Work Comp Ins.. What if you say no?

[lendaddy]

Just a musing, but as I stare at my comp bill of $25k this year for a shop employing less than 10 people this year I can't help but wonder what would happen if I told them to suck it?

[JeremyD]

In florida you can go to jail. Have you considered employee leasing? You may be able to carve that number down a little.

WC comp sucks -

[Tobra]

WC is a scam in Mexifornia. Your rates have nothing to do with your claim history, and there is nothing you can do to mitigate the cost. All this and it is the law that you have it.

[Porsche-O-Phile]

Originally Posted by Tobra

WC is a scam in Mexifornia. Your rates have nothing to do with your claim history, and there is nothing you can do to mitigate the cost. All this and it is the law that you have it.

Unless you're an illegal. Then you get "preferred" (read: tax-free) treatment.

[gr8fl4porsche]

I've had 4 claims this year. My employees keep falling off ladders and scaffolds. Not the young ones either, guys with 25-30 yrs experience. I'm gonna be paying for this for the next 5-7 years. I wish my wc ins was $25,000.

[cantdrv55]

Premiums depends on the risks they're exposed to in the workplace and the payroll. I think the general formula is what you pay your employee multiplied by their job classification insurance rate. And, if you told them to suck it, you could be fined by the Dept of Industrial Relations, if caught. The fines are quite hefty and it's for each employee. You'd basically be shut down until you buy WC insurance. And, if your employee gets hurt on the job and you don't have WC, you'd be liable for the claims costs, medical expenses, etc. I guess you'd have to weigh the risks.

[Dueller]

I did a cursory search of Michigan WC law and found that if you had 3 or more full time employees, you are required to have WC insurance. It is a criminal viloation not to do so. I did not get a chance to reasearch whether you could self insure but most jurisdictions it is not permitted per se.

I have worked on both sides of the fence; i.e., I've represented employers/carriers as well as claimants. Forgive me if I sound like a law school professor but it might help you to put up with the system as flawed as it is if you understand the public policy behind WC law.

WC laws first began appearing in this country in the 19th century when our society began moving from a primarily agrarian society to a more industrialized nation. Under early common law, there was what was called the "master Servant rule." Simply put a servant (employee) could not sue their master (employer). While you might want to move back to this rule as an employer, it often resulted in serious inequities for the working class. Even if an employer was grossly negligent employees were essentially powerless to recover for injuries arising in the course and scope of their employment. Where a person injured on the family farm might be taken care of by their family in the event of an injury, the employee of a company might be cast aside if the corporate "family" was not so altruistic.

Lawmakers were faced with a dilemma...it was not fair for workers to have no recourse for injuries on the job and it wasn't fair to abolish master servant rules since an employee who was seriously injured or killed in the course of their employment could sue the employer into bankruptcy. Modern WC laws are an effort to strike a balance between these two competing interests.

In simple terms the employer limits his liability to WC recovery guidelines and in exchange the worker does not have an onerous burden of proving negligence by the employer. This prevents an employee from suing his employer into insolvency. For example: in my jurisdiction the maximum benefit payable for a person killed on the job is about $150K under WC law. If I, as employer, remove safety devices from a machine to speed up the work and an employee is killed because of my negligent actions, the employee's survivors are limited to $150K (notwithstanding OSHA regs, etc...not a perfect example but you get my point). If the employer does not have WC coverage, then the employee is NOT limited under WC limits....that is one of main the things your hefty premiums are paying for.

Like I said at the outset I've worked on boith sides of the fence. Insurance companies can be unreasonable with their premiums/refusal to pay legitimate claims as can malingering employees who intentionally injure themselves to get on the dole. Not a perfect system but its what we got.

In any event to just ignore the requirement of WC coverage opens you up to serious exposure....Michigan law specifically states if you do not maintain coverge when required, you will be personally liable for injuries and not subject to the caps afforded by the law. Think about it....suppose you send an employee out to make a pick up for the shop. An uninsured, insolvent drunk driver plows into him and employee is paralyzed from the waste down. Sure it was the drunks fault. But theemployee was on a mission for the shop in the course of his employment. You wanna pay for that outta your back pocket? Or even something less dramatic...a machine falls on an employee and he breaks his leg requiring surgery. He is excpected to recover fully in 6 months with physical therapy. We're talking a $100 K easily in med bills. $25K begins to sound like a bargain.

[lendaddy]

Thanks, that's good info to have. I knew about the three employees but not the award limits.

[Porsche-O-Phile]

Dueller - thanks for the history on that. It does make more sense now. You're 100% correct - it's a flawed remedy, but probably the best one that can realistically be put into place.

[Zeke]

The system would probably work fairly well if it weren't abused by....





lawyers.


