Travelers Insurance, which recently passed Liberty Mutual to be the largest workers' compensation insurance carrier in the U.S., published a list of five common workers' comp myths, from a small employer's perspective:
- “I only have a few employees, so I don’t need comp insurance.”
- “My employees won’t sue me.”
- “Comp insurance is too expensive, so I’ll just pay out of my pocket if an injury occurs.”
- “I provide a safe workplace, so my employees won’t get injured.”
- “Medical costs in the workers' comp system are just too high.”
While these myths are prevalent, I often see an additional five beliefs from my perspective as a workers' comp defense attorney that are as mythical as a mermaid:
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 to resolve the claim directly with the injured worker without the time and expense associated with the claimant's 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 claimants 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 every injured worker needs an attorney.
Most comp claims are compensable, so the only issue is the nature and extent of impairment.
Is the final settlement for an unrepresented claimant always the same as for those who retained counsel? Obviously not, but that doesn’t mean the claimant gets less money. Remember that, in most jurisdictions, the claimant’s attorneys take between 20% and 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 still take home roughly the same amount as if he had retained counsel and paid fees and expenses out of a larger final settlement.
There is also the time value of money to consider.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, and injured workers who don't hire an attorney 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, such as the “positional risk doctrine,” the “mutual benefit doctrine” and the “scope and course of employment” doctrine. Nevertheless, in most states there must be some connection between the injury and the employment for a claim to be compensable. Merely feeling pain at work is not enough.
It doesn’t surprise me that many claimants believe otherwise. What is surprising is how many small business owners believe this same myth.
I often talk to business owners who tell me stories that 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, such as, “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.
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 or State B, or even both! 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 result is often the same: The judge denies the request.
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 premiums. However, with the cavalier attitude toward 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 carriers that develop a reputation for denying claims without a valid reason often face higher awards from judges and arbitrators.
I like the approach used during the missile reduction talks with the Soviet Union during the 1980s: “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.