The Connecticut General Assembly
OFFICE OF LEGISLATIVE RESEARCH
March 5, 1997 97-R-0430
FROM: Judith S. Lohman, Principal Analyst
RE: Connecticut Workers' Compensation System
You asked for a synopsis of the state's workers' compensation law and an overview of how the system works.
Workers' compensation is governed not just by statute but also by case law and administrative regulations and guidelines. It is impossible to cover all parts of the workers' compensation law in detail in a short report because of the sheer volume of case law and specialized commentary that the 80-year-old law has generated. Not all areas are addressed in this report. For example, some provisions of the state law make certain workers' compensation provisions apply differently to state employees. We have written other reports about workers' compensation and would be happy to expand on any area upon request. Please do not hesitate to contact us if you would like more information on a particular issue.
The Connecticut Workers' Compensation Act (Chapter 568 of the General Statutes) was passed in 1913. It requires employers to compensate their employees who suffer work-related injuries or occupational diseases, regardless of who is at fault. In return for receiving compensation on a no-fault basis, employees are prohibited (except in very limited circumstances) from suing their employers or fellow employees for damages arising from work-related injuries or accidents.
Workers' compensation benefits and the administration of the workers' compensation system were extensively revised in 1991 (PA 91-339) and in 1993 (PA 93-228). A summary of the changes in the law between 1991 and 1995 may be found in the attached report (95-R-1572). Most of the 1991 changes took effect on October 1, 1991 and most of the 1993 changes took effect on July 1, 1993. The changes in those laws apply to injuries that occur on or after those dates. Thus, many claimants are still receiving benefits specified in earlier versions of the law and some claims may yet be filed that will still be covered by the previous law. This is because workers have one year from the date of injury and three years from the date of first manifestation of an occupational disease to file a claim for workers' compensation.
Unless the General Assembly explicitly states otherwise, changes in the workers' compensation law are not retroactive. The benefits an injured employee is entitled to are those specified in the law that was in effect on the date he was injured. This way of applying the law is known as the “date of injury rule.” The operation of this rule means that changes in benefit levels take time to work their way through the system not only because claims take time to adjudicate but also because payments for particular claims can last many years.
ELIGIBILITY AND COVERED INJURIES
In order to receive workers' compensation benefits, an injured claimant must be a part of an employer-employee relationship and must be a covered employee. The law defines an employee as anyone who works under any contract of service or apprenticeship with an employer. The law explicitly includes certain people, such as volunteer firefighters and members of the Genera Assembly. It also allows sole proprietors and business partners to be covered voluntarily.
The workers' compensation law does not cover independent contractors (not defined in the law but determined by workers' compensation commissioners on a case-by-case basis); outworkers (those to whom materials are given and who take them away for processing on premises outside the management's control); casual workers who are temporarily employed for purposes other than the employer's trade or business; members of the employer's family who live in his house if the employer's workers' compensation insurance premium excludes the family member; domestic service workers regularly employed in private homes less than 26 hours per week; corporate officers who choose to be excluded; and students enrolled in supervised, community-based, career education programs approved by the State Board of Education.
Certain other employees are not covered by the state law because they are covered instead by various federal laws. These include maritime workers and sailors injured on the high seas or navigable waters of the United States; maritime workers, such as harbor workers, shipbuilders, and longshoremen, injured on shore while not part of ship crews; federal employees; and railroad workers. An example of a large group of Connecticut workers covered by one of these federal laws are the workers at Electric Boat, who fall under the Longshoremen's and Harbor Workers' Act.
Under the workers' compensation law, an “employer” is any person, company, or voluntary association that habitually and customarily uses the services of one or more employees for pay. The state, towns, and “any public corporation” are also employers.
An employee is entitled to compensation for any personal injury that “arises out of and in the course of his employment.” The meaning of this phrase has been interpreted and reinterpreted endlessly in 80 years of cases and is now deemed to cover a wide range of conditions, including psychological and emotional injuries. (Mental and emotional injuries that occur after June 30, 1993 are compensable only if they arise out of a physical injury.) In general, the law covers injuries that occur within the period of employment, at a place where the employee may reasonably be, and while the employee is reasonably fulfilling his employment duties or doing something incidental to his employment.
Employees are not entitled to compensation for personal injuries caused by their own willful and serious misconduct or by their own intoxication.
Workers' compensation benefits fall into two categories: (1) payments for medical expenses and treatment of a work-related injury or disease, and (2) benefits that compensate an injured employee for lost earnings and for any permanent disability. The latter benefits are called wage-loss and indemnity benefits.
The level and duration of wage-loss and indemnity benefits varies depending on the degree of disability (total or partial) and whether the disability is temporary or permanent. Total disability benefits are paid for as long the total disability lasts. They are subject to a higher maximum and claimants injured before July 1, 1993 also receive annual cost of living adjustments.
