Insurance Coverage for COVID-19 Infection Claims by Employees Returning to Work

Insurance Coverage for COVID-19 Infection Claims by Employees Returning to Work

By David Gauntlett*

David A. Gauntlett is a principal of Gauntlett & Associates and represents policyholders in insurance coverage disputes regarding intellectual property, antitrust, and business tort claims, as well as in the underlying actions. He also serves as an expert witness on insurance coverage issues and represents policyholders and their counsel on a range of fee dispute issues with their insurers. Mr. Gauntlett can be reached at (949) 514-5662 or dag@gauntlettlaw.com. For more information, visit Gauntlett & Associates at www.gauntlettlaw.com.  

As the nation tentatively begins to take actions to re-open, employers must confront the rising threat of COVID-19 infections as their employees begin to return to work and ensure insurance coverage against COVID-19 infection claims are present.

Most States Cover COVID-19 Infection Under Their Workers’ Compensation Statutes

Some states have incorporated COVID-19 infection into their workers’ compensation coverage classified as an occupational disease[1] within their statues[2] while other states have enacted additional laws and policies to include COVID-19 in workers’ compensation coverage[3]. Under this definition, if an employee files a COVID-19 infection claim, the burden of proof is placed on the employee to establish their COVID-19 infection as an occupational disease.[4] Because the spread of COVID-19 can occur beyond an employee’s workplace, a workers’ compensation claim for COVID-19 infection can be more difficult to prove.

Employers are Liable for COVID-19 Infection Claims Not Covered under Workers’ Compensation

There are outlying states that do not incorporate COVID-19 infection into their workers’ compensation policies.[5] In these states, employers can face civil lawsuits if their employees’ become infected with COVID-19. Because some state’s workers’ compensation laws do not cover COVID-19 infections, employers run the risk of having no coverage against employee COVID-19 infection claims and facing civil suits[6].

In those states where COVID-19 is not covered under workers’ compensation insurance, the “exclusive remedy” provision within workers’ compensation policies may not apply allowing employees to pursue civil claims against their employers. Because these claims do not have to reach beyond the “exclusive remedy” of workers’ compensation policy, employees can state personal injury actions against their employer resulting from gross negligence.[7]

Additional Costs May Arise from COVID-19 Claims Where Employees Are Infected

There is no present end date for which claims for COVID-19 accident claims can be dated. In many cases, long-term effects of COVID-19 infection do not arise until months after recovery making investigation after the initial claim difficult to navigate and examine. According to surveys cited by the CDC in January 2021, 35-54% of individuals that experienced mild acute COVID-19 had persistent symptoms after 2 to 4 months.[8] Additionally, the National Council of Compensation Insurance explains that the Workers Compensation Insurance Organization (WCIO) has expanded coverage under Injury Code 82 to include vaccinations.[9] This will not only expand the length and reach of workers’ compensation claim investigations but also extend the liability of employers should they not have proper coverage against COVID claims from their employees.

As there is no limitation date to when workers’ compensation for COVID-19 infection can be dated, a retroactive premium adjustment may arise years after the policy insurance occurrence and the date of infection.[10] It is also possible additional retroactive premiums could be assessed against employers where payroll amounts are altered or classification status is changed due to new tasks taken on my employees to address the exigencies for COVID-19 and the necessary health standards and precautions.[11]

“Intentional-Wrongs” May Subject Employers to Liability for “Personal Injury” Claims

In states where COVID-19 infection are covered by worker’s compensation coverage a distinct liability for employers beyond workers’ compensation coverage may arise. The “exclusive remedy” provision[12] states that an employee cannot file a civil claim against their employer for an injury incurred during work. [13] This provision, however, does not necessarily ensure protection against COVID-19 infection claims. [14] A civil case for an employee’s COVID-19 infection claim can be stated against an employer based on a the grounds of an ‘intentional-wrong’.[15] Intentional-wrong exceptions are applied where an employer’s actions can be proven to be deliberate and intentional in meaning to hurt an employee. The intentional-wrong exception is a high bar to prove so an employer simply refusing to comply with basic safety protocols may not be strong enough.[16]

CGL Policies May Cover Assertions of Intentional Wrong, Yet to be Proven

Employers can seek other insurance policies that apply coverage for COVID-19 infection claims beyond workers’ compensation coverage. Commercial General Liability “(CGL)” policies may provide potential coverage for “bodily injury”. Absent a communicable disease exclusion, COVID-19 infection that occurs at the workplace can potentially be considered injury under the “bodily injury” provision of CGL policies.[17]

The state of mind necessary to prove an “intentional wrong” must trigger an “occurrence” under a CGL policy. Nonetheless assertions of bodily injury that evidence recklessness or gross negligence may fall within the scope of coverage so as to require a duty for defense yet still constitute an “occurrence.”[18]

Conclusion

COVID-19 is a constantly evolving threat to business owners and employers and as employees begin to return to work, employers must take the necessary steps to make sure themselves and their employees are protected. Of those steps, employers must evaluate their insurance coverage, seek counsel, and make sure they are prepared for re-opening during a pandemic.

