13.4 Other States, USL&H, and Federal Acts

Item 3.A. vs. Item 3.C.

The NCCI policy's Information Page distinguishes two coverage triggers:

• Item 3.A. — Workers Compensation Insurance: lists the states where the employer has known operations. Full statutory benefits apply.
• Item 3.C. — Other States Insurance: lists additional states (or "all states except...") where coverage springs into effect if the employer expands operations there during the term.

Exam trap: Other States coverage does not apply to a state already listed in 3.A., nor to monopolistic states, nor to a state in which the employer had operations on the effective date but failed to list.

Monopolistic vs. Competitive State Funds

A monopolistic-fund state requires employers to buy WC only from the state fund; private NCCI policies cannot provide Part One there. The traditional monopolistic states are North Dakota, Ohio, Washington, and Wyoming (Wyoming also limits coverage). Because monopolistic funds do not sell employers liability, employers there often buy a separate Stop Gap endorsement on a CGL policy to fill the Part Two gap.

A competitive state fund simply competes with private insurers; the standard policy works normally.

Federal Maritime Acts

Two federal acts cover water-related work that state WC excludes:

• U.S. Longshore and Harbor Workers Compensation Act (USL&H): a no-fault federal benefit system for longshore, harbor, and shipyard workers injured on navigable waters or adjoining piers, docks, and terminals. Coverage is added by the USL&H endorsement because benefits exceed state levels.
• Jones Act (Merchant Marine Act): covers seamen (crew members of a vessel in navigation). Unlike USL&H, the Jones Act is fault-based — the seaman must prove employer negligence, similar to FELA.

Other Federal Acts

Memory aid: the Jones Act and FELA are the fault-based exceptions; nearly every other system is no-fault.

Extraterritorial and Reciprocity Rules

When a worker normally employed in one state is temporarily injured in another, extraterritorial provisions decide which statute applies. Most states let a visiting worker remain under the home-state law for a limited period.

Reciprocity agreements between states recognize each other's coverage so an employer need not buy a separate policy for short out-of-state trips. Exam trap: these rules protect temporary assignments; once operations become permanent in a new state, that state must be added under Item 3.A. or coverage may lapse.

Why Federal Acts Exist

State WC statutes generally exclude maritime and interstate transportation work because those fall under federal jurisdiction. Without federal acts, longshoremen, seamen, and railroad workers would have no compensation system. The acts also set higher benefit levels than many states.

Quick comparison of no-fault vs. fault:

• No-fault (benefits automatic): USL&H, Defense Base Act, FECA, Outer Continental Shelf Lands Act.
• Fault-based (must prove negligence): Jones Act (seamen) and FELA (railroad workers).

For the exam, anchor on the pairing: seamen = Jones Act; railroads = FELA, both fault-based.

A decision tree for jurisdiction questions

When a workers compensation question names a state or a type of worker, run a quick decision tree. First ask: is the worker a seaman (Jones Act) or a railroad worker (FELA)? Those are the two fault-based systems. Next: is the work on navigable waters or adjoining docks (USL&H), an overseas U.S. base (Defense Base Act), an offshore rig (Outer Continental Shelf Lands Act), or federal civilian employment (FECA)? Those are all no-fault federal acts. Only if none apply do you fall back to the state WC statute. This ordering resolves most multi-state and maritime questions quickly.

Monopolistic states and the Stop Gap solution

The four monopolistic-fund states - North Dakota, Ohio, Washington, and Wyoming - require employers to buy Part One coverage only from the state fund; a private NCCI policy cannot provide it. But the state funds do not sell employers liability, leaving a Part Two gap. Employers fill it with a Stop Gap endorsement added to their CGL. A frequent trap: a candidate is asked how an Ohio employer covers a third-party-over lawsuit - the answer is Stop Gap on the CGL, because the state fund handles only statutory benefits.

Extraterritorial coverage and Item 3.C. in practice

When operations cross state lines, two ideas govern. Extraterritorial provisions let a worker temporarily injured in another state stay under the home-state statute for a limited period, and reciprocity agreements spare the employer from buying a separate policy for short trips. But these protect temporary assignments only. Once operations become permanent in a new state, that state must be added under Item 3.A.; relying on Item 3.C. Other States coverage will not work if the employer already had known operations there on the effective date.

This temporary-versus-permanent line is the heart of Other-States questions.

Stop Gap closes the monopolistic-state employers-liability hole

A final point candidates miss: in the monopolistic-fund states (North Dakota, Ohio, Washington, Wyoming) the state fund supplies only Part One statutory benefits and sells no employers liability, so a third-party-over lawsuit or a consortium claim would be uncovered. The fix is a Stop Gap endorsement added to the employer's CGL, which restores Part Two-style employers liability in those states.

Pair this with the fault-based exceptions - Jones Act for seamen, FELA for railroad workers - and the no-fault federal acts (USL&H, Defense Base Act, FECA, Outer Continental Shelf Lands Act), and the maritime/federal questions resolve cleanly.