Partial disability benefits vary according to which body part is affected and the degree of permanent disability. Benefits are paid for a set number of weeks depending on the specific body part that is disabled. The schedule of benefits is specified in the workers' compensation law. In certain cases, workers with partial disabilities whose earning power is reduced may receive a temporary benefit tied to the wage differential between their pre- and post-injury jobs.
A claimant's compensation rate is, in most cases, based on his average weekly earnings for the 52 weeks immediately before the injury or illness. Special rules apply when the claimant did not work or did not work steadily in the 52 weeks before being hurt. Benefits are paid weekly and are subject to statutory maximums and minimums. Table 1 below summarizes the major benefits available under the Workers' Compensation Act.
Table 1: Connecticut Workers' Compensation Benefits
MEDICAL: payment for medical treatment for occupational injury or illness.
Payment according to a medical fee schedule set by the Workers' Compensation Commission chairman or, if employer has an approved medical plan, the amount the treatment costs under the plan.
As long as needed
TOTAL DISABILITY: wage replacement
75% of claimant's average weekly net wage (gross pay minus Social Security and state and federal income taxes) for the 52 weeks before the injury. 1
Maximum: 150% of state average weekly wage (as of 10/1/96, $678 per week)
Minimum: 20% of maximum but not more than 75% of claimant's average net weekly wage.
Begins after third day of disability and continues until able to return to work or until maximum medical improvement. 2
Duration of disability
DEATH: wage replacement paid to beneficiary(ies) if death from work-related cause.
Same as total disability plus $4,000 burial allowance.
Same as total disability except surviving spouse minimum benefit: $20 per week.
For spouse's life or until remarriage. For dependent children until 18 (22 if full-time student) or for life if incapable of earning wages.
PERMANENT PARTIAL (SPECIFIC INDEMNITY): Compensation for permanent loss of body part or function as determined by physician; paid at point of maximum medical improvement.
Weekly benefit rate as calculated for total disability multiplied by number of weeks allowed for loss of the body part or function (partial loss benefit is proportional).
Maximum: 100% of state average production wage ($589 per week as of 10/1/96)
Minimum: $20 per week
Varies according to body part or function lost and degree of permanent disability. Often paid in a lump sum.
WAGE DIFFERENTIAL BENEFIT: paid when a claimant earns less because of a partial disability.
75% of difference between net weekly wage earned before injury and net wage claimant can earn after.
Same as Permanent Partial
520 weeks or, if paid after employee receives permanent partial benefit, limited to duration of permanent partial award.
SCARRING AND DISFIGUREMENT: compensation for permanent and significant scars from injury or related surgery on the head, fact or neck, or on a part of the body that affects employability.
Same as permanent partial multiplied by number of weeks commissioner allows under statutory criteria.
Same as permanent partial; not to exceed weekly rate times 208 weeks.
Usually a one-time payment. Must wait until one year after injury.
1 Total disability benefit is 100% of net average weekly wage when an employee is injured or becomes ill because his employer violated federal or state occupational health and safety regulations. In addition, certain state employees in hazardous duty jobs receive a benefit equall to 100% of their base weekly pay for up to 260 weeks if they are injured as a direct result of the special hazards inherent in their duties.
2 If the period of total disability lasts more than seven days, the benefit payment is retroactive to the first day of disability.
The workers' compensation law requires employers to furnish all necessary medical and rehabilitative services to an injured employee. This duty encompasses not only an attending physician but also whatever medical treatment and diagnostic procedures the physician deems reasonable or necessary. Among the medical procedures and practitioners that can be covered are nurses, dentists, podiatrists, psychiatrists, osteopaths, naturopaths, chiropractors, masseuses, medicine, x-rays, and treatment by prayer or spiritual means. Employers are also required to provide prosthetic devices and artificial aids for work-related injuries.
The law allows the employee to choose his own physician, within limits, but if he does not or cannot do so, the employer may choose one for him. Once having chosen a physician, the employee must have the commissioner's approval before changing doctors. The law requires the medical treatment furnished to be adequate and reasonably accessible.
Employees must cooperate in their own treatment and accept treatment. An employee receiving compensation is also required to submit to an examination by a physician or practitioner chosen by the employer or the commissioner, whenever the employer or the workers' compensation commissioner reasonably requests it. Refusal leads to suspension of benefits.
Although the employee may choose his own doctor, the law also allows employers to set up medical plans with a particular group of medical providers to treat job-related injuries. These plans, which are essentially preferred provider organizations, must be approved by the Workers' Compensation Commission chairman, both before they go into effect and every two years thereafter. Injured employees covered by such plans are required to get medical treatment only from plan doctors.
