Category: Merge Blog

A brief history of Workers’ Compensation

In the insurance industry, workers’ compensation claims can seem difficult to navigate. But the history and evolution of, what we call, workers’ compensation can offer a new perspective on how and why these systems became what they are today. The concept of compensation for bodily injury began thousands of years ago, shortly after the advent of written history itself.

2100-2050 B.C.E. Ur Nammu

King Ur-Nammu, the ruler of the ancient Sumerian city of Ur, created the Code of Ur-Nammu, which was written on tablets and was comprised of 40 paragraphs containing both civil and criminal offenses, along with their punishments. Among other things like defining class rank and outlining the consequences of witchcraft, the Code of Ur-Nammu provided the first legal system in which monetary compensation was paid to injured victims. Much like modern day insurance, the amounts to be paid were based on the anatomic location of the injury as well as the severity.

This compensation system was also to be provided to laborers that were injured while performing their duties, making this the first documented instance of workers’ compensation in history. Heavy machinery and construction equipment didn’t exist in ancient times, so many workers’ injuries were caused directly by other people (and not always accidentally), so it was the offender’s personal responsibility to compensate the victim. The Code of Ur-Nammu became the basis for countless other legal codes and formed the foundation of legal systems still in place today.  

1795-1750 B.C.E. Hammurabi

King Hammurabi of the Old Babylonian Empire brought us the Code of Hammurabi, famously known for its unforgiving tit-for-tat, or eye for an eye disbursement of justice. The focus was on physically punishing perpetrators rather than just compensating the victim. And while the punishments certainly seem harsh by modern standards, the Code of Hammurabi sought to protect workers from employers whose negligence caused them harm.

The Code of Hammurabi was one of the earliest examples of the concept of presumption of innocence and gave both the accused and the accuser the opportunity to provide evidence. If it could be proven that a worker was injured unintentionally, and not due to their employer’s neglect or carelessness, the employer was only on the hook for the victim’s medical costs, and they could keep all their limbs.

Workers’ Compensation laws continued to evolve in the coming years as ancient Greek, Roman, Arab and Chinese civilizations soon adopted their own sets of compensation schedules. However, all these very early schedules of compensatory rates were either overly specific or vague, leaving way too much room for interpretation in either direction.

500s-1400s

These ancient compensation schedules were gradually replaced during the Middle Ages as feudalism became the primary structure of government. It was now up to feudal lords to make the determination about what, if any, injuries garnered compensation. Sometimes this worked in the victim’s favor, as it was an act of nobility and honor for a lord to care for an injured serf, but this was not always the case as not all feudal lords were so noble when nobody was watching. 

1400s-1800s

The development of English common law in the late Middle Ages and Renaissance era gave rise to a new legal framework that persisted into the early Industrial Revolution across America and Europe. In response to the increasing number of free citizens entering the workforce doing more labor-intensive jobs, early English Common Law established three principals upon which it would be determined if an injury was compensable. But these principals were known to be so incredibly restrictive, that they became known as the “unholy trinity of defenses.”

1. Contributory Negligence- if a worker was in anyway responsible for their injury, the employer would not be held liable, regardless of how hazardous the machinery or equipment may have been
2. The “Fellow Servant” rule- employers were exempt from liability if a workers’ injuries arose out of the negligence of a co-worker
3. The “Assumption of Risk”- employees are made aware of the potential hazards of any job once they sign their employment contracts, and they accept those risks. Because the risks were so high, these employment contracts became appropriately known as “Death Contracts”

Meanwhile in Prussia, Chancellor Otto Von Bismark established the Employers’ Liability Law of 1871.

The law provided social protection to workers who held high risk positions in factories, quarries, railroads, and mines. Several years later after the unification of Germany, Bismarck also created Workers’ Accident Insurance, the first modern system of workers’ compensation. These state-administered systems reserved large monetary benefits for job-related injuries, and covered both medical care and rehabilitation for injured workers.

The British eventually followed suit in 1893 with the proposal of the Workers Compensation Act, which would abolish the unholy trinity of defenses, including the issuance of “death contracts.” The Act held that an employee was entitled to compensation for any accident that was not their fault, even if there was no negligence on the part of the employer. Unlike the German model, the Act did not rely on the state to administer compensation, but it was instead up to organizations called “friendly societies,” which were mutual financial institutions similar to modern day insurance companies.

