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Workers' Comp Claimants Can Recover in More Than One State

LAWYERS WEEKLY USA
September 07, 1998
By Sylvia Hsieh

An injured worker is often covered by more than one state's workers' comp scheme, and may be able to get a much better recovery by shopping around for the best coverage, experts tell Lawyers Weekly USA.

This may be true if:

A worker's company is headquartered in a different state from the one in which he or she regularly works.
The worker was hired in a different state.
The worker lives in a different state.
The worker is injured while working in a different state. (This often happens with salespeople, truckers, construction workers, contractors, delivery workers, airline crews and others.)

Lawyers are being "shortsighted" if they don't look into what other states offer, says Lex Larson of Durham, N.C., an expert on workers' comp who has authored several treatises.

"You can really get into trouble if you're not aware of the choices and make an uninformed decision. You may end up choosing the state with the lowest benefits and the worst subrogation rights," says Rod Rehm of Lincoln, Neb., who represents employees.

Some companies have begun putting language in their employment contracts attempting to limit jurisdiction to one or more states.

State workers' comp laws differ widely in the amount of benefits, types of injuries covered and other restrictions, lawyers say. And many states have recently amended their workers' comp statutes, sharpening the differences between coverage.

Jurisdiction

Jurisdictional requirements vary from state to state, but are generally based on:

The place of injury;
Where the worker was hired;
The company's headquarters;
Where the worker lives; or
Where the employment relationship is carried out.

Depending on the state, any one of these factors may be enough to get jurisdiction.

The employee's home state will usually take jurisdiction, because the state has an interest in protecting its residents, says Michael Rucka of Salinas, Calif., who chairs the Workplace Injury Litigation Group, a plaintiffs' organization.

The worker also usually has the option of filing where the injury occurred, lawyers say. But this isn't always true.

For example, Florida and Colorado cover any employee who is injured in their state, even if the worker doesn't live there. But a worker who is injured in Rhode Island won't be covered unless the worker was hired in Rhode Island.

States where jurisdiction is based on "contract of hire" have generally held that a "hiring" is where the last act completing the contract is performed.

However, what this means depends on the facts.

"Is it showing up at work, filling out the paperwork, or when the employee says 'I accept'?" asks Deborah Kohl of Fall River, Mass.

"If the offer is made on the phone in Missouri and the employee accepts in Massachusetts, that's going to be an issue of fact where the contract was completed," notes John Boyd of Independence, Mo.

A court may find that the contract was completed in State X where the employer said 'You're hired,' or in State Y where the employee showed up for work, or in State Z where the worker signed an employee waiver form, adds Boyd.

Most states will require more of a connection to the state than merely the contract of hire, notes Larson.

However, if the company's main operation is in a certain state, this is usually enough to get jurisdiction even if the injury happens elsewhere, he adds.

Comparing Benefits

The level and types of benefits differ dramatically from state to state, experts say.

Some lawyers recommend creating a chart where more than one state's laws apply.

This is because the weekly benefits may be greater in one state, but another state might pay for a longer period of time. Some states cap benefits, while others -- such as New York -- provide unlimited medical coverage and wage replacement.

The general rule is that a worker can't get a double recovery by collecting from more than one state, but can offset the lower recovery against a higher recovery in another state.

So a worker who collects $10,000 from State A can go to State B, where the benefits total $15,000, to collect the remaining $5,000.

"It used to be you had to decide which state is the right state. But now you can have two, three, even four different possible states to go for a claim," says Larson.

However, some states bar a workers' comp claim if the worker is covered by another state, and some states say that if you make a claim in their state, you can't apply in another state, says Rehm.

Plaintiffs' lawyers should also compare each state to make sure the employee and the injury are covered.

Some states exempt certain classes of employees, such as farm workers, says Rucka.

Other states don't cover certain types of injuries, such as repetitive motion injuries, heart disease or psychiatric injuries, he adds.

"If you have carpal tunnel syndrome, Virginia is an extremely bad place to file. If you have a choice of going to North Carolina instead of Virginia, you should file there because North Carolina routinely covers carpal tunnel," says Larson.

The choice of state will also depend on the duration of the injury and whether the worker will have a permanent disability.

California, for example, requires an employer to retrain a worker who can't return to his or her old job, while other states don't offer rehabilitation at all.

In Illinois, a worker with a permanent disability can opt either to be retrained and receive minimal benefits or to continue working at a lower-paying job and collect the difference in wages, says Boyd.

"If the injury isn't a large disability, I'd look to the weekly check. But if my client needs a lot of services, or will be disabled for a long time, I'd weigh other factors, such as vocational rehab," says Kohl.