Workers' compensation benefits are not subject to federal or state income taxes. But benefits may offset or be offset by other benefits that claimants receive. Among these are public assistance, unemployment compensation benefits, Social Security benefits, and state and municipal disability retirement benefits. In addition, an employer who pays or is obligated to pay workers' compensation benefits is entitled to recover the cost of those benefits from any judgements or settlements claimants receive from damage suits against third parties that contributed to their injuries (see EXCLUSIVE REMEDY below).
Benefits are paid by employers, who are required by law to insure against their workers' compensation liability. Employers may either self-insure or buy workers' compensation coverage from insurance carriers. Most Connecticut employers buy workers' compensation insurance but the state, some municipalities, and many large employers self-insure. Before an employer is permitted to self-insure, it must provide a certificate of solvency to the Workers' Compensation Commission chairman proving that it is able to pay any claims.
Besides employers, the other major payor of workers' compensation benefits is the state-administered Second Injury Fund. The fund, which is financed by assessments on self-insured employers and workers' compensation insurers, pays workers' compensation benefits, under certain conditions, to previously disabled employees, employees whose employers are not insured, and in various special circumstances. The fund was closed to new claims from previously disabled workers as of July 1, 1995. (The Second Injury Fund is described more fully below.)
Suits Against Employers and Fellow Employees
The workers' compensation law is an employee's exclusive remedy against his employer and his fellow employees for all personal injuries that arise out of and in the course of employment. This means that, in general, an employee cannot sue his employer or a fellow employee over a work-related injury. There are only a few, very narrow, exceptions to this rule.
An injured employee can sue his follow employee if his injury was caused by the fellow employee's willful or malicious act or by the fellow employee's negligent operation of a motor vehicle. He can sue his employer if the employer's willful or serious misconduct caused the injury or if the employer discriminates or retaliates against him for filing a workers' compensation claim. Courts have kept the willful and serious misconduct exception very narrow by limiting it only to cases where the employer's intentional or deliberate act was actually designed to cause the injury that resulted. In practical terms, this limits the exception to cases of assault. In addition, an employee may sue his employer for negligence that caused his injury if the employer is uninsured.
Suits Against Third Parties
Injured employees are allowed to sue parties other than their employers and fellow employees if the third party's negligence contributed to their injuries. An example of such a third party might be the maker of a defective machine or the driver of a car whose negligence caused or contributed to the employee's injury. Employers can either join the employee's suit against the third party or proceed against the third party on their own. The employer's damages are limited to the workers' compensation benefits he paid or is obligated to pay to the employee. The employer's damages are deducted first from any amount recovered before the balance of the settlement is paid to the employee.
A contractor's employee may sue his so-called “principal employer” (the person who hires the contractor to perform work which is not part of his regular business) if the principal employer is not paying the injured employee's workers' compensation benefits. An example of such a principal employer might be a company that contracts for security guards to protect its premises. Principal employers are technically liable to pay workers' compensation benefits to their contractors' employees if the contractor is not insured or fails to pay. But since 1959, the Second Injury Fund has been required to pay benefits to claimants whose employers are uninsured or fail to pay, so the principal employer is almost never actually called upon to pay.
WORKERS' COMPENSATION COMMISSION
The workers' compensation law is administered by 16 workers' compensation commissioners, including one who serves as commission chairman. Commissioners are appointed by the governor and confirmed by the General Assembly. Each commissioner serves a five-year term. The chairman serves as chairman at the governor's pleasure. The commissioners have direct responsibility for adjudicating claims and insuring that injured workers receive the medical, wage, and indemnity benefits to which they are entitled in a fair and timely way.
The commission chairman, acting with the help of a nine-member Workers' Compensation Advisory Board made up of employer and employee representatives, is responsible for adopting policies, rules, and procedures needed to carry out the law. The chairman manages the claims processing and central and district office support operations. The chairman also prepares the Workers' Compensation Commission's budget and various statistical reports with the assistance of a central office staff.
The chairman oversees three divisions within the Workers' Compensation Commission: one that provides outreach and information to employers, employees, and medical practitioners about the workers' compensation system and workplace safety; one that provides retraining and reemployment services to injured employees; and the Compensation Review Board, a three-member appeals board that reviews the decisions of individual commissioners at the request of aggrieved parties.
The commission has eight district offices, each with an assigned commissioner, but all commissioners have statewide jurisdiction and the chairman may shift them from one office to another to meet workload demands. The commission's administrative expenses are paid by employers and insurers through annual assessments. Assessments are capped at 4% of the amount each employer or his insurer paid out in benefits in the previous year. Excess assessments must be refunded to employers in the following year.
Establishing a Claim
As already noted, workers' compensation claims must be filed within one year of the date of injury or within three years of the first manifestation of an occupational disease. Claims are established by filing written notice with the employer and a workers' compensation commissioner in the district where the injury occurred. Claims can be filed by letter or on a special form (Form 30-C) supplied by the commission. A legal claim may also be established without written notice if, following an injury, the employer either provided medical care or the employer and employee reach a voluntary agreement regarding payment of benefits. Many claims are established and paid under voluntary agreements without the worker filing a formal written notice of claim. A voluntary agreement must be approved by the workers' compensation commissioner.
