Short answer. It can, but only if intoxication actually caused the injury or death. The Labor Code makes the State Insurance Fund liable except where the disability or death was occasioned by the employee's intoxication. The word occasioned is the whole fight: having had a drink is not the same as being the cause.
What the law says
The State Insurance Fund shall be liable for compensation to the employee or his dependents, except when the disability or death was occasioned by the employee’s intoxication, willful intention to injure or kill himself or another, notorious negligence
Labor Code, Article 172 — Limits On Fund’s Liability. Read the full provision →
Liability is the rule; the exceptions are narrow
The provision is built as a general grant of liability followed by a short list of escape hatches. The Fund shall be liable to the employee or his dependants; it is relieved only where the disability or death was occasioned by one of the named things — intoxication, a willful intention to injure or kill oneself or another, notorious negligence, or another limit set elsewhere in the same Title. Because these are exceptions to a benefit scheme, the burden of establishing one of them does not sit with the injured worker or the grieving family. A denial has to be justified by evidence, not by an inference drawn from a single line in an incident report.
"Occasioned by" means causation, not presence
This is where most denials are vulnerable. The statute does not say the claim fails if the worker had been drinking, or if alcohol was detected. It says the claim fails if the injury was occasioned by intoxication — that is, if drink was the operative cause of what happened. A worker who had a beer at lunch and was later struck by falling material has not been injured by intoxication; he has been injured by falling material. The question in every case is whether the alcohol so affected his faculties that it produced the accident. Where an independent cause fully explains the incident, the exception does not fit however unhelpful the toxicology looks.
The neighbouring exceptions, and what they demand
The same sentence carries two other grounds that are often invoked alongside intoxication. Willful intention to injure or kill himself or another requires deliberate purpose; an accident, a moment of panic, or a fatal misjudgement is not a willful intention. Notorious negligence is deliberately a stronger word than ordinary carelessness — it points to conduct that is conspicuously reckless, a knowing disregard of an obvious danger, not the routine lapses that occur in any workplace. Employers and adjusters sometimes use these labels loosely. Read the denial letter closely and identify which ground is actually being asserted, because each one has to be proven on its own terms.
What to do with a denial
Ask for the denial in writing with the factual basis stated, and collect the record while it still exists: the incident report, witness accounts, the medical and any laboratory findings with their timing, and the shift and task records showing what the worker was doing. Timing matters enormously, since a reading taken hours later says little about capacity at the moment of the accident. Denials can be contested through the review routes that apply to the benefit claimed, and there are deadlines, so act promptly rather than waiting. Be clear-eyed as well: this article governs the Fund's liability only. It does not decide any separate employment consequence, and no result can be guaranteed.