Chapter 12: Workers' Compensation Insurance

Question 1

Purpose of Workers’ Compensation Insurance

Answer 1

coverage to employees for accidental bodily injury and/or occupational diseases that arise out of or in the course their employment

Question 2

5 common law obligations that employers have to their employees

Answer 2

Provide a reasonably safe place to work
Provide reasonably safe tools
Provide reasonably qualified fellow employees
Set up safety rules and enforce them
Warn employees of any known dangers of the job

Question 3

3 common law defenses of an employee

Answer 3

Assumption of Risk- person was aware of risk
Contributory Negligence- employee who contributed in any way to own injury was not entitled to any recovery
Fellow Servant Rule or Negligent Act by a Fellow Employee- if injured by fellow employee, sue fellow employee, not the company

Question 4

No-Fault Concept

Answer 4

employees give up right to sue employer in exchange for WC that gives medical, income, rehab and death benefits

Question 5

What is a monopolistic state

Answer 5

Employer can only purchase WC through the respective state fund

Question 6

List monopolistic states

Answer 6

North Dakota, Ohio, Washington, Wyoming

Question 7

what is the penalty if employers fail to comply with the law

Answer 7

Misdemeanor- fine up to $2,500 and up to 1 yr imprisonment for each day the employer was in violation
Felony- fine up to $15,000 and up to 7yrs imprisonment for each day the employer was in violation
*employer and those individuals responsible to act may be required to pay all benefits awarded by WC judge

Question 8

7 compliance requirements for employers

Answer 8

1. present WC information Form to all new hires, stating benefits, injuries should be reported, employees right to appeal
2. post in prominent place, notice stating “remember it is important to tell your employer about your injury”
3. establish a heath care provider list with 6 providers; obligated to use employer provider for at least first 90 days- after can go to their own with 5 days notice
4. notify their employer of injury with 21 days to be eligible for benefits; notice after 120 days may result in denial of benefits
5. employer notify Dept. of Labor w/n 48 hrs of accident resulting in death; resulting in injury w/n 7 days and copy to employer’s insurer
6. required to record all injuries
7. a notice of denial must be sent to Dept. of Labor and employee w/n 21 days of disability

Question 9

what employment is covered

Answer 9

all private and public employees; unless religious group prohibits and offers provisions

Question 10

what types of employment are exempt from coverage

Answer 10

1. Domestic servants (maids/nannies)
2. Casual workers (gardeners/handyman)
3. Agricultural employee (earn less than $1,200 per year or work less than 30 days per year)
4. Real estate salespersons
5. Elected officials of Commonwealth or subdivisions

Question 11

4 types of benefits provided

Answer 11

1. Unlimited medical
2. Income
3. Death
4. Rehabilitation

Question 12

can an injured worker use a healthcare provider of their choice

Question 13

Income benefits

Answer 13

66 and two thirds% average weekly wage; begin on day 8 after 7 day waiting period; retroactive if disability lasts beyond 14 days

Question 14

4 types of disability

Answer 14

1. Permanent Total- can never work again
2. Temp. Partial- can do some work; payable up to 500 weeks
3. Permanent Partial- scheduled benefits (loss of hearing)
4. Temporary Total- Short term total disability (broken leg)
5. Impairment Rating

Question 15

how much is a burial allowance

Answer 15

$3,000

Question 16

Survivor benefits

Answer 16

Family (spouse/children)- 66 2/3 %
Family (spouse/child)- 60%
Spouse only- 51%
Child only- 32%

Question 17

Rehabilitation benefits

Answer 17

physical/occupational therapy, devices, vocational training

Question 18

what is the subsequent injury fund and what is it’s purpose

Answer 18

(what it is) Pays portion of all claims by employee who has had a previous injury, and who suffers another injury
1. Equitably allocate the costs of providing benefits in cases where an injury combines with a pre-existing condition
2. to encourage hiring and retaining the physically challenged

Question 19

federal employers liability act (FELA)

Answer 19

provides exclusive remedy for railroad employees who receive work-related injuries caused by negligence of their employers
*railroad involved in interstate commerce
*worker must show railroad was negligent and negligence was proximate cause of injury

Question 20

U.S. Longshore and Harbor WC Act

Answer 20

provides compensation and medical benefits to land-based employees while working on navigable waters; unlimited medical benefits and prescribed weekly disability benefits
*loading/unloading ships, ship construction, maintence of docks

Question 21

The Jones Act- The Merchant Marine Act of 1920

Answer 21

provides seamen with a tort remedy when they incur a work related injury; successfully bring a negligence claim against employer
*only American seamen on American ships
*any person employed on vessel to accomplish the ship’s mission (navigator to cook)

Question 22

Item #3 on Information Page is divided into 3 major sections- what are they?

Answer 22

3A- WC insurance (what states are included for coverage)
3B- Employers Liability Coverage Limits
3C- Other States Coverage

Question 23

limits of insurance under 3B- Employers Liability
*100/500/100

Answer 23

1. Bodily Injury by Accident- each accident $100,000
2. Bodily Injury by Disease- policy limit $500,000
3. Bodily Injury by Disease- each employee $100,000

Question 24

4 situations where employers liability will pay

Answer 24

1. Third Party Claims
2. Care and loss of services- loss of consortium claims brought by injured employee’s spouse
3. Consequential bodily injury- spouse/relative of employee
4. Dual Capacity- employee is injured and employer may be sued in capacity other than the employer

Question 25

8 employers liability exclusions

Answer 25

1. liability assumed under a contract
2. punitive damages if a worker is employed in violation of law
3. bodily injury to an employee while employed in violation of law
4. WC in part 2 employers liability
5. bodily injury intentionally caused by employer
6. bodily injury outside US, its territories/Canada, except those outside on temp basis
7. wrongful discharge/discrimination of any employee
8. violation of federal laws

Question 26

purpose of Other states insurance

Answer 26

provides coverage for incidental exposures in those states other than those listed in 3A; for temp, traveling, occasional work in states
*not designed to provide WC an Employers Liability Insurance in every state on blanket basis
*if state in which benefits apply is listed, then coverage; no coverage for exposures in monopolistic state fund states

Question 27

purpose of voluntary compensation- employer liability coverage endorsement

Answer 27

provides coverage for those who are not covered under PA WC law (domestics, farm, casual workers)

Question 28

job classification

Answer 28

job activity characteristics and danger directly relate to performing the job; the higher the risk the higher the rate
*per $100 of payroll

Question 29

What is an Experience Modification Factor and how is it derived

Answer 29

*measures the individual employer’s loss experience against the average loss experience for its job classification
*Future premiums are based upon past loss experience; over 3 prior yrs, ending 1 yr prior to effective date
*less than 1= favorable; more than 1= unfavorable

Question 30

what is SWIF

Answer 30

• PA state market
  State Workers Insurance Fund