RMIN 5540 Exam 2 | Verified Answers, Complete Solutions

RMIN 5540 Exam 2 | Verified Answers, Complete Solutions Before WC, how did injured ees get money? They sued their er for negligence Employer common defenses Assumption of risk = you knew that this job was dangerous Contributory Negligence = You took part in the job so you are also responsible Fellow Servant = Your coworker caused the problem so sue them and not the employer Consequences for suing ers -Fired -Co-workers didn't want to get involved -Years to resolve -Even if they win the suit, pay-outs inadequate When did WC start and where 1902 First NY Then WI WC goals -Promptly pay adequate income & med benefits, according to a fixed and predetermined schedule. -Eliminate delays and costs of litigation to employee and society -Establishing a guarantee of benefit payment, secured by insurance -Promoting Industrial Safety and Hygiene Workers Comp -No Fault -ees are entitled to state-mandated benefits (defined by statutes) Sole/ Exclusive Remedy Ers pay ee but ee gives up the right to sue How can you sue under WC -Those not covered by WC statute. -Injuries intentionally caused by employer -Functioning in some capacity other than employer -If employer fails to pay for WC obligations, employee can sue and "er" cannot use its common law defences. Who isn't covered by WC -domestic and incidental farm wokers -businesses with 5 ees -federal workers Ee vs Independent Contracts WC is very strict about an ee than taxes. Determined by Behavioral control, Financial control and Type of Relationship Statutory Employees A principal hires a contractor and the contractor employs other people. The contractors ees become statutory ees (by the law) of the principal if the contractor does not give the ees WC. -Certificates of Insurance -Subrogation -Additional Premiums Certificate of Insurance Proves to principal that the contractor has insurance Temporary employee short-term assignments, usually considered regular employees of providing firm Leased employee appear as regular employees but are co-employees of a Professional employer Organization (PEO) and company who leased them. Instead of hiring ees outright, they hire ppl from a professional employer. So you work for target and you think you are working for target but target outsourced managing the employee to another company. What does WC pay for? -medical expenses - disability/ lost wages or lost time -rehab -death benefits What is disability you can't come to work or you can't come to work the same way you were before (lost time or wages) 3 Requirements for WC 1. Accidental 2. Arising out of Employment 3. In the course of Employment Accidental unforeseen & unintended Arising out of Employment Your job In the Course of Employment -Employee doing something for which (s)he is employed -Employer must have set time and place -Positional risk doctrine: Injury would not have occurred but for the employment... Second Injury Finds -Encourages the Employment of people with disabilities. -States assess employers annually -Benefits paid - typically covers amounts over what would have been paid if first injury Medical Benefits Requirements 1. Related to injury 2. Reasonable in amount of care and amount charged 3. Necessary to cure or relieve Description of Medical Benefits Broad Coverage Begins Immediately Who can the ee see? -specified docs or networks -if ee sees their own doc, the er may require an independent medical examiner (IME)/ -med costs rising Disability Benefits AKA lost time/ wages - waiting period of 3-7 days -4 categories 1. TTD 2. PTF 3. TPD 4. PPD TTD you can't come into work at all those days. This is 2/3 of your salary. In GA the cap is 575 so most people reach that cap Benefits generally 66.67% of weekly pay. Subject to caps in some states. PTD they cannot work again in any capacity. The smallest cases but takes all the money Benefits similar to TTD but for life or length of disability. Small percentage of WC cases, but large chunk of costs. TPD you broke your arm so you can't work at the machine but you can work at the desk. You can do something. Benefits generally 66.67% of the difference between earnings while injured and average weekly pay. Subject to caps in some states. PPD you are injured for forever but you cannot be at work doing what you were doing May begin with TTD until EE reaches Maximum Medical Improvement (MMI). Example of Temp Partial Disability (previous earnigs were $1k) You brought in $1k a week and the 66.67% Total: $666.70 Partial: (you earn $500). WC gives you 66.67% of the $500 that you are missing out on ($333.35) so in total you get $833.35 Rehabilitation -Reduces the Seriousness & Costs of injuries. -Some states include this under Medical Benefits -Can go beyond medical to include services, such as vocational training, etc. -If an EE declines vocational services, they may get reduced Medical and Disability payments. -Rehab can reduce benefits Death -Loss of Income varies by state and is usually scheduled by a # of weeks -# of weeks for ees with children -# if weeks if ee's spouse remarries -Burial exp = $3k x $15k, depending on state What happens when firms don't have WC? -Fines against the company -Imprisonment of officers -Civil penalties -Injunction of business operations and suits w/o common law defenses How must a firm get WC? Each state also says that this must be secured by an Ins. Company How do firms demonstrate that they can get WC? -Insurance from Voluntary Market -Insurance from Assigned Risk Plan -Insurance from State Fund -Self-Insurance Plans -Self-Insured Groups Insurance from Voluntary Market -A traditional insurance market -Everybody give me a quote for WC and you just choose Insurance from Assigned Risk Plan -This is for firms that no Er wants to write so the state govt requires that the firm applies for the assigned risk plan. -In the voluntary market multiple Ers are assigned a percentage to insure the firm. -The premiums are $$$$$$ -This encourages people to get their claims down Insurance from State Fund -The state, itself, have a mutual company that they run and you can just buy it from them but there is NO assigned risk pool/plan. -The state runs its own WC but they compete with the voluntary market. -There are a hand full of states