In today's competitive environment, most US-based medical technology and life sciences companies have employees who travel or work abroad. These employees may experience injury or illness arising out of or in the course of employment while overseas. Employers are naturally concerned with, and may be legally responsible for, the well-being of their employees wherever the employees are working. Consider these international work situations:
How does workers compensation apply in these situations? vIs the employer covered and protected from lawsuits? What is the role of risk management in these circumstances? In this article, we will explore these questions and review the coverages provided by domestic and international policies for Foreign Voluntary Workers Compensation.
As background for this discussion, we know that Workers Compensation insurance is required by state law for nearly all employees, and similar insurance is required under federal law for many employees not covered by the state laws. This insurance protects both employers and employees by offering compensation to employees for injuries suffered on the job, regardless of whether their employers were negligent. In return fro guaranteed workers compensation benefits, generally medical costs, compensatory damages for temporary or permanent disabilities, and lost wages set by each state or the federal government, as applicable, employees gave up the right to sue their employers. This insurance becomes an exclusive remedy for employee-injury compensation, and employers who are subject to the laws must carry workers compensation insurance or become qualified self-insured employers.
The National Council on Compensation Insurance, Inc. (NCCI) manages the nation's workers compensation information, providing analysis, rate making and standard coverage forms that are used throughout the country. The NCCI coverage form used by most states (WC 00 00 01A), does not define a coverage territory for its Part I, Workers Compensation Coverage, and extends coverage in Part II, Employers Liability, to those employees who are "temporarily outside" the United States or Canada. The term, "temporarily outside" is not defined in the policy, and it is often left to the carrier to determine if coverage applies to employees injured outside the United States. This situation leaves some uncertainty; and therefore, the basic workers compensation form is not generally adequate for medical technology and life sciences companies whose employees travel abroad.
There are two solutions available for this coverage:
1. A set of endorsements to the US workers compensation policy, or
2. A separate policy, specifically designed to cover international exposures for employees.
In this first solution, the basic NCCI form can be endorsed to provide some coverage often termed Foreign Voluntary Workers Compensation. The Voluntary Compensation Endorsement (WC 99 00 41) offers coverage for any occurrences of employee injury or disease outside the US and Canada, but not in countries or jurisdictions where trade or economic sanctions imposed by federal law exist. The endorsement extends coverage for both parts of the NCCI form, and provides for "voluntary" payment of the benefits required by the workers compensation law of the state of hire of the employee. The charge for this coverage is minimal, for those employees who are on trips of short durations.
In addition, the NCCI form may be endorsed for repatriation expense and endemic disease coverage. The Repatriation Expense endorsement (WC 99 00 40) offers coverage for the additional expense necessary to transport a seriously injured employee to the nearest adequate medical facility, or in the case of a death of an employee overseas, it will provide for the additional expense to return the employee's remains to the United States. The coverage limit is the same as the Employers Liability limit of insurance in Part II of the NCCI form. This coverage would assist the employee in the first scenario above if the employee, after being stabilized in the local hospital, needed to fly back to the United States for appropriate surgery and treatment of her broken ankle.
The Endemic Expense endorsement (WC 99 00 39) expands the definition to disease to include those illnesses that are endemic or common to certain regions of the world, which may not have been covered by the basic form. In the second scenario above, the employee's illness is a compensable loss, even if the disease is typical in the country he was visiting. With this endorsement, the employer's liability section of the workers compensation policy addresses the consequential injury to the employee's family members. Further, in the event of an unintentional spread of infection to the public the insured's commercial general liability would likely provide coverage.
Most workers compensation carriers routinely provide these endorsements upon request; however, the carriers may have various underwriting standards as to how much international exposure they are willing to cover, or they sometimes take a narrow approach on providing coverage for injuries that do not occur or arise from work related activities. Some underwriting standards may also consider the "temporarily outside" condition to be a definite time period, limited to three to six months, for example, since US employees working overseas permanently are usually eligible for local programs in the countries in which they work. In addition, some carriers may not be willing to provide these endorsements if employees are traveling to certain countries or regions which have exposure to political unrest, war, or other adverse activities. These countries under sanctions are listed on the US Department of Treasury, Office of Foreign Asset Control website: http://www.treas.gov/offices/enforcement/ofac/programs/. An alternative solution to endorsing the domestic workers compensation policy, and perhaps a better one, is available through purchasing a specific international insurance policy.
Foreign voluntary workers compensation insurance is an important component of an international insurance portfolio. Often referred to as Employers Responsibility coverage - in order to distinguish it from domestic workers compensation coverage - this insurance provides the traditional benefits of medical expenses, loss of earnings, employer's liability, repatriation expenses and endemic disease coverages. In addition, the international policy generally provides 24-hour coverage for employees, eliminating the condition that the injury or disease arises specifically from a work related activity, thus covering injuries sustained during travel or "off-duty" activities. The international policy may allow employees the option to choose benefits available in the country of loss, rather than in the state of hire, if the former is more generous. Further, this policy is often broadened to cover third country repatriation, which provides repatriation coverage for third country or foreign national employees to return to their country of origin. Finally, international policies often provide global travel assistance, a valuable benefit which may include medical assistance, emergency referrals, lost document aide, expedited emergency travel assistance and other support for US-based employees traveling to other countries on business. Initiating this coverage benefit generally requires that the employer notify the insurance carrier about the trip prior to departure. Often insurance carriers provide travel assistance cards which give the telephone numbers to access these services in urgent situations.
Employers Responsibility coverage is often a component of a package insurance program that may include international property and general liability, as well as international auto liability coverages. The premium charged for international employers' responsibility may be calculated on payroll based rating as domestic workers compensations or charged based on number, frequency, duration and destination of trips taken by employees.
A risk manager or insurance buyer for a medical technology and life sciences company can be confident in choosing either an endorsement to the domestic workers compensation policy or purchasing an international employer responsibility policy that the scenarios offered above are likely to be covered. The challenge for the buyer is to be certain that coverage evolves along with an exposure and business operations change. Here are some important considerations for risk managers of medical technology and life sciences companies:
The world and its risk are rapidly changing and US-based medical technology and life sciences companies continue to broaden their global connections. With the proper deep awareness of exposures and proper structures to their workers compensation and international insurance program, these companies can be confident that their employees are protected regardless of where they are working.