The New Business "Best Practice:"

Last month, we discussed how the lack of CMS guidance in liability cases leaves Medicare and Medicare-eligible people ('Beneficiaries') in the dark about paying for injuries and illnesses they've developed due to exposure to the coronavirus. Many companies count on those populations to make their living. Potential coronavirus exposures that occur in their place of business are now creating liability exposures if/when their clients and customers can tie those exposures to their time within those walls. Those company owners who want to both open their enterprise and reduce their risk of liability for inadvertent COVID-19 exposures should review their reopening processes carefully and build in as many "virus-avoidant best practices" as possible.


It's No Longer Business as Usual

It's hard to know where to start reopening a business that has been shuttered since the onset of the COVID-19 pandemic. Every company that routinely welcomes paying customers onto their premises must make accommodations to keep them safe from a potential coronavirus exposure. Employers are doubly taxed: they must provide as safe an environment as possible for their workers and their customers. Not only could an outbreak at their site create resonating workers’ compensation issues, but it also poses a risk of liability issues when it's a customer who falls seriously ill with the disease.


And those concerns layer over the challenges arising when trying to resume 'normal' operations:

  • Previous vendors and suppliers may not be available, requiring finding new ones or changing out products that are no longer feasible.
  • In many shops, 'social distancing' requires the reorganization of shelving units, dining tables, services bars, and even cash registers.
  • That reorganization often results in fewer 'productive square feet,' which will reduce revenues by a comparable amount.
  • In many jurisdictions, mask-wearing is the order of the day, so customers (should) know to do that. In those jurisdictions where no such mandate exists, business owners must also determine to what extent they want to impose the restriction and how they plan to enforce that new rule.

With so much to think about, it seems apparent that moving forward requires a well-thought-out strategy that balances every contingency, identifies and manages each risk, and maximizes as much as possible the profitability of each transaction.

Managing the Risks Inherent in Reopening During the COVID-19 Pandemic

Perhaps the biggest threat to the reopened company is the risk of inadvertently causing a COVID-19 outbreak. Company owners must manage two separate but similar concerns to ensure their enterprise isn't the next COVID-19 hot spot:


Protecting Workers

Some businesses have a higher risk of triggering an outbreak simply by their nature. Restaurants, hotels, gyms, and spas, to name just a few, must welcome the general public to stay in business. Their workers, therefore, are exposed to whatever contagions their customers carry. The close physical proximity and being indoors contribute to the spread of the virus among patrons and staff alike.


From a workers’ compensation point of view, the answer to one specific question arising from the situation has the potential to impact every employer in the country:


Is COVID-19 an 'Occupational Disease'?

Traditionally, the employer's workers' compensation (WC) insurance policy covers both injuries and 'occupational diseases,' when those arise within the 'course and scope' of the job. The coronavirus and its consequent disease, COVID-19, present a new wrinkle in the discussion about what constitutes 'course' and 'scope' of employment.


'Occupational diseases' typically develop when workers are exposed to toxic substances or materials inherently contained within production processes or employment practices. Firefighters and coal miners frequently develop occupationally-caused lung diseases related to the inhalation of toxic fumes and dust. Healthcare workers often contract the highly infectious conditions they find in their patients, such as tuberculosis or hepatitis.

The coronavirus is not an 'occupational disease' in the traditional sense because its contraction isn't limited to a specific occupation or job. Instead, because it spreads via airborne particles exhaled wherever an infected person might go, it can infect anyone in any position when there are insufficient protections in place to prevent that infection.


The hospitality industry is particularly vulnerable to triggering coronavirus outbreaks because of the frequency of customer turn-over. The more people there are entering the business, the higher the risk that one of them is an asymptomatic person carrying the virus, who, thereafter, unknowingly infects a staff person. Because hospitality workers must - by the nature of their work - interact with potentially infected customers, they can argue that their subsequent infection was, indeed, contracted within the 'course and scope' of their job. Their healthcare costs should be born by their employers WC insurer. The argument tries to move the job-related COVID-19 infection into that class of employment-related 'occupational diseases' that enjoy a "presumption of compensability:" if you contract the virus from a presumed work-based source, then your related healthcare costs are expected to be covered by the WC insurer.