1900s- Present Day

The United States was slower to adopt the hot new trend of compensating workers for occupational injuries, giving rise to social movements like the “Muckrakers,” which was a group of authors who wrote about the struggles of working in the modern industrial society. The most famous among these was Upton Sinclair, who published The Jungle in 1906. His novel exposed the horrific conditions in Chicago slaughterhouses from an immigrant workers’ perspective in graphic detail and in no uncertain terms.

In response to the growing unrest, Congress passed the Federal Employers’ Liability Act of 1908 under President Howard Taft which amended the unholy trinity of defenses to be less restrictive and more in favor of the worker. Keeping in mind this reform came at the federal level, it was still up to individual states to establish their own workers’ compensation guidelines.

In 1910, representatives of the industrial states assembled for a conference in Chicago with the goal of creating a unified set of guidelines for workers’ compensation law.

The first set of comprehensive workers’ compensation laws at the state level was passed in Wisconsin in 1911. Nine other states quickly passed similar legislation, followed by another 36 states before the end of the decade. Mississippi, the final state to pass workers’ compensation laws, finally did so in 1948.

In their original form, most state compensation acts made employer participation optional. But because employers who declined to participate were barred from using those common-law, unholy trinity defenses, the vast majority of employers opted in.

Today, after several thousand years of history in the making, our workers’ compensation systems are fully employer-funded through commercial insurance or through the creation of a self-insurance account, and nearly all states require employers to carry it. We have a much more sophisticated system of classification that has been tailored to fit each and every category of occupation, which allows insurers to provide infinitely more accurate compensatory rates to offer injured workers adequate compensation. The system, by nature, also carries incentives toward rehabilitating injured workers, which benefit both the employer and employee. And that’s why it’s so frustrating when we see people abusing and defrauding these systems that were created as a protection for them. The best thing we can do in our little piece of history is to make sure that these benefits are reserved for those who are genuinely entitled to them by proactively detecting, investigating, and reporting those questionable claims.

Sources:

• Insureon
• Encyclopedia Britannica
• Factinate
• History on the Net
• BBC
• World History Encyclopedia
• Lumen
• History.com

Sleep disorders are common and often undiagnosed. According to the National Institute of Neurological Disorders and Stroke, approximately 40 million people in the U.S. suffer from long-term sleep disorders, and an additional 20 million people suffer from occasional sleeping problems.  The fatigue from these disorders is not only a safety concern within the workplace, but also could become a huge financial burden for employers if working conditions or schedules are found to be a contributing factor to someone’s inability to sleep normally.

What are sleep disorders?

Sleep disorders can be described as a lack of sleep caused by something other than binging Netflix, staying out late at night, or consciously choosing another activity instead of sleeping. Sleep disorders are serious conditions that can cause impairment during the day. There are various types of sleep disorders with different effects on a person’s mental, physical, and emotional well-being.

The most common type of sleep disorder is Insomnia. Insomnia can make it difficult to fall asleep, hard to stay asleep, or cause you to wake up too early and not be able to get back to sleep. Short-term (acute) insomnia lasts for days or weeks, while long-term (chronic) insomnia lasts for a month or more. Insomnia can sometimes be associated with other medical conditions or medications.

Obstructive Sleep Apnea is a sleep disorder that causes a person to stop breathing repeatedly during the night. Many with sleep apnea suffer from other health problems that are exacerbated by their sleep disorder.

Restless Legs Syndrome is a condition that causes an overwhelming urge to move the legs, usually because of an uncontrollable sensation. This condition can often disrupt sleep as it typically happens in the evening or nighttime hours while sitting or lying down. This condition can begin at any age and generally worsens as you age.

Shift Work Disorder, also known as circadian rhythm sleep disorder, largely affects people who work during the night, in the early morning, or rotating shifts. This sleep disorder is characterized by insomnia, excessive sleepiness, or both, and affects people whose work schedules overlap with the typical sleep period.

Sleep is crucial to our overall health. Adults need an average of seven to nine hours of sleep each night, but 30% report averaging less than six hours. Chronic sleep-deprivation can cause depression, obesity, cardiovascular disease, and other illnesses, and is estimated to cost employers $136 billion per year in health-related lost productivity.

Common risk factors for sleep disorders include working second or third shift, obtaining less than seven hours of sleep per night, commuting longer than 30 minutes one-way to work, and having less than 12 hours off between shifts. Because of this, jobs like factory workers, nurses, police officers, firefighters, doctors, medical students, airplane pilots and air traffic controllers, truck drivers, senior management, and network administrators are all at high-risk for sleep disorders.