that have monopolistic fund, so you have to use that state fund. -The state does not know how to run an insurance company. So they have fronting companies. -So chubb runs that fund but they get the $ from the state fund. -The govt does this because Ins companies are better at it. Self-Insurance Plans -You pay for it out of your own pocket but they must prove to the state that they have the ability to do that. -They are going to use a fronting company because regular managers are not risk managers -Usually must post a Surety bond or other collateral -Typically have stop-loss coverage with specific and/or aggregate limits. -Stop loss = a high SAR (self assured retention): we understand our employees and our losses but WC can be unlimited. It does not have a cap. Self-Insured Groups -They are like a self insured plans but a whole industry goes in together. -Group of employers in the same industry -Third Party Administrators (TPAs) -Jointly & Severally Liability (not just your proportion) -Not covered by State Guarantee Funds. -Liability = you can be held liable for the group and just yourself. -The state says that the premiums will be covered. This could be in the form of a captive. Multistate we can have employees located in one state who does business in another state Ee can choose statutory benefits (s)he wants -Place of Injury -Place of Hire -Place of Employment -Location of Er -Residence of Ee Extraterritorial & -Some states include this provision within the WC statutes. -Allows ee to choose benefits of home states even while temporarily working in another. -This depends on what 3A of the WC policy states and what the state statutes are Reciprocal -Allows benefits from other states if ee works there for 6 months or less. -Some states have reciprocal agreements where in state x you have rights in state y and vice versa. -You get benefits from one or both states. -Under 3A you see state x, but state x has an agreement (law) with state y so you may be able to get the best of both worlds. No reciprocal agreements The employee may still choose benefits of the other state. The employer would have to pay those benefits of the other state. However, the insurance company would only cover those benefits if the other state is listed on the policy. What should you do if you know that you are sending ees to other states? 3A = locations 3C = list other states Is WC an ISO form? No, it is National Council on Compensation Insurance (NCCI) Parts of WC policy Part One: Workers Compensation Insurance (actual WC policy) Part Two: Employers Liability Insurance Part Three: Other States Insurance Part Four: Your Duties if injury occurs Part Five: Premium Part Six: Conditions Part One: WC -Covers state laws about WC,but not federal ( = fed ees are not covered) -BI by accident or disease: Must occur during the policy period. For disease, the LAST period of exposure or aggravating circumstance would apply. -Last exposure counts for benefit of the ee WC Covered Locations -Listed on the Information page. -Extraterritorial Provisions WC Legal Stuff Insurer has the right & duty to defend. -in addition to policy limits -"No fault": lawsuits about whether or not you are entitled to WC WC Exclusions (PMTS the Ed must make) -Ed engages in serious & willful misconduct -Ed knowingly hires and employee in violation of the law -Ed fails to comply with a health or safety law or regulation (OSHA) -Ed discharges, coerces or discriminates against an employee in violation of WC law OSHA Occupational Safety and Health Administration Other Provisions -Subrogation -Primarily for the benefit of employees, not for the benefit of the insured. WC Limits Based on state statute. There is no dollar limit but there is a statement about what you have to pay. Part 2: Employers Liability (EL) -For many states, WC is intended to be the sole remedy for workplace injury. -CGL excludes losses arising from employees / employment -EL will cover suits from employees (or ee's family) when the EE is not covered by a WC statute or opts out. -If the employee does not fit under the statute of WC (fed), then they retain the right to sue. The CGL policy has a near absolute exclusion for your ees suing you -Someone might want to sue because they want more $. They want pain and suffering, more than 2/3 of salary. You probably quit but you sue for negligence. 4 Common Claims covered by EL 1. Third Party Over Action 2. Loss of Consortium & Care 3. Consequential Bodily Injury - A second injury that occurs as a result of the first injury. 4. Dual-capacity claims Third Party Over Action Meg works for Starbucks and she is working on a machine made by Coffee International. She could file WC against Starbucks. She is mad so she sues Coffee Int for products. She wins. Coffee Int then goes back to Starbucks saying that they didn't train her well and they sue Starbucks Loss of Consortium & Care You can't have sex, your lifestyle has changed, your spouse has to be cared for in a way that stops their og plan. Dual Capacity You work at Ford, and then you buy a Ford car and you get injured because the brakes fails. This is products liability but the CGL will exclude because you are an employee. Insuring Agreement Bodily Injury by Accident or Disease arising out of the course of employment and the legal obligation is not covered by statute or federal law. Similar to Occurrence based policy For Injury, the policy in effect when the accident occurs applies For Disease, the policy in effect on the last day of the last exposure applies EL Exclusions -Any Workers Comp or Occupational Disease Benefits Law or statute -Occurring outside the US, its territories or Canada (unless there temporarily) -Liability for Employees assumed under contract (This would be covered under CGL.) -Employment Practices Liability -Punitive damages, -Those employed in violation of the law, -Intentional BI -Damages arising out of Employment Practices -Fines and Penalties imposed for violations EL Limits of Insurance -Bodily Injury by Accident Limit -Bodily Injury by Disease Limit -Bodily Injury by Disease Per Person -Defense costs and Supplementary Payments Aggregate Bodily Injury by Disease Limit Sublimit Bodily Injury by Disease Per Person NO sublimit for accident limit Common Law = Negligence