Comprehensive Guide: Arizona Workers' Compensation Law

I. Overview of Arizona Workers' Compensation System

• Purpose and Principles: The fundamental "no-fault" nature of workers' compensation, designed to provide expeditious compensation for work-related injuries and illnesses, shifting the burden from the worker and society to industry.

• Constitutional Basis: Arizona Constitution Article 18, Section 8, mandates the enactment of workers' compensation laws and specifically addresses compensation for manual/mechanical labor, and the non-reduction of compensation percentages/amounts.

• Legislative Power: The constitutional provision is a command to enact, not a grant of power, and that the legislature's power to enact such laws stems from the state's police power.

• Exclusivity of Remedy: The concept that accepting workers' compensation generally waives the right to sue the employer for tort damages. There are exceptions, such as willful misconduct of the employer or co-employee, and the employee's right to reject coverage prior to injury.

• Administration: The Industrial Commission of Arizona (ICA) is the regulatory body responsible for administering the chapter and adjudicating claims, holding hearings, and monitoring carriers.

II. Key Definitions and Concepts

• Employee vs. Independent Contractor: Learn the criteria for distinguishing between an employee and an independent contractor, focusing on the employer's control over the method of work. Understand that the Act is liberally construed to protect the employee.

• "Regularly Employed": Understand this term's broad inclusion of all employments, continuous or seasonal, in the usual trade, business, profession, or occupation of an employer.

• "Arising Out of and In the Course of Employment": This is a fundamental two-part test for compensability.

• "Arising Out of Employment": The injury must result from some risk of the employment or be incidental to the discharge of employment duties. Consider the nature and origin of the risk (peculiar, increased, actual, positional; distinctly work-related, wholly personal, mixed, neutral).

• "In the Course of Employment": Refers to the time and space limits of employment. Injuries occurring on company property during working hours are presumed to be in the course of employment. Traveling employees may have "continuous coverage" for activities necessitated by travel.

• Dual Purpose Rule: When a trip serves both a business and personal purpose, the injury is compensable if the business motive was a concurrent cause of the trip and would have been taken by the employee absent the personal motive (i.e., a "special trip" would have been undertaken).

• Unexplained Death Presumption: Recognize that a presumption applies when an unexplained death occurs within the time and space limits of employment, indicating the employment brought the deceased within range of harm.

• Average Monthly Wage (AMW): Understand how AMW is calculated based on earnings before the injury, and that certain non-traditional wages (e.g., wages from concurrent uninsured self-employment) may be excluded.

• Permanent Impairment vs. Loss of Earning Capacity: Distinguish between a physical impairment (rated by AMA Guides) and an earning capacity disability (which affects ability to earn wages).

• Medical Stationary Status: Recognize this as the point where an injured worker has reached Maximum Medical Improvement (MMI) and active medical care is no longer necessary to improve the condition.

III. Types of Injuries and Compensability

• Injury by Accident: Most common type of compensable injury, requiring an accident "arising out of and in the course of employment."

• Occupational Disease: Understand that certain occupational diseases are compensable, with specific statutory presumptions for some, like firefighters' cancer.

• Mental Injuries: Physical Trauma Resulting in Mental Injury (Physical-Mental): Compensable if the physical injury is work-related and substantially contributes to the mental condition. Requires expert medical testimony.

• Mental Stimulus Causing Mental Injury (Mental-Mental): Generally non-compensable if caused by gradual emotional stress from usual, ordinary, and expected incidents of employment. Compensable if caused by an unexpected, unusual, or extraordinary work-related stress.

• Hernias: Specific statutory requirements apply, including whether it's associated with pain.

• Self-Inflicted Injuries: Generally non-compensable if intentionally and voluntarily inflicted.

• Aggravation of Pre-existing Conditions: A new injury can be found if an incident worsens or accelerates a prior condition, requiring medical treatment or causing additional disability.

IV. Benefits and Payments

• Medical Benefits: Employers/carriers are responsible for reasonably required medical, surgical, and hospital treatment during the period of disability. This generally does not include domestic services or child care.

• Temporary Disability: Waiting Period: Understand the seven consecutive calendar days of disability required to receive compensation. These days do not need to be workdays.

• Temporary Total Disability (TTD): Paid when the worker is temporarily unable to work.

• Temporary Partial Disability (TPD): Paid when the worker can work but has reduced earning capacity. Compensation is 66 2/3% of the difference between pre-injury wages and post-injury earning capacity.

• Permanent Disability: Scheduled Injuries: Fixed compensation amounts and durations for specific body parts (e.g., eye, hand, arm, foot, leg) under A.R.S. § 23-1044(B).

