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COVID-19 And Workers’ Compensation Liability Policy Coverage

Written by: Rayford Taylor, Esq. 

It has been suggested that if an employee cannot obtain workers’ compensation benefits because of COVID-19, that employee might sue the employer under the employer’s liability portion of a workers’ compensation policy.

For purposes of this discussion, workers’ compensation policies essentially consist of two parts.  Part One, known as Workers’ Compensation Insurance, provides coverage to the employer for an employee who sustains a bodily injury by accident or disease in the course and scope of employment.  Part Two is identified as the Employers Liability Insurance, and it applies to claims brought against an employer under certain enumerated circumstances.  Part Two has exceptions upon which the insurer may rely to deny coverage benefits or refuse to defend the employer against excluded claims.

Litigation in Georgia over the extent of coverage available under Part Two has been generally limited.  The disputes are over whether the insurer had to defend the employer or pay any judgment entered against the employer under the terms of the policy.

Georgia requires a stringent standard of proof for an employee to prevail when seeking workers’ compensation benefits as a result of an occupational disease.  If an employee were denied benefits under Part One, that employee could theoretically bring suit against the employer to recover their damages based upon the negligence or conduct of the employer.  When that situation occurs, the preliminary question would be whether the insurer had any duty to defend the employer against that suit.  The next question would be whether the insurer would be required to pay any damages awarded to the employee/plaintiff.  These two questions can trigger litigation between the employer and its insurer over whether the carrier is going to provide insurance coverage to the employer.

Employers may assume they have coverage for such situations under the workers’ compensation policy.  However, a closer reading of Part Two does not provide such a clear and unambiguous answer.

Part Two: Employers Liability Insurance:

A. How This Insurance Applies

This employer’s liability insurance applies to bodily injury by accident or bodily injury by disease.  Bodily injury includes resulting death.

        1. The bodily injury must arise out of and in the course of the injured employee’s employment by you.
        2. The employment must be necessary or incidental to your work . . . .
        3. Bodily injury by accident must occur during the policy period.
        4. Bodily injury by disease must be caused or aggravated by the conditions of your employment. The employee’s last day of last exposure to the conditions causing or aggravating such bodily injury by disease must occur during the policy period.

 

B. We Will Pay:

We will pay all claims that you legally must pay as damages because of bodily injury to your employees, provided the bodily injury Is covered by this Employers Liability Insurance.

The damages we will pay, where recovery is permitted by law, include damages:

        1. Because of bodily injury to your employee that arises out of and in the course of employment, claimed against you in a capacity other than as employer.

 

Employers may assume the preceding provisions provide them with insurance coverage in the event an employee seeks to recover damages as a result of not being able to obtain workers’ compensation benefits.  However, the insurance policy also contains exclusions, some of which are noted below:

C: Exclusions

This insurance does not cover:

        1. Any obligation imposed by a workers’ compensation, occupational disease, unemployment compensation, or disability benefits law, or any similar law;
        2. Bodily injury intentionally caused or aggravated by you;

 

The most likely scenario would be an employee who failed to prove entitlement to workers’ compensation benefits for an occupational disease.  That employee might then sue the employer.  However, that employee would be seeking benefits against the employer as a result of injuries they claim they sustained as an employee, which may well not be covered under the various provisions of Part Two.  Part Two of the workers’ compensation policy has not been historically interpreted to provide a second source of recovery for an allegedly injured employee in the course and scope of employment.

There is no simple answer as to whether an employee who alleges they contracted COVID-19 at work can recover benefits under either Part One or Part Two of a workers’ compensation policy.  Resolution of the coverage question could result in the employer being left without insurance coverage.  That could mean that any employee who prevailed in such civil litigation might not have any insurance from which to pay any such judgment.

These cases revolve around the unique facts and situations regarding the relationship between the claimant, the employer, and the insurer.  The question of whether the law allows for a recovery in a particular situation would almost always require additional investigation.

For further information regarding the implications of COVID-19 in the workplace, please contact Rayford H. Taylor regarding coverage disputes involving an employer and carrier.