Immigration is among the most controversial of current political topics. It is a subject that impacts our society at many points, including worker’s compensation. Employers, carriers and administrators are handling increasing claims involving undocumented workers. The issue most often presented is what benefits, if any, an undocumented worker is entitled to under the Indiana Worker’s Compensation Act. The underlying premise of this issue is that undocumented workers, who are often illegal immigrants, have entered into an employment contract under false pretenses thereby negating the employment relationship and making them ineligible for worker’s compensation benefits. There are, however, many facets to this issue and at present no specific guidance from the present Worker’s Compensation Board as to how such claims should be handled. It appears that a consensus among the Board may be developing but there has yet to be any specific pronouncement by the present Board or any reported appellate court decision regarding an undocumented worker’s entitlement to worker’s compensation benefits.
The Garcia Decision
There is general widespread knowledge of an unreported decision of the Indiana Court of Appeals that unfortunately is often used as guidance for these sorts of claims. In the case of Garcia v. Owens-Corning, the Court sustained a decision of the Worker’s Compensation Board that awarded medical services and permanent partial impairment benefits to an undocumented worker, but denied temporary total disability (“TTD”) benefits on the grounds that the lack of a legal employment relationship made Plaintiff ineligible for income replacement benefits. Because the Garcia case is an unreported decision of the Indiana Court of Appeals, the decision pertains only to that case and is not to be used as guiding precedent in the administration of future claims. The Rules of Appellate Procedure (Rule 65 D) specifically prohibits such use.
Recently, the Worker’s Compensation Board staff has returned Agreements to Compensation providing for payment of disability benefits in cases where the Board was unable to obtain the proper social security number or other identification number clarifying the employee’s work status. The author has insufficient knowledge of whether this is still a consistent practice by the Board, but is aware that the issue has arisen in a number of cases requiring some resolution by the appropriate Board Member. In one instance, an injured employee’s undocumented status was discovered when the Board staff sought to obtain a social security/identification number while processing an Agreement to Compensation for permanent partial impairment (“PPI”) benefits. The undocumented status of the injured employee first became known to the adjuster handling the claim at the time of the Board’s rejection of the PPI agreement. The adjuster thereafter sought to claim credit for TTD benefits paid against the PPI settlement consistent with the Garcia case reasoning. The attorney for the injured employee argued that his client was entitled to the permanent partial impairment benefits regardless of any error in payment of disability benefits and that the claimed credit was inappropriate. The appropriate Board Member informally resolved the dispute in favor of the injured worker.
The emerging consensus of the Board seems to be maintenance of the Garcia reasoning; however, there are some indications that the Board may examine eligibility for benefits under a presumption that the employment relationship is legitimate and defer issues regarding documentation of the employment relationship to other authorities.
In addition, there may be some thought given to the statutory basis for the Garcia decision. In that case, the defendant-employer argued that plaintiff’s entitlement to disability benefits was precluded under Indiana Code §22-3-3-7 which provides that TTD benefits may be terminated when an employee is unavailable for work due to reasons unrelated to the work injury. While this is a sound basis for precluding eligibility for disability benefits, the specific language for the statutory provision that was used addresses termination of disability benefits after payment of such benefits has begun; not preclusion. The criticism then is that Indiana Code §22-3-3-7 addresses termination of disability benefits rather than eligibility for disability benefits. How the Board and the courts may view such argument if presented in another case is unknown; however, it is reasonable to anticipate that this argument will be advanced in any future case that may result in a reported decision by the courts.
A point regularly made in the immigration debate is that the employer-based enforcement mechanisms have not worked for any number of reasons. Employers may be given false documentation; but some also suspect there could be lax enforcement of applicable law, or violation of the law. This dynamic requires the Worker’s Compensation Board to examine the employment relationship under laws that may be outside of its jurisdiction, hence the seeming reluctance of the Board to decide issues better left to other authorities.
A possible conflict of laws arises when an employer/carrier/administrator seeks to keep an undocumented worker inside the United States, most probably inside the State of Indiana, in order to exercise direction of medical care. Taking such action as allowed by applicable Indiana worker’s compensation law, may be in violation of federal laws making it a crime to harbor an illegal alien.
Another facet to this dynamic is the cost of worker’s compensation insurance. The premium charge to an employer (or the securities required by the Worker’s Compensation Board for self insuring employers) is based upon experience and estimated exposure. Those costs are paid but then a reduction of liability estimates results from an injured worker’s ineligibility for disability benefits under the circumstances described above. Again, the practice within the industry on this matter is unknown to the author but some have raised the question of whether premiums or self insurance security requirements should be altered by what is effectively a reduced exposure resulting from payment of fewer TTD benefits to fewer claimants.
Given the lack of clarity in addressing claims involving undocumented workers, these matters could be evaluated and administered using four broad legal concepts:
First, there should be a determination of employment status; i.e. does the worker meet the definition of employee set forth in Indiana Code § 22-3-6-1 (b) and the associated case law. The parties could also look to the provisions of an insurance policy or the terms of an approved self insurance program to determine status in such cases. All further analysis will hinge upon the fundamental determination of whether there is an employment relationship that invokes application of the Indiana worker’s compensation law.
Secondly, there should be a determination of the benefits due to the worker. The traditional worker’s compensation benefit construct is medical services, disability and impairment compensation. If medical services are provided, consideration must be given to where such services are provided and by whom. While employer direction of medical care is appropriate under the Indiana Act, the Worker’s Compensation Board may assess the reasonability of direction of care under the extraordinary circumstances created by claims of this nature.
Experience indicates that medical services and PPI compensation will likely be awarded in these cases. However, there may be circumstances in which other forms of benefits may be owed to the undocumented worker.
Third, attention should be given to claims handling. In many cases involving undocumented workers there is a language barrier. Appropriate administration of a claim by employer representatives, adjusters and attorneys may require increased attention to language translation issues during claim administration, discovery, depositions and adjudication. The Board is likely to expect employers/carriers/administrators to make extra efforts to ensure proper claim administration and disfavor any impact caused by language barriers.
The last area of consideration dovetails with the first. In examining the employment relationship, the parties should also look to whether there are any secondary liabilities created by a contractor/subcontractor relationship. Indiana Code § 22-3-2-14 sets forth requirements and liabilities for such relationships. It is important for an employer and their carriers/administrators in these situations to have some understanding of the risk beforehand. It is not practically feasible for contractors to always know the employees of a subcontractor. Consequently, the statutory requirement that contractors obtain a certificate of compliance from subcontractors verifying proper worker’s compensation coverage has increased importance in this area.
As practitioners of Indiana worker’s compensation law wait for more definitive guidance in cases involving undocumented workers, it appears that the proper claim administration is to assess each claim individually. Board direction is readily available when appropriate in awarding benefits to undocumented workers.