A growing number of employers are opting out of state workers’ compensation systems. Employees injured on the job then can only rely on ERISA – the Employee Retirement Income Security Act – to address a workplace injury. Employers can only opt-out of state regulated workers’ compensation systems if the state legislature permits them to do so. Two states that currently allow employers to opt-out of state regulated workers’ compensation systems are Texas and Oklahoma. Examine the pros and cons of opt-out worker’s compensation systems from the perspective of the injured worker.
Workers’ Compensation Laws in Nevada: A Brief Overview
When a worker is injured on the job or develops an occupational disease, they apply for benefits under Nevada’s workers’ compensation laws. The benefits awarded may include coverage of medical treatment, compensation for wages (TTD), permanent partial disability (PPD), permanent total disability (PTD), vocational rehabilitation, payment to dependents in the event of the worker’s death, and other claims related expenses. The process from start to finish is handled by Nevada’s Division of Industrial Relations.
ERISA: A Brief Overview
Enacted in 1974, the federal statute ERISA mostly applies to pension plans, health plans, and other workplace benefits. ERISA may apply in cases where the employer has opted-out of the state workers’ compensation system but only if a federal question is applicable and the issue is not solely related to the workers’ compensation claim. ERISA purposefully excludes reviewing state worker’s compensation issues. ERISA challenges the aggrieved party to demonstrate the employer’s decision was arbitrary and capricious. If the injured worker is unable to prove his or her claim, they lose and may be on the hook for the employer’s legal fees. That famous “day in court” fantasy is never realized.
Why Employers Opt-Out of State Workers’ Compensation Systems
Employers’ embrace of opt-out alternatives to state regulated workers’ compensation plans is easy to understand. Proponents of employers who opt-out claim state regulated workers’ compensation systems result in expensive and long-term administration of benefits, costly litigation, and delays in medical treatment for the injured worker. The key words here are expensive, costly, and delay. By opting-out of state regulated workers’ compensation systems, especially if the employer is national and has job sites in more than one state, the employer saves lots of money.
Why the Injured Worker Loses Anyway
Stuck in this triangle is the injured worker. When the employer takes over the administration of a workers’ compensation claim from the state, the injured worker has limited options available when a disagreement arises. The employer sponsored workers’ compensation plan has a claim process, a review process, and an appeal process. On paper, the employer plan looks like any other state-sponsored plan. In reality, however, injured workers’ claims are met with skepticism and disbelief. The employer, people who work for them or get paid by them, are the judge, jury, and payer. All appearances of a neutral decision maker and a fair airing out of a claim may be ripped off the wall and thrown out of the window.
The employer may believe the injured worker is trying to scam the system. In some instances the employer sets out to prove as their defense that the accident never happened. If the accident never happened, the issue of lost compensation, medical treatment, and future medical treatment are irrelevant and are never decided by anyone.
Once the employer makes a decision on the injured worker's’ claim, all benefits for the employee are cut off. An internal appeals process is available to the injured worker who believes the employer’s determination is incorrect. But the fact finder or hearings officer continues to be partial to the employer. Some employer workers’ compensation plans want to ensure that the injured worker cannot take his or her case to a state or federal court and ask a judge to review the employer’s decision by including a mandatory arbitration clause – another closed adjudication system with players on the employer’s payroll.
The employee, the aggrieved and injured party, remains sick and unemployed and may lose transportation or housing while the medical bills pile up with diminished job prospects because of the work related injury.
ASK FOR HELP
If a worker believes they have been treated unfairly in a workers’ compensation opt-out plan, they should contact one of the Labor Department’s Benefits Advisors at www.askebsa.dol.gov or via telephone at 1 (866) 444-ERISA.