Foreign Assignments Raise WC Exposures

Saturday, June 16, 2007 | 0

By Eric Belk

Businesses that send their employees outside the country must take extra steps to protect themselves and their workers against gaps in workers' compensation coverage.

When an employee goes abroad, depending solely on their state workers' comp system for death and injury coverage can expose an employer to lawsuits resulting from claims for unsafe working conditions, improper training and failure to provide appropriate safety equipment, among other things.

One way to avoid these gaps in coverage is to have in place a foreign voluntary workers' compensation and employers' liability protection policy to pick up where the U.S. workers' comp policy leaves off.

The benefits payable under a foreign voluntary policy are tied to the benefits available under the workers' comp law of the state designated by the employer.

Such coverage works as though the employee were eligible for the benefits of their home state.

Although this type of policy often uses the term "workers' compensation" in the title, they are not statutory workers' comp policies, and do not replace compulsory workers' comp coverage.

This type of policy extends additional coverage that is provided under statutory workers' comp policies, adding an extra layer of protection for the employer and the employee.

For example, suppose a doctor hired in Belize is sent to Haiti on a short-term assignment, contracts typhus from a flea bite while asleep at night, and has to be transported back to Belize to obtain proper medical care.

The doctor would not be eligible for statutory worker's comp benefits in any state, as there was no contract of hire within the United States, nor was the ill worker principally employed within any particular state.

Most states would find the Haiti claim noncompensable because the claim for typhus did not arise from a work exposure.

However, foreign voluntary workers' comp policies typically provide endemic disease protection, covering injury resulting from indigenous diseases to which the employee is exposed while on assignment.

This extended coverage also usually provides for transportation and repatriation expenses, even if the employee is returning to a country other than the United States.

Another example would be a contractor who is hired in Texas and sent to Mexico on a long-term assignment. Two years later, while traveling to the job site, the contractor is injured in a car accident.

In Texas, the contractor is eligible for statutory workers' comp benefits for an out-of-state injury if the claimant was hired in the state and injured within one year of leaving the state--or was employed in the state at least 10 days of the preceding 12 months.

However, because the contractor was outside the state beyond these time limits, the injury would not be covered under state workers' comp laws.

Further, most states would find that injuries incurred while commuting to a regular job site are not compensable.

However, a foreign voluntary workers' comp policy would provide the necessary coverage to compensate for the employee's medical and income replacement needs, despite the limitations found in the state's workers' comp law.

In a final example, an engineer hired in Colorado travels to England on what is supposed to be a short-term assignment, but the job takes longer than expected. Seven months into the assignment, the engineer is electrocuted on the job site.

In Colorado, the Division of Workers' Compensation retains jurisdiction over an out-of-state injury--but only if the injury occurs within six months of the date the employee left the state. Under these rules, the worker would be a month over the limit and would not be covered.

Although the vast majority of states provide "extraterritorial" coverage for their employees, with no limit on the length of time an employee may be covered while working outside the state, there may be times when the employee's injury is outside the jurisdiction of the state's workers' comp law.

In that case, the employer may not be eligible for the statutory protections that are usually provided.

Thus, an employer may be exposed to damage claims exceeding the workers' comp benefits available by statute.

A great feature of these foreign voluntary workers' comp policies is that they are primary as to any other similar situations or claims that exceed the extraterritorial benefits of any state workers' comp statutes.

They cannot, however, replace the employer's universal statutory obligation to purchase and maintain a U.S. statutory workers' comp policy.

All states require an employer to insure their entire obligation under state workers' comp law.

Because of each state's particular filing and notice requirements, no foreign voluntary workers' comp policy can fulfill the employer's obligation to insure and administer its statutory workers' compensation exposure. However, the purchase of a foreign voluntary workers' comp policy can help fill the gaps.

Eric Belk is workers' comp senior counselor in the Defense Litigation Group at Travelers Workers' Compensation in Hunt Valley, Md. He may be reached at ebelk@travelers.com. This column first appeared in National Underwriter magazine. To learn, visit their Web site at:

http://www.propertyandcasualtyinsurancenews.com/cms/nupc/weekly%20issues/channels/Workers%20Compensation

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