By Irene Morrill, CPCU, CIC, ARM, CRM, CRIS, LIA CPIW Vice President of Technical Affairs

Transcription

1 TECH TALK Massachusetts Limited Other States Endorsement WC B Has changed effective 6/1/13... August 2013 By Irene Morrill, CPCU, CIC, ARM, CRM, CRIS, LIA CPIW Vice President of Technical Affairs Earlier this year when the Massachusetts Workers Compensation Rating and Inspection Bureau published Special Bulletin No the Massagent publication notified you of pending change. I ve had a few questions in the last couple of weeks regarding the updated Limited Other States endorsement so let s look at the revision. New WC B v. old WC A WC A Massachusetts Limited Other States Insurance Endorsement Wow, just looking at both, the former A was written almost 20 years ago! The 1994 edition was entitled Massachusetts Limited Other States Insurance Endorsement. This endorsement required at least two special bulletins by the WCRIB attempting to describe the intent of coverage under the endorsement. The special bulletins were No written July 2002 and No written November Each time the WCRIB tried to explain the intent of coverage in the 1994 endorsement. The problem with circulars is they are NOT policy language. Bottom-line, actual policy and/or endorsement coverage is determined in court and based on the exact circumstances of the incident. Also, with the LACK of language in the endorsement, I wonder if some of our clients made an ASSUMPTION that there was more coverage than intended or even described by the WCRIB? After all, the client is not sent the WCRIB special bulletins! The 2002 Explanatory Bulletin The WCRIB stated It is the intent of the Endorsement that Pool coverage should follow a Massachusetts employee who is in another state on a temporary basis in furtherance of his Massachusetts employment. The 1994 endorsement states that it will pay promptly the workers compensation law of any state other than Massachusetts, but only if the claim for such benefits involves work performed by a Massachusetts employee. The bulletin reminds us that a Massachusetts employee is someone HIRED in Massachusetts to work PRIMARILY in Massachusetts, but who are TEMPORARILY working in another state. The important notice on the endorsement reminds us that hiring employees to work OUTSIDE of Massachusetts or beginning operations in another state requires us to obtain coverage in that state. The bulletin is a bit more specific saying hey you if you hire people outside of MA to work in that other state, THERE IS NO COVERAGE! The bulletin also tries to tell us that any work or operations other than temporary outside MA is NOT covered. What temporary means was NOT adequately addressed and I m sure some clients took advantage of that! After all, everything is relative, is it not? Massachusetts Association of Insurance Agents 91 Cedar Street - Milford, MA TECH Hotline * * * (FAX)

2 2 The 2004 Explanatory Bulletin This bulletin addressed the issue of temporary since so many were probably pushing the envelope. The bulletin wanted our attention by stating IMPORTANT the purpose of the Endorsement is to describe the limited (I added this emphasis) situation(s) when a Pool policy will pay other state s benefits to a Massachusetts employee who is injured while temporarily working in another state in the furtherance of his Massachusetts employment. (The bulletin DID add the bolding feature to the words in this sentence I would have added more. Actually, I might have said hey look, fool, you are trying to do TOO much with this MASSACHUSETTS policy stop it suck it up and buy coverage in the other states where you are performing work. But then, you know me. The 2004 bulletin tried to define temporary as being within 180 days of the start of the job or contract. It also stated that the Pool policy will not pay other state s benefits if the Massachusetts employee was injured in this other state beyond the first 180 days of the start of the job or contract. The bulletin DID underline the words within, not and beyond. The 2004 bulletin also reminded us that other states benefits only apply to a Massachusetts The bulletin stated that according to Massachusetts case law, an injured worker is generally considered to be a Massachusetts employee and entitled to Massachusetts workers compensation benefits only if either His contract of hire was made in Massachusetts Or His injury occurred in Massachusetts Or both So, if you hire a cleanup person in Connecticut to clean up the jobsite he/she is NOT a Massachusetts employees. If the job in Maine lasts 7 months, there are most probably NO Maine benefits available for the Massachusetts employee injured in Maine on that job. Or, if the contract is for one year and only requires one day a month to maintain landscaping for a Vermont business, the contract is LONGER than 6 months and there would most probably be no Vermont benefits available for that Massachusetts employee injured on the job. The bulletin also cautions us to know what the laws of the state of business are. Even IF the endorsement allows payment of benefit it might NOT meet the state law requirements and will NOT pay the fines for lack of that state W/C benefits coverage. PS, the 1994 endorsement also states that this Limited Other States Endorsement does not satisfy the requirements of that state s workers compensation insurance law. And, yes, this is BOLDED on the endorsement right in the middle IMPORTANT NOTICE one can t miss it! But, is the important notice actually amending or replacing the Part Three Other States Insurance language of the W/C policy or just language on an endorsement? So almost 20 years and two special bulletins later, the endorsement is changed. Since, after all, it has been clear as mud to most of your clients, will the new endorsement fix the confusion? WC B Massachusetts Limited Other States Benefit Endorsement Now, WC B effective June 1, 2013 is entitled Massachusetts Limited Other States Benefit Endorsement. The title as well as the last digit or letter of the endorsement number is different. The former stated it was an insurance endorsement and the newer edition merely states it is a benefit endorsement.

