There are times that an employee might not pursue a claim or might not have a claim for a work related injury. While this is uncommon for employees, it does happen.
Reason 1 – Excluded People (no coverage)
State Requirements
If an employer does not meet a state’s requirements for workers comp insurance, the employee might not have a claim. For example, where states require employers with three or more employees to carry workers comp insurance, and the employer only has two employees, the injured employee would not be able to file for workers’ comp.
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In addition, some states exclude farm laborers, seasonal workers, domestic servants, real estate agents and direct sellers from coverage in their workers comp statutes. If one of these employees is injured on the job, they have an option to sue their employer if they believe the employer’s actions caused their injuries.
Sole Proprietors and Partners
Injured employees that are sole proprietors or a partner in a business are not covered for a workers’ comp injury unless they purchased a workers’ comp insurance policy. Most sole proprietors do not carry this insurance.
Reason 2-Pursuing a Tort Claim (looking for the deepest pocket)
Choosing Own Medical Provider and Pursuing Bigger Settlements
In states where a workers’ comp insurer has full rights to subrogation recovery, employees will sometimes not pursue the injury claim against the employer because they want to choose their own medical provider. For example, if the employee is a traveling salesperson injured in an automobile accident where a third party was at fault, the employee may not file a claim where the accident occurred in a state where the employer controls selection of medical providers and the employer/insurer has full subrogation rights. Instead of the employee being treated by the medical provider selected by the employer or the employer’s insurance company, the employee is treated by a medical provider selected by the employee’s attorney. The attorney may recommend a liberal medical provider who will keep the employee coming back for additional treatment for as long as possible. .
The longer the employee is off work and the higher the medical bills are, the greater the settlement the employee’s attorney can demand from the insurer of the vehicle at fault in the auto accident. Attorneys representing injured employees often tell their clients that they can get a much bigger settlement through the tort system than they can through workers comp.
Injury on a Construction Site
An injured employee might opt out of filing a workers’ compensation claim where the injury occurred on a construction site. On a large construction project there are often various subcontractors working at the same time. The employee might have been injured due to the negligence of a third party. The employee again will have the choice between pursuing the claim for personal injury against the responsible party or filing a workers’ compensation injury claim. In states where workers comp insurers right of subrogation has been diminished or taken away, the employee’s attorney will often pursue both types of claims simultaneously.
Delivery People
A delivery person who trips and falls on a defective sidewalk belonging to a business where the employee is making a delivery might choose to pursue a tort claim. While a delivery person has the right to pursue a workers’ comp claim against the employer, the property owner likely has liability insurance. The award that can be collected on the tort claim may surpass what can be collected on a workers’ comp claim.
Summary
While an employee usually will not opt out of coverage for a workers’ comp claim, it does happen. There are also times when insurance coverage does not apply to the work related injury. It is important for an employer to know when this occurs and to keep in close contact with the employee in case circumstances change.
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Author Michael Stack, Principal, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder & lead trainer of Amaxx Workers’ Comp Training Center. .
Contact: mstack@reduceyourworkerscomp.com.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.
