In West Virginia, workers comp coverage for volunteer fire fighters raise questions of life, death–and big problems for homeowners
A snarl in workers comp coverages for volunteer fire fighters in West Virginia could result not only in loss of coverage but also in at least one court case as well as hefty raises for insurance premiums on homes that would no longer be served by volunteer departments.
According to a mid-June Charleston Gazette article re-posted at a fire-and-rescue trade site, West Virginia legislators were mulling options “as hundreds of volunteer fire departments around the state [were facing] sharp increases in Workers’ Compensation premiums, effective July 1.
Homeowners insurance premiums could triple
“If volunteer fire departments ultimately shut down because of the high workers’ comp costs, residents in those areas would see their homeowners’ premiums nearly triple, Insurance Commission Rates and Forms director Tonya Gillespie told the Joint Committee on Government and Finance.”
The problem is doubly vexing for West Virginia because most of the state relies on volunteer forces; accordingly, many departments are affected–and, potentially, so are a lot of homeowners.
A June 16 piece in The State Journal says that State Fire Marshal Sterling Lewis Jr. explained that “447 fire departments operate in West Virginia. Only 12 are full-time fire departments. Another 16 are a combination full-time and volunteer, and the rest are volunteer.”
Some VFD departments’ rates could more than double
Various sources have reported that volunteer departments in the state have historically paid “suppressed rates” (artificially low) and that the current provider, Brickstreet Mutual, has been losing money since 2006 under laws requiring it to provide coverage. The first of July was to have been the end of that arrangement, and Brickstreet was set to raise the rates, in some cases more than double.
The Journal reported that “[o]ne department in Wayne County would see its premiums increase from $23,000 to $48,000 a year, State Fire Marshal Sterling Lewis Jr. said. Any departments that can’t afford workers’ compensation must shut down and leave residents in those areas without ready access to emergency services.
” ‘We’re hoping that between the executive branch and the legislative branch there could be some quick resolution to the problem because on July 1, that could be doomsday,’ he said.”
Governor pulls off a temporary fix
The doomsday deadline was averted, however, by an agreement reported on June 18 in the Mineral Daily News-Tribune:
“Volunteer fire departments throughout the state will get a reprieve — at least for a year — in the expected skyrocketing costs of Worker’s Compensation premiums.
“Gov. Joe Manchin on Thursday joined Department of Revenue Cabinet Secretary Virgil Helton, Brickstreet Insurance CEO Greg Burton, West Virginia Insurance Commissioner Jane Cline, members of the West Virginia State Firemen’s Association and others to announce Brickstreet Insurance’s decision to delay increasing state’s volunteer fire departments’ (VFDs) workers’ compensation premium rates for one year to allow time for the state to develop a long-term solution.”
Lost wages and severe injuries
One remarkable aspect of the situation involves the method calculating payments to injured volunteers. Premiums are based on awards to fire fighters working for minimum wage, but payouts addressing lost wages are calculated on actual lost wages–not from the unpaid volunteer position but for the person’s regular job income. Thus, an accountant or other highly paid worker can take on the voluntary duty without worrying about the financial repercussions to family in event of an injury.
Another interesting angle is that costs are significant not because of the number of claims but because when injuries do occur, they typically are severe.
According to the Journal, “BrickStreet currently is providing coverage to volunteer firefighters at a 600 to 700 percent loss, meaning it pays out roughly $7 in claims for every $1 it receives in premiums, [CEO Greg] Burton wrote [in an e-mail]. The company still will lose money at a rate of $3.5 million to $4 million a year even after the increase in premiums goes into effect.
“Not all volunteer fire departments will see a large jump in premiums. The increase may range from 3 to 10 percent in some cases, Lewis said. But in others, the increase could be more than 100 percent.”
Dramatic questions over ‘broad form’ liability
More intrigue enters the story due to requirements for supervisors to be covered in case of litigation filed by an inured fire fighter against one of the departments. ” . . . BrickStreet has announced it will stop providing such coverage after Sept. 1,” according to a July 24 article in The Intelligencer. “Other companies also are unwilling to provide the policies, according to the State Fireman’s Association.
” ‘Broad form’ liability policies cover officers and board members of volunteer fire companies. They protect officials against lawsuits by firefighters who are injured in the line of duty. Clearly, a volunteer fire company chief without such protection would have to be a fool to command members of his unit to enter a burning building.”
The intrigue ramps up, according to another Gazette article, from July 26, which reports that “a memo from the state Insurance Commission advises that the VFDs don’t need the coverage.”
Says the Gazette:
“Last week, representatives of VFDs protested at the Capitol, warning that some fire departments may “shut the doors” rather than risk personal liability for injury claims.
“A day later, Commissioner Jane Cline told lawmakers that directors and officers of VFDs don’t need the coverage, since state law gives them immunity under the Government Tort Claims Act.
“Under that law, she said, officials in state government as well as all government subdivisions have immunity from lawsuits stemming from employees’ work-related injuries — unless there is proof the employer had a deliberate intent to put the employee into unsafe working conditions.
But, says one VFD lobbyist, that raises an even larger question.
“There’s some glaring questions that jump out, including why was BrickStreet selling us broadform coverage if we didn’t need it?” said [Sam Love, lobbyist for the West Virginia Fireman's Association]. “There’s a lot of questions out there, that I don’t think this memo leaves firemen with a warm and fuzzy feeling.
“I’m afraid where it’s going to be headed is to a court case,” he said of issues regarding potential liability of VFD directors and officers.
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Have you, a friend or a loved one been injured on the job? Whether you’re merely seeking answers about your rights or believe a lawsuit may be necessary, be sure to seek counsel with attorneys trained and experienced in workers’ compensation. Here’s some resources:
