When is a Workers Compensation Claim Compensable?

Carefully evaluating workers compensation claims is crucial in helping your company save money and prevent fraud. Workers compensation is simply a form of insurance that offers employees medical coverage in the event they are injured at work or during a work-related function. It may also provide compensation for wages lost or cover rehabilitation costs so the employee can return to the workplace quickly and smoothly.

Workers compensation is crucial to protecting employees, but it is often a source of contention among employers because it comes with considerable grey areas. When is a claim compensable? How do we identify a fraudulent claim? How do we report a claim, and should we report all workplace injuries no matter how serious? This piece is designed to help you determine when – and – if an injury is covered by workers’ compensation. Requirements The claim must meet all five of these requirements in order to be compensable. Let’s examine each one individually: 1) Accident or Incident Occurred to One of Your Employees The first requirement is in place to ensure it is your employee filing the claim, not an independent contractor or vendor who works for themselves or a third party. Even if the incident occurs on your property, unless it is someone who works directly for you(e.g. is on your payroll), the claim is not compensable. 2) Result in Injury or Illness Injury is not the only thing that can potentially be covered by workers compensation. Illnesses could also qualify as a compensable claim, but only if they are directly related to the job. The illness must also be caused directly by the working conditions to be covered under a workers compensation policy. For example, a miner’s contraction of black lung would be compensable in all states. However, an employee in an office with a co-worker who smokes would not be eligible for workers compensation for treatment of illness due to second hand smoke. 3) Arise Out of Employment This requirement means there must be a direct connection between the injury and the desire or attempt to further the employer’s business. If the employer benefits in some way, whether monetarily or otherwise, from the employee’s activity, then the claim meets this qualification. 4) Occur in the Course and Scope of Employment The employee must be at work when the injury occurs. This includes any place or location mandated or expected by the employer. So when an injury occurs at the employee’s physical everyday work site, that employee must prove he or she was injured while actively engaging in the furtherance of the employer’s business. There is a special provision called the “coming and going rule”, which maintains that benefits are denied for injuries received when traveling to or from work. Additionally, injuries arising out of transit from one work site to another, for instance when traveling to visit clients, are compensable. This provision also requires that the actions leading to the injury of the employee in question be prompted by the aspiration to further the employer’s business interests. 5) Result in Impairment and/or Lost Wages The injury or illness in question must cause the employee to be impaired in some way and lose wages from not being able to perform his or her tasks completely. It is also a compensable incident if the injury or illness results in the need for medical treatment without lost wages, or vice versa. Identifying a Fraudulent Claim According to the U.S. Business Journal, roughly 80 percent of all workers compensation claims filed are legitimate. However, it is still important as an employer to watch for these red flags that may indicate a fraudulent claim:

  • Filing multiple claims.
  • Longer absences than anticipated by the employee, combined with an unwillingness to return to work.
  • Unwillingness to be assigned to other, lighter jobs within the company or to complete partial duties.
  • Constantly missing medical appointments.
  • Employee will not provide date, time or location of the incident that caused the injury.
  • Lack of witnesses to an accident or incident or witness reports differ from what the employee reported.
  • Employee cannot produce specific information about the nature of the injury.
  • Employee has a history of work-related injuries or pre-existing medical conditions.
  • Employee has a history of short-term employment.
  • Employee has a history of performance issues or was recently place on warning.
  • Employee reports an injury after giving notice that he/she is terminating employment or taking voluntary retirement.

If any of these red flags occur, it by no means makes the claim automatically fraudulent – these are simply guidelines to keep employers proactively evaluating the legitimacy of a workers compensation claim. Notify the claims adjuster or your Loomis Company representative if you suspect fraud or if you have further questions regarding whether or not to report a claim.

If you have additional questions or need assistance, please contact: Diane L. Cameron, Director of Claims Office (610)374-4040 ext. 2318 Mobile (610)413-3191

The Work Comp Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2011 Zywave Inc. All rights reserved.