While an injured worker can pursue a claim for a work injury that results in a sleep disorder, there are limitations as to whether one can claim permanent disability as a result of a sleep disorder. In California, the current law indicates that there shall be no increases in impairment ratings for sleep dysfunction arising out of a compensable physical injury. However, if the sleep disorder is the direct result of an incident that occurs at work, such as a stressful or traumatic event, the employee may be eligible for permanent disability.

These specific laws vary from state to state, but getting treatment for sleep disorders through a workers’ compensation claim is possible as long as the employee can reasonably prove that the sleep disorder was either caused by or worsened by work, which is standard for any work compensable injury.

The determination of whether or not the sleep disorder was caused by or worsened by work is left up to the QME or AME. The medical evaluation will determine the diagnosis and medical causation. Determination of liability of sleep disorders lies solely on the medical evaluation. However, helpful tools such as a medical facility canvass can help the employer or insured determine if there was previous treatment for the sleep disorder, which may be helpful in mitigating claims.

Not only can sleeping disorders become workers’ compensation claims themselves, but they can often lead to other work-related injuries. Research suggests that around 13% of all work injuries could be due to sleep problems. Sleeping disorders can cause difficulties concentrating, decreased hand-eye coordination, slowed thinking/reaction time, reduced attention span, worsened memory, poor/risky decision making, lack of energy, and mood changes, all of which can easily turn into a dangerous situation in the workplace. Highly fatigued workers are 70% more likely to be involved in accidents. In one recent case, a ferry captain suffering from fatigue failed to prevent his ferry from striking a ferry terminal, causing $10.6 million in damages to the boat and piling. Investigators determined that the captain had become briefly incapacitated during a microsleep episode, which caused him to lose control of the vessel.

Regardless of who is held liable for the sleep disorder, it is clearly important that employers and insurers are actively helping to educate and prevent disordered sleeping amongst employees. This will, in turn, help to decrease other work-related injuries altogether.  

When possible, employers should avoid rotating shifts, offer ample time off between shifts, ensure a work-life balance is prioritized, and provide flexibility for employees who may be struggling with lack of sleep. Workplace environments can also be modified to increase alertness with lighting, temperature, and noise, and can incorporate dedicated break rooms or even nap rooms. Making these changes may result in higher levels of productivity while lowering safety risks and the potential for workers’ compensation claims down the line.

Providing employees with the information and tools to understand and improve their sleep is a great place to start. Encourage employees to establish a regular bedtime routine, avoid caffeinated drinks such as soda, tea, and coffee before bed, minimize stress, and exercise regularly to ensure a good night’s rest.

Know the signs and symptoms of when someone should seek treatment for a sleep disorder, and where they can go for help. For more information, visit the CDC’s website below:

Sleep: An Important Health and Safety Concern at Work (cdc.gov)

Additional sources:

National Safety Council

WebMD

OSHA

Mayo Clinic

Law Offices of Edward J. Singer, APLC

Are remote workers eligible for Workers’ Compensation?

You are probably already aware that Workers’ Compensation is a government-mandated program that provides benefits to workers who become injured on the job, or as a result of the job. This program has expanded and evolved over thousands of years to suit various societal constructs, and it’s looking like it may need to be adapted once again. Working from home, while not an entirely new concept, has become much more predominant in our society since the beginning of the COVID-19 pandemic in 2020. When non-essential businesses were required to shut down, many made the switch to a work from home environment in order to safely maintain their operations. Fast forward to present day, and that work remote environment hasn’t changed for many Americans. In fact, a recent study suggests that 45% of people still work from home in some capacity, with approximately 15% of people working from home full-time, and the other 30% on a hybrid schedule.

The expansion of the work from home model has transformed the way people view and feel about work. For many, the idea of “work” is no longer associated with rush hour commutes or chats around the water cooler. Board rooms have been replaced by web cams, and the demand for business casual attire has declined while loungewear sales are at an all-time high.

The concept of employee safety in the remote environment is a new consideration for many businesses. The unfortunate reality is that work injuries can still occur, even at home, and workers compensation policies and regulations have been slow to adapt in response.

Consider this scenario: an employee, who spends most of her working time traveling to see customers, is at home putting some work materials in her vehicle before her next appointment. As she walks out her back door into the garage, she trips over her dog and falls, sustaining a wrist fracture. Is the injury compensable? The actual answer wasn’t so simple, as this exact situation was seen in the case of Sandberg v JC Penney Co Inc. The employer initially denied compensation to the claimant based on the idea that the employee was not exposed to the risk of tripping over her dog as a result of her employment, but from her home environment. However, when the claimant took the case to the court of appeals, the decision was remanded and reversed. The court ultimately ruled in favor of the claimant because the employer could have offered her an alternative space to store work supplies where safety was within their control. Instead, they willfully allowed the employee to keep supplies in her home garage, which is where the injury was sustained. This case is a prime example of how difficult it can be to account for the many liabilities of employees working from home, and the consequences of overlooking potential risks in the home environment.