An employer may contest its liability to pay a workers' compensation claim by filing a disclaimer of liability with the workers' compensation commissioner. The employer must file its disclaimer or begin paying the claim without prejudice within 28 days of receiving notice of the claim. If no disclaimer is filed or payment is not begun within the requisite time, the employer's liability for the injury or disease is presumed and it forfeits its right to contest compensability.
Disputes over compensability or degree of disability are resolved through informal hearings with the commissioner. The commissioners encourage parties to reach settlements and sign voluntary agreements. If settlement is not possible, parties may request a quasi-judicial, formal hearing. Commissioners' decisions may be appealed to the Compensation Review Board. CRB decisions may be appealed in court.
Employers and insurers may discontinue paying workers' compensation benefits only with the approval of a workers' compensation commissioner. Before discontinuing benefits to an employee who is able to return to work, the employer or insurer must file a form (Form 36) with the compensation commissioner with jurisdiction over the claim and send a copy to the employee. The form contains the intended benefit termination date, the reasons for discontinuing benefits, and a certification from the attending physician that the employee is able to return to work.
Claimants who wish to contest a discontinuance must do so within 10 days. Commissioners are required to give discontinuation hearings priority over other types of hearings. Usually, the parties are called to an informal hearing. Unresolved issues or disputes over benefit terminations may require formal hearings and may be appealed.
An injured worker does not have to have a lawyer to file a workers' compensation claim but, in practice, many claimants are represented by attorneys. The law recognizes the role of attorneys in the system by giving commissioners authority to approve their fees for representing claimants and by allowing commissioners to award reasonable attorneys' fees in cases where an employer's or insurer's unreasonable conduct required the claimant to hire an attorney. The latter two situations are (1) when an employer or insurer unreasonably contests liability for an injury and (2) when an employer or insurer discontinues benefits without giving proper notice and without the commissioner's approval.
SECOND INJURY FUND
The Second Injury Fund was established in 1945 to provide an incentive to employers to hire workers with physical disabilities or prior injuries. For cases where the subsequent injury occurs before July 1, 1995, the law allows employers to transfer the liability for paying workers' compensation benefits to the Second Injury Fund after paying benefits for 104 weeks. All such transfers must be completed by July 1, 1999. Once the fund takes over a claim, the employer relinquishes all financial and administrative responsibility for it.
Over the years, the General Assembly expanded the fund's role to include providing payments to claimants who are entitled to benefits but because of various circumstances may not otherwise receive them. The fund is currently required to pay:
1. cost of living adjustments to totally disabled workers and to dependents of deceased claimants whose injuries or deaths occurred before certain dates,
2. benefits to claimants whose employers are uninsured or who fail to pay benefits awarded,
3. part of the benefits for employees who held more than one job when they were injured, and
4. retroactive death benefits to dependent survivors of workers injured before certain dates who died after certain dates.
The state treasurer administers the Second Injury Fund and the attorney general's office provides the fund with legal services. The fund contests claims and its liability to pay claims before workers' compensation commissioners in the same way as employers and insurers do. When the fund pays benefits because an employer was not insured or violated the law, it seeks recovery from the liable employer.
WORKERS' COMPENSATION FRAUD
Anyone who knowingly misrepresents or conceals material facts in order to obtain workers' compensation benefits or prevent or decrease someone's benefits is guilty of a felony. The same penalty applies to anyone who intentionally helps someone make a false claim.
If the value of the benefits (including medical benefits) is less than $2,000, the crime is a class C felony (one to 10 years in jail, a fine of up to $5,000, or both); if more than $2,000, it is a class B felony (one to 10 years in jail, a fine of up to $10,000, or both). In addition, the violator is subject to a civil suit for treble damages.
The employer fine for failure to carry workers' compensation coverage is a minimum of $5,000 or $500 per employee whichever is less, and a maximum of $50,000. There is an additional fine of $100 per day for each day of violation up to a maximum of $50,000 and it is a class D felony to deliberately (1) fail to carry coverage, (2) misrepresent employees as independent contractors, or (3) provide false and misleading information to insurance companies in order to reduce a workers' compensation premium. In addition, the attorney general may seek injunctions to bar employers who deliberately and repeatedly violate the workers' compensation law from doing business in the state.
There is a workers' compensation fraud unit within the Division of Criminal Justice. The unit, which is funded by employers and insurers as part of their assessments for the administrative expenses of the Worker's Compensation Commission, must be used exclusively to investigate fraud in the payment or receipt of workers' compensation claims or with regard to workers' compensation insurance or self-insurance.
Attachment: OLR Report 95-R-1572