I've been sued under the system. I'm not going to go into it, but suffice to say lawyers made a literal mountain out of a mole hill. I haven't had an "employee" since. Fvch the whole thing. Seriously. And I'm not alone in my opinion. Check out the number of employers that are moving out of CA. They will tell you WC ins is on top, or near the top, of reasons to relocate.

I can't comment on other state's laws, but if it seems half way reasonable, it probably is. No lawyers and binding arbitration would go along way in bringing the cost in line everywhere. If I have to sign a form to see a doctor, any employee should have to do the same, IMO.

[Jims5543]

Work Comp and another Insurance crock of crap!

I have to carry it too and it costs my little struggling business $7500 a year. I have had only 1 incident in 10 years, one of my guys got poked in the eye walking in the woods. I paid for the medical expense out of pocket in fear of making a claim and my rates going higher.

So basically I carry this insurance that I am afraid to use due to retaliation from the insurance company.

Yup, its really beneficial to me, maybe one day one of my employees will be really hurt bad and then I will have to make a claim only to see my premium double in the aftermath.

[Dueller]

At the risk of this becoming a lawyer bashing thread let me say at the front end I think society is better served when lawyers can be kept out of our individual lives. I turn away probably 80% of potential clients or advise them how to deal with government or the insurance industry on their own. But if they run into a snag, you can bet big brother is gonna lawyer up against the little guy. So often they have no choice but to retain their own advocates. I think its myopic to universally blame lawyers for everything from big government to outrageous insurance premiums to unaffordable healthcare to...ad nauseum. True, our society has become litigenous, and while lawyers may contribute in a large part, we are not solely to blame.

Milt...when you were sued under the WC system, did your insurance carrier pay for your attorney? If they didn't, they were supposed to. You don't have to go into details, but was the mountain started by your insurance company not paying a legitmate claim? Perhaps it was a bad employee trying to milk the system....but that employee had to be the one that listened to some ambulance chaser, no? If the employee had been a stand up person, why didn't he work with you and the insurance company? I understand your frustration but the lawyers are not operating in a vacuum. Is it solely the fault of lawyers that the Cali legislature (elected primarily by non-lawyers) passes laws that are anti-business? Believe me there is plenty of blame to go around.

Good for you for finding a way around the system so you are not held captive by the WC insurance companies. Are you satisfied with the level of your auto insurance premiums? No? So why not find a way around auto insurance? Oh, I see....you gotta have a car ergo you gotta pay car insurance. Well, some businesses gotta have some employees ergo they have to have WC insurance according to the public policy set by the elected officials.

So lets throw the lawyers out and go to arbitration. Who watches the arbiters to make sure they follow the law. Who picks the arbiters. What if the agency regulating arbiters onkly appoints those who are pro-employee? Or pro-employer? Talk about a kettle of squid...

You doctor's release form is not an appropriate analogy. Yup,in using his services you sign a release saying you won't hold him responsible for any mistakes but if you do you'll agree to arbitration. But your employee is not seeking your services, you are seeking the employees services. To make your analogy proper, YOU (as employer) would have to sign a release saying I'm gonna let you work for me but if you fuch up I can't sue you or fire you. That what you want?

Jim...trust me I feel your pain in my own business. And with my personal insurance. How many of us have had a fender bender and paid it out of pocket to keep our rates from going up? I know I have. And I have paid employees' minor medical expenses and time off for work injuries out of my own pocket. Fortunately, I've never had a major work related injury. Nor have I had a claim in 25 years on my auto policy. But if I have a blowout on the interstate at 70 mph, veer into another car loaded with mom and three kids and they plow into a tree killing mom and brain damaging one of the babies, I hope my $1.5 mil insurance limits will be enough to take care of the survivors. And hopefully it will be enough that I don't lose everything I've worked for.

I know you were being sarcastic in hoping one of your employees would be seriously injured so you could make a claim and see your premiums would double. Would you be equally as sarcastic to hope you could avail yourself of an insurance claim if it were your wife I killed and your child I rendered brain damaged?

Off the soap box now....if someone has a better solution to resolve the public policy in competing societal interests, come forward.

[Porsche-O-Phile]

Independent contractors sound like the way to go.

[Dueller]

Originally Posted by Porsche-O-Phile

Independent contractors sound like the way to go.

You would think so. BUT most state laws anticipate this loophole and put the burden on the prime contractor/employer to verify WC coberage is in place by the IC/subcontractor. If its not there, then the prime contractor is responsible to either provide coverage or risk being liable for work related injuries in excess of the WC caps.

Proceed at your peril.

Keep in mimd I'm only the messenger

[Porsche-O-Phile]

So every time I hire a consultant, I'm supposed to extend WC coverage to them? That doesn't sound right at all.

