An Introduction to the Virginia Workers' Compensation Act

By Raymond L. Hogge, Jr., Esq.
Payne, Gates, Farthing & Radd, P.C.
Attorneys and Counsellors at Law
Dominion Tower, Fifteenth Floor
999 Waterside Drive
Norfolk, Virginia 23510-3309
Telephone: (757) 640-1500
Fax: (757) 627-6583
E-mail: RHogge@PayneGates.com
www.VirginiaLaborLaw.com

HISTORICAL DEVELOPMENT OF WORKERS' COMPENSATION

Before workers' compensation, an employee could recover against his employer for a work-related injury or an occupational disease only if the employee could prove the employer was negligent. In contributory negligence states such as Virginia, any contributory negligence by the employee would completely bar recovery.

Worker's compensation statutes allow an employee who sustains a work-related injury or an occupational disease to receive compensation regardless of fault. It benefits the employee by relieving him of the burden of proving the employer was negligent, and be eliminating the defense of contributory negligence. It benefits the employer by limiting the potential liability for compensatory damages and eliminating punitive damages.

Today in Virginia, most workers' compensation is governed by the Virginia Workers' Compensation Act. In some circumstances, the federal Longshore and Harbor Workers' Compensation Act applies (e.g., drydocks). In other specific circumstances, other laws may govern the liability of employers to employees (e.g., the Federal Employers' Liability Act, applicable to railroads). The Virginia Workers' Compensation Act ("VWCA"), however, governs the majority of Virginia employees, and therefore is discussed here.

ADMINISTRATION OF VIRGINIA WORKERS' COMPENSATION ACT

The VWCA is administered by the Virginia Workers' Compensation Commission (formerly the Industrial Commission). The Commission has established its own Rules, which govern the administration of the VWCA and the procedures for claims adjudication.

Employers are require to notify the Commission of all workplace accidents. Minor accidents (accidents where the time lost from work or partial incapacity is 7 days or less and the medical expenses are less than $1,000) may be reported monthly on Form 45A. Major accidents must be reported on a "First Report of Accident" form within 10 days of he employer's learning of the accident. A major accident is any accident in which:

a. Time lost from work or partial incapacity exceeds 7 days;

b. Medical expenses are grater than $1,000;

c. Compensability is denied;

d. Issues are disputed;

e. Medical reports indicate permanent partial disability or disfigurement; or

f. A fatality occurred.

If the parties agree regarding compensability, they may file a Memorandum of Agreement with the Commission. Unless either party notifies the Commission within 20 days that it is withdrawing the agreement, the Commission will enter an order confirming the agreement. CAUTION: Employers should not enter into such agreements until they have fully investigated the accident or injury and are satisfied that it is compensable.

If an award is entered and circumstances change, the employer may file with the Commission a change in condition application.

THE WORKERS' COMPENSATION BAR

When the VWCA applies, the employee is jurisdictionally barred from filing a civil lawsuit against his employer or his follow employees for damages arising from his injury or occupational disease. His exclusive remedy the VWCA. This Workers' Compensation Bar has been interpreted to apply even to intentional torts be coworkers.

EMPLOYERS UNDER THE ACT

Covered Employers

All employers that have 3 or more regular employees must furnish workers' compensation insurance (through a carrier or through self-insurance) at no cost to its employees. Regular employees include part time employees, but does not include casual employees (employees performing work not normally performed by the employer) and certain other types of employees. Sole proprietors and partners whose employees are eligible for workers' compensation may elect to be covered by the VWCA.

Independent Contractors

Disputes often arise concerning the status of a worker as an employee or an "independent contractor." Independent contractors, unlike employee, are not entitled to workers' compensation. A worker may hold himself out as an independent contractor to avoid withholding of payroll taxes. However, if the worker is injured, he may claim he is an employee in order to obtain benefits under the VWCA. To minimize the risk of such claims, employers should:

Use a written independent contractor agreement to confirm the independent contractor's status;
Issue all independent contractors 1099's and not W-2's;
Verify the worker has his own business license;
Verify the worker has his own federal tax identification number;
Verify the worker has registered with the Virginia Employment Commission as an employer;
Verify the worker has his own insurance;
Verify the worker has his own tools and equipment;
Verify the worker has his own place of business;
Avoid supervision of the worker; and
Pay the worker in progress payments or upon completion, rather than in a manner that resembles payment of wage.

Statutory Employers

A "statutory employer" is an entity which, although it is not the immediate employer of an individual, may be required by the VWCA to provide workers' compensation if the immediate employer cannot (e.g., goes bankrupt). A non-public owner, contractor, or subcontractor may be a "statutory employer" if the work performed by the worker is part of the trade, business or occupation of the owner, a contractor, or a subcontractor. The same principle applies to public entities, but the result depends upon the legal authority of the entity to engage in the activity in question. See Nichols v. VVKR, Inc., 241 Va. 516 (1991); Ford v. City of Richmond, 239 Va. 664 (1990); Rogers v. Vanguard Construction Co., 56 O.I.C. 272 (1974).

