Nevada Supreme Court Limits Workers Compensation Coverage


The Nevada workers' compensation scheme is contained in the Nevada Industrial Insurance Act ("NIIA"). To recover for injuries under the NIIA, an employee must have been injured in the course of her employment, and the injury must have arisen out of her employment. The meaning and scope of these requirements has been subject to much litigation.

In Rio All Suite Hotel & Casino v. Phillips, 126 Nev. Adv. Op. No. 34 (September 30, 2010), the Nevada Supreme Court addressed the requirement that injuries "arise out of" employment. The Court adopted an "increased risk" test to determine whether certain injuries arise out of employment. While clarifying the law, the decision unfortunately limits coverage for injured Nevada employees.

In Rio, the Court explained that there are three types of risks: employment-related risks, entirely personal risks, and neutral risks. Employment-related risks are risks specific to the particular job, and are generally considered to arise out of employment. Entirely personal risks, on the other hand, are risks associated with an individual's personal condition or health.

The Rio Court dealt specifically with neutral risks, which are neither entirely employment related nor personal. The Court noted that falling down the stairs for an unknown reason, or for no reason, could be a neutral risk. After analyzing different tests used in other jurisdictions to deal with neutral risks, the Court adopted the "increased risk" test. This test asks whether the employment exposed the claimant to a risk greater than that which the general public was exposed. The increase does not have to be qualitative; it can be quantitative. The Court stated that if an employee is required to use the stairs more frequently than the general public, that is an increased risk. In Rio, because the employee had to use a certain flight of stairs to take her mandatory breaks, the court held that her injury, caused by a twisted ankle while using those stairs, arose out of employment.

The Court rejected the actual-risk test or the positional-risk test, used in other jurisdictions. The actual-risk test allows recovery "when the employer subjects the worker to the very risk that injures him." The positional-risk test asks "whether the claimant would have been injured 'but for the fact that the conditions and obligations of the employment placed the claimant in the position where he was injured.'" These tests favor recovery in more circumstances than the increased-risk test.

The Court stated that the increased-risk test "strikes an adequate balance between the employee's right to receive compensation for a work-related injury and the employer's right not to be held liable for every injury suffered by an employee in the workplace." However, the limitations that this test will place on employees' ability to recover may prove that this test does not strike an appropriate balance, and employees will not receive compensation for injuries incurred while on the job.

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