Navigating Federal Workers' CompensationPosted on 05/14/19 by ORRM Underwriting Consulting Group
Many of us are familiar with workers’ compensation (WC) insurance since it is a mandated requirement for employers in the United States. However, when it comes to protections for those whose employment is not subject to state WC laws, the solutions, benefits, and methods for securing coverage are not as widely known. The following is a review of the most common WC coverages available under federal law referred to as “federal coverages.”
The Jones Act (aka Maritime Law or Merchant Marine Act of 1920)
- Protects workers injured at sea and applies only to “seamen” who are crew members of a vessel or fleet that operates in “navigable” waters.
- The accident or sickness must occur while performing their duties related to the vessel’s purpose. The worker can be compensated for medical and cost of living expenses.
- A negligence lawsuit may be filed against their employer for an injury that results from the careless acts of an employer or co-worker, and for which they are entitled to additional medical care expenses, lost wages, cost of living expenses, and pain and suffering.
The Longshore and Harbor Workers’ Compensation Act (USL&H)
- The act extends to land based maritime workers other than members of the crew of a vessel.
- Covers workers injured while loading, unloading, repairing or making maritime vessels.
- Employers subject to the Act must purchase insurance or qualify for authorization to self-insure through the U.S. Department of Labor (Division of Longshore and Harbor Workers’ Compensation).
- An overlap between state mandated WC benefits and benefits under the USL&H could permit recovery of benefits under both laws.
- Employers of maritime workers must carry workers compensation and USL&H coverage to protect themselves against potential liabilities.
The Defense Base Act (DBA)
- Applies to civilian employees working outside of the United States on US Military bases or under contract with the US Government.
- Extends coverage provided by the USL&H to cover civilian contractors who are injured, killed or kidnapped during the course of their work.
- Allows benefits when an injury did not occur during working hours if the injury occurs while residing in a “zone of special danger” or in other broad applications of the DBA.
- DBA is the exclusive remedy an employee has for recovery if engaged in government contracted employment outside the US.
- Provides disability and medical benefits for life to covered employees, and provides benefits to survivors in the event of death.
The Federal Employers Liability Act (FELA)
- Protects and compensates interstate railroad workers injured on the job as state WC laws do not apply to employees of interstate railroad companies.
- Benefits are similar to WC, but FELA is fault-based, which requires the injured worker to prove they were not 100% at fault and that their employer was negligent, at which time the worker can sue for damages in either state or federal court.
- Damages are based on actual damage suffered and may include loss of wages, medical expenses and general damages, including pain and suffering and mental anguish.
- Relaxed standard of causation as to what constitutes negligence when the employer is to provide a safe place to work.
- Awards are generally much higher than typical WC claims benefits because they are determined by a jury based on the “comparative negligence” of the injured worker.
- Punitive damages or prejudgment interest are not recoverable under FELA.
Under the federal coverages, an injured worker must file a legal claim under the applicable federal Act and within the prescribed time frame or risk losing compensation. Generally, a lawsuit can be filed in either state or federal court within the jurisdiction where the employer engages in business. The nuances for filing a claim may be challenging, and injured workers need to be diligent in understanding their benefits and responsibilities.
The federal coverages stipulate that an employer must provide the necessary payment of benefits or risk civil action as well as criminal misdemeanor charges. Insurance coverage for these exposures can be obtained via an endorsement(s) to a standard workers’ compensation policy.
Insurers are often asked to add these coverages to workers’ compensation policies even if there is no known exposure. By doing so, an employer eliminates the risk of a federal coverage violation should an injured worker be found to be covered under a federal coverage. Of course, if there is a known exposure, the insurance carrier and employer will need to work together to carefully underwrite and evaluate the risk to develop an appropriate insurance program.
The Underwriting Consultant Group provides in-house technical underwriting support for Old Republic Risk Management. The group is responsible for setting and communicating underwriting guidelines for the company, working closely with the Product Development and Compliance Department. The Underwriting Consulting Group is based out of the corporate offices in Brookfield, Wisconsin.