First published on May 22, 2020
While most press reports, public policy debates and lawsuits have centered on business interruption insurance, state workers compensation systems and the insurance products underlying them have been adjusting to the COVID-19 crisis. The attached paper outlines the most significant developments with respect to:
- Compensability of COVID-19 related claims under state workers compensation schemes; and
- The calculation of workers compensation insurance premiums.
These developments will continue to unfold as businesses reopen and a broader range of employees begin to return to their pre-crisis work locations.
Compensability of COVID-19 Claims
State workers compensation schemes cover occupation diseases. However, it can be difficult for a worker to prove he or she contracted a widespread illness such as COVID-19 in the course of employment. Moreover, many workers compensation statutes exclude diseases to which the general public is exposed.
To open the workers compensation system to first responders, health care professionals and other workers at unusual risk of exposure to COVID-19, some state have implemented special evidentiary rules. Most of these rules take the form of a rebuttable presumption that COVID-19 related illnesses suffered by covered workers had been contracted in the course of employment.
Because the availability of a workers compensation remedy bars an employee’s negligence claim against his or her employer, the coming months may turn on the dynamics between the non-fault workers compensation system with its defined benefits and the tort system through which general damages are available.
Workers Compensation Premium Costs
The cost of a workers compensation policy is largely driven by the nature of an employer’s operations and its annual payroll. In response to the sudden and dramatic changes in business operations due to COVID-19 lockdown orders as well as the use of paid furloughs and other temporary arrangements, workers compensation insurers are implementing special procedures to adjust premium costs to more accurately reflect non-COVID-19 related exposures.