Navigating Workers’ Compensation Psych Claims

No two stress claims are alike. One employee may suffer a severe injury, such as an amputation, and not ask for treatment for anxiety related to the incident even though this would seem to be a reasonable request. Yet another employee may experience a minor back strain at work with no disability and claim psychological distress, which could raise questions. Two employees may witness the same violent incident in the workplace. The first employee carries on without residual psychological symptoms, whereas the other suffers severe post-traumatic stress disorder (PTSD).

Whatever the circumstances, workers’ comp stress claims can be a pain point for employers. In this blog, we’ll: 

• Break down the different types of psychological claims in workers’ compensation (WC)
• Describe how to recognize when psych claims have merit
• Review the benefits offered to injured workers with genuine claims
• Explain how employers and claims professionals can fight suspect claims
• Suggest preventive measures for employers to reduce stress claim filings

Psychiatric Claim Categories

State jurisdiction matters when it comes to psychiatric claims—more than it does for any other type of WC claim. Only about eight states provide WC coverage for mental-only claims without physical injury. The bulk of states in the US cover these in limited situations, such as for healthcare workers, first responders, or victims of violent incidents.  California excludes cumulative trauma mental claims if the employee didn’t work for their employer for at least six months or if the reported stress was due to a good faith personnel action. Other states only require that the alleged stress be predominantly caused by work factors. The National Council on Compensation Insurance (NCCI) has observed that several states that previously denied psych claims are starting to accept them.

Data from the California Workers' Compensation Insurance Rating Bureau (WCIRB) indicates workplace violence incidents are on the rise, with a high share of these claims involving mental diagnoses such as PTSD.

Some industries have seen more mental-only claim filings, such as those filed by restaurant workers. According to Insurance Business, in 2021, heavy workloads, unusually high demands, and pressure caused mental stress claims to spike 71% above pre-COVID levels. This was largely because food service companies were ill-prepared to handle staff shortages left in the pandemic’s wake.

Aside from mental-only claims, the more common type of psychiatric claim is one tacked on to a physical injury. These tend to be more often accepted, particularly if the physical injury is severe. Depending on the jurisdiction, the benefits afforded injured workers for these types of claims may be more limited compared to the benefits for the physical injury. For example, an employee with anxiety may be entitled to medical treatment with a therapist and prescriptions, but not entitled to disability.

Differentiating Between Valid and Questionable Psychiatric Claims

Before choosing to fight a psychiatric claim, consider its validity. Does the state in which the employee works provide coverage for psychiatric claims? Is the employee a long-term, highly motivated, responsible person whose workload has substantially increased in the absence of adequate resources for support? Did the employee witness a violent attack? If an employee sustained a serious or complex physical injury and is unable to work, some degree of anxiety or depression is normal. Remember all individuals differ in how they cope with stress. It is best not to compare one injured worker’s mental response to injury or stress with another’s. Instead, ask what mental reaction might be considered reasonable for most individuals.

Physical injuries are tangible obstacles that individuals face. Whether it's a sprained ankle, a back strain, or a broken bone from an accident, the focus is primarily on the physical aspect of recovery. However, what often goes unnoticed is the profound impact these injuries can have on an individual's mental health.

The consequences of physical injuries extend beyond the pain and discomfort associated with the injury itself. The sudden loss of mobility and independence, the disruption of daily routines, and the inability to participate in usual activities can lead to feelings of frustration, sadness, and isolation.

Furthermore, the fear of re-injury or the uncertainty about the extent of recovery can create significant anxiety. This can be especially true for workers whose identity and livelihood are closely tied to their physical abilities.

Without a doubt, some psychiatric claim filings are suspect and should be disputed. It’s often easy to recognize the red flags. These include but are not limited to:

• The employee files a claim after being terminated or after disciplinary action, such as a performance improvement plan.
• The employee claims stress symptoms from a minor physical injury.
• The employee has a history of prior claims, especially those alleging stress.
• The employee is a short-term hire.

How to Fight a Questionable Stress Claim

Claims adjusters can leverage jurisdictional defenses as a first line of attack. Obviously, if psych claims are not covered under the state in question, there is no need to do further investigation. The claim can be denied outright.

Prior medical records and employee depositions can be useful to determine the extent of psychiatric symptoms from work versus personal non-industrial stressful circumstances. This documentation can help the treating doctors and medical legal evaluators form an opinion about industrial causation, whether work is a substantial contributing factor in psychiatric symptoms, and the duration or level of disability due the employee.

Sub-rosa video surveillance is not limited to physical injury claims and can also be effective in psychiatric claims. For example, if an employee has alleged work-related depression causing an inability to function, a deposition combined with sub-rosa video could help refute the claim. Imagine an employee testifying in a deposition that she cannot go outside or have a romantic relationship because of her depression symptoms. The employer gives a tip to the adjuster indicating details about the employee’s upcoming wedding scheduled soon after the deposition. An investigator successfully films the employee during her wedding ceremony and reception, complete with tabletop dancing. Presenting this type of film with the contradictory deposition transcript to the doctor will likely infuriate them since they had given the employee a sympathetic ear—this may cause the doctor to alter their opinion about the employee’s entitlement to benefits.

Personnel records are necessary to bolster a defense in the event of litigation which often follows a claim denial. This is especially relevant in states such as California, that allow the claim to be denied when the stress is due to good faith personnel actions, or when the employee worked for the employer for less than six months.

Reducing Stress Claim Filings and Claim Severity

Incorporating mental health into the workers' compensation claims process requires a multifaceted approach that involves collaboration between employers, claims adjusters, healthcare providers, and mental health professionals. Employers play a critical role in creating a supportive work environment that prioritizes employee well-being.

Employers should not immediately dismiss or deny an employee’s report of stress, even if such a report doesn’t seem valid. 

Remember, everyone experiences situations differently. Listening, validating, and providing internal resources can go a long way and reduce the chances that the employee will file a WC stress claim. 

Such resources may include referrals to healthcare providers, EAPs, wellbeing apps, or other forms of confidential counseling. These supplemental supports are also useful alongside a valid WC stress claim since they can reduce the claim severity, including lost time from work. Improved mental health is known to lead to improved injury outcomes.

Insurers and health care providers also have a responsibility to ensure that mental health services are readily available and easily accessible to injured workers. This may involve using nurse case managers, coordinating care plans that address both physical and mental health needs, and facilitating timely referrals to mental health specialists.

Balancing Vigilance and Care in Workers’ Comp Claims

It’s crucial to recognize and challenge questionable psychiatric claims, but mental health is also a key part of other WC injuries and needs careful and proactive attention. Recognizing and treating genuine mental stress in the workplace and the psychological impact of physical injuries is essential for effective holistic recovery and positive claim outcomes.