[Zeke]

Originally Posted by Dueller

At the risk of this becoming a lawyer bashing thread let me say at the front end I think society is better served when lawyers can be kept out of our individual lives. I turn away probably 80% of potential clients or advise them how to deal with government or the insurance industry on their own. But if they run into a snag, you can bet big brother is gonna lawyer up against the little guy. So often they have no choice but to retain their own advocates. I think its myopic to universally blame lawyers for everything from big government to outrageous insurance premiums to unaffordable healthcare to...ad nauseum. True, our society has become litigenous, and while lawyers may contribute in a large part, we are not solely to blame.

Milt...when you were sued under the WC system, did your insurance carrier pay for your attorney? If they didn't, they were supposed to. You don't have to go into details, but was the mountain started by your insurance company not paying a legitmate claim? Perhaps it was a bad employee trying to milk the system....but that employee had to be the one that listened to some ambulance chaser, no? If the employee had been a stand up person, why didn't he work with you and the insurance company? I understand your frustration but the lawyers are not operating in a vacuum. Is it solely the fault of lawyers that the Cali legislature (elected primarily by non-lawyers) passes laws that are anti-business? Believe me there is plenty of blame to go around.

Good for you for finding a way around the system so you are not held captive by the WC insurance companies. Are you satisfied with the level of your auto insurance premiums? No? So why not find a way around auto insurance? Oh, I see....you gotta have a car ergo you gotta pay car insurance. Well, some businesses gotta have some employees ergo they have to have WC insurance according to the public policy set by the elected officials.

So lets throw the lawyers out and go to arbitration. Who watches the arbiters to make sure they follow the law. Who picks the arbiters. What if the agency regulating arbiters onkly appoints those who are pro-employee? Or pro-employer? Talk about a kettle of squid...

You doctor's release form is not an appropriate analogy. Yup,in using his services you sign a release saying you won't hold him responsible for any mistakes but if you do you'll agree to arbitration. But your employee is not seeking your services, you are seeking the employees services. To make your analogy proper, YOU (as employer) would have to sign a release saying I'm gonna let you work for me but if you fuch up I can't sue you or fire you. That what you want?

Jim...trust me I feel your pain in my own business. And with my personal insurance. How many of us have had a fender bender and paid it out of pocket to keep our rates from going up? I know I have. And I have paid employees' minor medical expenses and time off for work injuries out of my own pocket. Fortunately, I've never had a major work related injury. Nor have I had a claim in 25 years on my auto policy. But if I have a blowout on the interstate at 70 mph, veer into another car loaded with mom and three kids and they plow into a tree killing mom and brain damaging one of the babies, I hope my $1.5 mil insurance limits will be enough to take care of the survivors. And hopefully it will be enough that I don't lose everything I've worked for.

I know you were being sarcastic in hoping one of your employees would be seriously injured so you could make a claim and see your premiums would double. Would you be equally as sarcastic to hope you could avail yourself of an insurance claim if it were your wife I killed and your child I rendered brain damaged?

Off the soap box now....if someone has a better solution to resolve the public policy in competing societal interests, come forward.

Well, obviously I touched a nerve. Your comments are to be expected since you're a lawyer. It's normal for you to defend your chosen trade, even though you really didn't have to.

OK, since you did, I have to respond. You make good points (some) and you have disussed this before many times or you contemplated your thoughts for a good period before posting. However, as logical as your statement is that the doctor release is backwards, I differ.

Logic can be manipulated just as statistics and you've done just that, IMHO. In the employer/employee relationship, I may be seeking the services of the employee, but my accountability is similar to the doctor's. As the employer, I am to provide a safe working environment and be responsible for any (read: ANY) injuries. This should equate to the doctor being responsible for what he is insured for. Therefore, the release should not necessarily say, "...I'm gonna let you work for me but if you fuch up I can't sue you or fire you." Rather, it would be more of a two way agreement allowing me (or my ins co) some relief from the "ambulance chasers." The AC's, or any other counsel, bring the ins co's laywers into the fold and raise the cost of insurance.

I've been down that road, spent 3 years in the CA Workers Compensation Court system and seen how it works. It's a colossal circus and total waste save for a unique case or two, now and then, which could be taken to civil court if all else fails. Just that fact that the defendant must see the the doctors on the lawyers' payroll (don't dispute that or I'll really come on here with a rant like you've never seen with hard, hard evidence) so as to provide for the opposing opinion, makes for a tremendous increase in the expense of litigating a case.

In case you're not following me, let me make it clear that I'm talking about (at this point) a fictional case where the injured employee gets treatment provided by the employer, or employer's ins co, and then contacts a lawyer (or the other way around). At this point, the defendant is ordered to see another doctor for a "second opinion." Usually, the 2nd opinion is in favor of the plaintiff's point of view, that the patient/defendant is entitled to no more. With the cost rise at this point, the patient could have instead received a LOT more benefits of different types.

