Background
Most employers think of the Workers’ Compensation
Act (“the Act”) only as a source of liability and expense,
however, it is also an important source of protection. The
law, first enacted in the 1930’s, gave employees the right
to claim limited statutory benefits for work related injuries
without the need to prove fault of any kind. In return, the
“exclusive remedy” provision of the Act made those limited
statutory benefits the sole remedy for the personal injury
or death of an employee. Civil lawsuits by employees
against their employers, with their high defense costs and
potentially unlimited damages, were largely eradicated by
the exclusivity provision.
In 2005, at the urging of Missouri businesses, the General
Assembly made extensive changes to the Act for the
purpose of limiting workers’ compensation claims. The
changes restricted the definitions of “accident” and “injury”
under the Act. Unfortunately, the exclusivity provision also
uses the term “accidental injury.” Therefore, on February
24, 2009, the Missouri Supreme Court held that any
injury that does not fall within the new, narrower definition
of accident, can now be pursued under the common
law, just as employees could prior to the enactment of
the Workers’ Compensation Act (Missouri Alliance for
Retired Americans v. Department of Labor and Industrial
Relations, No. SC88368). Consequently, employers may
have fewer workers’ compensation claims, but are likely to
see an increasing number of civil suits by employees and
third-party claimants seeking a way around the workers’
compensation exclusive remedy.
Insurance Issues
To add to the problem, virtually all general liability
policies exclude coverage for claims by employees.
Therefore, employers who are self insured, or in a pooling
arrangement for workers’ compensation, may find they
have no coverage at all for these claims.
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Employers with
workers’ compensation insurance will have to rely upon the heretofore seldom used “employers liability” side of their
workers’ compensation policy. Unlike workers’ compensation
coverage, which normally is unlimited, employers liability
coverage has individual claim and aggregate limits like
other liability coverage.
Things Employers Should Do
Self Insured Employers (individually or in a pool)
All Employers
-
Review your coverage with your attorney or broker to be sure (a) you have adequate employers’ liability
coverage and (b) your umbrella policy also covers
employers’ liability
-
Review your loss prevention procedures and policies to ensure that your company:
- Reports potential claims to your employers liability carrier as soon as possible
- Investigates and documents employee injuries as you would third-party injuries if there is any doubt about
them falling within the scope of workers’ compensation
- Advises your carrier to consult with you about contesting a workers’ compensation claim on the
grounds that it is not an “accident” within the meaning
of the Act. You could be hopping out of the pan and
into the fire
For more information, please contact:
Wil Tomlinson, 314-621-5070 wtomlinson@armstrongteasdale.com
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