Chapter 2
There is a sole proprietor whose business provides consulting services to other businesses.
The sole proprietor has no other employees; however she currently contracts with seven
independent contractors to perform specified functions ranging from IT to legal analysis. She
operates in a state that exempts employers with fewer than five employees from the workers’
compensation system and she has chosen to not participate. What is a disadvantage for this
sole proprietor associated with her decision to not be a part of workers’ compensation?
a) She might be penalized if her independent contractors should have been considered
employees and she did not cover them under workers’ compensation.
b) She might be sued by one or more of her independent contractors for injuries or
illnesses they sustain while performing work for her business.
c) Neither a) nor b)
d) Both a) and b)
d) Both a) and b)
When should a particular state be listed in Item 3C. of the Information Page of the standard
workers’ compensation policy?
a) When the insured anticipates having employees working in that state sometime
during the policy period.
b) When the state has a monopolistic state fund.
c) When the employer’s insurance company is not licensed to write workers’
compensation insurance in that state.
d) When the insured already has employees working in that state at the time the policy
goes into effect.
a) When the insured anticipates having employees working in that state sometime
during the policy period.
An injury that is outside the scope of a given state workers’ compensation law’s definition of
a compensable injury can often be pursued by the injured worker as a tort claim against an
employer. In other words, it may then be allowed as an exception to the exclusive remedy
doctrine.
a) True
b) False
True
Workers’ compensation pays on a
a) Tort basis.
b) Contributory negligence basis.
c) Comparative basis.
d) No-fault basis.
d) No-fault basis.
All states are required to use NCCI as their rating bureau for workers compensation.
a) True
b) False
b) False
What purpose is served by a “reciprocity” agreement in workers’ compensation?
a) It tries to guarantee that an employee cannot sue his or her employer for injuries that
are not compensable under workers’ compensation.
b) It’s an understanding between individual states declaring that workers from their own
states who are injured as out-of-state workers will only be covered by their own
workers’ compensation statutes.
c) It’s an agreement between individual fellow employees that allows each to be held
personally liable for the other’s injuries when negligence is involved.
d) It’s an agreement between all insurance companies writing workers’ compensation
insurance in a given state that describes how much each company will pay into a
second injury fund.
b) It’s an understanding between individual states declaring that workers from their own
states who are injured as out-of-state workers will only be covered by their own
workers’ compensation statutes.
Adam was supervising a sub-contractor’s work on a construction project when he was
injured as the result of an accident arising out of and in the course of his employment.
Believing the sub-contractor to be negligent, Adam sued the sub-contractor. The sub-
contractor, in turn sued the Adam’s employer for its alleged negligence in contributing to the
accident. This is known as a
a) Third-party over action.
b) Mess.
c) Dual capacity case.
d) Loss of consortium claim.
a) Third-party over action.
Which of the following is least likely to be permitted to benefit from the exclusive remedy
doctrine?
a) An otherwise non-exempt employer who fails to obtain workers compensation
insurance.
b) An insurance company that provides workers compensation insurance coverage to an
employer.
c) An uninjured fellow employee involved in an accident injuring another worker.
d) A company considered by law to be the direct employer of an injured worker.
a) An otherwise non-exempt employer who fails to obtain workers compensation
insurance.
Under this common law defense used frequently before workers’ compensation laws existed,
as long as the employer could show that the injured employee was partially at fault for the
accident, the employer was relieved of all legal responsibility for the injury despite perhaps
being partially at fault as well. Identify this common law defense.
a) Concurrent negligence
b) Assumption of risk
c) Attractive nuisance
d) Contributory negligence
e) Fellow-servant rule
d) Contributory negligence
Under a retrospective rating plan, an insured business
a) pays a premium to the insurer during the policy term and then receives a sliding
dividend if their losses are better than expected.
b) pays a premium to the insurer when the coverage begins, and the premium is later
adjusted after the policy expires based on changes to the insured's loss experience
from that particular coverage year.
c) pays a premium to the insurer when the coverage begins, and the premium is later
adjusted after the policy expires based on changes to the insured’s job classification.
d) pays a premium to the insurer after the policy expires, which is based only on the
insured's experience modifier.
b) pays a premium to the insurer when the coverage begins, and the premium is later
adjusted after the policy expires based on changes to the insured's loss experience
from that particular coverage year.