3 3 Changes new from old Change 1 The 1994 endorsement states that Part Three coverage (of the Workers Compensation policy) is AMENDED. The 2013 version states that this endorsement REPLACES Part Three. (Interesting, I could only find a 1994 version. It appears there was a first reprint of WC A effective April 1, The only difference between the 1994 and the April 1, 2005 reprint version was the statement that the endorsement replaced the WC Part Three- Other States Insurance instead of amending it. The 2013 version is much more pronounced in its declaration that this endorsement REPLACES Part Three of the W/C coverage. There is NO doubt now! Change 2 The word insurance is removed AGAIN Paragraph A under the 1994/2005 version stated How this insurance applies while the 2013 endorsement states how this ENDORSEMENT applies. Read the policy and the MA law to determine how the insurance and coverage will apply. Look at this endorsement to see the change to the norm. Change 3 Paragraph A now states: We do not provide other states insurance coverage as described in Part Three of the Policy. Furthermore, the Massachusetts Limited Other States Benefit Endorsement does not satisfy the requirements of another state s workers compensation law. Hello out there earth to client earth to client When you start work in a state OTHER than Massachusetts, and that state is NOT listed in Section 3A of the WC Information/Declaration page, you have a PROBLEM! If this is a pool policy; there will NEVER be a state other than Massachusetts listed in item 3A on the W/C information/declarations page. You as a client have a potentially HUGE coverage and LEGAL problem. Wake up and smell the coffee! Change 4 Paragraph A is also amended to state: However, pursuant to this endorsement, we will pay promptly, when required by the workers compensation law of a state other than Massachusetts, the benefits due to employees pursuant to such other state s law, but only if the claim for such benefits involves work performed by a Massachusetts It USED to say We will pay promptly, when due, the benefits required of you by the workers compensation law of any state other than Massachusetts, but only if the claim for such benefits involves work performed by a Massachusetts This newer version is all about benefits and the injured employee and not about YOUR requirements to meet state law. If the law says the MASSACHUSETTS employee deserves that state s benefits then we pay. But, just what IS a Massachusetts employee?

