CALIFORNIA WORKERS' COMPENSATION CLAIMS
(Yes, this employee is using two
ladders, stacked.)
| WHAT IS WORKERS' COMPENSATION? | |
| If an employee is injured on the job due to physical injury or stress, he or she typically fills out a form at work that starts a workers' compensation claim [at times I'll refer to it as "WC" .] The completed form is then sent to the employer's insurance company who then pays the injured employee's medical costs and also pays the employee money for time off from work. This money is in lieu of wages the employee would have earned on the job. | |
| Although the workers' comp system is heavily regulated by the State of California, workers' compensation benefits are paid by an employer's workers' compensation insurance policy. Disputes between the employee and the insurance company are litigated in the State system, the Workers' Compensation Appeals Board [WCAB]. | |
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Think of WC insurance working the same way as your auto insurance
policy. With your car, if you get in an accident that is your
fault, your insurance carrier pays claims under the provisions of your
insurance policy. It works the same way with an employer's workers'
compensation insurance policy. Although the WC system is "no fault," because it's the employer's insurance policy that pays the claims, if injured employees make WC claims the employer's insurance policy rates will most likely increase, much the same as your auto insurance policy premiums might increase if an accident was your fault. |
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| In California there are hundreds of insurance companies providing workers' comp insurance coverage to employers. Just like your car insurance, the employer tries to find a carrier based on what the policy will cost, deductibles and coverage limits. And just like your auto insurance, if injured employees have made claims, at policy renewal time a carrier will require the employer to pay higher rates for coverage. [It's this fact that motivates some employers to discourage injured employees to file a WC claims.] | |
| Perhaps most important on how all this works, although you file a workers' compensation claim with your employer, after the forms are filled out the claim is forwarded to the employer's insurance carrier, similar to what you would do in an auto accident. Just like your auto insurance policy, it's the employers' workers' compensation insurance company that administers benefits to injured employees. | |
| After you file a claim the claims process is out of the employer's hands. Just like your auto insurance policy, a workers' comp insurance company has adjusters, investigators, doctors and lawyers to determine the propriety and value of claims made by employees. It's the workers' comp insurance company that investigates your claim, decides what it will or will not cover, pays wage benefits to you, pays the medical providers, and at some point terminates payment of additional benefits because in the insurance company's opinion you are cured or healed. | |
| WHICH EMPLOYERS MUST HAVE WORKERS' COMPENSATION INSURANCE? | |
| As said on California's Workers' Compensation Website: "California law requires employers to have workers' compensation insurance if they have even one employee." | |
| Failing to have workers' compensation coverage for an employee is a criminal offense. Section 3700.5 of the California Labor Code makes it a misdemeanor punishable by either a fine of up to $10,000 or imprisonment in the county jail for up to one year, or both. Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers. You would be correct in concluding that California law takes very serious an employer's failure to have workers' comp coverage for employees. | |
| DO I NEED A LAWYER - WHY DO I? | |
| Considering the number of California employees injured on the job each day, it's reasonable to conclude that the majority of workers' comp claims are handled smoothly and without incident. However, if an employee pursues a significant claim [e.g., where an injury might result in a permanent disability; or maybe there will be lots of time off required for rehabilitation], the severely injured employee may need to retain an attorney specializing in workers' compensation claims to fight the insurance company's inevitable limitation or denial of benefits to the injured employee. | |
| WHY DOES THERE HAVE TO BE A FIGHT? | |
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On serious claims [where there is a lot of money in play] Workers'
Compensation claims become contentious because of opposing interests.
An injured employee wants his or her doctor bills paid. He or she
wants to be paid wages while healing. If there is a permanent disability,
the employee wants just compensation for rehabilitation, retraining for
another occupation conducive to one's disabled condition. In contrast, a workers' compensation insurance company is a business, just like any other. This means the insurance company is in business to make money, aka profits. |
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The golden rule on making money in the insurance business is to
receive
monthly premium dollars, to invest that money elsewhere, and to pay out as little as possible in benefits.
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For a good example of how
things can work [badly] in the insurance industry, see The Rainmaker
starring Matt Damon, Danny DeVito, John Voight, and Claire Danes.
Directed by Francis Ford Coppola. |
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| How can insurance company employees sleep at night? Aggressive insurance companies [and adjusters or claims representatives] operate illegally or act maliciously under the assumption that most employees pursuing workers' compensation claims are malingerers or frauds. And if the employee has a lawyer, the insurance company assumes the injured employee's attorney is nothing more than an incompetent loser hack lawyer advancing excessive or fraudulent claims [sometimes this is true]. | |
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For
example:
In permanent disability claims [the most serious and contentious of all WC
claims] the insurance company will "fight to the death" because
paying out on serious injury claims are the biggest
drain of the carrier's cash vault. The carrier justifies
aggressive tactics on the assumption that the employee is faking it so to
win the "Big Spin lottery" and the lawyer is looking for a big fee with
little work. Sidenote: In general, employers approve of an insurance company's aggressive tactics because if less benefits are paid out this may result in lower increased insurance premiums the employer has to pay for coverage. This is no different than your fighting a traffic ticket to prevent your auto insurance rates from increasing. |
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| THIS IS ALL A RATHER JADED VIEW, YOU SAY | |
| Well it's not just employlaw.com that thinks this way: | |
 After reading this workers' comp page a California Judge contacted employlaw.com and offered the following viewpoint. [A major thank you for Your Honor taking the time to write employlaw.com. Readers will surely appreciate the Court's insights. |
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I am a veteran Workers' Compensation
Judge at [location deleted by employlaw.com]. I recently came across your
website. I enjoyed your realistic approach.
