The Indiana Worker’s Compensation Act (the “Act”) has been a part of the law of Indiana for over 100 years and it affects practically all Indiana employees and employers. Employers are required to purchase insurance for worker’s compensation.1 Costs of worker’s compensation versus the benefits provided are discussed in most legislative sessions. Yet, the Act moves on under the radar in many circles. So, why was the Act created and what does it do? This article discusses a brief history of the Act, why it was enacted, and it provides a brief overview of the rights and responsibilities contained in the Act. Also, this article advocates for legislative action to address issues that face injured workers.
The Act, enacted in 1915, may well be the first intervention by the Legislature to regulate the employer-employee relationship, which has been the subject of numerous amendments over the ensuing century. The Act is a special statutory proceeding enacted in response to the Industrial Revolution when “more and more men poured their lives, their limbs, and their health into the might of industry,” and an estimated 80% of workers’ common law actions for work injuries were defeated by employers’ assertion of contributory negligence or assumption of the risk defenses. 2 At the time it was enacted, the object of the Act was to furnish “employees and their dependents an absolutely certain indemnity in case of injury.3 The purpose of the Act is “to promote the prevention of industrial accidents; [and] to cause provision to be made for adequate medical and surgical care for employees;[.]”4 The foundation of the Act is social justice: “The industry should bear the burden of its accidents, and the cost thereof should be added to the selling price of its products, and be distributed among the consumers.”5 “It is the longstanding rule of this jurisdiction that terms contained in our Workmen’s Compensation Act are to be liberally construed so as to effectuate the humane purposes of the Act; doubts in the application of terms are to be resolved in favor of the employee, for the passage of the Act was designed to shift the economic burden of a work-related injury from the injured employee to the industry and, ultimately, to the consuming public.”6
The Act is the legislative response to the serious social problem of injured workers unable to obtain medical treatment and provide for their families. “Once a workmen’s compensation act has become applicable … it affords the exclusive remedy for the injury by the employee or his dependents against the employer and insurance carrier. This is part of the quid pro quo in which the sacrifices and gains of employees and employers are to some extent put in balance, for, while the employer assumes a new liability without fault, he is relieved of the prospect of large damage verdicts.”7
The Act provides the exclusive remedy for personal injury or death by accident arising out of and in the course of employment and the Worker’s Compensation Board (the “Board”) has exclusive jurisdiction to determine the rights and responsibilities of employees and employers under the Act.8 The Board Members are appointed by the Governor to serve four year staggered terms. The Board consists of seven Members, six who are assigned to geographical regions around Indiana, and one serves as Chair.
Elements of Compensability
For the Act to apply to an injury, the injured employee must prove: 1) personal injury or death by accident; 2) arising out of employment; and 3) arising in the course of employment. Once these three elements are met, the Board has exclusive jurisdiction to determine the parties’ rights and responsibilities. If all three are not met, the case may proceed in the courts.9
“Personal injury or death by accident” means unexpected injury or death.10 “Arising out of employment” refers to the causal connection between the injury and work. The courts look to whether the risk of the injury was related to the employment, personal or neutral. Only those risks that are related to the employment or are neutral satisfy this element of compensability.11 “Arising in the course of employment” considers the time, place, and circumstances of the injury. The injury must occur within the period of employment, at a place the employee may reasonably be, and while the employee is performing a duty for the benefit of the employer or incidental to the employment.12
The Act provides three main benefits for a compensable injury: Medical Treatment, Temporary Disability and Permanent Impairment.
The injured employee is entitled to all the medical treatment that is necessary for the injury. Although there are limits to the other benefits, there is no limit to the amount of medical treatment to which an injured employee is entitled, provided the treatment is necessary. In Indiana, the employer has the right to direct the medical treatment. In fact, if an injured employee seeks treatment that is not furnished by the employer, the employee will be responsible for payment unless the employer refuses to furnish treatment, in the case of an emergency or for some other good reason.13 Employers argue that giving them control over the medical treatment keeps the costs of worker’s compensation low. However, from an employee attorney’s perspective, the employer’s right to direct treatment causes many injured workers to be concerned about the doctor/patient relationship where the employee is concerned that the doctor does not have the employee’s bests interests in mind. This friction is the source of many disputes. For example, injured employees report that employers tell them they cannot go their own doctor. The truth is injured employees may seek treatment from their own doctor, but they might end up paying for it if one of the exceptions does not apply. Further, if an employee refuses the treatment furnished by the employer, the employee shall be barred “from all compensation and the employee’s right to prosecute any proceeding under [the Act] shall be suspended and abated until the employee’s refusal ceases.”14 Is it any surprise that many times injured employees feel helpless and out of control of their own injuries?
Not many States give the employer so much power over medical treatment. The Illinois Compensation Act, for example, gives the employee a two doctor chain of referral limit, meaning the employee can select a doctor and if that doctor refers the employee to another physician, the employer would be liable for necessary treatment within some limits. Illinois recently enacted a new provision that allows the employer to create a preferred-provider program, which allows the employee to select one doctor from a list.15 The preferred-provider program allowing an employer to create a list from which employees can select their doctors seems like a way to reduce the friction, disputes and feelings of powerlessness that arise out of the employer unilaterally directing medical care.
