What happens if I am injured on the job and my employer does not carry Maryland workers compensation insurance?
That’s a problem. While on it’s face it may not seem like such a big deal an employer does not carry a workers compensation policy, but failure to do so could result in negative repercussions for both the employer and the injured worker. Not only are Maryland employers required to have a workers compensation policy to protect their employees in the event of a work injury, but without workers comp insurance the Employer is breaking the law and subject to a penalty. Fortunately, there is some protection provided for the employee in the event this happens.
Ordinarily the workers compensation process can be very confusing even when the employer has a valid workers compensation policy. For the injured worker the process becomes exponentially more difficult to navigate when the employer has no workers compensation insurance and the Uninsured Employers Fund (UEF) must be involved. It is strongly suggested that the injured worker consult a workers compensation attorney to discuss their case if they have found out their employer does not have a valid workers compensation insurance policy.
Why does my Employer not have workers compensation insurance?
There could be a number of reason why an employer does not have an active workers compensation policy. Most often the reasoning seems to be that the policy lapsed and the employer inadvertently failed to update the policy. In some circumstances ignorance is plead. The employer was unaware that they are required by law to carry such a policy. Thankfully, and in the name of humanity, less often is the case the employer chooses not to purchase a workers compensation policy because of the expense. Regardless of the reasoning for not having protection for their injured Maryland employees, employers should realize that in the long run not having an applicable workers comp policy could cost them their business.
What happens to my employer for not carrying Maryland workers compensation insurance?
Under Md. Code. Ann. Labor & Employment §9-1005 an employer is subject to an assessment after an award of compensation has been issued by the workers compensation commission. The assessment must be between $500 to $1,000. In addition the Commission must also order the employer to pay 15% of any award made in the claim not to exceed $5,000 in any 1 claim.
In my opinion, and I would venture to say in the opinion of many, these assessments are not enough. It is important to keep in mind that this assessment is indicated in the Labor and Employment article. The employer is not off the hook after paying only the potential $6,000 assessment.
If the employer decides not to pay the assessment a lien can be placed on the assets of the company. If there simply are no assets to cover the lien the UEF can place a lien on “any officer of the corporation who has responsibility for the general management of the corporation in the state.” The officer would be jointly and severally be liable for the assessment.
The UEF fund can attempt to get reimbursed for the expenses of the claim. Medical bills and compensation can quickly add up in a case and the UEF may want to attempt to recover these monies from the employer. The fund may file a lawsuit against the employer in order to recover its expenses. They may also place a lien against the company assets. The result of which could be devastating and lead to the company failing.
The UEF director will notify uninsured employers that their license to do business in Maryland will be suspended if they do not pay the fund back or fail to pay an assessment. A company without a license is a company that can not operate.
If, in addition to the workers compensation claim, there is also a third party lawsuit such as a negligence lawsuit against a negligent driver the UEF would enjoy the right to place a lien on any benefits from this lawsuit or even subrogate and file the lawsuit on its own.
The UEF may also refer the case to the State’s Attorney’s office for proper criminal proceedings to be brought. Under §9-1108 the criminal penalty is a misdemeanor of up to $5,000 or up to 1 year in prison. Officers of the company are subject to this section of the law which means they may be the ones to pay or spend some time in jail.
What is the Uninsured Employers Fund (UEF)
The UEF was created by state legislation in order to provide payment of medical bills and compensation to injured workers in the event their Employer failed to carry an active workers compensation policy at the time of the injury. In essence the UEF acts as the workers compensation insurer and provides benefits to which the injured worker would otherwise collect from workers comp. It is important to provide injured Maryland workers with workers comp coverage in the event they do sustain work injuries: Without these benefits it is possible the employee would lose his house, health, and welfare.
How does the UEF come up with the money?
In cases that involve a workers compensation insurer, not the UEF, an assessment is paid by the insurer to the UEF fund. The Workers Compensation Commission Order will demand a payment of 1% of each award of permanent disability, death, disfigurement or mutilation and likely under a settlement.
When the Fund has reached $5,000,000 employers/insurers payments may be temporarily suspended until the amount of the fund is below $3,000,000.
The UEF process
Unfortunately for the injured employee of an uninsured Maryland employer the UEF process can take longer than the ordinary workers comp process. The claim is filed as one is ordinarily filed but with “impleading” the UEF as a party. The employee must then wait and respond to a questionnaire that is sent to them which requests information regarding the employee’s injury and work history, but also requests information about the employer. The employer has 21 days to respond with information regarding insurance coverage. The Workers Compensation Commission will then set the case in for a hearing or issue an Award. At a hearing it must be established that there was an employer to employee relationship, and the accident was compensable before any benefits can be awarded. This is often a very frustrating process as many uninsured employers, in my opinion, do not show up to the first and sometimes subsequent hearings. The employers’ failure to show up can result in multiple postponements leaving the injured employee without any benefits. It is not unusual for an employee to go 6 months with no compensation in cases involving the UEF.
Once the award is issued the employer will have 30 days to respond to the award and pay the benefits. The employer may also chose to object to payment of the award. If no objection or payment is made the employee must then request payment from the UEF. The UEF then has the option to pay the award or apply for review. Review being the ability to file for a hearing to determine particular benefit entitlements.
The UEF process is riddled with steps that have the potential of creating delays and ongoing complications. By no means is the process perfect however it does provide help for those injured Maryland workers who truly need it.