Project Two

This case involves the interrelation between Short Term Disability and Worker's Compensation Systems and an example of how an employer can be caught in the relationship and incur potentially significant costs.

The case involves a fifty-eight year old person who was employed as a seamstress in a clothing store. She stopped working in August of 2001 because of a sore shoulder. On September 11, 2001 she received a note from her physician saying she should be out of work until further notice because of right shoulder impingement. She was to receive physical therapy from August until December. Claims were made under her major medical coverage.

She began treatment with a physician on November 1, 2001. In December 2001, after not getting any relief, she underwent a MRI, which revealed a torn rotator cuff injury. Late in December, she presented the note dated September 11, 2001 to her Supervisor. The Supervisor stated that prior to her lost time there were no complaints of any problems, accidents or injury.

In January 2002, New York State Disability papers were forwarded to the employee to be filled out by both her and her physician, because she had not filed since her first day of absence. Those papers indicated the problem began in January 2001 due to overuse and she stopped work in August. They also stated that she had no idea when the injury occurred.

The physician's portion of the form indicated, "Pt. has pain in neck as well as both shoulder areas radiating down both arms. Experiences numbness and tingling in both arms and hands," diagnosis confirmed by MRI as right rotator cuff tear." The doctor also indicated that in his opinion "this disability didn't result in the course of employment."

On January 25, 2002, the claimant received a denial of Disability Benefits denying benefits for two reasons: 1) Disability began more than four weeks after employment terminated. She stopped work in August and the first treatment was in November; 2) When interviewed by the claims examiner she indicated the problem was the result of work. Therefore short-term disability benefits were denied because the examiner felt it was work related (i.e, would fall under Worker's Compensation rather than Short-term Disability).

On February 15, 2002, the client received a letter, dated February 4, from the claimant saying that CNA (the disability carrier) suggested she file for Worker's Compensation and she was informing the client of her intention to file.

On March 8, 2002, Northeast HR for Hire filed on behalf of the client a "Negative First Report of Injury (c2)", which indicated no accident, no incident and no prior knowledge of any accident.

Discussion:

Often a client will not know how to handle this situation. An employee sometimes will leave work with a problem that is totally unrelated to his or her employment; however, once it is diagnosed it suddenly becomes work-related. The exposure to this client can mean some significant dollars. If the Worker's Compensation Board rules against the client, the liability is two thirds of all wages due since the first date of absence in August. In addition, the client could be liable for all costs incurred with the repair surgery including physicians, a hospital stay and therapy. There could also be some permanency associated with this kind of injury, which could result in an additional financial reward to the claimant.

Clients need to be especially aware of the differences between Short-term Disability and Worker's Compensation. Sometimes an unscrupulous employee will attempt to claim for Worker's Compensation rather than Short-term Disability because he or she can be awarded two-thirds of salary without taxes under WC rather than $125/week maximum benefit under short-term disability.

In addition, an employer can be subject to other costs such as surgery, hospitalization, doctors' appointments, physical therapy, etc.

Resolution:

Northeast HR for Hire was asked to assist this client in determining whether this employee was eligible for short-term disability or Worker's Compensation benefits. By researching this employee's medical records and file, our consultant was able to save the client significant costs related to an injury that was determined not to be work-related and, therefore, not eligible under Worker's Compensation.