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Coronavirus/COVID-19: Frequently Asked Questions About CIRSA Coverages and Related Issues

By Tami Tanoue, Executive Director and Sam Light, General Counsel

March 18, 2020

The Coronavirus/COVID-19 pandemic is impacting every sector of our country and state, including municipal governments. As CIRSA members grapple with responses for the protection of their citizens and employees, some common questions are surfacing. We will keep this post updated with answers to these FAQs.

As you can see, some of the questions, especially as they pertain to coverage, are answered in the negative. Unfortunately, most kinds of insurance were not designed for the kinds of crises generated by pandemic situations and, in fact, specifically exclude such situations. As you can imagine, there would be no way for an insurer to underwrite – to assess and establish a price for – the types of risks that a worldwide pandemic implicates.

Also, keep in mind that these are general answers to general questions. An actual coverage determination is case-specific and fact-specific. To resolve specific questions, members are welcome to contact us for further discussion. We may suggest that you file a claim so that specific circumstances can be investigated and a determination made.

Question: Would an exposure to coronavirus/COVID-19 in the workplace be covered by workers’ compensation?

Answer: This is a complicated issue. That’s because coronavirus/COVID-19 is most likely characterized properly as an illness rather than an injury. And workers’ compensation rules around compensable “occupational diseases” are difficult to sort out when the illness in question is one that is community-spread as well as potentially present in a work setting.

To explain a bit more, in Colorado injuries within the workers compensation system fall into two categories: (1) accidental injuries, which are traceable to a particular time, place, and cause, and (2) occupational diseases, which are the result of exposure occasioned by the nature of the employment.

Contagious diseases, particularly those that are community-spread, simply do not fit well within either category.  Further, the workers compensation rules do not specify what must be shown to prove that a contagious disease arose out of and occurred within the course and scope of employment.  And, finally, workers’ compensation claims must of course be handled on a case-by-case basis, and compensability determinations must be made with attention to the specific details of the claim.

In short, there is no one-size-fits-all answer to this question.  On one hand, if the employee was working at the time of the exposure and can establish a causal connection between their employment duties and the infection, then the claim may be compensable.  On the other hand, if the virus is widespread throughout the community, it may be difficult for the employee to establish that coronavirus/COVID-19 was contracted at work.

Thus, our best recommendation with respect to workers compensation is to follow the normal employer protocols.  Therefore, in the event an employee reports a claim alleging an injury or occupational disease for an exposure or suspected exposures, you should document the incident well, complete the normal workers’ compensation paperwork, file a claim so that CIRSA can investigate, and seek medical attention promptly.

Also, with respect to coronavirus testing, if an employee believes they may have symptoms, the employer should tell the employee to get tested by any provider of their choice.  Pursuant to a recent directive of the Colorado Division of Insurance, the cost of the test may be covered by health coverage without cost to the employee, though the emergency regulation formalizing this directive has not yet been issued.  If the test costs are submitted in connection with a workers’ compensation claim, CIRSA will evaluate whether the costs are payable under the claim.

Question: Some or all of our operations are being shut down due to coronavirus preparation or response. This will mean revenue losses in areas like recreation programs. Does “business interruption” coverage apply to such revenue losses?

Answer: “Business interruption” or “loss of business income” coverage is a portion of your property coverage that applies in certain circumstances when a property loss results in a loss of revenues. However, for this coverage to apply, there must be direct physical loss of or damage to the member’s property, caused by a covered cause of loss. A covered cause of loss might include, for example, a tornado destroying a recreation center. In such a situation, the “business interruption” element of the member’s property coverage would apply to the loss of “business income” the member sustained due to the interruption of operations during the period of restoration.

You can see that, in the case of a closure of a recreation center as a precautionary measure in connection with pandemic preparation or response, there would be a loss of revenues, but that loss would not be connected to direct physical loss of or damage to the recreation center. Thus, the business interruption element of your property coverage would not apply to that revenue loss.

And, in any event, the property coverage does not apply in the instance of a discharge, dispersal, or release of any pathogenic materials, such as a virus. This is a long-standing exclusion to the property coverage.

Question: Does the CIRSA liability coverage include any coverage to help us pay for an employee’s leave due to a coronavirus/COVID-19-related circumstance?

Answer: Liability coverages generally apply to a third-party liability claims, such as a claim where someone alleges injury because the member has failed to meet a duty of care and bears legal responsibility for the injury. Thus, coronavirus-related absences are not the type of situation to which liability coverages would apply.  Moreover, the unprecedented events resulting from the coronavirus pandemic aren’t suitable for property coverage and may not be covered by workers’ compensation, as discussed above.

Certainly, state and federal authorities are considering resources to assist businesses, governments, and individuals as we all grapple with the issues. For example, the Colorado Department of Labor and Employment (DOL) announced recently that some workers affected by temporary closures due to COVID-19 will be eligible to receive unemployment benefits.  You can find DOL’s resources page on this issue here.  There are some additional links to FAQs and other information on that page, but you’ll see that even the FAQs highlight that the scope and amount of additional unemployment benefits is currently unknown, pending any federal and/or state proposals and emergency rules.

It’s likely that there will be continued discussions about broadening unemployment compensation to deal with extended absences for coronavirus/COVID-19 even though the employee will not be “looking for work” during that time.  In addition, we understand the DOL has been pointing employers to its Work-Share Program as an alternative to layoffs.  The Program provides some wage replacement if the employer meets the Program requirements and can provide work such that hours in the work group are not reduced by more than 40 percent.

While we have not yet heard of any federal or state enhanced leave program—other than the employer-paid HELP mandate discussed below—we have heard of employers considering temporary changes to leave policies, such providing more or unlimited sick leave or not charging people’s sick leave during this time.  Other employers are looking at some form of leave replenishment.  These would also be at the employer’s expense absent a backfill program, but are an alternative approach to providing some compensation in form of leave.

Regarding the HELP Rules, Governor Polis  announced recently the issuance of emergency rules that temporarily require employers in certain industries to provide up to four days of paid sick leave to employees who are being tested for COVID-19.  The link to the home page for the Rules is here. Under the Rules, employers engaged in certain fields, such as leisure and hospitality, are required to provide up to four days of paid leave for testing.  It’s not entirely clear how the Rules apply to municipalities, but the term “employer” does include local governments.  CIRSA members may already provide paid sick leave to all employees sufficient to meet the HELP Rules mandate—in which case the Rules don’t apply—but if not, these Rules may be a basis under which a member may be obligated to pay an employee at least a few days of leave if they were out for the reasons covered by the Rules, apart from temporarily losing their hours.

Members should also look to other coverages they may have in place. For example, many members have short-term disability benefits in place. Check with your short term disability provider for any waiting periods and other requirements that may apply, such as a requirement of a diagnosed COVID-19 illness.

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