2020 Tennessee workers’ compensation legislative update

By Lillian Hartgrove, State Board of Education Chairman
Special to the UCBJ

The Tennessee General Assembly passed two workers’ compensation bills in 2020. Both implement important statutory changes. For the most part, these changes tend to favor the injured worker. 

  1. Tennessee Public Chapter 731 (Senate Bill 2190)

The more significant of the two workers’ compensation bills for 2020 was Senate Bill 2190. This bill was signed by Gov. Bill Lee on June 22, 2020. 

  1. Period of Compensation for Permanent Partial Disability

Permanent partial disability (PPD) under the current workers’ compensation law is typically addressed at two separate points in the claim. The original award of PPD is calculated simply by multiplying the impairment rating by 450 weeks, and then multiplying the result by the employee’s compensation rate. The result is a sum of money to which the employee is entitled regardless of his or her work status. However, the original award of PPD also creates a period of compensation, which is the amount of time represented by the original award.  For instance, if the employee has an impairment rating of two percent (2%) to the body as a whole, then the period of compensation is nine (9) weeks – because two percent (2%) of 450 weeks is nine (9) weeks. 

The period of compensation will begin on the date of maximum medical improvement and will expire at a specified date in the future depending on the number of weeks involved.  On that date, the employee’s work status is examined, and if the employee is not back at work at the same or greater wages for any employer, then the employee may be entitled to additional PPD based on the application of certain enhancement factors for work status, age, education, and unemployment rate.  This additional PPD is referred to as the “resulting award” of PPD.

That two-part system looks fine on paper, but in practice, the system breaks down a bit when the employee has a small impairment rating.  For instance, if the employee has an impairment rating of one percent (1%), then the period of compensation is only four and a half (4 1/2) weeks.  In many cases, that period will have come and gone before the impairment rating is even known, let alone allowing enough time to settle the original award and then subsequently examine the employee’s entitlement to a resulting award of PPD.

In Senate Bill 2190, the General Assembly has addressed this issue by adding an additional amount of time after which the employee’s entitlement to a resulting award of PPD will be determined.  That is, under the new law, the employee’s entitlement to a resulting award of PPD will be determined as of the date the period of compensation expires, or 180 days after the employee reaches maximum medical improvement, whichever is later. The effect of this change will be to allow greater opportunity for employees with smaller impairment ratings to seek additional PPD if they do not return to work within 180 days of reaching maximum medical improvement. 

Likewise, under prior law, the employee had one (1) year after the period of compensation expired to file a Petition for Benefit for Determination seeking additional PPD benefits. That time period has also been modified to allow the filing within one (1) year after the period of compensation expires, or within one (1) year after the 180-day period after the employee reaches maximum medical improvement, whichever is later

  • Uninsured Employers Fund

The Uninsured Employers Fund (UEF) was created to help provide some compensation benefits to employees who suffered work injuries while working for employers who did not have workers’ compensation insurance. To be eligible to receive compensation from the UEF under the statute and prior law, an employee had to satisfy five criteria.  First, the employee had to be employed by an employer who failed to properly secure workers’ compensation insurance coverage. Second, the employee suffered an injury that would be considered compensable under the workers’ compensation law, at the time the employer had no worker’s compensation insurance coverage. Third, the employee was a Tennessee resident on the date of injury. Fourth, the employee provided notice within sixty (60) days after the date of injury to the Tennessee Bureau of Workers’ Compensation of the injury and of the employer’s failure to secure insurance coverage. Finally, the employee must have secured a judgment for workers’ compensation benefits against the employer for the injury. 

Senate Bill 2190 left this system mostly intact, but slightly modified the fourth element of employee eligibility to make it easier for an employee to seek benefits from the UEF. Specifically, the sixty (60) day notice requirement was extended to 180 days. 

Senate Bill 2190 also removed a statutory requirement that the Court of Workers’ Compensation Claims must convene a full and final hearing no more than sixty (60) days after the notice of hearing has been filed. This requirement was deemed to be unrealistic, and it was therefore deleted from the statute. 

  • Effective Date

The statutory changes discussed above under Senate Bill 2190 are effective for injuries on or after June 22, 2020. 

  1. Tennessee Public Chapter 682 (Senate Bill 2189)

Senate Bill 2189 is a relatively narrow bill targeted at a very specific issue: jurisdiction and enforcement over out-of-state construction companies. 

Under prior law, extra-territorial jurisdiction over out-of-state construction services providers was analyzed using the same statutory standard that would apply to any other employer. However, under Senate Bill 2189, a new scheme now applies for out-of-state construction companies. 

Under the new law, any construction services provider performing work in the state of Tennessee must maintain workers’ compensation insurance coverage throughout the duration of that work and must designate “Tennessee” in section 3A of the construction services provider’s workers’ compensation insurance policy or endorsement. 

To help enforce this requirement, Senate Bill 2189 also added a new statutory mechanism to collect penalties issued against violators of the workers’ compensation insurance coverage requirements, who try to avoid the penalties by closing the business down and opening a similar business under a new name. That will no longer work, because the Bureau can now seek to enforce penalties against a successor in interest.  

Senate Bill 2189 was signed by Gov. Lee on June 15, 2020, and it is effective as to penalties assessed on or after that date. 

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