Five Traps in North Carolina Workers’ Compensation Law
By Kevin Bunn, Board Certified Specialist in Workers’ Compensation Law
Like every other practice area, workers’ compensation refuses to stay neatly within its prescribed boundaries. Practitioners in many different areas of law will occasionally run into an active or potential workers’ compensation claim. With that in mind, please consider the following workers’ compensation traps that could have big consequences for employers, injured workers, and even the attorneys who represent them.
Carefully consider the jurisdictional issues.
Most attorneys know that employers with three or more employees are covered by the Workers’ Compensation Act. But that is just the beginning of the jurisdictional analysis. Part-time workers count towards the three-employee threshold, but true independent contractors may not. Corporate officers are counted as employees but can opt out; however, members of LLC’s are not considered employees unless they opt in. Nonprofit corporations, including homeowner associations, have slightly different rules. A subcontractor’s employees are included under the act, without regard to the three-employee threshold under G.S. 97-19. Special rules for trucking operations are found in G.S. 97-19.1.
Timely report injuries to the workers’ compensation insurance carrier.
Employers frequently delay reporting accidents to their insurance carrier in the hope that the employee will just get better. Employers may even pay for a doctor visit or two. But insurance carriers do not like to be surprised by claims that happened months ago, even if the employer knew about the injury. Such claims are likely to be denied, delaying medical treatment and the return of a valuable employee to work. Filing a Form 18 with the Industrial Commission should trigger notice to the carrier. But when in doubt, notify the insurance carrier directly of the injury. Carrier information is here.
Double-check the Average Weekly Wage calculation.
Yes, this means getting payroll records and then doing the math. But because the Average Weekly Wage will likely be multiplied many times through the course of a claim, even a small miscalculation can make a big difference. Compare the AWW using the hierarchy of methods provided in G.S. 97-2(5). Include any per diem, housing allowance, overtime, and bonuses. Exclude allowable periods when the employee did not work.
Consider the effect of a settlement on other benefits.
Settling a workers’ compensation claim can have a significant—and perhaps irreversible—effect on other medical and cash benefits. These can include Social Security disability, Medicare, Medicaid, private short-term and long-term disability plans, as well as other private pension and welfare benefits. Cases involving local and state employees can be particularly challenging in this regard. Carefully allowing for the interaction of these potential benefits can lead to a settlement that is advantageous for all parties. Failing to do so can lead to serious financial consequences down the road, not only for the employee, but also for the employer and its insurance carrier.
Be careful with the timing in third-party cases.
Employees who are injured while on the job as a result of the negligence of a third party have a workers’ compensation claim as well as a separate personal injury claim. G.S. 97-10.2 grants the employer a lien against the proceeds of the third-party claim for amounts the employer pays in the workers’ compensation claim. The amount of the workers’ compensation lien is admissible in the personal injury trial. This lien can be valuable evidence of damages in a “bill v. paid” world. But if the employee settles the workers’ compensation claim and extracts a waiver of the lien from the employer, that evidence may go away. The employee has the right to a hearing before a superior court judge to have the lien reduced or even eliminated. As with many things, the timing matters a great deal here.
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