There is no disputing that COVID-19/Wuhan/SARS-CoV-2 has had implications for virtually everyone. There is a public health crisis at our collective door and it is impacting daily life. Workers are concerned about contracting it, employers are concerned about it impeding ongoing operations, policymakers are concerned about its broader impacts, and whether they realize it or not their collective focus is largely on workers' compensation.
Next week, I will join the CEO of the Workers' Compensation Research Institute, John Ruser, in a webinar to frankly discuss the impacts and implications of COVID-19/Wuhan/SARS-CoV-2 on the world of workers' compensation. It promises to be an engaging conversation about perceptions, facts, and the regulatory reactions and challenges of a sudden onset situation that has challenged our thinking, operations, and systems. There is a link below to register for this event.
Workers' compensation has been likened to oxygen. It surrounds us, unseen and unheeded. We notice it more when we need it. It began as an adjunct to the world of work as the industrial revolution drove us from our agrarian roots, but has become so ingrained in the world of American work that its necessity is now rarely denied. Despite that, it is a subject that is avoided by many, relegated to a conversation focused on "must" instead of "should," and often referred to only in the most scornful of tones. In the end, both employers and employees may find fault with this statutory substitute for our traditional tort processes, and yet each may also find comfort in it.
Like oxygen, it underlies our existence, our vocational or professional existence. Outside of very small employers (generally speaking, less-than-four-employee businesses are not required to participate, but in some instances, all employers must), workers' compensation, its protections, its costs, and its complexities, is an active element of the employer/employee relationship in America. Business decisions are made and evaluated based in part on the implications of this social insurance program. Like oxygen, we may take it for granted until it is no longer there (or not there as we expected).
The nutshell is that a "grand bargain" was euphemistically struck legislatively between management and labor in the early 20th Century. As the American worker was increasingly engaged in industrial employment, there was an increased risk of injury and disability which had been more familial in the traditional agrarian environment (family farm, a social collective) that preceded the Industrial Revolution. In this compromise, employers and employees each gave up rights and received benefits. It was interpreted as a statutory path to compromise in which there was perceived balance and equity from legislative actions.
In a true nod to American Federalism workers' compensation here has been the product of state law. The protections and burdens are seen as issues of health, safety, and welfare, and for the most part, the U.S. Government has remained uninvolved. There are exceptions in the creation of specific federal benefit programs like workers' compensation for federal employees, the Federal Employers Liability Act (FELA), and most broadly the oversight and interference of the Medicare Secondary Payer process that seeks to prop up underfunded and much ignored federal health care delivery platforms for the poor, disabled, and elderly. Despite those federal involvements, workers' compensation remains predominantly a state system and is thus prone to jurisdictional disparity and distinctions that are often discussion points among those of us who have an academic interest in the Grand Bargains.
Workers' compensation is clearly a socialistic process. It is embedded in our capitalistic economy. There is thus conflict inherent in the inter-relationship. There is friction between the needs of the worker and the employer. That friction may be focused on the costs of injury, treatment, and disability. Some argue that the friction should be less when the employer is not some capitalist enterprise, but the government itself. The payments for and to government employees are largely funded by the government's power to tax (taxation being socialistic in nature, a gathering from the many). As an aside, there has been significant discussion of socializing risk and investment. It is a fascinating subject even outside of the pandemic discussion.
The purpose of workers' compensation, in the beginning, was clearly upon the occurrence of an injury by accident. There was some event that happened suddenly, an "accident," which resulted in an injury. It was seen as logical that the cost of that event should be borne by the enterprise/business that was gaining from the activity that led to it. There was also a perception that employers were in the best position to promulgate, monitor, and enforce safety measures in the workplace. The propensity to do so was seen as enhanced by the employer having responsibility for the costs of accidents that did occur. Smart employers would strive to maintain healthy and safe work environments in order to minimize injury and cost. That equation is not overly complex.
