If you own a business in Nevada (or any other state) and have employees, you are statutorily required to purchase workers compensation insurance. Prior to 2001, Nevada was a “monopolistic” state, meaning that workers compensation coverage was provided by a government-run program. In Nevada, it was known as SIIS (State Industrial Insurance System). The SIIS system was hopelessly mismanaged and was paying claims far in excess of revenue collected. The Nevada legislature tried to fix some of the issues in 1997 but soon realized that privatization was the best solution. As a result of privatization and competition, overall rates are lower today than they were 10 years ago and Nevada business owners can choose to purchase workers compensation from dozens of private insurance companies or self-insured groups.
The workers compensation policy is composed of two parts: workers compensation and employers liability. In this article, we will examine both coverage parts and the protection afforded to employers that purchase workers compensation coverage.
Coverage Part One
In Nevada, all insurance companies use a standardized workers compensation policy form issued by NCCI (National Council on Compensation Insurance). The policy contains two coverage parts (cleverly named Part I and Part II) that spell out the terms of coverage, how benefits are paid, and to whom they are payable. Coverage Part one is entitled “Workers Compensation Insurance” and pays for disease, injury or death to your employees caused by a condition of their employment. There is no coverage limit specified for Part I, only that benefits are paid as required by statute (in Nevada, NRS 616 section a, b, c).
Coverage Part Two
Also known as Employers Liability, coverage part two protects your business against lawsuits due to employment-related injuries or illnesses, for damages not covered by statute (payable under coverage part one). The lawsuits can come from the employee, his/her family members, relatives, and third parties. Employees who are injured due to an employer’s negligence can pursue their employer for compensation even in cases where the business goes into liquidation. This is additional coverage included in Workers’ Compensation policies and does not reduce the amount of coverage available under part one. Do not confuse employers liability with “employment practices liability“, the latter of which pays for claims related to sexual harassment, wrongful termination, discrimination, etc.
Nevada and most other states provide statutory protection for employers who purchase workers compensation insurance. Generally speaking, an employee does not have the legal right to claim additional damages against their employer, unless there is a proof of gross negligence or other unique circumstances such as willful intent. This means that employees must accept the benefits paid by workers compensation as their sole remedy or sole source of compensation. Exclusive remedy is a strong concept that has held up to repeated legal challenges and offers a strong incentive for employers to purchase coverage. Remember also that the converse is also true: if an employer does not purchase workers compensation coverage, the protection offered by exclusive remedy is forfeit.
Locations and Other States
Workers compensation coverage is not location specific, meaning the injury can occur anywhere within the policy coverage territory, typically a single state listed on the policy declarations. Each state, however, has slightly different laws that govern how benefits are paid and how much compensation is owed to injured employees. To accommodate the differences between states, a workers compensation policy contains a section called “Other States” and “Specified States”. These states are listed on the policy declarations under section 3.A (specified states) and 3.C. (other states). A “specified state” is one in which the employer has on-going or expected operations during the policy period, meaning employees are located in or living within that state and working for the employer. The “other states” listed in 3.C. are those in which the employer does not have on-going operations and does not expect to within the policy period. An example would be employees who travel to another state to attend a seminar, convention, or classes. The bottom line is that employers need to notify their workers compensation provider of any operations outside of their home state to ensure coverage applies and benefits are paid correctly.
Employers Duties (before and after an injury occurs)
Employers have a legal duty to create a safe work environment for all employees. This means providing the necessary safety equipment, rules, training and screening to ensure the workplace is as safe as reasonably possible. Employers that fail to meet this obligation can, potentially, expose themselves to a lawsuit that pierces the protection afforded by exclusive remedy laws. In addition, if the cause of the injury is found to an intentional, negligent or willful act of the employer, coverage may be excluded from employers liability (part two).
After an injury occurs, employers must provide immediate medical attention to the injured employee. This can be first aid at the scene of the injury or transportation to the nearest medical center. The employer must notify the insurance company and provide all relevant information about the injured worker, nature of the injury, witness and other details. Certain claim forms, such as a C1, C3 and C4 will need to be completed by the employer and the injured worker. OSHA forms, such as the 300 log may also need to be completed but are not required by the insurance company.
In most cases, the employee does not have the right to choose any physician or chiropractor for follow-up care. In Nevada, the treatment provider must be a member of the Panel of Treating Physicians and Chiropractors and most insurers will further assign care to an MCO (managed care organization) to handle payment of benefits.
For additional information about workers compensation please visit the website of the Nevada Division of Industrial Relations and review the Employer Information section. As always, contact us with any questions or comments.