Does Employer Bankruptcy Halt Workers’ Comp Benefits?

family man looking at billsWhat happens if you are receiving workers’ compensation benefits and you get the news that your employer has filed for bankruptcy and closed down?

Before you panic about your benefits being stopped or delayed, here is some helpful information about how workers’ compensation benefits may be managed in this kind of situation. If you have additional questions about workers’ compensation benefits or you are looking to file a claim, we encourage you to contact one of the experienced Savannah workers’ compensation lawyers from Roden Law.

Will I Still Get Benefits if My Employer Goes Bankrupt?

Georgia law requires any business with three or more workers to carry workers’ compensation insurance, and you may verify that information about your employer on Georgia’s State Board of Workers’ Compensation website.

Workers’ compensation benefits are generally administered in one of three ways:

  • A State-Run Program – This is the option chosen by many employers, especially smaller businesses – or a business in an industry that carries fewer risks for workplace injuries.
  • Insurance Company Program – Many states permit an employer to purchase workers’ compensation insurance through a private insurance company. If this is what your employer did, your benefit checks will come from the insurance company, rather than your employer.
  • Self-insurance – Larger companies that purchase this type of workers’ compensation insurance are first required to prove they have sufficient financial stability and assets, as well as the ability to provide a minimum security of $250,000 for workers’ compensation claims. Additionally, these companies have to pass a financial audit where no “going concerns” are found.

No matter how your employer is insured, your benefits should not be affected if the company goes under. However, the situation can be complicated, so it is a good idea to contact an attorney for help.

When Payments Might Be Delayed

If a third party administers your workers’ compensation benefits, you may experience delays in receiving your benefits. For example, if you had just filed your claim when your employer went bankrupt, the insurance carrier may still be investigating.

Claims may also be delayed if the insurance company is trying to get additional information about your claim and is having trouble reaching your employer. If some of your benefits depend on your ability to work, and the work you performed was specific to your employer, it may be more difficult to determine if you are eligible to return to work.

Will My Claim Be Denied If It Is Still Pending?

Your claim will not necessarily be denied just because your employer goes bankrupt. However, to be eligible for workers’ compensation benefits, you must be able to establish that you were working at the time of the injury, your injury was work-related, and you sustained the injury within the scope of your employment.

Your claim will not be denied just because it is pending at the time your employer went bankrupt. The workers’ compensation carrier will evaluate the merits of your claim and determine if you were working for your employer and were injured within the scope of your employment, even if you no longer have that employment.

While your case will not necessarily be denied under these conditions, this situation is more complex than a typical workers’ compensation case. Therefore, you might want to consider hiring a workers’ compensation attorney to help guide you through the process.

How an Attorney May Be Able to Help

Cases involving bankrupt employers are often more challenging, which is why we encourage you to consider hiring one of our experienced attorneys.

If you are pursuing a workers’ compensation claim and would like to know whether we can help, contact our office today for a free initial consultation and review of your claim.