The worker’s compensation program was established by Congress as the legal guideline and benefit application for injured workers across the nation, but the federal government stopped short of making it a federal oversight operation. Each state was delegated the responsibility to design the workers comp program according to the needs of the state, which has contributed significantly to the confusion and financial problems the program now experiences. The individual dynamics of each state program are clearly inconsistent except for the basic rules that workers who are duly injured on the job can file a claim after missing seven days due to a workplace injury, with the claim being retroactive to the day of the injury. The state systems must provide earnings replacement at a two-thirds rate of gross weekly earnings as well as cover medical bills for the injury. The problem is that many workers comp injury claims are strongly defended or outright denied by the employers or workers comp insurance companies, which means that collecting benefits can be a frustrating experience in some instances. This resistance to processing claims could also be impacted by problems states are having funding the program.
Elective Participation
New Jersey is one of two states that allows employers to choose whether they participate in the workers compensation insurance program. However, New Jersey employers cannot “go bare” with respect to operating without some type of liability insurance coverage regarding their injured employees. These employers are effectively leaving any injury claims for adjudication in the state court system for the most part. The problem is that the injury claim could potentially be claimed in two states when interstate work in being performed. In addition, non-economic pain-and-suffering claims can also be attached. The standard federal requirements allow pain-and-suffering damages to be eliminated as a protection devise for the employer in exchange for immediate beginning of benefits for the injured employee. This option could clearly potentially be eliminated by legislators because it puts employees at a severe disadvantage immediately following an injury.
Premium Increases
The workers compensation insurance claim fund is also in very bad financial condition because of the number of high-value claims settled, even though no pain-and-suffering damages are included. Workers who are seriously injured can opt for a lump sum settlement when there is little chance of them returning to their previous line of employment. This is especially common when the injury results in a total disability approval from any application pension or government benefit program. This option commonly results in much higher claim payouts, which eventually impacts the premium level that employers must pay. The premiums are re-evaluated each year and employers or insurance carriers have little option but to fight a claim in hopes of a reduced total payout. This means that participating employers are often not able to budget insurance premium resources accurately for the future, which can result in fewer participants and a smaller claim benefit pool.
The final result of this combination of problems is that the system is not working very well for employers or employees, and the state of New Jersey is now assessing what can be done to make the system better for both parties, along with the legal professionals that are assigned to represent these individuals when claims are highly contested or outright denied. It is entirely possible that New Jersey legislators will opt to make workers compensation insurance coverage mandatory for all employers within the state that are of a specific size in an effort to help both workers and employers while relieving the court dockets across the state.
Learn more about Workers’ Compensation Lawsuits.
