WorkComp Advisory
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Q & A: Waiting periods, insurance company bankruptcies, negligent third parties

Q. “Why is it so important to return an injured employee to work before the end of the waiting period. What difference does a few days make?”

A. The waiting period is the length of time allowed under a state’s statute before Workers’ Compensation disability payments need to be paid. It really is analogous to a deductible. If the injured employee can safely return to work during the waiting period, the claim becomes a “medical-only” claim. If the injured employee does not return to work, indemnity is paid once the waiting period has lapsed. Given the complex way that the Experience Modification formula is structured, even a small indemnity payment can dramatically increase the cost of your premium.

Q. “With so much uncertainty in the market today, we have learned to expect the unexpected. Who continues covering and paying benefits to injured workers if an insurance company goes bankrupt?”

A. States have guarantee funds that take over benefits when a carrier goes bankrupt. Sometimes new insurance carriers purchase and take over a bankrupt carrier's claims.

Q. “Can a worker sue someone other than the employer if another party is even partially at fault?”

A. While it is well documented that a cost of a claim increases significantly when an attorney is involved, there is an exception. Injured employees can sue negligent third parties in common law civil suits if they are the cause of the accidental injury and employers may be able to recoup the costs of medical treatment. Proceeding carefully and thoroughly is very important, as legal steps need to be taken to protect your rights to reimbursement.