I think arbitration could relieve this scenario of many of its flaws.

"Good for you for finding a way around the system so you are not held captive by the WC insurance companies. Are you satisfied with the level of your auto insurance premiums? No? So why not find a way around auto insurance? Oh, I see....you gotta have a car ergo you gotta pay car insurance. Well, some businesses gotta have some employees ergo they have to have WC insurance according to the public policy set by the elected officials." Now, you're really off base here with your analogies. First of all, I did not find a way around anything. I simply refuse to hire anyone. If I do, I rent them temporarily. No headaches and I'm guaranteed sobriety and performance or I get another. I guess I don't have to respond to the next statement about getting around auto ins.

"Milt...when you were sued under the WC system, did your insurance carrier pay for your attorney? If they didn't, they were supposed to. You don't have to go into details, but was the mountain started by your insurance company not paying a legitmate claim? Perhaps it was a bad employee trying to milk the system....but that employee had to be the one that listened to some ambulance chaser, no? If the employee had been a stand up person, why didn't he work with you and the insurance company? I understand your frustration but the lawyers are not operating in a vacuum. Is it solely the fault of lawyers that the Cali legislature (elected primarily by non-lawyers) passes laws that are anti-business? Believe me there is plenty of blame to go around."


I will not go into this as I've discussed this in detail a couple of times before on these type of threads with the lawyer vs. the anti-lawyer barking at each other. The "defendant" was a neighbor and an immigrant to this country (legally--sponsored by the Catholic church) who was doing some unrelated work for me in another location. what got me was his pay for his contract work that was regular and similar over a short period. This was a very unfortunate coincidence that worked against me. What's more, the "employee" walked into my shop w/o permission and used a table saw w/o my permission and got hurt. His duties in another location were related to painting, not power equipment. This person used to also open my garage (remember, he was a neighbor as well) w/o permission and use power tools w/o permission. What's more, I didn't know this until later. But, when he got hurt (minor, no severed digits or anything like that), it was my fault. Well, that's BULL SH!!!T.

[lendaddy]

Originally Posted by Jim Cesiro

I paid for the medical expense out of pocket in fear of making a claim and my rates going higher.

I have done this in the past as well, but later found out it's a huge no no. By paying for the treatment you admit responsibility and therefore any future complications are on your ass. Lets say the guy scratches hi eye and you pay for drops, later he loses the eye due to infection or something...guess who gets sued for six figures? You personally since you released your comp carrier when you failed to report the injury and paid the initial fees out of pocket.

This is how I understand it anyway.

[Dueller]

Zeke, Zeke, Zeke....seems as if I'm the one who has touched a nerve. At the outset let me say I appreciate your restraint to not turn this into a lawyer vs non-lawyer barking session. There are some things upon which we have to agree to disagree. Not because either of us is in an untenable position to support our relative positions, but rather we have completely different perspectives.

Keep in mind I used to work for the WC carriers as well as other insurance companies. Some of the stuff I observed while I was pissing out of the tent is why I left that work. Just one real case I handled...person is seriously injured and insured was clearly liable. On the front end I advised company of this and recommended an immediate effort to settle the case fairly. Company gave me the go ahead. Opposing counsel and I negotiated a tentative settlement within 2 months of the injury. Insurance company wanted to go in with a lowball offer. I told them they were nuts to not settle for a more reasonable amount. Insurance company doesn't back down and assigns the case to another lawyer. I write a few CMA letter and watch the case from a distance. The case drug on for 4 years. Goes to trial. The original settlemnt I recommended (and opposing counsel agreed to accept early on) was $200K. Ins company probably spent at least that much to defend. Jury returns a verdict for $4 million. Thats why I'm pissing into the tent now. Not because of the money but the fact the ins companies will go to any lengths to screw not only claimants but also their own customers. Not to mention slow paying on my legal bills.

As far as your example with the neighbor, understand your frustration. If I were representing you I would have defended it to the end or tried to settle it for nuisance value (i.e., cost to defend) on the front end given the limited facts you gave. I'm suprised it wasn't thrown out early on on the theory he wasn't acting in the course and scope of his employment or on a trespass theory. Damn Judges

[Zeke]

OK, then we agree to settle.

[Dueller]

Originally Posted by Porsche-O-Phile

So every time I hire a consultant, I'm supposed to extend WC coverage to them? That doesn't sound right at all.

No, POP. If they truly are an independent contractor or consultant (i.e., you are not controlling their work such as hours, method, etc...you are just seeking an end product) you would not be liable. However, if you are in control of them in the work place and directly supervising what and how they do the work they may be viewed as a de facto employee.