The Act provides that an injured employee whose injury has caused the employee to be temporarily unable to perform work of the same character and nature as that performed at the time of the injury may be entitled to compensation known as temporary disability.16 An injured employee is entitled to Temporary Total Disability (“TTD”) if the employee is unable to work due to a work injury. TTD is paid at 2/3 of the employee’s average weekly wage, which is calculated by averaging the employee’s weekly wages for the 52 weeks preceding the date of injury.17 There is a 7 day waiting period, and if the injured employee is off more than 21 days, the first 7 days are paid. There is a minimum average weekly wage of $75, and a maximum, currently $1,170, that can be considered for calculating TTD. For injuries occurring on or after July 1, 2016, the most an employee can be paid for TTD is $780 per week.18 TTD is not taxable. The Legislature, from time to time, increases the maximum amount that an injured employee can be paid in TTD. Nevertheless, it is not difficult to imagine the crushing financial blow suffered by an employee who is injured and unable to work, and whose wages average more than $1,170 per week.
TTD may not be unilaterally terminated by the employer unless the employee has returned to any employment, dies, refuses to accept the medical treatment or suitable work furnished by the employer, has already received 500 weeks of compensation which is the maximum amount the employer is liable to pay for compensation, or the employee is unable or unavailable to work for reasons unrelated to the compensable injury.19 However, when the employer’s doctor releases the employee to return to work, TTD can be terminated. At that time, if the employee disagrees with the termination and does not return to work, the employee has a right to an Independent Medical Examination (“IME”) from a physician who is selected by either both parties or the Board and who is paid for by the employer. The Act specifies the procedure and forms that the employer is required to serve on the employee, and the time frame in which the employee must request an IME.20
Many times, the doctor releases the injured employee to work and determines that the injuries have reached a state of maximum medical improvement. (“MMI”). MMI is not defined in the Act; however, the Court of Appeals has held that the employer is not obligated to pay TTD after the effects of the injury become permanent and quiescent.21 If TTD is stopped for this reason, and the employee does not return to work, the employee may request and receive an IME. If the IME determines the effects of the injuries are not permanent and quiescent, temporary restrictions remain and additional treatment is recommended, the employee has a claim for the treatment and TTD from the date it was terminated until the next course of treatment concludes. 22
Being released to return to work and not being released from medical treatment creates a different scenario. That is, if the employee disagrees with the termination of TTD and does not return to work, the employee can request and receive an IME. However, since the employee is still in treatment and has not reached MMI, the issue for the IME would be whether the employee is able to work. Many times in this situation, the IME is postponed until the employer’s doctor releases the employee from treatment.
Light Duty Work and Temporary Partial Disability.
The Act provides an employer relief from paying TTD if the employer procures employment suitable to the employee’s capacity. “Light duty” as it is commonly called, is work performed within temporary restrictions placed by the employer’s doctor. If the employer procures light duty work, and the employee refuses, the employer may deny paying TTD, provided the employer sends notice on a form prescribed by the Board notifying the employee of the consequences of refusal of light duty. However, TTD may continue if the Board finds the refusal justifiable.23
When the employee with temporary restrictions returns to light duty and earns less than the average weekly wage, the employee is entitled Temporary Partial Disability (TPD”) which is paid at 2/3 of the difference between the average weekly wage and the amount actually earned by the employee. 24
The third benefit, permanent impairment, is compensation for loss of physical activity.25 Once the injury has reached a state of permanence and quiescence, temporary disability ceases and the extent of permanent impairment or permanent total disability is determined.26 Compensation for permanent impairment is paid by degree.27 Some injuries are scheduled by body part and the amount of permanent partial impairment (“PPI”) is determined by statute. For example, consider the amputation of the thumb that occurred July 1, 2021. The compensation due for the loss of a thumb is 12 degrees.28 The first 10 degrees are valued at $1,750 each and degrees 11 and 12 are valued at $1,952 each. Thus, the value is $21,404. However, the Act further provides that where an employee suffers a loss by separation the of a thumb, the value of the impairment is doubled, making the total PPI award $42,808.29 Injuries suffered to nonscheduled body parts are paid to the degree of impairment not to exceed 100 degrees.30 For example, the compensation due for a back injury occurring after July 1, 2021, that results in a 5% PPI, would be 5 degrees of compensation at $1,750 each or $8,750.
As with Temporary Disability, the Legislature from time to time increases the value of the degrees. It is important to note that PPI does not include pain and suffering. PPI also does not include permanent damage to the employee’s ability to work unless the employee is permanently and totally disabled, which is discussed in the next section. PPI ratings are rendered by the employer’s doctor, and if the injured employee seeks a second opinion on PPI, the injured employee bears the cost. Further, PPI ratings almost always refer to the one of the Editions of the AMA Guides to Impairment; however, unlike other States, the Board is not bound to follow the AMA Guides.