Borrowed Servants

If a worker is "loaned" by his employer to another employer, the second employer can become the "special master" of the worker and may be required to provide workers' compensation to the worker. The control exercised over the worker by the borrowing employer is the most important factor is determining whether a borrowed servant relationship exits.

COVERED RISKS

Types of Risks Covered

The VWCA does not apply to every injury or illness. Instead it applies only to (1) an "injury by accident arising out of and in the course of employment," or (2) an "occupational disease."

Injury by Accident

An "injury by accident" can involve a physical or mental condition. However, a condition causing disability or pain will not be considered an injury for purposes of the Act unless accompanied by a sudden or obvious mechanical or structural change in the body." Snead v. Harbaugh, 241 Va. 524 (1991). Thus, for example, most cumulative trauma is not covered by the Act. Likewise, injury to reputation caused by defamation is not compensable.

Arising Out Of the Employment

Some states adhere to a "positional risk test. Virginia, however, adheres to the "actual risk test," which has been expressed as follows in the recent case of Lear Corporation Winchester And Employers Insurance of Wausau V. Anna M. McFarland, Record No. 2139-98-4 (Va. Ct. App. 5/11/99 unpublished): "In order to receive compensation benefits, claimant must prove that she suffered an injury by accident that arose out of and in the course of the employment. An injury 'arises out of' the employment if a causal connection exists between the claimant's injury and the conditions under which the employer requires the work to be performed, or some significant work related exertion caused the injury. Under this test, if the injury can be seen to have followed as a natural incident of the work and to have been contemplated by a reasonable person familiar with the whole situation as a result of the exposure occasioned by the nature of the employment, then it arises 'out of' the employment. But it excludes an injury which cannot fairly be traced to the employment as a contributing proximate cause and which comes from a hazard to which the workmen would have been equally exposed apart from the employment. The causative danger must be peculiar to the work and not common to the neighborhood. It must be incidental to the character of the business and not independent of the relation of master and servant. It need not have been foreseen or expected, but after the event it must appear to have had its origin in a risk connected with the employment, and to have flowed from that source as a rational consequence."

Arising In The Course Of the Employment

The phrase "in the course of" employment refers to the time, place and circumstances under which the accident occurs. An accident occurs in the course of employment when it takes place within the period of employment at a place where, given the nature of the work, the employee reasonably may be expected to be performing the duties of his employment or doing something reasonably incidental thereto.

Causation

Causation never should be taken for granted. The claimant must establish a causal connection between his injury and his employment. It is not enough to show that a physical condition occurred during work. This issue is presented, for example, where there is an "idiopathic" or unexplained injury, e.g., a claimant unexplainedly blacks out and is injured while driving a motor vehicle during his work hours.

Occupational Disease

In general, the VWCA defines an "occupational disease" as "a disease arising out of and in the course of employment, but not an ordinary disease of life to which the general public is exposed outside of the employment." Va. Code Section 65.2-400(A).

The VWCA (Va. Code Section 65.2-400(B)) provides that a disease shall be deemed to arise out of the employment only if there is apparent to the rational mind, upon consideration of all the circumstances:

(1) A direct causal connection between the conditions under which work is performed and the occupational disease;

(2) It can be seen to have followed as a natural incident of the work as a result of the exposure occasioned by the nature of the employment;

(3) It can be fairly traced to the employment as the proximate cause;

(4) It is neither a disease to which an employee may have had substantial exposure outside of the employment, nor any condition of the neck, back or spinal column;

(5) It is incidental to the character of the business and not independent of the relation of employer and employee; and

(6) It had its origin in a risk connected with the employment and flowed from that source as a natural consequence, though it need not have been foreseen or expected before its contraction.

Under recent amendment to the VWCA, hearing loss and the condition of carpal tunnel syndrome are not occupational diseases, but are ordinary diseases of life as defined in the Act.

See Va. Code 65.2-400(C).

Ordinary Diseases of Life

Under some circumstances an "ordinary disease of life" may be compensable. The VWCA (Va. Code Section 65.2-401) provides that an ordinary disease of life to which the general public is exposed outside of the employment may be treated as an occupational disease if each of the following elements is established by clear and convincing evidence, (not a mere probability):

(1) That the disease exists and arose out of and in the course of employment as provided in Virginia Code Section 65.2-400 (which governs occupational diseases) with respect to occupational diseases and did not result from causes outside of the employment, and

(2) That one of the following exists:

a. It follows as an incident of occupational disease as defined in this title; or

b. It is an infectious or contagious disease contracted in the course of one's employment in a hospital or sanitarium or laboratory or nursing home as defined in Virginia Code Section 32.1-123, or while otherwise engaged in the direct delivery of health care, or in the course of employment as emergency rescue personnel and those volunteer emergency rescue personnel referred to in Virginia Code Section 65.2-101; or

c. It is characteristic of the employment and was caused by conditions peculiar to such employment.