For a variety of reasons, which are certainly not limited to the risks associated with allowing employees to work from home, some companies are finally attempting to shift back to in-office operations. Most recently, companies like Apple and Google have announced their return-to-office plans, and have received massive push-back from their employees in return. This push-back may motivate employees to falsify or embellish injuries and disabilities, suddenly claim they have a condition that requires accommodation, or simply decide to quit in order to avoid returning to the office setting. In any case, companies and insurers are preparing for a multitude of risks associated with bringing employees back to the office. 

With the many gray areas and “what ifs” that work-from-home trends bring to the table for the Workers’ Compensation industry, employers and claims representatives will need to shift their strategies in response. Thankfully, our friends at The Hartford have put together a list of ways to protect employees as well as business owners as they prepare for home-based claims. One measure that employers can take is to require their work-from-home staff to complete a safety survey, or even inspect their home offices to ensure that they are using equipment that is properly designed and located in an area with adequate lighting and ventilation. It is recommended that the work environment is checked every six months, and that employers keep photos for their records. Another step that can be taken is to assign the employee a dedicated workspace within the home where they will complete their job duties. That way, the risk of an injury claim is limited to incidents that occur within that space. Most importantly, experts at The Hartford suggest that employers speak with their insurance companies to make sure that coverage extends to home workstations.

It’s important to stay ahead of the fraud curve by educating yourself about the emerging trends and risks. But being able to identify those red flags and questionable claims is only half the battle. These injuries will largely be unwitnessed, and therefore much more difficult to disprove. Having a reliable investigation agency that is willing to get creative while helping you validate a claim is essential when mitigating these new types of fraud. Consider asking your investigation company to conduct a scene investigation of the workspace or take a recorded statement to reconstruct the events that led to the injury. Surveillance can also be an effective means of determining the true extent of injuries claimed, and Facility Canvasses can be a useful tool for verifying if an employee’s condition is valid. Claimants are nothing if not crafty, but the right investigation company will always be one step ahead.

Insurance Fraud in an Economic Recession

The past few years have undoubtedly challenged both industries and individuals in a variety of ways. But as many of us attempt to return to a sense of normalcy, there are some lasting changes that are just too difficult to ignore. Price increases, labor shortages, supply chain disruptions and geopolitical unrest have left many of us questioning if an economic recession is imminent.

According to the National Bureau of Economic Research, formally, we are not in a recession at this time. The indicators of a recession include quarterly Gross Domestic Product (GDP), unemployment rate, housing prices, stock prices, income level, and manufacturing industry health. To officially be in a recession, our nation must undergo deterioration for more than two consecutive quarters – deterioration that is measured based on the aforementioned indicators. Today’s economic conditions are setting off alarm bells for many Americans who experienced our most recent official recession, The Great Recession of 2007-2009. That all-too-familiar perfect storm is brewing, and the pressure is building as families figure out how to weather it.

That pressure is the first piece of what experts call the Fraud Triangle. Coined by Dr. Steve Albrecht, the Fraud Triangle theory is used to explain the reasoning behind an individual’s decision to commit fraud by resolving the “why” and the “how.” The framework of the Fraud Triangle involves three components: (1) a perceived pressure, usually due to financial stressors; (2) rationalization; and (3) an opportunity to actually carry out the fraud. We see those three elements more frequently during economic downturns and recessions as financial strain becomes more prevalent and people feel they are forced to take drastic measures to stay afloat. That first element, pressure, may present itself in the form of wanting to maintain one’s lifestyle despite inflation and rising costs of living. Wide-scale layoffs are also more common during recessions, and people will face pressures when paying bills. Regardless of the specific reason, pressure inevitably increases during recessions as people struggle to meet their basic needs.

With the economic trajectory looking grim and pressure mounting, many will feel forced to seek out alternative sources of income to take care of themselves and their families. For some, those alternative sources may not be legitimate. Economist Gary Becker, a Nobel laureate, developed a theory that, in some cases, committing a crime was a rational decision – that a person would only commit a crime if the expected utility exceeded that of using his time and other resources in pursuit of alternative activities, such as leisure or legitimate work. Financial hardship causes more people to justify things that they may not normally do, such as abuse their insurance policies, exaggerate a claim, or fake a claim entirely for their own personal gain. This justification, or rationalization, is the next piece of our Fraud Triangle. People are more likely to rationalize their dishonest behavior if they feel they have no other choice. They may even feel that it “doesn’t hurt anyone” or that they are somehow entitled to a financial gain. 