4 4 Change 5 Paragraph A goes on to add: For purposes of this Endorsement a Massachusetts employee is someone whose contract of hire was made in Massachusetts or whose work for you, as of the date of injury, has primarily been conducted in Massachusetts. Other state s benefits will not be paid if: a. The employee is claiming benefits in a state where, at the time of injury, you have other workers compensation insurance coverage that would cover the injured employee, or b. You were, by virture, of the nature of your work or operations in that state, required by that state s law to have obtained separate workers compensation insurance coverage in that state that would cover the injured NONE of the above language was in the previous endorsement. HOWEVER, the WCRIB had kindly written circulars to alert the insurance agents as to what needed to be done and/or provided to make sure their clients were properly insured. Circulars and bulletins are nice but they are NOT part of the policy. As agents we MUST be aware of the client s actual exposure. What does the client do and WHERE is it done? If the client conducts operations or has workplaces in other states then hopefully a voluntary policy showing all these states in item 3A on the W/C information page can be provided. If a voluntary carrier won t provide 3A status for all the necessary states or the client has been placed in the pool, then MULTIPLE POLICIES MIGHT BE NECESSARY. The above language reminds us that other states benefits will only EVER apply to a Massachusetts The previous edition mentioned this requirement as important notice. Was this notice actually part of policy language or merely a heads up? Now, there is no doubt, it is policy/endorsement language as it is part of the endorsement language that REPLACES Part Three of the W/C policy. Interesting this language appears MUCH stronger than before. First, it now states there is NO other states coverage if you HAVE purchased coverage in that other state as you were supposed to do per that state s law. This is certainly a restriction for duplication of coverage. If there is a MA pool policy with this endorsement and the employer purchased a separate policy for that other state then this policy will NOT participate. There is no primary and excess that other coverage is only. Secondly, your client had BEST be aware of the state law for buying workers compensation in the states it wants to conduct operations. Under the prior version, if your client was a carpenter and had a job that would only take a week in New Hampshire and your client decided to do this job with his Massachusetts employee, there could have been coverage for an injury to this Massachusetts Just so you know, New Hampshire workers compensation law REQUIRES 3A status ALWAYS no job is too small. Would your client have been in violation of New Hampshire law? Yes. But, if the injured employee was a Massachusetts employee, could the PREVIOUS Limited Other State Insurance endorsement have provided New Hampshire benefits if the injured employee opted for them? Yes. Will the NEW edition provide other state s coverage when the employer is in violation of state law? It doesn t appear so! It will be an all around bad day for that client! Change 6 The new version adds a couple of new paragraphs to Paragraph A: 3. If you hire any employees to work outside Massachusetts or begin work or operations in any state other than Massachusetts, you must obtain any insurance coverage required by that state s laws, as this Limited Other States Benefit Endorsement does not satisfy the requirements of that state s workers compensation insurance law.

5 5 4. This endorsement does not affect the payment of Massachusetts benefits under this Policy. The newly added paragraph 3 is based on the former important notice but a tad stronger. This endorsement does NOT apply to employees you hire for non-massachusetts this endorsement does NOT provide ANY insurance coverage required by that state s insurance law. If you begin WORK or operations no matter how long or short... you MUST buy WC coverage in that state to meet that state s insurance law. ALSO, you must obtain ANY insurance required by that state. The state of New York requires 3A status for workers compensation benefits and also requires separate disability policy coverage. This endorsement DOES remind us (and the insurance company) that while the other state s benefits might not be payable, a Massachusetts employee will be provided Massachusetts benefits. Whew! Awareness is half the battle We MUST know where our client perform work or operations as workers compensation coverage is mandatory in every state. If one takes a literal interpretation of this new language, then there appears to be less coverage. If 3A status is required by the state then your client MUST buy state specific coverage, it won t matter how long or short the job is or whether your client is willing to take a chance with getting caught and fined. The Special bulletin No states: The New Endorsement makes clear that it does not provide other states insurance coverage, it does not satisfy the requirements of another state s workers compensation law, and that benefits will not be paid to employees hired to work outside of Massachusetts or to employees working in another state for whom the insured should have obtained separate workers compensation insurance. Remember, your client does NOT receive special bulletins, but you can. The Massachusetts Agent gave you a link to the WCRIB special bulletin but here it is again so that you can read the endorsement, the changes from the old endorsement and cautionary language from the WCRIB regarding the new endorsement. If I can be of service to you, please call me, Irene Morrill, Vice President of Technical Affairs at or me at imorrill@massagent.com. This article has been developed expressly for the members of MAIA. Reprint by other than members without the express permission of the author is not permitted.