Compensability Presumptions

The VWCA supplies presumptions of compensability under certain circumstances. For example, Virginia Code Section 65.2-402(B) provides that "hypertension or heart disease causing the death of, or any health condition or impairment resulting in total or partial disability of (i) salaried or volunteer firefighters, (ii) members of the State Police Officers' Retirement System, (iii) members of county, city or town police departments, (iv) sheriffs and deputy sheriffs, (v) Department of Emergency Services hazardous materials officers, and (vi) city sergeants or deputy city sergeants of the City of Richmond shall be presumed to be occupational diseases, suffered in the line of duty, that are covered by this title unless such presumption is overcome by a preponderance of competent evidence to the contrary."

The VWCA provides employers the ability to take steps to guard against these presumptions operating to result in awards being entered for non-occupational diseases. For example, Virginia Code Section 65.2-402(D) provides that the presumption applicable to hypertension and heart disease of firefighters imposed by Virginia Code Section 65.2-402(B) "shall only apply if persons entitled to invoke them have, if requested by the private employer, appointing authority or governing body employing them, undergone preemployment physical examinations that:

(1) were conducted prior to the making of any claims under this title that rely on such presumptions;

(2) were performed by physicians whose qualifications are as prescribed by the private employer, appointing authority or governing body employing such persons;

(3) included such appropriate laboratory and other diagnostic studies as the private employer, appointing authorities or governing bodies may have prescribed; and

(4) found such persons free of respiratory diseases, hypertension, cancer or heart disease at the time of such examinations."

Defenses to Liability

A number of specific defenses are recognized under Virginia Code Section 65.2-306. Specific written notice of these defense must be given no less than 15 days before the hearing on the claim.

wilful misconduct;
intentional self-inflicted injury;
workplace violence (attempt to injure another);
intoxication;
use of nonprescribed controlled substance (drug abuse);
willful failure or refusal to use a safety appliance;
willful failure or refusal to perform a duty required by a statute; and
willful breach of reasonable employer rule brought to attention of employee prior to accident.

Other defenses also may be asserted. For example, an employer can avoid workers' compensation liability by establishing (1) a material misrepresentation intentionally made by the employee on his employment application or other employer documentation, (2) reliance by the employer upon the misrepresentation, (3) detriment to the employer caused by the reliance, and (4) a causal relationship between the misrepresentation and the injury.

Also, if the employee claims partial disability, then he has a duty to market his residual wage earning capacity. If he fails to do so, compensation (but not medical benefits) can be denied.

BENEFITS

The following are the primary benefits generally available under the VWCA:

1. Compensation for loss of earnings (two-thirds of employee's average weekly wage, tax-free, for up to 500 weeks). Note: Employer who claims partial disability has a duty to market his residual wage earning capacity.

2. Scheduled benefits for loss of specified body parts, e.g., thumb.

3. Lifetime medical care.

4. Vocational rehabilitation training.

5. Death benefits to surviving spouse and dependants.

OVERLAP WITH OTHER LAWS AND CONSIDERATIONS

Few situations which involve workers' compensation will involve only workers' compensation. In any situation involving an employee's medical condition, the following also must be considered:

The Americans with Disabilities Act, or ADA (e.g., the employer's duty of reasonable accommodation to ADA disabilities);
The Family and Medical Leave Act, or FMLA (e.g., the employer's obligation to provide up to 12 weeks of unpaid FMLA leave for serious health conditions of eligible employees);
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and 42 U.S.C. Section 1983 (e.g., the possibility that granting favorable treatment to one employee may result in claims of discrimination when other employees are denied similar treatment);
The Occupational Safety and Health Act (e.g., the employer's obligation to provide a safe workplace);
The Internal Revenue Code (the employer's obligation to properly administer payroll);
The Employee Retirement Income Security Act, or ERISA (e.g., the employer's fiduciary duty to properly administer employee benefit plans);
The National Labor Relations Act (e.g., the employer's obligation to bargain over changes in terms and conditions of an injured worker's employment);
The Longshore & Harbor Worker's Compensation Act, or LHWCA (e.g., the benefits the employer is required to provide when there is concurrent jurisdiction of the two statutes);
The employer's policies and practices governing sick leave, vacation, personal leave, and other types of leave (e.g., the employer's obligation not to charge compensable days against sick leave);
The employer's policies and practices regarding drug and alcohol testing (e.g., pre-employment physicals, post-accident testing, return to work certifications);
The employer's policies and practices regarding discipline and discharge (e.g., the employer's right to terminate an employee who willfully violates a safety rule);
Workplace morale (e.g., the employer's need to maintain morale and avoid unionization);
Financial accountability (e.g., the employer's need to maintain an economically profitable workforce); and
Public relations (e.g., the employer's need to manage political issues).

CONCLUSION

The worker's compensation system is complex, and a thorough understanding of the applicable statutes, Commission Rules, and case decisions is necessary if workers' compensation claims, whether potential or asserted, are to be handled effectively. Moreover, adequate risk management required that any situation involving worker's compensation also be evaluated with respect to the other applicable laws, and that all potential legal claims be assessed. Piecemeal or ineffective handling workplace injuries and illnesses is virtually certain to result in the employer incurring unnecessary risk and liability; the best results are achieved through the use of a comprehensive approach to human resource management focusing on workplace health and safety.