Pandemics in the Workplace

How a Flu Pandemic Impacts Workers’ Comp

Influenza is nothing new. Seasonal flu epidemics — disease outbreaks with more cases than normal— occur annually killing between 250,000 to 500,000 people worldwide. While most deaths associated with influenza in industrialized nations occur among people age 65 or older, an epidemic can cause serious public health and economic problems, including high levels of worker absenteeism and productivity losses.

When influenza viruses reach pandemic proportions — or a worldwide epidemic of the disease — the results can be devastating. So as H1N1 virus, or swine flu, continues to spread across the globe, the world has begun to take notice. For some, H1N1 also stands as a stark reminder of a much deadlier flu pandemic just a few years ago, H5N1, or avian flu.

Insurance Implications

A pandemic’s effect on assets of any organization whose business involves the gathering of people could be severe. Most businesses would find no coverage for losses resulting from a pandemic. To combat the potential impact, it’s important for businesses to have a crisis plan in place, says Dr. Steven Weisbart, the Insurance Information Institute’s chief economist and resident pandemic expert. Employers need to adopt special policies for emergency times like this so their business is impacted less, Weisbart advises.

“There’s very little insurance for the business implications of supplier disruptions other than the usual perils,” he said. “This (swine flu) is not on that list so therefore would not be an insured event.” Not only suppliers but also customers are at risk. In a pandemic, “you would potentially see people staying home from movies or malls. There is no coverage for business interruption that would pay off in those instances either,” he noted.

Weisbart said that unlike the avian flu, where mortality rates have been identified as very high, the swine flu so far appears to be less lethal. But he cautions, it’s still very early. The deadly 1918 flu pandemic had a death rate lower than 2 percent, he said, and that flu killed some 40 to 50 million people worldwide.

Paul Braun, Aon’s director of casualty claims in the United States says that while businesses may have prepared plans a few years ago in response to the avian flu pandemic, when the threat of avian flu subsided, so did some risk mitigation efforts.

“Like everything else, when the pandemic was considered to be not as much of an issue everyone backed away from it and now we have once again a similar kind of situation,” Braun said. “The same issues apply,” he said. “You need to have a plan. It’s all about protecting the worker. You need to take the appropriate actions as an employer on developing a plan on how you are going to respond depending on the type of industry you are in.”

Workers’ Compensation

Workers’ compensation might be somewhat affected in the property/casualty market should a pandemic take hold, but only for those industries where the flu may have been contracted during the course and scope of the job, experts say.

To be considered an occupational disease and therefore compensable under a workers’ comp policy, the disease must arise out of or be caused by conditions peculiar to the work, says Chris Boggs, associate editor of and author of “The Insurance Professional’s Practical Guide to Workers’ Compensation: From History Through Audit.”

“A worker contracting asbestosis, that’s peculiar to the job. Coal miners, contracting black lung disease, it’s a hazard of the work. But if you’re a grocery store worker and you get sick, that’s not peculiar to the job. That’s peculiar to being a human,” Boggs said. Unless the disease arises out of the job, not because you were at your job, workers’ compensation would not come into play, he added.

While workers’ compensation rules vary by state, compensable claims are very fact specific, says Ken Brown of the National Council on Compensation Insurance Inc.

“Each state has specific rules in regards to what’s covered,” Brown said. In some cases, workers’ compensation coverage for contracting swine flu might not be an issue, perhaps in health care work. “But for most folks, it’s going to be tough to prove where the exposure to the disease took place. It gets back to whether the exposure was in the course and scope of the employment or not.”

In Texas, for example, for a claim to be compensable the exposure to the disease has to be something that occurred within the course and scope of the person’s employment, directly tied back to what they do. “For a health care worker that distance becomes a lot shorter, but for a construction worker where was the exposure? If the health care worker works in a clinic and is dealing with people that have that disease, you might be able to prove that link.”

In the end, workers’ comp coverage ties back to medical evidence, says Aon’s Braun. “Medical evidence and the laws in states — in every case there has to be the facts of the claim and the medical evidence that supports the issue of compensation,” he added. “You are applying proper investigation to make sure this is truly an occupational disease.”