Despite Legal Protections For Workers, Insurance Companies Still Deny COVID-19 Claims
Some States have attempted to protect certain classes of workers when they are infected with COVID-19 by passing new laws. Nevertheless, huge insurance companies still have found ways to deny the help injured workers desperately need.
At the beginning of the pandemic, insurance companies and business groups sounded a false alarm, claiming they would be “overwhelmed” with COVID-19 workers’ comp claims. But those fears turned out to be unfounded as COVID-19 claims were more than offset by a sharp drop in non-COVID-19 claims caused by layoffs, shutdowns and a shift to remote work, thus reducing the number of workplace accidents and injuries, according to The Wall Street Journal.
Despite the additional legal protections that State lawmakers have put in place in some States, insurance companies are denying an extraordinarily high rate of COVID-19 workers’ compensation claims by sidestepping the laws to avoid paying urgently needed treatment and wage replacement benefits to workers infected with COVID-19.
According to the National Council on Compensation Insurance, workers’ compensation payments were 7.6% lower in the first three quarters of 2020 when compared to the same period of 2019. With the decline in payouts, some insurers are lowering premiums for coverage this year. However, instead of also passing these savings on to workers by adhering to the new laws, the insurance companies latest excuse for payment avoidance is making the unproven claim that “many” infected workers will have continuing complications from COVID-19 infections, and will need large and ongoing medical and wage-replacement payouts.
Though no comprehensive data exist on the number of COVID-19 related claims, payouts, denials and acceptances, data on workers’ compensation payouts released by several states suggests that the majority of COVID-19 claims have been relatively inexpensive for insurance companies, according to James Lynch, chief actuary for the Insurance Information Institute.
In States that don’t have laws that offer additional protections to workers infected with COVID-19 on the job, claims have been denied by insurance companies at higher rates.
In notoriously anti-worker Texas (where residents are freezing to death due to a deregulated energy industry), more than 32,000 claims related to COVID-19 were filed through December 6, 2021. The state does not have a presumption of eligibility for workers infected with COVID-19, and insurers have denied 45% of those claims. In California, which has a broad presumption of eligibility for certain workers, 93,740 claims were filed through the end of December, with 26% of those claims being denied.
COVID-19 claims pose unique challenges to worker’s on the front line. Instead of looking for reasons deny workers compensation benefits to workers infected with COVID-19 on the job, insurers should follow the new laws and quickly pay the benefits legitimately owed. This would benefit workers’ health, and also employers by getting people back to work.
Denying legitimate COVID-19 claims only creates needless frictional costs to the system.