Workers'
compensation cases are characterized by the same emotionality that you
rightfully attribute to other types of employment disputes and family law
cases. It has been my experience that insurance companies often deny reasonable claims. Neither claimants nor insurance companies seek out doctors whom they think will give them an "honest" opinion because what they want is a medical opinion that favors their respective interests. Consequently, it can be difficult to know which opinion to believe. Insurance companies frequently deny benefits on the basis of absurd medical opinion (opining the employee is physically fit and able to return to work) when in fact employees can't be rehabilitated and the employer on whose job the employee was injured won't take him or her back.This is not to say that claimants-employees don't try to take advantage of employers and insurance companies. They do. After 15 years of judging, and with 7 years practice in the field, I've come to the conclusion that opportunists can be found in equal proportions on both sides. |
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| MISCELLANEOUS TIDBITS | |
| In California, the omnipresent Department of Industrial Relations monitors and enforces employer compliance with workers' compensation laws. This agency's Field Enforcement agents carry badges and can really put the wombie on an employer who fails to carry Workers' Compensation insurance. | |
| The battleground for disputed workers' compensation cases is the Workers' Compensation Appeals Board ["WCAB"]. An appeal of an administrative law judge's decision is heard by a WCAB panel who render a decision on a timely filed appeal. Battles are fought at the WCAB because California government does NOT want workers' compensation disputes clogging up the State civil court system. Moreover, disputes are supposed to be handled on an expedited basis and not turn into complex and costly litigation, such as the parties would suffer should they be allowed to fight it out in civil Superior Court. | |
| By law, attorneys who handle workers' compensation claims are restricted to collecting a limited contingent fee from the employee for legal services rendered. Since our firm does not handle workers' compensation claims, we don't know what the fee percentage is, although a few years ago we heard it was around 13 percent. We believe it has gone up though, but not by much. | |
| The most significant relationship Workers' Compensation claims has to employment law is the "exclusive remedy" doctrine. Lawmakers, courts, insurance companies, employers, employees and lawyers have extensively wrestled with the doctrine and its application to workplace disputes/injuries and employment law claims. The concept is best understood by example. | |
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Assume an employee has been sexually harassed and assaulted at work. Also assume that
once the employee complained to her employer, it responds by falsely accusing her of
stealing and terminating her for the alleged theft. For this example assume the employee can prove physical and emotional injury [or "damages"] from her claims of assault and battery, sexual harassment, defamation of character [falsely accused of stealing], and wrongful termination. In other words, assume the employee is a "basket case." Plaintiff's counsel estimates the fired employee's case has a trial value of $500,000, but tells her if she is restricted to workers' compensation benefits, she will receive $22,000 in lost wages [for being unable to work for six months] and $1600 in medical payments [including therapy.] |
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| In the above example, if the employer can restrict the employee's claim to receipt of workers' compensation benefits, and nothing else, the employer will save a lot of money by not having to pay tort damages [the $500,000]. So how does an employer do this? Typically, the employer first argues that the employee's injuries, no matter what type, were "work related" [that is, the employee's injuries occurred on-the-job]. The employer then argues that because the injuries are work related, the employee is entitled only to work-related injury payments, typically reduced wages and medical payments paid by the employer's workers' compensation insurance carrier. | |
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In retort, through her
employment law attorney the employee argues that her injuries were not
work-related [in other words, the injuries were not typical work injuries, such as falling
on the floor],
therefore, she should be allowed to sue the employer to recover tort damages.
Tort damages would far exceed workers' compensation payments. Tort
damage recovery may include recovery for emotional distress, punitive
damages, and statutory attorney fees. The possibility that an employee might recover emotional distress and punitive damages has provided strong motivation to employers to aggressively argue that no matter what happens in the workplace, the employee is entitled only to lost wages while off work receiving employer-paid medical treatment. |
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THE BIGGEST DANGER IN ALL THIS:
AN EMPLOYEE CAN ELECT WORKERS' COMPENSATION BENEFITS AS THE EXCLUSIVE REMEDY FOR HIS OR HER WORKPLACE INJURIES. AN EMPLOYEE CAN ALSO WAIVE THE RIGHT TO PURSUE OTHER REMEDIES BESIDES WORKER' COMP BENEFITS. AND TO FURTHER COMPLICATE MATTERS, AN EMPLOYEE CAN PURSUE BOTH WORKERS' COMP AND TORT REMEDIES, AND COLLECT UNDER BOTH THEORIES! |
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Many things can happen to an employee at work
that are not part of the employment contract between employer and employee: assault and battery, sexual
harassment, false imprisonment, defamation of character, fraud, battery, or violation of statutes
protecting employee privacy, the list is almost endless. Whether or not workers' compensation is the exclusive remedy for an employee's injuries is not too complicated, but you should seek the advice of a competent employment law attorney in your area to obtain information on these issues. |
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LINKS
Excellent general information on workers' compensation.
Frequently Asked Questions [and answers] for employers. California Workers' Compensation, injured employee's page.
WCAB Policy and Procedure Manual
(How WCAB employees are to carry out their duties)