Very generally speaking, under which of the following categories of employment are
workers commonly considered covered for workers’ compensation purposes?
a) Noncitizens
b) Domestic help (in the home)
c) Real estate agents or brokers
d) Agricultural laborers
a) noncitizens
Workers’ compensation insurance contracts can be cancelled
a) only by the policyholder at any time with no minimum notice requirements to the
insurer.
b) only by the insurer but only after the policy has been in force for at least six months.
c) by either the policyholder or the insurer but only for reasons pertaining to claims
handling disagreements.
d) by either the policyholder or the insurer but with a minimum amount of notice to the
other party.
d) by either the policyholder or the insurer but with a minimum amount of notice to the
other party.
In a minority of states, if a workers compensation insurer makes an unreasonable claims
decision with regard to an injured employee’s claim, the injured worker might be able to
pursue a tort lawsuit against the insurer under which of the following exclusive remedy
exceptions?
a) Fraudulent concealment
b) Bad faith claims practices
c) Violation of federal law
d) Dual persona doctrine
b) Bad faith claims practices
Early in the history of the movement to compensate victims of workplace accidents, common
law was modified by employers’ liability laws. Which of the following statements is (are)
correct statements about employers’ liability laws?
a) Employers’ liability laws were no-fault laws that did not require that injured workers
prove employers negligent.
b) Employers’ liability laws were only passed at the state level with no such federal law
ever passed.
c) Employers’ liability laws removed the ability of employers to use particular common
law defenses to defeat claims by injured workers.
d) Employers’ liability laws were usually directed at very specific industries.
e) Both c) and d).
e) Both c) and d).
The Discount Ratio (or D-Ratio) is used in the experience modification factor calculation to
determine
a) the percentage of the total expected losses that are assumed to be related to primary
loss amounts (i.e., less than $18,000).*
b) the ratio of losses paid to the premium amount paid by a given employer.
c) the percentage of total actual losses that are considered excess loss amounts (i.e.,
greater than $18,000).
d) the percentage of actual losses that are specifically excluded from the experience
modification factor calculation.
a) the percentage of the total expected losses that are assumed to be related to primary
loss amounts (i.e., less than $18,000).*
Daily double. Refer to question 1 of chapter 2
From the information in the previous question, which of the following is likely the most
important factor in determining whether one of her independent contractors is considered an
employee rather than an independent contractor under workers’ compensation?
a) The contractor was hired by the sole proprietor after an open and extensive search.
b) The contractor is paid a salary by the sole proprietor.
c) The sole proprietor has defined the scope of the contractor’s work.
d) The sole proprietor retains the right to control all aspects of the contractor’s work.
d) The sole proprietor retains the right to control all aspects of the contractor’s work.
Coverage for workers under the Longshore & Harbor Workers Compensation Act
(L&HWCA) can be added to the standard workers’ compensation policy by endorsement.
a) True
b) False
a) True
Which of the following legal standards of proof is generally the least challenging for an
injured worker to satisfy in order to be permitted to bring a direct tort action against an
employer?
a) Deliberate intent
b) Specific intent
c) Negligence
d) Substantial certainty
d) Substantial certainty
Which of the following is NOT considered a category for citations or penalties levied by
OSHA?
a) Other-than-serious violation
b) Programmed violation
c) Willful and repeated violation
d) Serious violation
b) Programmed violation
The initial basic premium paid by Janet’s company for its workers’ compensation
retrospective insurance program was $50,000 paid at the start of the annual policy period.
Losses were relatively low during the first eighteen months after the policy coverage began
so that Janet’s company received a refund of $15,000 at the first retro premium adjustment.
At the second retro premium adjustment twelve months later, the retro premium was
calculated to be $75,000. How much is Janet required to pay to the insurance company after
the second retro premium adjustment? Ignore any maximum or minimum premium factors.
What is the difference between a contractor and an employee?
Discuss / Agree (Im done googling these questions)
The Jones Act is a federal law creating an opportunity for injury compensation to be paid out to:
Merchant Marines
Assume that an injured worker who is prevented by the exclusive remedy doctrine from
directly suing his employer, decides to sue a potentially negligent contractor instead. The
contractor, in turn, brings the employer into the lawsuit as a third-party defendant based
strictly on the terms of its contract with the employer wherein the employer has agreed to pay
for similar losses incurred by the contractor. This is an example of
a) a third party over action involving contribution.
b) a dual persona lawsuit.
c) a third party over action involving indemnification.
d) a loss of consortium claim.
c) a third party over action involving indemnification.
Most workers’ compensation laws today replace
67% of income
What is a retrospective rating plan?
Workers compensation Retrospective Rating Plans are insurance policies with a built in mechanism to allow employers to share in the financial risk and reward with regard to their insurance coverage. Retro plans are typically designed for companies that pay $250,000 or more for a standard workers comp policy.