The Uninsured Employers Fund: Making a Silk Purse from a Sow’s Ear

By Judge Robert V. Durham, Cookeville

Back in the old days — you know, before 2014 — injured employees of uninsured employers were, in the vast majority of cases, simply out of luck.

While they might be able to obtain a judgment against their employers, it did little good, since the reason most uninsured employers don’t have workers’ compensation insurance is because they don’t have much money in the first place. As the old saying goes, you can’t get blood out of a turnip. (You know, when you think about it, this phrase really doesn’t make much sense. Why would you want blood out of a turnip?)

Therefore, even though they had a compensable injury, employees would be left up the creek without a paddle. (See, there’s another one. How could you ever be “up” a creek without a paddle? Wouldn’t the current always be taking you “down” the creek if you didn’t have a paddle? Who came up with these sayings, anyway?)

However, with the reform to the Workers’ Compensation law, employees of uninsured employers now have a chance to obtain some relief, so long as they meet the requirements and the Bureau decides to give it to them.

Pursuant to Tennessee Code section 50-6-801 et seq., the Bureau created an Uninsured Employers Fund (UEF) from penalties collected from employers who should have been carrying workers’ compensation insurance but were not doing so. Through the UEF, employees of uninsured employers may receive up to $40,000.00 in combined temporary disability benefits and medical expenses, provided they meet certain criteria:

The employee sustained a compensable work-related injury on or after July 1, 2015;
The employee worked for an uninsured employer at the time of his or her injury;
The employee was a Tennessee resident at the time of the injury;
The employee notified the Bureau of the injury and of the employer’s failure to secure payment within a “reasonable time,” but no later than sixty days from the date of injury; and,
The employee obtained an order from the Court, either through a compensation hearing or an expedited hearing, awarding temporary disability benefits and/or medical benefits.

The element most likely to set a trap for the unwary is the sixty-day limit on notifying the Bureau about the injury and the employer’s failure to provide benefits. In “litigation time,” sixty days is a mere blink of an eye, and an unscrupulous employer could easily string a claimant along for most, if not all, of this time. Notably, the phrases “the date of the injury” or “notice to the Bureau” have yet to be interpreted. Therefore, it’s probably worth taking a shot, even if the facts are somewhat ambiguous. The potential reward for claimants far outweigh any cost.

The other notable criterion is that benefits may not be paid from the Fund without an order from the Court resulting from a compensation hearing or an expedited hearing. Whether an order stemming from a settlement agreement between the parties would be considered a “judgment for workers’ compensation benefits” has yet to be addressed. The Bureau can provide benefits following an expedited hearing order, even if additional evidence results in a contrary decision at a compensation hearing. However, payment from the Fund through a compensation hearing can only be obtained for temporary disability benefits and medical expenses. Even though a final compensation hearing may result in an award for permanent disability, the Fund will not pay for that.

Obtaining an order does not automatically entitle claimants to benefits from the UEF. Claimants must submit a request on a specific form within sixty days of the date the employer is obligated to comply with the order, which would be calculated from the appeal deadline or, if there were an appeal, from its resolution.

Further, meeting all of the UEF requirements doesn’t guarantee the receipt of benefits. The Bureau has complete discretion in determining whether to provide benefits, and if so, in what amount. If the Bureau does provide benefits, it can, and likely will, seek reimbursement from the uninsured employer.

Of course, claimants still have the opportunity to recover benefits from uninsured employers even if the Bureau declines to provide any funds from the UEF or does not provide an amount sufficient to cover full reimbursement. Moreover, in addition to temporary disability and medical expenses, claimants may also seek payment of permanent disability benefits from the employer, even if they also received payment from the UEF for other benefits. While more difficult than obtaining benefits from a properly insured employer, it is not impossible. Like they say, there is more than one way to skin a cat. (Okay, not only does this phrase conjure up disturbing images, is it even true? I mean, how many ways can there be, really? I need to find a new way to express myself.)