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The claimant was injured on a large construction project.  As a result, his left leg had to be amputated above the knee.  He recovered workers’ compensation benefits through his employer.  He also sued one of the subcontractors on the job for his injuries.  The jury awarded a total of $43 million in damages.  However, the Fourteenth District Court of Appeals in Houston reversed and rendered judgment that the claimant take nothing from the subcontractor.Berkel & Company Contractors, Inc. v. Lee. 
 
The court held that the subcontractor was entitled to claim the exclusive remedy defense because the subcontractor and claimant were co-employees.  This determination was based on a provision in the Workers’ Compensation Act that deems the general contractor to be the employer of the subcontractor and the subcontractor’s employees if the general contractor enters into a written agreement with the subcontractor to provide workers’ compensation insurance coverage to the subcontractor and the subcontractor’s employees.  It was undisputed that the general contractor agreed to provide workers’ compensation insurance to all its subcontractors.
 
The court also clarified the application of the intentional-injury exception to the exclusive remedy defense. The court held that the evidence was insufficient to show that a vice-principal of the subcontractor knew to a substantial certainty that his conduct would bring about harm to a particular victim, or to someone within a small class of potential victims within a localized area. --James Loughlin, Stone Loughlin & Swanson, LLP

On July 6, 2017, Howard Gregg Diamond, M.D. was indicted on federal criminal charges including conspiracy to distribute controlled substances, possession with intent to distribute controlled substances, health care fraud, aiding and abetting, and money laundering.
           
The indictment alleges that Dr. Diamond conspired with others to write prescriptions for drugs including hydrocodone, oxymorphine, methadone, fentanyl, morphine, oxycodone, alprazolam, and zolpidem, without a legitimate medical purpose.  The conspiracy is alleged to have resulted in the overdose deaths of at least seven individuals.  At the time of his arrest, Dr. Diamond was reported to have on or about him a firearm, possible marijuana, and expired passports. 
 
On July 20, 2017, the Texas Medical Board issued an order temporarily suspending Dr. Diamond’s medical license based on their determination that his continuation in the practice of medicine would constitute a continuing threat to the public welfare. --James Loughlin, Stone Loughlin & Swanson, LLP

On July 19, 2017, Sentrix Pharmacy filed Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of Florida.  How does that apply to Texas, you ask?  
 
Sentrix Pharmacy is located in Pompano Beach, Florida but mails compound pain creams and scar creams to injured workers in Texas.  Past charges include $2,488.99 for a one month supply of pain cream and $12,050.06 for a one month supply of scar cream. 
 
On July 7, 2017, Sentrix Pharmacy filed comments to the Division’s informal compound drug rule proposal we reported on last month.  The proposed amendments would require preauthorization for compound drugs.  Not surprisingly, Sentrix opposed the amendments.
 
In its comments, Sentrix argues with a straight face that compound pain creams are a valuable tool in the fight against the opioid epidemic and that if preauthorization is required for compound pain creams, it could contribute to the opioid epidemic.  No mention is made of all of the other more effective, less expensive treatments for pain than a $2,500 jar of compound pain cream.
 
We commend the Division's efforts to require preauthorization for compound drugs. Preauthorization is typically required for treatments and services that are costly, medically questionable, or subject to abuse.  Compound drugs fit the bill on all three counts. --James Loughlin, Stone Loughlin & Swanson, LLP

The Medicare Secondary Payer Act requires primary payers, including workers’ compensation carriers, to reimburse Medicare for payments it made for healthcare for which the primary payer was responsible.  Many carriers have reported seeing an increase in secondary payer recovery activity by Medicare, particularly with regard to demands for reimbursement of services that bear no relation to the compensable injury. 
 
For example, on a low back sprain/strain claim, the carrier may receive a demand for reimbursement of services for treatment of COPD, diabetes, or other ordinary diseases of life.  In other cases, the provider’s bill may list a compensable diagnosis code but no treatment was actually provided for that condition.  Finally, in some instances treatment may have been provided for both related and non-related conditions, yet the carrier receives a demand for the full amount.
 
It appears that in many instances Medicare is not making an initial determination about whether and to what extent the services it paid for were actually for the compensable injury.  If the beneficiary has a prior workers’ compensation claim, Medicare simply sends a demand letter.  InCIGA v. Burwell, a federal district court case out of California, decided January 5, 2017, the court rejected Medicare’s argument that the primary payer is responsible for both the related and unrelated conditions when the provider combines the services into a single charge.  According to the court, Medicare must attempt to apportion the charges between related and non-related services. 
 
The court also held that Medicare is bound by state law in determining whether the insurance carrier is required to reimburse Medicare.  The Fifth Circuit Court of Appeals reached the same conclusion inCaldera v. Ins. Co. of the State of Pa., decided in 2013.  Therefore, if Medicare contends that a disputed condition for which it paid for treatment is related to the compensable injury, the proper forum for resolving that dispute would be the administrative dispute resolution process provided by the Texas Workers’ Compensation Act.  So far, however, it does not appear that Medicare has attempted to invoke the Division’s dispute resolution process.        
 
