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.
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.
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.
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.
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.
The following are some general risk management tips that can result in time and cost savings.
If these timely steps are followed, jurisdictional disputes should be resolved with a minimum of time, effort, and headaches!
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.