Is COVID-19 the New Asbestosis of the 2040’s?

Will these workers’ compensation claims become the new civil tort of the future?

What Is Known
As America enters the winter of 2022, the COVID-19 crisis has become only marginally clearer. However, more people have returned to work and more employers have curtailed remote working accommodations, with both events adding to the possibility of additional COVID-19 exposures. Over the past almost two years the COVID-19 virus has mutated, transitioned, ebbed, and flowed. Critical industries, such as construction, have led the way in creating safe and responsible return to work protocols that have responded to these fluctuations.

Similarly, federal, state, and local municipal regulations and mandates have evolved as more is known about the disease and as the number of cases rises and falls. All these directives have been incorporated into the return-to-work protocols implemented and monitored by responsible organizations.

In California, SB1159, which went into effect September 17, 2020, and applied retroactively to March 19, 2020, amended existing California workers’ compensation laws to address the impact on employees who contract COVID-19 and the extent such illness is considered industrial (i.e., an illness caused by your work environment), thereby entitling the employee to workers’ compensation benefits. It also established a series of new requirements and definitions as well as created the possibility of civil penalties for employers. Despite the presumption of COVID-19 being industrially related and the imposition of a 30-day timeframe in which to accept or deny a claim imposed, employers and their workers’ compensation claim management partners successfully integrated these mandates into their claim handling.

As a result of SB1159, an exceptionally substantial number of COVID-19 workers’ compensation claims have been filed in California. Public sector employees comprise 32.4% of the claims filed, closely followed by the healthcare industry with 30.7% of the claims filed. Interestingly, the construction industry accounts for only 1.3% of the COVID-19 claims reported. Acknowledgment should be given to the claim-handling industry for quickly developing compliance protocols to timely and aggressively investigate the almost 300,000 COVID-19 claims submitted. Current California COVID-19 statistics are:

In addition to the industrial presumptions established, SB1159 also mandated that all positive COVID-19 tests, clearly non-industrial or not, be reported by the employer to their insurance carrier/workers’ compensation claim handler. These claim-handling organizations were to consolidate the COVID-19 positive tests and create databases from which they would report to the state and determine if an “outbreak” (see California Labor Code Section 3212.88) had occurred which would automatically trigger the industrial presumption.

What Is Not Known
What does the future hold for California COVID-19 claims? SB1159 has recently been extended until 1/1/2024 and will, most probably, be extended beyond that. 

Based on the data, most COVID-19 claims (66.1%) are accepted. While an unfortunate number have resulted in death and significant physical impairment, when the claims are accepted, workers’ compensation benefits paid and soon administratively closed after the employee has been discharged from care. These claims, while administratively closed were never adjudicated to a conclusion. Therefore, they have never been officially closed. Certain claims will be documented that the Reynolds letter (notice of employee rights that serves as the start of the statute of limitations) had been sent. We can expect employers and the workers’ compensation defense community to argue that the statute of limitations will have expired on all these claims, with or without the Reynolds letter. Despite their arguments, this issue may become a fertile area for applicant attorneys to take advantage of in future years should employees’ respiratory medical issues develop

Irregular compliance with the SB1159’s mandate to report ALL positive COVID-19 tests to the claim handler is another area that could be exploited to open new or reopen old claims in the future. The intent of this portion of SB1159 was to accrue data to be used in identifying when an outbreak had occurred at a jobsite. An outbreak, usually considered four or more positive individual employee tests arising out of a specific place of employment within 14 days of the employee’s positive test, does not involve only a single employers’ employees. Using a construction jobsite as an example, there could be 4+ employees with positive tests within the 14-day timeframe, but since they work for separate employers, it is never identified as an outbreak nor reported as such. If it ever becomes apparent that a defined outbreak occurred, retroactive workers’ compensation benefits may be due.

Currently, the long-term effects of the COVID-19 virus are hotly debated and not yet known. One could easily foresee that this respiratory disease could become the asbestosis of the future. The latency period between exposure, symptoms and long-term impairment is not yet known. Just as asbestos-related diseases have been fodder for civil litigation, we can expect COVID-19 to be treated similarly in the civil arena. Already, per Fisher Phillips, nationwide there are more than 7054 civil lawsuits associated with COVID-19. California is the leader in this area of litigation with 1,827 cases filed, including 51.1% of the class action cases filed. The healthcare industry is leading the way with 22.1% of the lawsuits arising from that industry, while the construction industry contributes 4.1% of those actions. The most often cited causes of action are: 1) Employment discrimination, 2) Retaliation/whistleblower and 3) Remote work/leave conflicts. Due to the relative brief period since the appearance of COVID-19, there have yet to be a considerable number of bodily injury cases filed.

Current California and national COVID-19 civil litigation case numbers reflect:

Finally, as discussed earlier, the future effects from a COVID-19 infection are unknown. It is a possibility that the Centers for Medicare & Medicaid Services in the future may attempt to cost shift their exposures for respiratory medical issues to a specific industrial case of COVID-19 suffered by an employee in prior years back to that employer or workers’ compensation program. We are currently seeing liens from the Centers for Medicare & Medicaid Services being filed “out of the blue” for medical services they provided, which are alleged to be arising from an industrial injury years before. As time passes one can easily see this continuing.

What To Hope For
Ideally, COVID-19 will cease to be a rampant pandemic and revert to an annual expected, but mild, variant of something akin to the flu. It seems that only time, and science, will tell if this scenario happens. From the insurance perspective, we have no doubt that COVID-19 will continue to generate risk and claims in both the general liability and workers’ compensation arenas.

Gene Clancy is a vice president with Alliant Insurance Services in San Jose, CA. His practice focuses primarily on workers’ compensation program consulting and placement. 

He can be reached at (408) 352-6700, or visit online at www.alliant.com