Along with the anticipated increase in fraudulent claims during a time of economic uncertainty, legitimate insurance claims are also likely to rise in response to financially-motivating crimes, such as theft. Now, more than ever, it is important for those in the insurance industry to stay vigilant. However, it is also in the realm of possibility that claims professionals will have to cut costs of their own during tough times, whether that is through downsizing, layoffs, or reducing investigation costs. This combination of more claims and fewer resources leads us to the third piece of our Fraud Triangle: opportunity. Frauds who have the knowledge and ability to carry out their insurance scams will now also have less oversight while claims professionals are spread thin.

Insurance crimes are not victimless crimes, and these actions are never justified. As investigators, we are well-equipped and prepared to help you get to the bottom of those questionable claims and determine when it’s time to engage the SIU. Through our SIU & Fraud Abatement Program, we can also educate you on how to identify red flags as well as those situations where the pressure, rationalization, and opportunity have turned an ordinary claimant into an overnight fraudster.

Hard times for some can mean desperate times for others. But a strong collaboration with your investigation agency will help you remain tough on fraud while we all navigate the uncertain economic future.  

Is manned or unmanned surveillance better for your claim?

As technology evolves, so does the world around it. Machines and robots are slowly developing and taking over more and more jobs that were once specific to humans. Private investigating is not immune to these developments. We see surveillance systems almost anywhere we go, and many people even have these systems in and around their homes. As these unmanned surveillance systems become more common, it begs the question of whether real, live humans are even needed for surveillance anymore.

Fortunately, as a private investigation agency, we are not obsolete just yet. There are benefits to both options of manned and unmanned surveillance, and they both make up for what the other lacks. If you’re in the market for surveillance, then it is important to know when to choose which option and how either option can potentially benefit your specific case.

Out of sheer bias, we’ll start with the benefits of manned surveillance. The flexibility and adaptability of a human private investigator is unequivocally superior to any unmanned technology, as there are still many things humans can do that technology can’t replicate. For example, private investigators can use pretexting to verify if a person of interest is even in the residence that they are surveilling, and oftentimes develop more information about the subject and their schedule simply by talking to neighbors in the surrounding areas. Us human investigators are also readily available to go mobile to continue surveillance once the claimant has left their residence. After all, we can often obtain some of our best footage while on the move.

There are many variables constantly in play when doing surveillance, things like weather and traffic can impact visibility during surveillance, and a trained investigator is nothing if not adaptable. Since private investigators are not immobile, they’re able to easily move positions, switch angles, adjust the camera to ensure in real time they are obtaining the best possible footage of whomever they are surveilling.

Now, manned surveillance is not without its flaws, and unmanned surveillance systems can certainly make up for what manned surveillance is lacking in some ways. Often it can be difficult to find the perfect vantage point on some homes depending upon their neighborhood setup. Apartment buildings, rural areas, and close-knit neighborhoods that are more aware of unfamiliar cars on their street are instances where unmanned surveillance systems might be a better option. These systems are inherently more discreet, easily concealable, and can be positioned and mounted in a variety of locations. These systems also have the benefit of time. Depending upon the battery life, these systems can be left to obtain footage for much longer than a private investigator can go without sleep and other human necessities. Plus, labor laws don’t exactly apply to robots just yet.

Speaking of laws, this is another issue that comes into play when discussing the differences between a private investigator and unmanned surveillance systems. Many states already cover their bases with laws regarding the conduct of private investigators, and have policies in place to ensure that any evidence obtained by a licensed professional will be legal and admissible in court. Unmanned systems are not yet regulated as closely, and there is the potential for argument or debate when it comes to what is, and what will be, allowed in a courtroom. There are still some gray areas surrounding the ethical implications of unmanned systems, especially when it comes to privacy laws. For example, the state of Georgia has already established that any unmanned surveillance camera must be in plain sight, which sets a precedent for where things might get questionable down the line.

With all of that said, this information does not necessarily prove that one option is explicitly better than the other. However, this information does highlight which situations are better suited for either option. Knowing the benefits and shortcomings of both options, along with the details of your case, will help you (or your investigation agency) to choose the best option to help you get more “bang for your buck.” Hiring a private investigator who will give you those honest recommendations, regardless of cost/profit for them, is extremely important in obtaining the best results possible.