Unfortunately, from an insurance standpoint, there is no way to fully quantify the impact of the Coronavirus until an actual loss/claim arises. It is important to understand that in the current insurance market, most carrier/policies do not contemplate coverage for disease-related exposure as potential losses are unquantifiable from an underwriting perspective and, would present a potential for devastatingly large losses across the entire insurance industry. From the carriers’ perspective, if all economic losses were insured/insurable, it would be commercially unviable for the carriers to remain in business. With that said, there may be coverage available through the EIA’s coverage programs, and each potential claim should be considered on a case by case basis.

Workers’ Compensation Programs

With the COVID-19 virus (aka Coronavirus) outbreak, the U.S. population is adapting to this new strain of the virus. We previously shared some tips on self-care and mitigating the exposure in the workplace. Here, we will focus on industrial causation. Is the coronavirus covered under workers’ compensation? There are still many unknowns.

The WC Act and case law does not find community-spread viruses (e.g. colds, flu, etc.) are within the scope of the workers’ compensation system. Within the past weeks, several workers’ compensation law firms have circulated newsletters addressing this question as well, with unique perspectives and references to existing case law.

At this time, we recommend that if you receive a claim for worker’s compensation for coronavirus exposure, you should evaluate each claim on an individual basis and on its own merits, just as you would any other exposure claim. The following are some questions you may want to consider when evaluating a claim:

  • Has an injury been sustained?
    • This may be in the form of a confirmed diagnosis, need for medical treatment and/or disability.
  • Is this exposure and/or confirmed diagnosis industrial or non-industrial?
  • Does the employee’s job make their chances of contracting the virus “materially greater” than the general population?
    • Is there a direct peculiar or unique/unusual exposure?
      • This may be more prevalent with safety officers (first responders: police/sheriff and firefighters) or medical care providers.
    • The law treats illnesses and common ailments (e.g. colds, flus) differently than other injuries as a matter of public policy due to the difficulty of establishing a link between the illness and employment.
  • Is there medical evidence showing a causal relationship?
    • Current law puts the burden of proof on the employee.
    • Regulations 14300.5(b)(2)(H) excludes the “common cold or flu”; however it further states that “contagious diseases such as tuberculosis, brucellosis, hepatitis A, or plague are considered work-related if the employee is infected at work.”
      • It is unknown if the COVID-19 virus will ultimately fall under this latter classification.
  • Does self-quarantine or medically advised quarantine (e.g. home isolation) qualify an employee for temporary disability or Labor Code 4850 benefits?
    • It seems like there is no clear guidance as to whether someone who has been exposed needs to self-quarantine. While the initial directions coming out indicated that this should be done, now various organizations are issuing instructions indicating that self-quarantining is not necessary.
      • The Governor’s Executive Order on March 16th states first responders and health care workers that may have been exposed, but who are asymptomatic, should not self-quarantine and continue working during the period of this emergency.
    • Current law does not provide benefits where an injured worker has missed work to undergo diagnostic testing or medical appointments. This includes fitness-for-duty testing that occurs prior to an employer bringing an employee back to work.
    • Does a quarantine establish an “injury”?
      • Current law finds that being exposed to the disease or being placed in quarantine does not actually establish “injury”, so there would likely be no obligation for the employer to provide a DWC-1 claim form.
  • Does your organization have an existing policy or bargaining agreement addressing communicable diseases?
    • Does it cover this exposure?
    • Does it address paid vs unpaid leave or work furlough?
      • Is this administrative pay or use of leave balances (e.g. sick or vacation leave)?

The CDC's and WHO's websites suggest that the coronavirus is a risk to the general population, both nationally and globally. They do not find that this is specific to workers in particular fields. In so many words, it is analogous to the common cold or flu – albeit one unlike anything we have seen in the recent past. In general, employers are not required to provide employees who are exposed to or contract the virus with a DWC-1 claim form, unless the facts suggest the employee was at a materially greater risk of contracting the virus than the general public and medical evidence supports a link between the employment and the virus.

In an effort to track our membership’s exposure and claims relating to this, if you receive any claims for the COVID-19 virus, we are requesting that you report these claims to the EIA, even if it does not meet the regular reporting requirements.

Note that this is an evolving exposure and recommendations from our State and Federal governments and agencies may change daily.

Liability Programs

In reviewing the Memorandum of Coverages (MOCs) for the EIA’s GL1 and GL2 Program, we find that there does not exist an affirmative grant of coverage nor a specific exclusion for communicable disease or a pandemic. There are certain exclusions that could potentially be applicable depending on the facts of a given claim. For one thing, both MOCs contain an exclusion for losses arising out of the rendering or failure to render medical professional services. Essentially a medical malpractice exclusion. There is an exception to the exclusion for incidental medical malpractice, covering things such as paramedics, emergency first aid and certain preventive health services. Additionally, both MOCs also contain a pollution exclusion, which potentially could be triggered if the virus itself was construed to be a pollutant. Finally, both MOCs contain a war exclusion, which could conceivably be triggered if the virus was determined to be a biological attack.

Although such claims might not reach a reportable level based on the injury alleged or your SIR, please let us know if you receive any liability claims arising out of COVID-19. Once we see the claim we will be in a better position to provide our thoughts on whether the claim would be covered.

Property

For Property, Endorsement U-21 of the EIA Memorandum of Coverage (see attached) provides $500,000 Communicable Disease each occurrence and $2,000,000 annual aggregate for Towers I-VIII combined. Coverage to covered parties is extended to include:

  • Actual business income loss sustained, and;
  • Communicable disease extra expense*, and;
  • Crisis Response expenses*

* Communicable disease extra expense and crisis response expenses are defined in Endorsement U-21

Coverage is triggered by an order of an authorized government agency during the policy period that results in a partial or total suspension of your business operations. It must be stressed that a determination of actual coverage (or lack thereof) will not be possible until the facts of an actual Claim are sustained, as there are far too many variables that could potentially implicate and/or invalidate coverage under any given scenario. Accordingly, when claims arise, we are addressing member concerns on a case-by-case basis and working to manage expectations that coverage for Coronavirus-related Claims is far from a sure thing.

Medical Malpractice Program

The Medical Malpractice Program also does not contain an exclusion specific to a communicable disease or a pandemic. Claims arising out of the rendering or failure to render medical professional services in a members’ established health care facility could potentially be covered under this program, subject to the specific facts of any given claim. It should be noted that the Med Mal MOC also has a pollution exclusion, and it specifically includes “medical waste” as a pollutant in the Pollution definition.

It is important to note that there are no definitive answers. Each claim will need to be considered on its own merits. Members who believe they have suffered a loss are encouraged to report same to EIA and/or Alliant.

Should you have any further questions, please feel free to contact Jen Hamelin or Karin Wedworth (Workers’ Compensation claims), Heather Fregeau (Liability and Medical Malpractice Claims), or Mike Pott (any claims).