North Dakota Compared to Louisiana: Insuring Volunteer Firefighters

Wednesday, April 30, 2008 | 0

By the AASCIF Standing Committee -- Law

Significant challenges arise in insuring known groups of workers. Those difficulties are multiplied when insuring unknown groups of workers.

In North Dakota, volunteer firefighters are “employees” and are, therefore, covered by Workforce Safety and Insurance, the monopolistic provider of workers compensation insurance.

Volunteer firefighters and emergency response members pose serious underwriting challenges.  North Dakota is a large, mostly rural state.  There exist only four “paid” fire jurisdictions in the state, each is a metropolitan district; the balance is comprised of volunteer fire districts with every level of organization.

North Dakota has taken a unique position in charging for coverage to this, largely undefined group.  Defining that undefined population of workers is not contemplated by the North Dakota solution.  Instead, premiums are assessed based on the population of the municipality or fire district.  “Such charge shall be a fixed sum for each one hundred of the population of the municipality involved, the same to be uniform as to all such municipalities but in proportion to the population thereof.”  NDCC Section 65-06-04. Theoretically, as a population grows, so too does its demand for firefighting services.  As a result, we have a number, upon which the relative risk may be assigned.  It is not without flaws, but this system has worked for North Dakota.

Once the charge is determined, the insurer is free to apply experience rates to the district based on previous loss history.

In contrast, Louisiana, through litigation, has determined that there is no mandatory coverage, since the volunteer does not meet the employer-employee relationship.
 
For a claim to be compensable under the Louisiana Worker’s Compensation Act there must first be an employer-employee relationship.  In determining whether such a relationship exists, courts have focused on four primary factors.  These are:  1) selection and engagement; 2) payment of wages; 3) power of dismissal; and 4) power of control.  Because of the lack of payment of wages, volunteer firemen in Louisiana are excluded from the Worker’s Compensation Act.

In Genusa v. Pointe Coupee Volunteer Fire District No. 4, 644 So.2d 851 (La. App. 1st Cir. 1994), the fire chief of the volunteer district brought a claim for worker’s compensation benefits.  The workers’ compensation insurer paid benefits for two years and then terminated benefits on the basis that the claimant was a volunteer.  At trial, the evidence revealed that the claimant received no wages or other remuneration of any kind.  The court cited the four factors listed above in its determination of whether an employer-employee relationship existed.  The court found that none of the factors was the sole determinant of whether an employer-employee relationship existed.  As a general rule, though, a contract was required in which services were provided in anticipation of being paid.  Since there were no wages paid to the claimant as he was a volunteer, the court denied his claim for worker’s compensation benefits.

After the Genusa decision, the Louisiana legislature enacted La. R.S. 23:1036.  It is in essence a modified worker’s compensation system for volunteer firefighters.  For it to be activated, the state fire marshal must elect to provide worker’s compensation coverage to the volunteer fire company members.   If that occurs, the statute provides medical benefits and limited indemnity benefits at the minimum rate set forth in R.S. 23:1202. 

To date, the state fire marshal has not elected to provide worker’s compensation benefits to the volunteer fire districts.  The fire districts do have a “medical payments” policy which will pay a limited amount for medical benefits to an injured volunteer fireman.  However, volunteer firemen remain excluded from the Louisiana Worker’s Compensation Act.  As a result, there is no established scheme for underwriting the risk.

This column was reprinted with permission of the American Association of State Compensation Insurance Funds