Impairment is considered to be paid at the compensation rate and determining the beginning date for which compensation is paid is critical because the injured employee has a right to reopen a case on account of a change in conditions provided the claim to reopen is filed within two years from the last date for which compensation was paid.31 Note that the statute does not state two years from the date the compensation was actually paid, but the time period for which it was paid. It is possible for an employee actually receive compensation that is paid for a time period of more than two years before. Many times, the injured employee gives up the right to reopen the case for extra consideration and the parties enter into a full and final settlement.32 This type of agreement is commonly referred to as a “Section 15” settlement. 33
Permanent Total Disability.
Another benefit for permanent injury is when the injury results permanent total disability (“PTD”). If an injury results in PTD, the employee is entitled to 500 weeks of compensation.34 Weeks paid for TTD count toward the 500 total that are to be paid. Total permanent disability requires that employees be so injured that they cannot carry on reasonable types of employment and reasonableness is measured by their physical and mental fitness and the availability of employment.35 The Act also provides compensation pursuant to the Second Injury Fund. The Fund is made up of assessments collected by the Board from all employers and their carriers. One of the Fund’s purposes is to continue to pay the weekly compensation for PTD after the employer has paid 500 weeks, provided the employee remains permanently and totally disabled.36
Future and Ongoing Medical Treatment.
Although the Act does not contain any specific provisions that obligate an employer to furnish ongoing or future medical treatment, it has been construed to allow the Board to order payment of lifetime expenses as a part of an original award.37 In Stofko, the employee became infected with Hepatitis C and the evidence presented showed that this disease could cause serious future medical problems, including the need for a liver transplant. The Court affirmed the Board’s finding that the employer was responsible for the future treatment because the order for the future medical treatment was part of an original award of PPI compensation by the Board.
A problem area for the Act is when an employee suffers an injury that causes a permanent partial disability or the injury precludes the employee from performing work in a certain class of job. For example, if an employee working at an automotive assembly plant injures a shoulder, resulting in a permanent restriction of no overhead work, the only remedy in the Act is compensation for permanent impairment. The employee may receive a $20,000 settlement for the shoulder injury, but the well-paying job is gone. Doing overhead work is an essential function of the job, which would likely preclude any claim under the Americans with Disabilities Act. (The “ADA”). There is no recovery for permanent partial disability under the Act in Indiana.38 There is also no job protection under the Act. The result under the Act is that the employee will most likely be forced to accept employment at a much lower rate of pay. This is a significant problem. Employees who earn between $85,000 and $100,00 per year in the manufacturing or construction trades who suffer a permanent partial disability may need to accept employment where they earn a fraction of what they did at the time of their injuries.
The Act’s answer to this problem is that where a compensable injury results in payment of TTD for more than 21 days and where the injury results in the employee prevents from returning to injured employee’s previous employment, the employee is eligible for vocational rehabilitation services.39 These services are available to all eligible Indiana citizens with disabilities, not just injured employees. The services include retraining and assistance to learn new marketable job skills that can lead to a new career. However, due to budget and staff limitations, and with permission of the US Department of Education, Indiana Vocational Rehabilitation Services has been forced to adopt an “order of selection,” meaning that only those Indiana citizens with more severe disabilities will receive any services. Injured employees with more severe disabilities would probably be considered PTD under the Act and not in need of services.40
Not only does the Act pass the cost of permanently and partially disabled employees to a public agency instead of the employer, and ultimately the consumer, the public agency finds itself having to explain that although injured employees are statutorily eligible for services, they will not receive services. Instead, they will be placed on a waiting list and likely never receive vocational rehabilitation services during their work lifetime. As a result, these individuals and their families are often forced into bankruptcy, repossession of vehicles, or relocation. Their lives and the lives of their families are disrupted, all because an employee suffered a serious, but not catastrophic work injury. In the 18 years of representing injured employees, I have seen this this scenario played out all too often.
Ignoring the economic burden suffered by permanently and partially disabled employees conflicts with the stated purpose of the Act which is to shift the economic burden of a work related injury to the employer and, ultimately, to the consuming public.41 The Legislature could provide sufficient funding for Indiana Vocational Rehabilitation Services so that injured employees can receive services. Another remedy could be for the employer to be responsible for providing vocational rehabilitation services. Perhaps requiring the employer either to bring the permanently partially disabled employee back to work or to pay some premium above the normal PPI value, perhaps 10 times the amount, would result in a more just result; however, such a remedy might mean the employer being forced to create new jobs as an accommodation pursuant to the ADA for partial disabilities that are not work related. At the least, the Legislature should consider the issue to determine the extent of the problem. If we do nothing, we risk creating another army of permanently and partially disabled employees who are forced into terrible consequences simply because they suffered a work injury. Leaving these employees and their families to face the disruption caused by suffering a permanent partial disability is a disservice to Indiana employees and it conflicts with the Act’s goal of social justice.
The Act was enacted to address a serious social problem of how to deal with injured workers who were unable to receive medical treatment and compensation. The Act does furnish unlimited medical treatment under the employer’s control and some compensation without having to prove fault; however, the Legislature should continue to amend the Act to reflect the changes in our economy and address the problem of permanent partial disability.