Jurisdiction in Workers Compensation Cases
September 2000
When it comes to workers compensation benefits,
some states are much more generous than others. Learn how jurisdiction is determined,
what problems can arise when more than one state is involved, and risk management
tips for saving time and money.
by Jim
Pocius
Marshall, Dennehey,
Warner, Coleman & Goggin
When it comes to workers compensation benefits, some states are much more
generous than others. National employers with multistate operations should always
first look to individual state statutes to determine which state will have jurisdiction
in their workers compensation matters. This is important initially because different
states provide a widely diverse amount of benefits in workers compensation matters.
For example, Pennsylvania is the fourth most generous state with regard to
workers compensation benefits. Pennsylvania bases payments on work loss and
earning capacity. If a claimant has no earning capacity, that claimant can collect
total disability benefits for a lifetime. New Jersey's system, on the other
hand, pays the claimant for temporary total disability and then pays a lump-sum
benefit for partial total disability based on a schedule of whole body loss
(5 percent of the body equals a set sum).
Jurisdiction also determines which state law applies concerning whether or
not workers compensation is the exclusive remedy and whether or not the employer
retains immunity from civil suit. The employer's subrogation interests are also
determined by which state law applies in each case.
How Is Jurisdiction Determined?
Under our constitutional system, each state is still considered sovereign.
Therefore, each state controls the law within its boundaries. However, most
states also try to apply their laws outside their borders if they have the most
contact with the facts of the case. In workers compensation matters, states
will exercise their jurisdiction in the following three general ways.
- All states will apply their jurisdiction if the injury happens within
their borders. For instance, if a New York employee is traveling to Michigan
and suffers an injury in Michigan, Michigan will still apply its workers
compensation laws to that injury.
- Forty-three states will apply jurisdiction if the contract of employment
was made within the state. For example, Harry, a traveling salesman, signed
his contract of employment in North Dakota. His sales route necessitates
travel to Atlanta, Georgia, where he suffers an injury. North Dakota will
still apply its workers compensation laws to that injury.
- Forty states will apply jurisdiction if the employment is principally
located in that state and the employee is injured in another state. For
example, consider the case of Marie, a construction worker, who works principally
in Louisiana. Her company gets a construction contract in Texas, and she
goes to Texas for a day to work on that project. During that day she is
injured. Louisiana would still apply its jurisdiction.
The only exception to these examples of state jurisdiction is that 15 states
will not apply their law to out-of-state employers with insurance under another
state law. However, these states are in the minority.
Concurrent Jurisdiction Problems
From the examples above, it is obvious that there are some conflicts in these
jurisdictions. For instance, if someone is injured in Pennsylvania but whose
contract of employment was signed in New York, which state's law would apply?
The answer is that both states' laws can apply.
The claimant can actually elect which state's benefits are best and proceed
in that state. Further, a claimant can usually proceed in the second state after
being paid benefits in the first state or file two claims, one in each state.
While this sounds complicated, most states will agree to offset benefits. Thus,
in our example, the claimant will not be paid full benefits in both Pennsylvania
and New York.
Jurisdiction can be confusing, and usually advice of legal counsel is necessary
to determine whether jurisdiction will lie in a particular state. However, employers
must be attentive and try to retain jurisdiction in the state most favorable
to the employer, if possible. In addition, the employer must be aware of the
offset provisions and benefit requirements in order to make the proper legal
defenses in jurisdictional disputes.
Cost-Saving Tips for Risk Management
The following are some general risk management tips that can result in time
and cost savings.
- As quickly as possible, determine the facts and location of the work
injury.
- Check the state law from the location of the injury to determine whether
or not that law will encompass all injuries within that state.
- Check any employment contracts.
- Determine where the employee spent the most amount of his/her time (if
this was a single trip to another state, jurisdiction will lie in the state
where the claimant was employed for the majority of the time).
- Retain legal counsel to evaluate the different facts affecting jurisdiction
and raise the correct legal defenses.
If these timely steps are followed, jurisdictional disputes should be resolved
with a minimum of time, effort, and headaches!
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