T - When is a Workers’ Compensation Claim Compensable?

Carefully evaluating workers’ compensation claims is crucial in helping your company save money and prevent fraud. What is Workers’ compensation?  It is simply a form of insurance that offers employees medical coverage if they are injured during an event that is related to work.  Depending on the state of residence, it may also be able to give compensation for any disabilities sustained or cover any rehabilitation costs so the employee can return to the workplace as quickly and conveniently as possible.

Workers’ compensation is critical in the protection of your employees, but is also often a source of contention among employers due to the grey areas you might run into.  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? Here's where we come in.  We're here 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:

Happened 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, the claim is only compensable if the effected person is someone who works for you. 

Results in an Injury or Illness

Along with injuries, illnesses may also qualify as compensable claims as long as they are directly related to the job and caused by working conditions covered in a worker's 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 secondhand smoke.

Arose 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.  The claim meets this qualification if the employer benefits in some way due to the employee's activity, whether this is in terms referring to money or something else.

Occurred 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. Keep into consideration the “coming and going rule,” which which denies benefits for injuries received when traveling to or from work.  Additionally, injuries due to  commuting from one work site to another are compensable.  Example: Traveling to meet a client.  This provision also requires that the actions leading to the injury of the employee in question are prompted by the aspiration to further the employer’s business interests.

Resulted 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 complete his or her tasks to their full extent.  It is also a compensable incident if the injury or illness results in impairment without the loss of wages or vice versa.

Identifying a Fraudulent Claim

Studies commonly show that roughly 90% of all workers’ compensation claims filed are legitimate. However, it is still important for 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 a date, time, or location of the incident that caused the injury
• Employee has no recollection of services provided for related medical bills
• Lack of witnesses to an accident or incident
• Employee cannot produce specific information about the nature of the injury
• Employee has a history of short-term employment

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.