• Unscheduled Injuries: For body parts not listed or multiple body parts, compensation is based on loss of earning capacity. Calculated at 55% of the difference between AMW and estimated earning capacity, or 66 2/3% for total loss of earning capacity. A prior unscheduled claim with a loss of earning capacity converts a subsequent scheduled injury to unscheduled.

• Death Benefits: Compensation to surviving spouses (66 2/3% of AMW) and children (additional allowance per child, up to 66 2/3% of AMW). Children under 18 (and older if incapacitated or full-time students) are conclusively presumed totally dependent. Other dependents require proof of dependency.

• Vocational Rehabilitation: Available to assist injured workers in returning to meaningful employment, especially when they cannot return to their date-of-injury work. Administered by the Special Fund Division.

• Lump Sum Commutation/Full and Final Settlement: Understand the conditions and limits for converting permanent benefits to a lump sum ($25,000 for scheduled, $150,000 for unscheduled with carrier approval). Full and final settlements require the claimant to be stationary.

• Medicare Set-Aside Arrangements (WCMSAs): Funds allocated from WC settlements for future Medicare-covered medical expenses related to the work injury. These must be exhausted before Medicare will pay.

V. Claim Processing and Procedures

• Reporting Requirements: Injured workers must report injuries to their employer "forthwith." Formal claims must be filed with the ICA.

• Notice of Claim Status (Form 104): Issued by the carrier to accept or deny a claim within 21 days of notification. Also used to indicate temporary compensation, release to duty, or closure of medical-only claims.

• Protest Period: Parties have 90 days to protest a notice or award by requesting a hearing, otherwise, it becomes final and res judicata.

• Reopening a Claim: Requires proof of a "new, additional, or previously undiscovered temporary or permanent condition" with a causal connection to the initial injury. Cannot be reopened if previously denied by a final notice unless an exception applies.

• Rearrangement of Benefits: Petition to adjust permanent benefits, requiring a change in physical condition affecting earning capacity, or an original award was based on incorrect information.

• Independent Medical Examination (IME): Employers/carriers can request an IME. A claimant can record an IME but cannot have a non-physician attendant present unless ordered by an ALJ.

• Hearings and ALJ Decisions: Conducted by Administrative Law Judges (ALJs) employed by the ICA. ALJs resolve factual conflicts (especially expert medical testimony) and make specific findings of fact and conclusions of law. Review of ALJ decisions is limited to whether the ALJ acted within power and if findings support the award.

• Admissibility of Evidence: Hearsay evidence may be considered in compensation proceedings. New evidence developing after the first hearing may be admitted at the ALJ's discretion.

• Treatment Guidelines (ODG): The ICA has adopted the ODG as the standard for evidence-based medicine. Preauthorization may be required for certain drugs or treatments not listed as first-line.

• Change of Physician: Liberally authorized by the Commission for most carriers. Self-insured employers may have directed care programs. In that case, change of doctors only permitted if health, life, or recovery is in jeopardy, or if the carrier agrees.

• Leave the State: Approval from ICA required for periods exceeding 14 days, otherwise benefits may be suspended.

VI. Important Statutory Provisions and Forms

• A.R.S. § 23-1026(B): Regarding independent medical examinations.

• A.R.S. § 23-1027: Unreasonable refusal to submit to medical treatment.

• A.R.S. § 23-1028(A) & (4): Forfeiture of benefits for knowingly making false statements to obtain compensation.

• A.R.S. § 23-1031: Suspension of benefits during incarceration.

• A.R.S. § 23-1041: Basis for computing compensation, including average monthly wage.

• A.R.S. § 23-1043: Hernia compensation.

• A.R.S. § 23-1043.01(B): Mental injury statute and the "unexpected, unusual, or extraordinary" stress requirement.

• A.R.S. § 23-1044(A): Temporary Partial Disability calculation.

• A.R.S. § 23-1044(B): Scheduled injury list.

• A.R.S. § 23-1044(F): Rearrangement of awards based on changed physical condition.

• A.R.S. § 23-1046(A): Death benefits.

• A.R.S. § 23-1061(H): Reopening claims based on new, additional, or previously undiscovered condition.

• A.R.S. § 23-1061(J): Request for investigation

• A.R.S. § 23-1062(A): Medical treatment benefits.

• A.R.S. § 23-1062(B): Waiting period for disability.

• A.R.S. § 23-1062(D): First and subsequent installment of compensation payments.

• A.R.S. § 23-1062.01(C): 24-month deadline for travel expense reimbursement.

• A.R.S. § 23-1065(C): Special Fund reimbursement for employers hiring individuals with pre-existing non-industrial impairments.