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[1] See, e.g., Ind. Code Ann. § 22-3-7-10 (“A disease arising out of and in the course of employment. Ordinary diseases of life to which the general public is exposed outside of the employment shall not be compensable, except where such diseases follow as an incident of an occupational disease as defined in this section.”)

[2] Connecticut; Delaware; Louisiana; New Hampshire; New Jersey; New York; Pennsylvania; Rhode Island; South Dakota; Vermont; Virginia; Washington; and Wyoming

[3] Alaska, Arkansas, California, Connecticut, Illinois, Kentucky, Michigan, Minnesota, Missouri, New Hampshire, New Mexico, North Dakota, Utah, Vermont, Washington, Wisconsin, and Wyoming

[4] See, (January 4, 2021) Drake T. Land, Workplace COVID-19 Exposure and infection Claims. What Employers Need to Know.

[5]  Colorado; Florida; Georgia; Idaho; Iowa; Kansas; Montana; Nebraska; Nevada; North Carolina; North Dakota; Ohio; Oklahoma; Oregon; South Carolina; Tennessee; Texas; and West Virginia

[6] Valdez v. Himmelfarb, 144 Cal. App. 4th 1261, 1268 (2006) (“An employer’s failure to carry workers’ compensation insurance for its employees can result in criminal punishment, including …administrative penalties and a civil suit for damages by an injured employee”) [the court allowed the employee to amend his compliant to request the appropriate relief outside of a workers’ compensation claim as it was later learned the employer did not have workers’ compensation insurance]

[7] Le Pare Cmty. Ass'n v·. Workers' Comp. Appeals Bd., 110 Cal. App. 4th 1161, 1172 (2003) (“…[I]f an employee can prove that there is no coverage under their employer’s workers’ compensation insurance policy, an employee may file a personal injury action against the employer as a result of employer negligence”) [The appeals court held that the civil action for negligence against an illegally uninsured employer under § 3706, was not based on the same cause of action as the application for workers' compensation and that the employee is able to pursue both actions.]

[8] See, (April, 21, 2021) Diana Tsudik, Long-Haul COVID-19 and WC

[9] See, (April 5, 2021) COVID-19 and Workers Compensation: What You Need to Know

[10] Id.

[11] Id.

[12] See, e.g., Cal. Lab. Code. § 3602(a)

[13] Corby Kuciemba, et al v. Victory Woodworks, Inc., Case. No. 20-cv-9355-MMC, at *1-3 (U.S. Dist. N. Dist. Cal. May 10, 2021) [Wife of employee sues husband’s employer claiming her husband (employee) contracted COVID-19 at work causing her to get infected as well. Court dismissed case based on exclusivity clause of workers’ compensation policy in California.]

[14]See,  (Accessed: Sept. 1, 2021) E.A. Gjelten, Can You Sue Your Employer If You Were Exposed to COVID-19 at Work?

[15] See, (May 4, 2020) Gibson, Dunn & Crutcher, LLP, Employer Liability and Defenses for Suit for COVID-19-Related Exposures in the Workplace

[16] Acevedo v. Consolidated Edison Co., 189 A.D.2d 497, 499 (April 22, 1993)  [Employees were exposed to asbestos after an explosion of a steam pipe. The court ruled that while the employer’s conduct may have risen to the level of gross negligence, it was not willfully intended to cause harm to the employees.]

[17] See, (April 2, 2020) Joseph M. Saka, Insurance Coverage in the Time of COVID-19

[18] Horace Mann Ins. Co. v. Barbara B., 4 Cal. 4th 1076, 1084 (March 11, 1993) (“an insurer has a duty to defend the entire third party action if any claim encompassed within it potentially may be covered …see also: State Farm Fire & Casualty Co. v. Eddy (1990) 218 Cal.App.3d 958, 965 [267 Cal.Rptr. 379] ["[A]lthough a determination on the merits might show that there was intentional conduct . . . the [underlying] complaint alleged both negligent and intentional torts; therefore, State Farm must defend . . .."].) [The court found that the insurer remained under a duty to defend the underlying teacher misconduct action because the harm demonstrated factual basis for insurer's potential liability under an educator's liability policy.]