You got hurt at work. Maybe it was a fall, a machinery accident, or a repetitive stress injury that finally became impossible to ignore. You filed your workers’ compensation claim, your weekly income benefits started coming in, and your doctor visits were (and are) covered under your approved treatment plan. Life isn’t back to normal yet, but there’s a system in place, and you’re relying on it.
Then you find out that your employer is closing its doors and filing for bankruptcy. Suddenly, the system you’ve been counting on feels like it’s standing on shaky ground, and you’re left wondering what that means for you personally. In this guide, we’ll outline why workers’ compensation claims typically survive employer bankruptcy, who takes responsibility for paying benefits when a company closes, and what happens when the employer was self-insured.
How Workers’ Compensation Insurance Works in Georgia
Georgia’s workers’ compensation system is outlined in O.C.G.A. Title 34, Chapter 9, which sets out the rights and responsibilities of employers, employees, and insurers throughout the state. The Georgia State Board of Workers’ Compensation, commonly called the SBWC, administers the entire program and oversees everything from claim filings to insurance compliance.
Most employers in Georgia are required by law to carry workers’ compensation insurance. Specifically, any employer that regularly employs three or more people, whether full-time, part-time, or seasonal, must have insurance coverage in place. When a covered worker is hurt on the job or develops an occupational illness, benefits include medical treatment, weekly income replacement, and, when appropriate, permanent disability.
Most employers purchase a workers’ compensation insurance policy from a private carrier. Others (typically larger companies and governmental entities) are approved by the SBWC and the Georgia Self-Insurers Guaranty Trust Fund to pay claims directly as approved self-insurers. Who actually funds the workers’ compensation benefits – the insurance carrier or the employer itself – is the central question when an employer files for bankruptcy.
Does Employer Bankruptcy Stop Workers’ Compensation Benefits?
The short answer is no. A workers’ comp insurance claim doesn’t simply vanish because an employer files for bankruptcy. The claim survives because it’s tied to the insurance policy that was in force at the time of the injury. As long as coverage was active when you were hurt, the insurance provider’s obligations remain intact.
That said, bankruptcy can introduce complications for injured workers even if it doesn’t end a claim outright. For example:
- Reaching the employer to verify records or collect documentation becomes harder once a business closes.
- Identifying the correct insurance carrier is more difficult if the employer’s administrative staff is gone.
- Newly filed claims may have a longer investigation period while the insurance company tries to confirm coverage details without the employer’s cooperation.
These challenges won’t necessarily cause your workers’ comp claim to fail, but they can complicate things, which is why you should speak to a Georgia injury lawyer once you know your employer has declared bankruptcy.
Who Pays Workers’ Compensation After an Employer Goes Bankrupt?
In most cases, the answer is the insurance carrier. When an employer purchases a workers’ compensation insurance policy, that carrier pays claims for any injury that occurs during the covered period. If a dispute arises, resulting in a hearing before the SBWC, the insurance carrier’s representatives, not the now-bankrupt employer, show up to handle it.
For injured workers who already have an open claim when the employer files bankruptcy, the disruption is usually minimal. Payments that were already in place should continue on schedule. The claim file stays open, and the insurance company continues meeting its obligations under the policy.
The situation gets more complicated for workers who haven’t yet filed a claim when the employer closes its doors. With some limited exceptions, Georgia law gives injured workers one year from the date of injury to file a claim. Anyone who waits too long risks losing the ability to pursue workers’ compensation benefits entirely. That’s why injured workers and their attorneys should quickly identify the insurance carrier through the SBWC’s coverage verification system and properly get a claim on file before missing a deadline.
What Happens if the Employer Was Self-Insured?
Most injured workers in Georgia have a traditional insurance carrier standing behind their claim. But roughly 300 private companies and 100 governmental entities in Georgia operate as approved self-insurers, meaning they pay workers’ compensation claims directly out of their own funds rather than through a third-party insurance company. For workers employed by those organizations, a bankruptcy filing creates a more complicated situation.
When a self-insured employer files for bankruptcy, they may no longer have the money to pay workers’ compensation wage loss, medical, and permanent impairment benefits. There’s no separate insurance carrier to step in. Instead, the bankruptcy court takes control of the employer’s assets and sorts out what creditors (including injured workers) are owed and in what order.
Fortunately, the Georgia Self-Insurers Guaranty Trust Fund covers workers’ compensation obligations when a self-insured employer becomes insolvent. Employers who receive self-insurance approval in Georgia must contribute to this fund and to maintain a surety bond or letter of credit of no less than $250,000. If the self-insured employer fails, the Trust Fund steps in to satisfy ongoing workers’ compensation claims.
What if the Insurance Company Also Goes Bankrupt?
It’s already unsettling to learn that your employer has filed for bankruptcy. Learning that the insurance carrier behind your workers’ compensation claim has also become insolvent is even more troubling. But it does happen, and Georgia law covers it.
The Georgia Insurers Insolvency Pool usually steps in when a licensed insurance carrier becomes insolvent. For injured workers with active workers’ compensation claims, the Pool absorbs those obligations. But not every claim transfers smoothly. When a carrier is declared insolvent, the Pool takes time to identify all covered claims, notify claimants, and assign new administrators to manage them. During that transition period, payments can be delayed, and paperwork requirements increase.
