There are some businesses that choose to operate without workers compensation. In some cases they operate without any kind of insurance what so ever. The cruel fact is that once an accident happens to a company who is uninsured, they run the risk of huge financial losses. The profits of these companies will be seriously jeopardized. When this occurs, the state must take on the burden of looking after the injured employee. They will provide financial compensation to the employee, only to recover the outstanding account from the business later on down the track. The local, and state government are relentless when pursuing uninsured employers, and may impose fees and/or penalties over the compensated amount paid to the employee.
Workers compensation is directly linked with the state government who oversee it. So obviously, since it's controlled by their office, the state takes an extreme interest in cases where an employer provides insufficient coverage for a worker that has been injured. This is because the state has a legal obligation to provide for all injured personnel if the company cannot. Between the possible fines there are strict legal penalties, as well as contact with potential civil lawsuits from injured parties. Usually, the offender responsible can be the top management along with actual owners of the company. In cases of extreme negligence, often these people can be tried for criminal charges as well. Regardless, after the state takes care of the injured employee, all reasonable steps are then made to force the company into compliance.
When the business is not able to deal with injured employees, such as when injuries exceed the company's liability insurance cover, many states will use a special fund, which is reserved exclusively for this type of situation alone. Obviously, it is an exceptional case that would require these funds to be allocated. In California, when the state governing department has to step in to assist and manage an injured worker, the cost can be in excess of $60,000. Usually, a special claim of this sort is bought to the attention of the federal government to review it. The state will then pay off any additional liabilities incurred by the worker's injury, such as due compensation and medical bills etc. This is just like when a private insurance company would compensate workers. The only difference between the private sector and the state government office is the process would take considerably longer and be much more inconvenient to the injured staff member in the private sector.
There is also the ethical responsibility that should motivate all employers to follow the law and obtain adequate workers compensation insurance. Moreover, the state will handle miscreant employers with a heavy hand, and an equally heavy day in court. They may even fine the employer for the period of time when it was uninsured, since it was basically operating as a huge liability to everyone else and the public's coffers. There is no benefit what so ever for employers who choose not to cover themselves with adequate workers compensation insurance.
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