Some states are more generous than others in covering certain procedures, such as surgery for loss of function or disfigurement, she adds.

It also may be more difficult in some states to prove that an injury was "work-related."

For example, Oregon recently amended its workers' comp statute to limit coverage only to injuries where a work-related incident is a "major contributing cause," says Scott Meiklejohn of Denver.

This means a trucker who hurts his back while loading a shipment may be denied coverage if the treating doctor says the loading wasn't more than 50% to blame for the back injury, he adds.

But the same worker would be fully covered in Colorado, as long as he could show that the loading had any causal relation to the injury, says Meiklejohn.

Some states also limit the worker's choice of doctor by allowing the employer to choose the treating doctor.

"If the worker is concerned about choosing his own doctor, that would be another reason to file in one state instead of another," says Larson.

Another issue is statutes of limitations, which vary widely in notice and filing requirements, ranging from less than one year to four years.

"If a client comes to you late, you want to see if you can go to another state," says Bart Ecker of Hazleton, Pa.

Finally, the choice of state may also depend on what's most practical, such as where the doctors are located and where it's convenient to litigate.

Subrogation Rules

States have different rules on the worker's right to bring a claim against a third party and the employer's subrogation rights against the worker's claim.

"It's a minefield. It makes a big difference for severely injured clients," says Rehm.

Some states give the employer or the insurer the first opportunity to sue a third party, and only after that can the employee sue, says Jack B. Hood of Macon, Ga., the author of several books on workers' comp.

"It's a huge practical consideration. You may opt for the state with lower comp benefits if you have a good third party claim, because in the long run you'll recover more," says Rehm.

In some states, an employer's comparative fault can be used to reduce its lien against the worker's recovery in a third party suit.

In Kansas, for example, an employer who pays $100,000 in benefits can only recoup $50,000 if it's found to be 50% at fault in the third party suit.

But if the worker filed in Nebraska, the employer could get back the full amount.

Therefore, if a worker sued a third party and recovered $300,000, the employer would have a lien for $100,000 under Nebraska law, but only $50,000 under Kansas law.

Although no state allows a worker to sue an employer directly for ordinary negligence, New York allows a manufacturer who is sued by an employee to implead the employer and argue that the employer contributed to the injury, says Martin Minkowitz of New York.

For example, if a worker sues the manufacturer of a machine for damaging his hand, the manufacturer can implead the employer, claiming that the injury was caused not by a defect, but because the employer removed a safety device.

This would be important where a manufacturer did not have a deep enough pocket, says Minkowitz. "If a worker has a horrible injury and needs extraordinary care, the employee could sue the manufacturer which may be good only for $1 million. But if the manufacturer can bring the employer in, the recovery could expand to $5 to 10 million," says Minkowitz.

Is the Employer Covered?

One problem with filing in several states is that even if the worker has a choice, the employer may not be covered everywhere.

Most states require companies to have workers' comp insurance, but some don't. Texas, for example, has an opt-out provision, so many Texas employers are uninsured, says Rucka.

Companies whose employees travel around the country, such as airline and trucking companies, usually have "all-states" policies, says Robert Dietz of Orlando, Fla.

But a company whose employees normally work in-state are often uninsured when a worker leaves the state and gets hurt.

"If a construction company that only has a policy in Georgia sends a crew to Florida where a worker is injured and the plaintiff files in Florida, the plaintiff won't have a workers' comp remedy," says Dietz.

However, if the employer's negligence contributed to the injury, "the plaintiff's attorney then has a choice between filing a workers' comp claim in Georgia or a tort suit in Florida," Dietz notes.

Federal Law

Certain workers may be covered under the federal Longshore and Harbor Workers' Compensation Act, including dock workers, workers involved in ship repair or building piers and marinas, and some civilians who work on military bases.

Many workers' comp lawyers aren't aware that there may be concurrent jurisdiction under the federal Act, says Steven Birnbaum of San Francisco, who chairs ATLA's workers' comp section.

As a result, workers may get stuck with state benefits that are lower, he says.

Contracting Around It

Employers can try to contract to have workers' comp claims brought in a certain state or states.

Companies with employees who regularly travel, such as trucking and airline companies, often put a provision in their employment contracts limiting workers' comp claims to one or more states, lawyers say.

In some jurisdictions, such agreements are enforceable. But other states won't allow it.

"If it looks like the employer's waiving the employee's rights in order to restrict benefits, it will be void," says James Smith of Tampa, Fla., who represents employers and insurers.