Not surprisingly, there is a lot of push back against the 'presumption of compensability' that limits the employer's opportunity to point out the worker's other possible transmission points (family members, i.e.) and thereby deflect the burden of added COVID-19-related WC premiums.

  • Data retrieved from its 38 states by the National Council on Compensation Insurance (NCCI) notes that the cost of increased WC premiums driven by COVID-19 infections could rise to as much as $81 billion a year. New York states' estimate (not included in the NCCI study) sets that cost at $31 billion just within its borders, which represents an increase of over 350% over its 'typical' annual WC bill.
  • Others argue that coverage for COVID-19 isn't contemplated in the 'Grand Bargain' that established the concept of 'workers’ compensation' in the first place. Because a COVID-19 infection doesn't arise from any specific job but instead floats into the workplace arbitrarily on the breath of a customer, client, or some other party, it shouldn't be considered eligible for coverage by WC insurance.

Also, not surprisingly: those arguments and more are now the focus of discussion for more than one state government and WC insurer.


Protecting Customers

We noted last month our belief that COVID-19 cases will trigger thousands of liability lawsuits, as infected sufferers look for ways to obtain and cover the cost of the healthcare services they need. For sufferers who are also 'Beneficiaries,' those lawsuits will take on added significance. This population is at risk for worse infections with more severe symptoms and often take longer to recover. Further, because they often also have underlying health conditions that complicate their COVID-19 case, they are also more likely to suffer permanent damage and injury. In those cases, they will need COVID-19-related healthcare services for the rest of their lives. Lawsuits filed by members of this population will provide the necessary evidence to ensure that CMS doesn't bear the brunt of those added COVID-19-related expenses in its future healthcare payments. By bringing the suit, Beneficiaries will have access to a separate healthcare fund without imperiling their future Medicare healthcare coverage.


Sensible Precautions for All Populations

Fortunately, implementing safeguards and precautions to prevent business-based coronavirus infections protect all populations as much as is possible, considering what is currently known about how the virus spreads. Today's best business practice is implementing a virus-protection plan to avoid getting hit with unnecessary WC or liability claims for COVID-19 infections.


There are two fundamentals to consider when developing your plan: how to make the physical plant safe, and how to modify business practices to keep workers and customers safe.


Steps to Safeguard Your Workplace

A walk through the place of business and a review of current practices will each reveal vulnerabilities that might cause a virus exposure. Manage whatever threats exist, then change your policies to prevent those risks from emerging again.

  • Studies indicate that social distancing prevents transmissions, so move tables, desks, chairs, seating areas, etc., to sit at least six feet apart.
  • Studies also indicate that masks work by providing a barrier between an infected person and their uninfected neighbor. If you don't have a mask policy in place, develop one that includes both staff and customers, and enforce it rigorously. One or two lost customers aren't worth the costs incurred by triggering a virus outbreak.
  • Sanitation matters more now than ever.
    • Ensure that cleaning supplies kill viruses; not all do, despite their claims to the contrary.
    • Develop company-wide protocols for sanitation management throughout the business day and then monitor those activities every day.
  • Implement a tracking system for both employees and customers, so you know who's been inside your company doors. Tracking slows the spread of the virus by notifying those who may have been exposed and allowing them to isolate themselves so they don't pass it on.
  • Develop a Virus Response Plan that details how your enterprise will react when it discovers a possible virus exposure. It will guide your workers as they work to reduce the likelihood of further infection. At the least, it should detail:
    • How to determine when and where the exposure occurred so practices can be changed to avoid the circumstance in the future;
    • A listing of who might have been exposed, including the identification of both staff and clientele. All should be notified as quickly as possible.
    • Which agencies should receive the report of the outbreak, which might be some or all of your local, regional, and nationally based entities.
    • Most importantly, the plan should lay out how to return to operations with new systems in place to prevent a similar exposure.


It's abundantly clear that covering the healthcare and related costs of just one COVID-19 case are high, and that they become exponentially greater when staff and customers are the sufferers. Establishing appropriate safety precautions throughout the enterprise to protect both staff and customers is imperative for every business struggling to keep afloat in the wake of the COVID-19 pandemic. It's always better to prevent a disaster than recover from one, and all too often, a COVID-19 outbreak has caused the demise of many excellent companies. Don't let yours be one of them.