Navigating the Future of Workers' Compensation and Liability in the Wake of COVID-19

The Expanding Landscape of COVID-19 Insurance Disputes

As states gradually reopen their economies, the focus of coronavirus-related insurance litigation is shifting from business interruption coverage to workers' compensation and general liability policies. Industry experts predict a decade-long 'bloodbath' of litigation, as employers face potential lawsuits despite government directives to resume operations. The Trump administration and Republican lawmakers are pushing for an employer liability shield in the next round of pandemic relief legislation, but the Democratic party's stance remains uncertain.

California's Bold Move to Facilitate Workers' Compensation

California Governor Gavin Newsom has taken a significant step by signing an executive order that simplifies the process for essential workers to obtain workers' compensation benefits if they contract COVID-19. This order creates a rebuttable presumption that such workers contracted the virus on the job, shifting the burden of proof from employees to employers or insurers. While labor groups applaud this move, business organizations argue that it could destabilize the workers' compensation system by making businesses the 'safety net' for government responses to the pandemic.

The Financial Impact of COVID-19 on Workers' Compensation

The National Council on Compensation Insurance (NCCI) has analyzed the potential financial impact of COVID-19 on workers' compensation, estimating that if 10% of healthcare workers contract the virus and all claims are deemed compensable, loss costs could double or even triple in some states. In a worst-case scenario where 50% of workers are infected and 60% of claims are compensable, the increase in costs could reach $81.5 billion, more than two and a half times the current workers' compensation loss costs. However, if eligibility is limited to first responders and healthcare workers with only 5% infection rates, the cost increase would be significantly lower, at $2 billion.

For readers, it is crucial to stay informed about the evolving legal and financial landscape of workers' compensation and liability in the wake of COVID-19. Understanding the potential risks and protections available can help both employers and employees navigate this complex terrain more effectively.