland “Cooperative Accident Insurance Fund”. • 1908- FDR pushed for, and got compensation for Federal employees.
Early Laws • 1909- Montana law for miners and laborers in coal. Declared unconstitutional, but got other states thinking about compensation for workers. • 1910- New York for certain hazardous jobs. • None of the early laws included occupational disease- “injury by accident”.
Early Laws • Every state (except Oregon) required waiting periods of one to two weeks before benefits were paid. Some provided retroactive payments after a prescribed period. • 1911- Wisconsin WC law was the first to remain effective and was soon followed by Nevada, New Jersey, California and Washington.
Early Laws • 1916- the United States Supreme Court declared workers compensation laws to be constitutional. • Workers compensation was not provided in every state until Mississippi enacted its first law in 1948.
Compensation Legislation • All 50 states, DC, Guam and Puerto Rico, plus Federal Employees Compensation Act (FECA) and the Longshoreman’s and Harbor Workers Act. • While there have been increases in benefits and scope, the basic concepts have remained unchanged.
Objectives of WC • Six basic objectives- Page 151. • Income Replacement. • Medical and vocational rehabilitation. • Incentives for both the company and injured persons to get back to work ASAP. • Accident prevention and Reduction?
Major Characteristics • Compulsory • Elective • If you reject the act you would lose the “common law” defenses: • Assumption of risk • Negligence of fellow employees • Contributory negligence
Major Characteristics • Most jurisdictions require employers to obtain insurance or prove financial ability to carry their own risk. • “Self-Insurers” • Some states (13) permit employers to purchase insurance from either a competitive state fund or from a private insurance company.
Covered Employment • Many laws exempt employers having fewer than a specified number of employees-usually 3 or 4 in any one location. • Other exemptions. • Federal Employer’s Liability Act.
Limitations on Coverage • Each state act was the result of political compromise. • These laws would introduce greater certainty into the calculation and payment of benefits- in contrast to the common law system: • Could sue under common law • If you lost, you got zero
Limitations of Coverage • Two factors usually prompt compensation litigation: • 1. Work relatedness- did the injury arise out of the course of employment? • 2. Extent of the disability.
“Exclusive Remedy” • “Quid Pro Quo”- employers accept the responsibility for injuries without regard to fault. • In exchange, employees give up the right to sue for unlimited damages. • However, workers may bring suit for negligent actions on their employer, fellow workers, contractor, entity or other individual.
Broadening Exclusive Remedy • The expansion of Dual Capacity Doctrine- if the injury was caused by the employers product or a service available to the public. • Intentional Tort.
Covered Injuries • “Arising out of and in the course of employment. • Four Tests: • Personal injury • By accident • Arising out of • In the course of
Occupational Disease • Originally not part of WC. • Most states do not provide for “ordinary diseases of life”. - See 1996 Virginia State Supreme Court ruling on page 154. • Compensation for Occupational Disease is the same, however, some states do not provide permanent partial disability for certain diseases. • Most states have extended periods for reporting latent, slowly developing diseases.
Work Related Impairment • Hearing • Black Lung Disease
Work Related Impairment • “In the course of employment” – means from the time they step on the employer’s premises until the time they leave it. • Not easy to define. What is meant by premises? • “Arising out of” – causal relationship between the employment and the injury. (ie, heart attack)
Work Related Impairment • Actual Risk Doctrine- the hazard resulting in injury be a risk be a risk of the particular employment regardless of whether it is a risk to which the general public is exposed. • Positional Risk Doctrine- the “but for” test. The employment places the worker in a position where he/she is injured.
Benefits • TYPES: Loss income, medical payments and rehabilitation. • 70% for “temporary total disability” • Only 25% of such cases were for cash benefits paid. • Benefits for “permanent partial disabilities” accounted for 66% of the total dollar amount.
Benefits • Benefits are payable as a wage-related benefit. • Varies by state. Between 66% and 100% of current wages. • Some can get less than two-thirds of their pay because of ceilings. • Tax free.
Benefits • Maximum time periods for receiving benefits. • Waiting period, usually 3-7 days- applies to only cash indemnity payments. • Retroactive payment varies from state to state.
Benefits • Will vary depending on whether the disability is temporary or permanent, partial or fatal. • Dollar ceilings may mean individuals are not fully compensated for lost earnings. • Permanent total disability- prevent any work in the labor market and are of an indefinite duration.
Benefits • Permanent Partial Disability- calculated on a relatively complex basis: • Scheduled Injuries • % of average weekly wages • Paid for fixed period • Vary according to type and severity • Non-scheduled injuries • General nature, back and head injuries
Benefits • Death benefits: • Income replacement for families • Burial benefits
Medical Benefits • Compromise 1/3 benefits: • First Aid • Physician services • Surgical and hospital services • Nursing and drugs • Prosthetic devices
Medical Benefits • Medical benefits required in all states • ½ States have the right to choose physician. • Social Security benefits. • Private Disability Insurance
Rehabilitation • One of the primary objectives of WC. • Restore workers to fullest economic capacity. • Benefits are paid (sometimes in addition) for training, education, testing and services to get the injured back to work. • Federal Vocational Rehabilitation Act
Administration • State agencies handle cases and ensure that all parties comply with the law. • Worker rights under the law.
Handling Cases • Uncontested • Direct Payment • Agreement System • Contested Cases: • Hearing by referee or hearing officer. • Appeals.
Rehabilitation • Medical Rehabilitation: • Treat the impairment and restore lost function. • Medical care. • Vocational Rehabilitation: • Prepare for new occupation or continuing in an old one. • Retraining.
Degree of Disability • Temporary Total and Partial Disability. • Permanent Partial Disability: • Whole Person Theory • Wage Loss Theory • Loss of Wage Earning Capacity Theory • Combinations
Degree of Disability • Permanent Total Disability. • Insurance Incentives. • Safety Incentives.
Managing a WC Program • Hiring • First Report of Accident • Doctors and Medical Institutions • Rehabilitation • Follow-up