• A.R.S. § 23-1068(B): Liens on third-party claims.

• A.R.S. § 23-1070: Employer's right to direct medical, surgical, or hospital care.

• A.R.S. § 41-1063: ALJ requirement for findings of fact and conclusions of law.

• Forms: Form 104 (Notice of Claim Status), Form 106 (Notice of Permanent Disability), Form 107 (Notice of Permanent Disability and Request for Determination of Benefits), Form 109 (Notice of Average Monthly Wage).

VII. Judicial Review and Precedent

• Standard of Review: ALJs' factual findings are upheld if reasonably supported by evidence; legal conclusions are reviewed de novo.

• Res Judicata/Claim Preclusion: A final notice or award is binding and generally cannot be re-litigated.

• Law of the Case: Regulates reconsideration of issues resolved before a final decision.

• Stare Decisis: Adherence to prior judicial decisions.

• Liberal Construction: Workers' compensation statutes are generally construed liberally to achieve their remedial purpose.

Glossary of Key Terms

• Accident: An unexpected, unusual, or extraordinary event that causes or contributes to an injury.

• Activities of Daily Living (ADLs): Basic self-care tasks (e.g., bathing, dressing, eating) and functional activities, often used to assess the impact of an impairment.

• Administrative Law Judge (ALJ): An attorney employed by the Industrial Commission of Arizona (ICA) who conducts hearings and makes findings of fact and conclusions of law in workers' compensation disputes.

• American Medical Association's (AMA) Guides to the Evaluation of Permanent Impairment: A publication used in Arizona to determine the presence and degree of permanent impairment. The most recent edition in effect at the time a claimant's condition becomes stationary is utilized.

• Apportionment: The process of dividing responsibility for an impairment or disability between multiple contributing factors or injuries.

• Arising Out of Employment: One part of the two-pronged test for compensability, requiring the injury to result from some risk of the employment or be incidental to the discharge of employment duties.

• Average Monthly Wage (AMW): The basis for computing compensation, typically calculated from the employee's earnings during a period prior to the injury.

• Binaural Hearing Impairment: Loss of hearing in both ears, evaluated using specific formulas based on audiogram results.

• Claim Preclusion (Res Judicata): A legal principle that prevents the relitigation of issues that have already been decided by a final judgment or order.

• Commutation (Lump Sum): The conversion of future periodic workers' compensation benefits into a single, one-time payment.

• Compensable Injury: An injury or illness that meets the statutory requirements for workers' compensation benefits (e.g., arising out of and in the course of employment).

• Complex Regional Pain Syndrome (CRPS): A chronic pain condition that can develop after an injury, often disproportionate to the initial event, with specific diagnostic criteria for impairment rating.

• Contract of Hire: An agreement between an employer and employee establishing an employment relationship, a key factor in determining "employee" status for workers' compensation.

• Contributory Negligence: A legal defense asserting that the plaintiff's own negligence contributed to their injury; generally abolished in workers' compensation cases.

• Disfigurement: An altered or abnormal appearance that may be a residual of injury or disease, rated for impairment purposes (e.g., facial disfigurement).

• Dual Capacity Doctrine: A legal theory where an employer, usually protected by workers' compensation exclusivity, may be sued in a tort action if it also acts in a separate and distinct legal capacity toward the injured employee.

• Dual Purpose Rule: A legal rule determining compensability for injuries during trips serving both business and personal purposes, requiring the business motive to be a concurrent cause.

• Earned Paid Sick Time: Statutory provisions for employees to accrue and use paid time off for medical or other reasons.

• Election of Remedies: The choice between two or more legal remedies (e.g., workers' compensation claim vs. civil action) that are inconsistent with each other.

• Employee: A person working under a contract of hire, whose employment falls within the scope of the Workers' Compensation Act.

• Employer's Liability Law: Historically, laws that made employers liable for employee injuries due to employer negligence, preceding workers' compensation.

• Exclusive Remedy: The principle that workers' compensation is the sole legal recourse for an injured employee against their employer for a work-related injury, barring civil lawsuits.

• Expert Medical Testimony: Testimony from qualified medical professionals, often required to establish causal connection for certain types of injuries (e.g., mental injuries, aggravation of pre-existing conditions).

• Fast Track ALJ Dispute Resolution Program: A program within the ICA for expedited resolution of disputes.

• Fibromyalgia: A chronic disorder characterized by widespread musculoskeletal pain, fatigue, and tenderness in localized areas; noted as difficult to evaluate objectively.

