Workers’ compensation was the first form of social insurance to be developed in the United States. According to the Insurance Information Institute in 2017, U.S. employers paid in excess of $45 billion in net workers compensation insurance premiums.
About 2.8 million nonfatal workplace injuries and illnesses were reported by private industry employers in 2017, occurring at a rate of 2.8 cases per 100 full-time workers.
Workers’ compensation is designed to provide wage replacement benefits and medical care when employees suffer work-related injuries or illnesses and survivor benefits to the dependents of workers whose deaths result from a work-related incident. In exchange for receiving benefits, workers who receive workers’ compensation are generally not allowed to bring a tort suit against their employers for damages of any kind.
In other words, workers’ compensation is a no-fault program. So essentially you don’t have to prove that your employer was at fault to get workman’s compensation. Usually, the amount of compensation is not affected by the degree of your carelessness or your employer’s fault. However, you may lose your workman’s comp if you were under the influence of alcohol or drugs at work, breaking the law or were injured during horseplay.
Workers’ compensation is regulated by individual state governments and those regulations and rules are designed to suit the local requirements, and there can be significant differences in the claim process, calculation of premiums and benefits covered under the program.
When a workers’ compensation injury is caused by a negligent third party (other than the employer), the injured worker has the right to sue the wrongdoer for damages in civil court. The employer or insurance carrier also has subrogation interest – a right of recovery against the negligent party.
Carrier subrogation occurs when a company pays for the workers compensation injury costs, then makes its own claim against others who may have caused the loss, insured the loss, or contributed to it to offset the cost of that claim.
According to www.corporate.findlaw.com all but one state allows for workers’ compensation subrogation but that is where the similarities end. In truth, there are very few areas in which the laws of each individual state vary more and are applied as differently, than in the area of workers’ compensation subrogation.
Generally there are three types of claims that could be caused by a third party: The action or inaction of a third party (e.g., a motor vehicle accident), claims that occur on property owned by a third party (e.g., slip and fall claims) and claims involving machinery or equipment that is owned or maintained by a third party.
As an employer whose future workers compensation premiums are contingent on the outcome or costs of a severe injury or fatality claim, it is important that the policyholder gets involved early when a third party may be negligent and should share in the liability for the injury to their employee.
Early investigation is the key to successful subrogation and the single most important ingredient to uncovering subrogation is an early incident investigation. This cannot be emphasized enough.
Your workers’ compensation adjuster may not recognize the third party negligence and the potential subrogation opportunity at the front end of a claim or the and when they do they are reacting several days if not months later.
Acting quickly to investigate the incident is crucial for several reasons to the employer. First, witnesses disappear quickly. Witnesses who were working nearby disburse and, for whatever reason, are often never identified or located. Witnesses also frequently move, seek other employment and even die before a case can be settled.
Moreover, even if a witness is available for an interview, their memory of the details surrounding an event can fade over time. Consequently, to get the best understanding of the facts, all people with knowledge need to be immediately identified and interviewed.
The second reason for conducting an early investigation is to prevent important evidence from getting lost or discarded. An early investigation will identify any product, machinery or equipment that must be set aside and preserved. That is vital to successful subrogation because having no product almost always means that no product liability claim can be asserted.
Third, incident scenes rapidly change over time for a variety of reasons. Few things are more devastating to identifying subrogation as a spoiled or materially altered incident scene.
An early investigation will yield the best evidence and will maximize the chances of revealing a subrogation opportunity worth pursuit, which could result in substantial savings on an employer’s comp insurance premiums.
An effort to obtain all of this information is part of the standard fact-finding step. A physical inspection of the machine or product involved in an incident is usually the cornerstone of a technical investigation. Information and evidence collected during a site visit can rarely be matched by reviewing similar information from another source.
A benefit of physically inspecting is having the opportunity to operate machines or equipment and perform relevant studies or tests. The sooner such an inspection is conducted, the better it will be for the investigation, as sometimes equipment and machines can be altered, moved or replaced. However, even if some time has passed, it is still beneficial to inspect the subject product, if available.
Another benefit of a site visit is having the opportunity to observe exemplar or competitor products, as the inspection location may have several lines for the same process. This can provide valuable information on what the state‐of‐the‐art may be in the design of a given product or type of equipment.
During a product or site inspection, it is important to take photographs to thoroughly document locations, conditions and the details found. When taking photographs, capture as many photographs from multiple different angles and distances, and be sure to use nearby objects as a point of reference for size. Photographs capture information that may change or otherwise be lost: the positions of machines relative to each other, the condition or absence of guarding, the location of marks or other evidence created because of the incident.
In many instances, the photographs themselves become evidence. In some cases, the images captured are all that remain after a scene has changed or an item has been moved or no longer exists. The importance of fact-finding in the information-gathering step cannot be overestimated.
The facts obtained become the foundation for subsequent analysis and ultimate findings. In fact finding, it is necessary to gather and preserve “just the facts.” This is not the place for assumptions, opinions, judgments, blame or the like. However, fact-finding should be done while keeping options open and looking past the obvious apparent obstacles to subrogation. It is also important to note that the information gathered here should be suitable for later use by other investigators who were unable to access the information firsthand.
Early In the Investigation
– Identify whether your employee was culpable in the event which has caused the loss, injury or fatality. If not, and it appears that an identifiable third party is involved, and then identify the legal basis of the potential cause of action.
– Identify any key contractual exclusions relating to the third party, which may render it not worthwhile pursuing a complex forensic and factual investigation.
– Secure any contractual documents. Primary information will include any clause limiting liability; any applicable exclusions; any clauses requiring early commencement of proceedings; any peculiarity in respect of the jurisdiction or choice of law clause; and the existence, or otherwise, of any alternative dispute resolution clause, including arbitration.
– Investigate all safety features and determine if they were working properly.
– Make note of any known or visible negligence.
– When conducting witness interviews inquire about prior issues with any behavior or equipment or that may have contributed to the accident.
Evidence to Collect & Preserve at the Time of Inspection
• Photographs before and after an incident
• Photographs of equipment involved
• Photographs safety features such as guards, control panels, interlocks, barricades, signage or lack of safety signage, etc.
• Photographs of any visible defects, wear and tear, etc.
• Photographs of contributing factors that may have caused the accident
• Measurements
• Police, OSHA or MSHA investigation reports (may have to file an open records report)
• First responder/EMT report, 911 call (may have to file an open records report)
• Visitor Logs on the day of the accident
• Nearby security video footage
• Accident reports, witness statements, voice recordings, etc.
• Customer or vendor accident reports
• Contact information for witnesses- work #, cellphone #, work address, home address, etc.
• Environmental studies
• Manufacture of Equipment and contact information
• Product information, warranties, ID placard information, date of manufacture, model numbers & serial numbers
• Repair or servicing records, names of contractors servicing equipment
• Maintenance logs
• Instruction manuals
• Suppliers
• Invoices
• Shipping orders
• Maps, evacuation maps, sketches, diagrams, etc.
• Training records, training records for vendors, etc.
• Leases and rental agreements
• Insurance policies and indemnification agreements
• Owner information
• Weather information the day of the incident
• Property owner information
Be Safe, My Friends
Keven Moore works in risk management services. He has a bachelor’s degree from University of Kentucky, a master’s from Eastern Kentucky University and 25-plus years of experience in the safety and insurance profession. He is also an expert witness. He lives in Lexington with his family and works out of both Lexington and Northern Kentucky. Keven can be reached at kmoore@roeding.com.