The coverage of accidents slowly expanded. There was a broadening of employer liability over decades. Some states included coverage for what became known as "repetitive trauma" injuries, while other states excluded them. There has been ample debate regarding the merits of both courses. Similarly, states legislated the addition of "occupational disease" coverage for employers. Some of these have clear epidemiological evidence of industrial causation, such as Black Lung and the coal mining vocation. Other occupational diseases are less clearly linked through medical science to an industry or occupation and thus may be compensated by workers' compensation upon sufficient proof of causation and relationship in an individual case.
In response to the challenges of proving the compensability of such disease, various states enacted presumptions. A presumption is merely something that is true until proven otherwise (presumed innocent until proven guilty). These were largely for the benefit of "first responders," and have appeared now in many jurisdictions. They concern cancer, hypertension, and other medical conditions that are capable of both occupational and personal causes. The legislative decisions to presume them occupational, like all definitions of compensability, reflects policy choices based upon a variety of considerations and inputs.
Without a presumption in her or his favor, a worker may face a difficult battle to prove that any particular disease is "occupational" rather than personal. This is founded on the notion that an illness can be contracted by any of us in virtually any location while undertaking virtually any activity (or inactivity). Disease can be mercurial, fickle, and unpredictable. Time and again we experience the oddity of two people similarly exposed to some risk with one becoming ill and the other escaping unscathed. Infection or exposure itself can also be less apparent than an accident, and thus the states that provide compensation therefore have largely required heightened proof to support such liability. In short, if you contract an illness like a cold, how is that shown to be an at-work as opposed to an at-home event?
Some have argued, with success, that disease is different from accidents. In some instances, the challenges of occupational proof have even been viewed as supporting some alternative social programming in response; a response more systemic than a workers' compensation presumption for certain workers. An example is the Zadroga Act that followed the terrorist acts of 2001 (I presume it remains appropriate to refer to the attacks of September 11, 2001, as terrorism in the age of increasing "correctness"). In that instance, there was recognition that process and science for a multitude of claims might significantly challenge both the workers and employers, not to mention the workers' compensation system. Therefore, a compensation fund and system were created as a legislative response to socialize the broad and intensely personal impacts.
Similarly, there has been recognition that some risks are simply too large for the insurance industry. Another side-effect of the September 11, 2001 response was the enactment of the Terrorism Risk Insurance Act (TRIA). This program provides a "backstop" or stop-loss when systemic events create catastrophic losses in the marketplace economy. This is a government reaction to a perceived significant risk.
The fact is that workers' compensation, at its core, is a social contract. It is socialistic in that it alters the equation regarding personal risk and injury and places that risk instead upon an employer. Through either direct payment or through payment of insurance premiums, the employer undertakes responsibility for the consequences of its industry or production. To finance that cost, the employer includes that risk among the other "costs" of product or service inputs. In short, the price an employer charges for its good(s) or service(s) includes the cost of, the risk of, injury to those who are responsible for the production.
If the work causes injury or disease, then the paradigm produces compensation for the individual at the expense of the work. The cost is subsumed into the economic cost of production and spread to the consumer(s). The cost of the risk is socialized. The fact is that when an injury occurs, there is a Someone has to Paycost. Workers' compensation is not about regulating the existence of cost, but about who will bear that cost. I have said before that Someone has to Pay. Workers' compensation strives to provide transparency, predictability, and functionality to the decisions of who pays, how much, and when.
Then comes a widespread viral challenge such as COVID-19/Wuhan/SARS-CoV-2. The implications for society are widespread and systemic. For the first time in generations, health concerns have sidelined swaths of American workers. There have been factories closed, retail is largely dormant, and the food service industry is largely reduced to curbside or delivery functions. There has been a great resulting displacement of employees. There has been a similarly intense impact on businesses and those who own them. The direct effects are patent and pernicious.