The Division’s involvement would be welcomed to help address the problems carriers are having with Medicare reimbursement claims.  In 2014, then Commissioner Rod Bordelon wrote a letter to Medicare to address a related problem in which Medicare would not pay for medical services because the Medicare beneficiary had a previous workers’ compensation claim.  Topics to be addressed in a new letter may include facilitating a process to better identify the compensable injury and related services before a blanket demand letter is sent, and, in the event of a disagreement, clarifying the process for resolving that dispute.  For example, do Medicare or Medicare/Medicaid managed care providers meet the definition of a “health care insurer” under section 409.0091 such that they are required to follow Labor Code section 409.0091 and submit a DWC-026 healthcare insurer reimbursement form? --James Loughlin, Stone Loughlin & Swanson, LLP

By now, those of you reading this blog know that in order for an injury to be compensable in South Dakota, the injury must arise out of and be in the course of the employment. Pretty straight forward, right?

Not so much.

While South Dakota adopts the “coming and going rule, establishing that an employee is not covered for purposes of workers’ compensation while coming from and going to work, the law has also established a ‘gray area’ regarding what is, and what is not. covered. Three seminole cases in South Dakota address this topic: Norton v. Deuel Sch. Dist. 2004 S.D 6; Fair v. Nash Finch Co., 2007 S.D. 16; and Terveen v. South Dakota Dept. of Transp. 2015 S.D. 10. These cases make it clear that a fact investigation into a workers’ compensation claim must include an analysis of minute details of the claim.

In Norton, the SD Supreme Court found that personal activities involving self-care, such as eating, resting, smoking, or using bathroom facilities should be considered in the course of employment. In Fair, the Court found that an employee’s deviation from work duties does not ‘automatically constitute departures from employment, but may … be found insubstantial.’” Fair was injured while she was exiting Family Thrift after a brief deviation from her usual direct route to her vehicle. The Court found that while it was reasonable to expect employees to exit the premises after work, it was also reasonable to expect Fair to engage in personal shopping after her shift had ended. Thus, the Court found that mere fact that an employee deviates from their work does not preclude a finding that the injuries are compensable.

Insubstantial deviations have been defined as those “largely the kind of momentary diversions which, if undertaken by an inside employee working under fixed time and place limitations, would be compensable under the personal comfort doctrine.” Arthur Larson, Larson Workers’ Compensation § 17.06[3] (2014). If someone engaged in an act for personal comfort, they do not leave the course of employment unless the extent of the departure is so great that an intent to abandon the job temporarily can be inferred. Id. at §21. In Terveen, the Court adopted the majority rule around the nation, finding that an employee who has made a personal side-trip has to ‘get back on the beam’ before being deemed to have resumed the business trip. Id. § 17.03[5]. Additionally, the Court noted that the deviation cannot be substantial.

Now you are probably wondering, what information you need to find out during an investigation. Some information you need to know will include finding out what the employee was doing at the time of the injury; did the employer authorize, expressly or impliedly, that running personal errands was acceptable; was the employee on their typical route home, did they get lost, or, perhaps, were they stopping for food? These cases are very fact specific so be sure to take the time to gather all the facts you need to make a determination.

As always, we are here and happy to help. Give us a call anytime.

The Alabama Court of Civil Appeals recently released its opinion in Kirby v Jacks Family Restaurants, LP.In that case, the plaintiff filed claims for workers’ compensation benefits, retaliatory discharge, and the tort of outrage against Jacks, its insurance fund, its third party administrator, and its case management company. All of the defendants filed Motions to Dismiss the outrage claim and the trial court granted them. The trial court further certified the judgment on the dismissal of the outrage claims to be a final judgment for purposes of appeal. However, the Court of Appeals held that even though the Order contained language certifying it as final, such certification was not appropriate in the case because the plaintiff’s workers’ compensation and retaliatory discharge claims were so intertwined with the outrage claims. The Court of Appeals noted that the plaintiff relied on facts and circumstances surrounding her injury and her termination to support her claim for the tort of outrage, and that she would rely on the same set of underlying facts in her remaining claims. The Court of Appeals held that it is improper for the trial court to certify a dismissal as "final" when at least some of the issues presented in the claim still pending in the trial court are the same as the issues presented in the claims addressed in the judgment, and repeated appellate review of the same underlying facts would be a probability in the case. Therefore, the Court of Appeals dismissed the plaintiff’s appeal as having been taken from a non-final judgment.