The coverage the Pool provides does have limits. While it covers workers’ compensation claims without a fixed dollar cap on benefits, injured workers should be aware that the Pool’s resources are finite and that claims are handled in a certain order of priority. Also, the Pool will occasionally assert that it does not have to cover a claim because of certain legal limits on its coverage. Getting documentation in order, staying in contact with the new administrator assigned to the claim, and having an attorney who can push back against delays can protect your benefits during an insolvency transition.
Filing a Claim After an Employer Goes Out of Business
Some workers are injured on the job but haven’t yet filed a formal claim when their employer closes. Maybe the injury seemed manageable at first, and treatment was delayed. Maybe the worker didn’t realize the condition was work-related until a doctor connected the dots. Whatever the reason, the employer’s closure doesn’t eliminate the right to file, but it does make the process harder.
In Georgia, an injured worker generally has one year from the date of the accident to file a workers’ compensation claim. What’s more complicated is confirming who to file against. For example:
- The HR department that would normally handle workers’ compensation paperwork is gone.
- The insurance carrier’s contact information may not be readily available.
- Records that would confirm coverage dates and policy numbers may be scattered or inaccessible.
Fortunately, the Georgia State Board of Workers’ Compensation maintains a coverage verification system that injured workers and their attorneys can use to identify the insurance carrier that covered the employer at the time of the injury. That system is accessible by calling the SBWC’s Call Center at (404) 656-3818 or toll-free at (800) 533-0682.
Even when you know what insurance company provides coverage, filing a claim properly can be complicated. Paperwork must be filed properly, and decisions about what benefits to request must be made. The failure to file paperwork properly could prevent you from receiving the benefits you should.
Can Workers’ Compensation Benefits Be Delayed During Bankruptcy?
Benefits can continue after an employer files for bankruptcy, but there may be delays. The most common reason is the insurer’s inability to reach the employer for documentation. An insurance company investigating a claim needs to confirm that the worker was employed during the coverage period, that the injury happened at work, and that the claim meets Georgia’s eligibility requirements. Without the employer’s cooperation, getting that confirmation takes longer than it would in a normal claim.
It’s important to remember that a delay is not a denial. If benefit payments slow down during a bankruptcy investigation, the insurance company isn’t necessarily refusing to pay. But if payments stop without explanation or a formal denial is issued, Georgia law gives an injured worker the right to request a hearing before the State Board of Workers’ Compensation. An Administrative Law Judge can order the insurance company to resume payments if the claim is valid.
What Injured Workers Should Do if Their Employer Goes Bankrupt
Finding out your employer has filed for bankruptcy while you’re in the middle of a workers’ compensation claim is alarming, but there are steps you can take right now to protect your benefits.
- Keep Attending Medical Appointments: Don’t stop medical treatment because the employer closed or because you’re unsure who’s paying. A gap in treatment can give the insurance company a reason to argue that your condition improved or that ongoing care isn’t necessary. If an insurer tries to cut off medical expenses during a bankruptcy transition, you can bring it before the Georgia State Board of Workers’ Compensation, but you want to show that your treatment record is intact and current.
- Document Everything Going Forward: Keep copies of all medical and wage records, as well as every Explanation of Benefits, letter, or email from the insurance carrier, and payment you receive or don’t receive. Write down the dates and content of any phone conversations with adjusters or administrators. If benefits for lost wages stop arriving or medical authorizations go unanswered, that paper trail can demonstrate a pattern of delay or denial that the SBWC can act on.
- File Form WC-14 Without Delay: If you haven’t yet filed a formal claim, consider submitting a Form WC-14 to the Georgia State Board of Workers’ Compensation immediately or hiring an attorney to do that as soon as possible. You do not necessarily need every document which will support your claim in order to file it. Missing a deadline can prevent you from receiving the benefits you should.
- Speak with a Georgia Workers’ Compensation Attorney: An attorney can identify the responsible insurance carrier, track down policy information, and file for a hearing before an Administrative Law Judge if necessary. If the employer was self-insured, an attorney can pursue the Georgia Self-Insurers Guaranty Trust Fund on your behalf. If the insurer itself is insolvent, an attorney can engage with the Georgia Insurers Insolvency Pool to keep your claim active.
Protect Your Workers’ Compensation Benefits if Your Employer Goes Bankrupt
Employer bankruptcy is genuinely frightening when you depend on weekly benefits and ongoing coverage of your medical bills. Fortunately, the Georgia’s workers’ compensation system has protections built in at every level, and those protections don’t disappear when a business does.
If your employer has filed for bankruptcy while you’re receiving workers’ compensation benefits for lost wages and medical treatment, or if you need to file a claim against a business that has gone insolvent or no longer exists, contact Perkins Studdard today for a free consultation. Our legal team handles Georgia workers’ compensation claims every day and knows exactly how to protect your rights when an employer’s bankruptcy threatens to interrupt your recovery. For more information or to schedule an initial consultation, call (770) 285-0548.
