Here’s a claim scenario many companies may not have considered. An employee, after sustaining a heart attack at work, files a lawsuit against their employer, claiming that stress caused by excessive work demands and the hostile work environment they were subjected to ultimately resulted in their critical health condition. This may sound far-fetched but a recent report from the surgeon general on workplace mental health highlights the risks posed by toxic work environments. According to the report, chronic stress caused by heavy workloads, long work hours, and unpredictable schedules can disrupt sleep, increase muscle tension, and impair metabolic function, resulting in an increased vulnerability to; infection, diabetes, high blood pressure and heart disease. Work related pressures can also result in an increase in unhealthy habits such as smoking, drinking and substance abuse. It seems logical that severe workplace stress could result in physical ailments, especially if bullying or harassment are added to an already stressful work environment, however it poses a greater question. If an employee believes their toxic work environment was the catalyst of an acquired illness or medical emergency, and decided to sue their employer, would such a claim be covered by workers compensation, or an EPLI insurance policy? The answer is very likely, neither.

Worker’s compensation policies do provide coverage for illnesses and diseases acquired at the workplace, however, while the laws can differ, many workers compensation laws require that the illness or disease be the direct result of a unique risk posed by a particular occupation (as opposed to simply being exposed to a stressful environment itself). Additionally, the employers’ liability insuring agreement of workers compensation policies nearly always exclude coverage for damages arising out of “coercion, criticism, demotion, evaluation, discipline, defamation, harassment, humiliation, discrimination against, or termination of any employee”.

EPLI policies on the other hand, which do provide coverage for claims alleging retaliation, harassment, discrimination and hostile work environments, all contain broad exclusions for bodily injury, often only “excepting” emotional distress. Simply put, carriers will not amend their exclusions to cover actual bodily injury claims. The result is a potential coverage gap that cannot be addressed effectively in the current marketplace. Regardless of this potential gap, companies should implement robust EPLI insurance, ensuring the policy terms are as broad as possible, as the vast majority of claims arising from harassment and/or hostile work environments are more likely to allege wrongful acts, and include damages, that would in fact be covered by insurance. Additionally, while any awarded plaintiff damages related to actual bodily injury claims would be excluded, some policies may provide defense costs in order to defend against such a claim, particularly if other covered allegations are also made.

These lawsuits do of course face a number of hurdles in court, however it’s conceivable that certain factors could make them easier to bring, such as; health emergencies or heart attacks that occur at the actual workplace, repeated warnings to HR, and/or egregious behavior or working conditions. Employers should also be aware that such litigation has already been brought in the past. In 2018 The Southeastern Pennsylvania Transportation Authority sustained exactly such a claim, after one of their employees filed a lawsuit against them, alleging his heart attack was ultimately caused by his supervisor’s bullying. Most recently, an employee of Gravity Diagnostics successfully sued his employer after suffering a panic attack from a birthday party he specifically asked not to be celebrated (due to his anxiety disorder).

While all companies should already be cultivating positive, health-conscious work environments, it’s more important now than ever. It may also be the only defense against potentially costly litigation.

Meet the Author

Evan Bundschuh, RPLU, is partner and commercial lines head at GB&A an independent insurance brokerage located in New York focused on insurance programs and risk management solutions for emerging and mid-sized tech companies, financial & professional services, manufacturers and product-based businesses. Evan assists policyholders with insurance program coordination and client-side advising on Directors & Officers (D&O), Professional Liability (E&O) and Cyber Insurance, and is a writer on topics related to executive and cyber risk.