• Findings and Award for Unscheduled Permanent Partial/Total Disability (Form 109): An ICA form that officially sets the wage and determines unscheduled permanent partial or total compensation.

• Forfeiture of Benefits: Loss of the right to receive workers' compensation benefits, often due to fraudulent statements or non-compliance with statutory requirements.

• Forthwith Report: The requirement for an injured worker to report an accident and injury to their employer promptly.

• Fraud: Deliberate misrepresentation or concealment of a material fact to obtain benefits or avoid obligations; can lead to forfeiture of benefits and criminal charges.

• Full and Final Settlement: A comprehensive agreement between the injured worker and the carrier to resolve all future liabilities related to a claim.

• Geographical Labor Market: The area where an injured worker is reasonably expected to look for work when determining earning capacity.

• Global Assessment of Functioning Scale (GAF): A scale used in psychiatric assessment to rate overall psychological, social, and occupational functioning.

• Hazardous Duty (Firefighters): Specific duties that, combined with other conditions, entitle firefighters to a presumption of compensability for certain occupational diseases.

• Hearsay Testimony: Out-of-court statements offered in court to prove the truth of the matter asserted; may be considered in workers' compensation proceedings.

• Independent Contractor: A person who contracts to do work for another but is not controlled by the other as to the means by which the work is done; generally not covered by workers' compensation.

• Independent Medical Examination (IME): A medical examination conducted by a physician chosen by the employer or carrier, not the treating physician, to evaluate a claimant's condition.

• Industrial Commission of Arizona (ICA): The state agency responsible for administering and enforcing Arizona's workers' compensation laws.

• In the Course of Employment: One part of the two-pronged test for compensability, referring to the time, place, and circumstances of the injury in relation to employment.

• Interested Party: Defined under workers' compensation law as the employer, employee, commission, insurance carrier, or their representative.

• Intoxication: The state of being under the influence of alcohol or drugs, which can render a workers' compensation claim non-compensable if it's more than a slight contributing factor to the injury.

• Issue Preclusion: A legal doctrine that prevents the relitigation of issues of fact or law that have already been necessarily determined by a court in a prior action.

• Law of the Case Doctrine: A legal principle stating that once an issue is decided in a case, it will not be re-litigated in subsequent stages of the same case.

• Legal Causation: The legal relationship between an event and an injury that makes the injury compensable under the law.

• Loss of Earning Capacity (LEC): The diminished ability of an injured worker to earn wages after an industrial injury, used to determine unscheduled permanent disability benefits.

• Maximum Medical Improvement (MMI): The point at which a worker's medical condition has stabilized and is not expected to improve further with additional medical treatment; also referred to as "medically stationary status."

• Medical Causation: The medical relationship between an event (e.g., industrial accident) and a resulting injury or condition.

• Medical Stationary Status: See Maximum Medical Improvement (MMI).

• Medicare Secondary Payer (MSP): Medicare's role as a secondary payer when other insurance, such as workers' compensation, is available to cover medical expenses.

• Medicare Set-Aside Arrangement (WCMSA): An allocation of a portion of a workers' compensation settlement for future Medicare-covered medical expenses related to the work injury.

• Mental Injury (Mental-Mental): A psychological injury caused by mental stimulus, requiring "unexpected, unusual, or extraordinary" work-related stress to be compensable.

• Mental Injury (Physical-Mental): A psychological injury resulting from a physical work-related injury.

• Neuropathic Pain: Pain caused by damage or disease affecting the nervous system, distinct from pain arising from tissue damage (nociceptive pain).

• "No-Fault" System: A system (like workers' compensation) where benefits are paid regardless of who was at fault for the injury.

• Notice of Average Monthly Wage (Form 109): An ICA form used to officially set the claimant's average monthly wage.

• Notice of Claim Status (Form 104): A form issued by the insurance carrier to accept, deny, or provide updates on a workers' compensation claim.

• Notice of Permanent Disability (Form 106): A form issued by the carrier or self-insured employer to notify the claimant of a permanent disability and request determination of benefits.

• Notice of Permanent Disability and Request for Determination of Benefits (Form 107): An ICA form used when a claimant's condition is stationary and a determination of permanent benefits is requested.

• Occupational Disease: A disease arising out of and in the course of employment, due to causes and conditions characteristic of, and peculiar to, a particular occupation.

• Official Disability Guidelines (ODG): Evidence-based medical treatment guidelines adopted by the ICA as a standard reference for treating injured workers.

• Peripheral Neuropathy: Damage to nerves outside the brain and spinal cord (peripheral nerves), often causing weakness, numbness, and pain, particularly in the hands and feet.

