Many COVID-19-related workers compensation claims are denied, according to recent data that shows a third to half are deemed to not involve workplace contraction of the virus.
Often workers don’t press the claims after the initial denial and experts say questions over compensability have kept claim counts and costs low.
“The trend is that most employers are denying claims because of the questionable causation of developing it at work,” said Rich Lenkov, capital member and head of the workers compensation practice at Bryce Downey & Lenkov LLC in Chicago. “You can catch it everywhere, and most of the claims I am seeing you are getting the causation question.”
While there is no centralized database of COVID-19 claims, some states such as Florida and Texas have been releasing regular reports on claims activity.
Several large workers comp insurers declined to comment on claims activity. In recent months negative publicity over workers allegedly contracting COVID-19 at work and not being compensated for their illness has been commonplace.
The Florida Division of Workers’ Compensation’s most recent data, from April, shows that 35,430 COVID-19 claims have been denied since 2020. There were 34,797 claims accepted in 2020 and 30,564 in 2021.
In March, the Texas Department of Workers’ Compensation reported that insurers denied 45% of COVID-19 positive test claims. Despite more than 18,000 denials of claims with positive tests or diagnoses, there were only 166 disputes filed with the DWC as of Feb. 6.
“It is true that COVID claims are being denied at a higher percentage than non-COVID claims,” said Matt Zender, Las Vegas-based senior vice president of workers compensation strategy for AmTrust Financial Services Inc., who pointed to data from the California Workers’ Compensation Institute.
The CWCI found a COVID-19 denial rate of 37%, compared with a non-COVID-19 denial rate of 12%. Of the COVID-19 claims denied: 58% were denied for medical reasons, which include a negative test or no test, and 32% of the denials were non-industrial, “meaning that they were not exposed at work or the employee withdrew their claim,” Mr. Zender said. The remaining claims were denied due to reporting errors, “which usually meant that the employee was not an employee of the policyholder,” he said.
The difficulty of proving contraction at work is one of the reasons behind the opposition to COVID-19 presumption orders and laws, which require employers to assume that the disease was caught at work, unless proven otherwise. Still, many states allowed for presumptions, though in some cases only for those working in such industries as health care and public safety.
The National Council on Compensation Insurance reported that COVID-19 claims weren’t as bad for comp insurers and employers as many had anticipated. An analysis of data from 45 jurisdictions in conjunction with several state ratings agencies found an average cost of $7,800 per COVID-19 claim. Indemnity, or income-replacement, claims accounted for 41% of reported COVID-19 claims — meaning such claims were mild and did not require medical intervention.
Without the COVID-19 claim denial figures, would the picture be different for the comp industry? It’s likely, according to Katie Williamson, director of data science at NCCI. In a presentation at NCCI’s Annual Insights Symposium in May she went over data of what a pandemic looks like in terms of a surge in infections in the United States. For workers, the issue that could keep comp claims at bay is “adjusting for compensability,” she said. How do you prove — or disprove, as employers in presumption states are tasked with — contraction at work?
“The easiest way to go is to make a denial,” said John Novella, a partner in the workers compensation practice in the Princeton, New Jersey, office of Goldberg Segalla LLP.
According to Mr. Novella, employers and their insurers in states such as New Jersey have limited time to either deny or accept a claim.
“If you have a case where it’s a car accident, it’s clear you are going to accept (the claim). But with occupational illness like COVID exposure … we don’t have all the facts so we can’t recommend the client accept the case without all the facts,” he said. From there, if the denial is appealed “there are a lot of avenues to explore for investigating,” he said.
“Obviously, we have to get medical records, family doctor records; those would have information on a history of the claimant,” Mr. Novella said. “The doctor might know that a family member got COVID, or they were at a restaurant.
“You are also looking at prior medical history, history of (chronic obstructive pulmonary disease), smoking, asthma. Those are all types of illnesses that could cause symptoms as opposed to COVID.”
Social media searches regarding social events attended by a claimant or whether the worker has children in school could be another avenue to dispute workplace infection, he added.
Yet such investigations aren’t common, and most denials are not appealed, according to experts.
Jonathan Barrish, Chicago-based partner with Litchfield Cavo LLP, said only two claims made it to litigation in Illinois, which is a presumption state. In both cases, arbitrators ruled in favor of the claimants, despite a judge ruling in one that the employer successfully rebutted the presumption, he said.
Even without a presumption in place employers are “going to take the cases where it is obvious and deny the rest,” Mr. Barrish said. In workplaces such as health care settings, workplace spread of COVID-19 makes sense, while in others it might not, he said.
“If there is no evidence that anyone in the work environment has COVID that’s an easy one to deny,” he said.
This article was first published in Business Insurance.