But, the actual effects of the disease are merely the start; there is also the mere fear of the disease. The Centers for Disease Control noted early that COVID-19/Wuhan/SARS-CoV-2 may first produce symptoms or signs fourteen (14) days following exposure. We were therefore advised to self-quarantine (click here for an interesting history of the idea of quarantine) following a "known" exposure. That is no real solution for several reasons. First, and foremost, it turns out that vast numbers of people may be carrying this virus without any discernible symptoms. They do not know they have the virus! How are we supposed to know that they have it when they themselves do not know? Thus, the quarantine solution is troubled at best.
Second, there are few among us who were mentally or financially prepared to stay home and self-quarantine for two work weeks due to a potential for illness. In recent weeks, I have spoken with people who quarantined as instructed; some who actually became ill during that time, and others who never had a symptom during that time. When one sought testing, and obtained a "negative" result, the advice remained to quarantine against the possibility that exposure had nonetheless occurred and the test as simply done too soon. Thus, some were sidelined for "just in case" and their frustration and financial suffering were palpable.
The discussion eventually turned to workers' compensation. Should this social insurance cover the cost of the lost work for two weeks of quarantine? The classic analysis yielded "no" because this system(s) covers the expense for injury or disease, not so much the prevention of disease or the "just in case." Employers ordered employees home to prevent exposure, and enforced work absence, but often did not compensate. Those employers at times faced criticism or complaints. However, few discussed openly that employers might have been as financially unprepared to pay workers to stay home.
In May 2020 we see industry begin to reopen. Georgia and Texas led a move to less discriminate reopening. Florida has undertaken a more measured approach. The expressed reality is that businesses will reopen, and the questions are rather how and when instead of "if." Accompanying this reality is the co-existent fact that COVID-19/Wuhan/SARS-CoV-2 infections will continue. The risk is still present. Workers will face exposure, businesses will face the expense of heightened cleaning, reduced sales, and potential for absent employees on little or no notice. There will be managerial and personal challenges for all.
Thus, next week we undertake to discuss:
"How have communicable diseases been treated in the past in workers’ compensation?"
"What has changed about COVID-19?"
"How have the various states altered the potential compensability of COVID-19 claims?"
"How would the different approaches to potential compensability affect the volume of claims?"
"Does the treatment of COVID-19 claims signal a change in the future for how communicable diseases are covered in workers’ compensation?"
Is workers' compensation designed for, or adaptable to, the challenge that is an unseen and presently unpredictable pandemic? If not, is there a need for foundational and societal reaction to socialize the costs associated with such an onset (outside of the truckloads of dollars already borrowed by the federal government and distributed as "stimulus")? Is there a valid path to involve the expertise and efficiency of a century of workers' compensation in the complexities that COVID-19/Wuhan/SARS-CoV-2 presents?
If workers' compensation is be bear responsibility, how will that be measured? How will the price for that risk be collected and then distributed? Is it fair or legal for employers to shoulder the full cost of this pandemic, having never collected that cost in either product cost or insurance premium? Will the effects further illustrate the distinctions and differences of the more than 55 different individual programs (remember that Guam, the U.S. Virgin Islands, Puerto Rico, and the District of Columbia have workers' compensation, in addition to the federal programs and the 50 states)?
Furthermore, if workers' compensation is to pay for costs associated with the threat or the presence of such disease, will it do so protecting all workers equally? Or, will there be disparate treatment for some, such as "first responders" to the dismay and disappointment of others? Will laws include "presumptions" for the benefit of certain occupations, leaving other occupations wanting? If there are to be presumptions or exceptions, will they be founded on perceptions, science, or expediency? And, if there is to be compensability of COVID-19/Wuhan/SARS-CoV-2 or similar, will the definitions and decisions be based legislatively, judicially, or regulatorily?
There are a great many discussions to be had. Join us for some key points on Thursday, May 14 at 2 p.m. ET. Read more and register at WCRInet.org.