My Two Cents:

When tort claims accompany a workers’ compensation claim, it is common for the trial court to either sever the claims completely and assign new case numbers or keep the claims together and hold separate trials. When the trial court merely orders separate trials, the claims remain joined in one civil action, and any order disposing of anything less than all of the claims and all of the parties will generally not be considered a final order for purposes of appeal. The trial court may include language in an order certifying the order as final (as in this case), but sometimes, that is still insufficient to render an order final for purposes of appeal. On the other hand, if a tort claim is severed from a related workers’ compensation case (assigned a separate civil action number), an order granting summary judgment would be a final order for purposes of appeal. Therefore, it is often wise to ask the trial court to sever an outrage claim, rather than only asking for separate trials.

About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

The Supreme Court recently released its opinion in Foster v North American Bus Industries, Inc. in which it reversed the trial court’s summary judgment in favor of the employer on a retaliatory discharge claim. The employer, NABI is a bus manufacturer in Anniston that has what it refers to as a "no fault, points based attendance and absenteeism policy". Under the policy, NABI assigns points to each absence or tardiness. Foster worked for NABI as a Harness Technician and alleged that she sustained an injury in July 2012. Foster went to the hospital and reported the alleged workplace injury and NABI told the representative at the hospital that Foster’s injury was not work-related. Foster was evaluated and treated at the hospital and given a work/school absence form excusing her from work. Foster missed some time from work and was subsequently terminated for violation of NABI’s absenteeism policy. Foster then filed an action for retaliatory discharge against NABI. NABI moved for summary judgment, which the trial court granted, and Foster appealed.

On appeal, the Supreme Court found that Foster had presented a prima facie case of retaliatory discharge, and that the burden of proof should have been shifted to NABI to present evidence that Foster’s employment was terminated for a legitimate reason. NABI argued that its absenteeism policy was followed in all instances, whether the employee had a work-related injury or not. NABI offered evidence that it had terminated 44 employees for violating the same policy and that it had not made any exceptions to this policy. However, the Supreme Court noted that there was evidence before the trial court that NABI had made an exception to the policy on prior occasions and that those exceptions, which dealt with the method of delivering a medical excuse note, created a genuine issue of material fact that precluded summary judgment. Specifically, the Supreme Court found that Foster introduced sufficient rebuttal evidence in support of her position that NABI’s stated reason for terminating her employment was pretextual.

About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

The Alabama Court of Civil Appeals recently released its opinion in Frederick Roosevelt Dunning, Jr. & Janice Dunning Sandifer v. Lula Mayhew, in which it determined Roosevelt and Lula were married at common law. Although the Alabama legislature abolished common law marriage in Alabama effective January 1, 2017, any common law marriage that existed prior to that date is still valid. The Court of Appeals reiterated that a common law marriage requires proof by clear and convincing evidence of capacity to marry; a present mutual agreement to permanently enter into a marital relationship to the exclusion of all other relationships; public recognition of the relationship as a marriage; a public assumption of the marital duties; and cohabitation. The Court of Appeals further stated that while there was conflicting evidence presented at trial concerning the second two elements, the trial court is tasked with making credibility determinations and resolving conflicting evidence and that the appellate courts may not disturb the trial court’s findings in that regard as long as they are supported by substantial evidence.

My Two Cents:

The issue of common law marriage comes up frequently in workers’ compensation death benefits cases. Interestingly, as this case points out, a party must prove a common law marriage by clear and convincing evidence, whereas the standard to recover workers’ compensation benefits is generally a preponderance of the evidence. Nevertheless, an appellate court will not re-weigh the evidence on appeal, so the trial court’s findings of fact are generally final. The trial judge is in the unique position of being able to assess the credibility of the witnesses, and the appeals courts cannot substitute their own judgment in that regard.

About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

On August 1, 2016, a new federal law, The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, went into effect which required all federal agencies to adjust their monetary penalties to account for inflation. One such agency, the Occupational Health & Safety Administration (OSHA), increased its maximum penalty for "serious", "other than serious", and posting requirements violations to $12,675 per violation, and its maximum penalty for willful or repeated violations to $126,749 per violation. For the last year, all citations issued by OSHA have been subject to the "new" higher penalties. However, it seems that OSHA may have put the cart ahead of the horse, and as a result is charging violators more than the law actually allows.

OSHA, like all federal agencies, gets its rule making and enforcement authority from its authorizing statute, and that authorizing statute generally supercedes subsequent laws like The Federal Penalties Inflation Adjustment Act Improvements Act. The problem for OSHA is that the Occupational Safety & Health Act of 1970 (OSH Act) has not been amended to allow for the higher penalties. Under the OSH Act, OSHA cannot issue penalties higher than the levels set way back in 1990, which are up to $7,000 for "serious" violations, and up to $70,000 for repeat/willful violations.

My Two Cents:

The discrepancy between the statutory caps under the OSH Act and the current fine levels creates a situation that is ripe for litigation. Employers are likely on the winning side of that battle, especially under the current, more "business friendly" federal administration. It is probably only a matter of time before a court strikes down the "new" penalties as unauthorized. When that happens, OSHA may very well have to start issuing refunds.

About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related matters. If you have questions about this article or OSHA citations in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.