• Petition to Reopen: A formal request to re-evaluate a closed workers' compensation claim due to a "new, additional, or previously undiscovered" condition.

• Physical-Mental Injury: A mental or psychological injury that results from a physical work-related injury.

• Positional Risk: A type of employment-related risk where the injury would not have occurred "but for the fact that the employment placed the employee in a position where he or she was injured."

• Post-Traumatic Stress Disorder (PTSD): A mental health condition triggered by experiencing or witnessing a terrifying event; can be a compensable mental injury if work-related.

• Preauthorization: The process of obtaining approval from the payer (e.g., insurance carrier) before certain medical treatments, services, or medications are provided.

• Pre-existing Condition: A health condition that existed before the industrial injury.

• Presumption of Dependency: A legal assumption that certain individuals (e.g., minor children, surviving spouses) are dependent on the deceased employee for support, without requiring additional proof.

• Prima Facie Claim: A claim that, on its face, appears to be valid and sufficient to warrant further investigation or consideration.

• Protest Period: The specified time frame (e.g., 90 days) during which an interested party can formally dispute a notice or award from the ICA by requesting a hearing.

• Rearrangement of Benefits: A process to adjust an existing permanent disability award based on a change in the claimant's physical condition affecting their earning capacity.

• Regularly Employed: A definition including all employments, continuous or seasonal, in the usual trade, business, profession, or occupation of an employer.

• Reimbursement (Special Fund): Payments made by the Special Fund to employers or carriers for a portion of compensation paid in certain circumstances, such as hiring workers with pre-existing impairments.

• Request for Hearing: A formal written request submitted to the ICA to dispute a notice or award and initiate a formal hearing before an ALJ.

• Res Judicata: See Claim Preclusion.

• Retraining Program: Part of vocational rehabilitation, involving education or training to help an injured worker return to meaningful employment.

• Roth Credit: A credit applied against future permanent disability payments when a claimant has received an award for compensation on a prior disability.

• Scheduled Injuries: Permanent injuries to specific body parts (e.g., arm, leg, hand) for which the workers' compensation law provides fixed compensation amounts and durations.

• Self-Insured Employer: An employer that has demonstrated financial ability to pay workers' compensation benefits directly, rather than through an insurance carrier.

• Severance: The act of separating issues or parties in a legal proceeding, often for good cause.

• Special Fund Division: A division of the ICA that provides benefits to employees injured while working for non-insured employers and also handles certain reimbursements and vocational rehabilitation.

• Spinal Cord Stimulators (SCS): Implantable devices used to manage chronic pain by delivering electrical pulses to the spinal cord; discussed in WCMSA guidelines for pricing and replacement.

• Stare Decisis: The legal principle of following precedent, where courts adhere to prior judicial decisions.

• Stationary Status: See Maximum Medical Improvement (MMI).

• Stipulation: A formal agreement between parties in a legal proceeding regarding a certain fact or issue.

• Subrogation: The substitution of one person or entity (e.g., Medicare) for another (e.g., injured worker) in claiming a debt or right.

• Successive Injury Doctrine: A legal principle applied when an employee suffers multiple injuries, determining which employer or carrier is responsible for the current condition.

• Temporary Partial Disability (TPD): Compensation paid to an injured worker who is able to perform some work but has a reduced earning capacity due to their injury.

• Temporary Total Disability (TTD): Compensation paid to an injured worker who is completely unable to work for a temporary period due to their injury.

• Third-Party Administrator (TPA): An entity that handles administrative services, such as claims processing, for an insurance carrier or self-insured employer.

• Tips: Remuneration received by an employee from customers, which may or may not be included in the calculation of average monthly wage.

• Treatment Guidelines: Evidence-based guidelines for medical care in workers' compensation, adopted by the ICA (e.g., ODG).

• Unscheduled Injuries: Permanent injuries that are not listed on the statutory schedule, for which compensation is based on the actual loss of earning capacity.

• Vocational Rehabilitation: Programs and services designed to help injured workers return to suitable employment, especially if they cannot return to their previous job.

• Waiting Period: A statutory period (e.g., seven consecutive calendar days) of disability that must elapse before an injured worker is eligible to receive temporary compensation benefits.

• Willful Misconduct: Intentional and deliberate behavior by an employer or co-employee that causes injury; an exception to the exclusivity of workers' compensation remedy.

• Workers' Compensation Act: The statutory scheme in Arizona governing the rights and responsibilities related to industrial injuries and illnesses.

• Workers' Compensation Medicare Set-Aside Arrangement (WCMSA): An arrangement that allocates a portion of a workers' compensation settlement to cover future work-injury-related medical expenses that would otherwise be covered by Medicare.