State News

A national conversation on workers’ compensation took place this month. It was a two day event
where regulators, judges, insurance professionals, academics, union reps, lawyers, and medical
professionals met to correct flaws in the worker’s compensation system. It was so productive, that
a follow up meeting is planned for some time in June or July to take place via telephone. While
there were some complaints that the meeting was secretive, a list of attendees and notes from the
event will be published soon.

An investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Texas State
Fire Marshal’s Office revealed that the April 2013 explosion at a fertilizer plant in West, Texas was
intentionally set. This tragic fire claimed 15 lives and injured hundreds more. The operator of the
plant did not carry workers’ compensation insurance; however, because the fire was the result of an
intentional act of a third party, the carrier would not have been liable even if the operator had
coverage.

After receiving comments from system participants, Commissioner Brannan approved a revised
Compound Medications Plan-Based Audit on April 28, 2016. The audit will look at prescribed
compounds that were filled from September 1, 2014 through August 31, 2015. The goal of the audit
is to: (1) promote the delivery of quality health care in a cost-effective manner; (2) ensure that
doctors adhere to the ODG and medically accepted standards of care when prescribing compound drugs; and (3) determine the appropriateness of medical decision making regarding prescription of
compound drugs.

Our little birds tell us that Hearing Officer Tom Hight has replaced Cheryl Dean as the North Texas
Team Lead. Congratulations, Judge Hight!
We’ve also heard a rumor that Brenna Arredondo, who rose to prominence as a Customer Service
Representative, is currently training to be the new permanent Benefit Review Officer in the Austin
Field Office. We’re saddened to lose Ms. Arredondo in the customer service role, but we look
forward to working with her as a Benefit Review Officer.

A claimant cannot bring a declaratory judgment action with an action for judicial review. The
claimant filed suit against the carrier seeking judicial review of the Division’s determination that
her injury was no longer compensable based on an injurious practices defense. She also sought a
declaration that the injurious practices defense is not a proper defense under the Workers’
Compensation Act. The claimant brought suit against the carrier, but the Division intervened in the
suit as a necessary party to the declaratory judgment action, which it considered “an impermissible attempt to control state action.” The Court dismissed the declaratory judgment action and held that
it was barred by the doctrine of sovereign immunity. The Court noted that the claimant did not
challenge the validity of a statute, but rather its interpretation.
Tex. Dept. of Ins. v. Green, 2016 WL 2745063 (Tex. App.—Houston [1st Dist.] 2016).
A different Court of Appeals has also held that a claimant cannot bring a declaratory judgment
action with an action for judicial review. The claimant sought judicial review of the Division’s
determination that he was not a covered employee at the time of injury and that his injury was not
compensable. He also sought declarations that he was a covered employee, regarding various
provisions of the client contract at issue, and that a worker becomes a covered employee when
certain criteria are met. The claimant brought suit against the carrier, the Division, and the
Commissioner for all claims asserted. The Court held that the judicial review claims were barred by sovereign immunity as against the
Division and the Commissioner, and that no exception applied. Concerning the declaratory
judgments, the Court held that sovereign immunity bars claims against the state that seek
interpretation of a statute, as opposed to challenging the validity of the statute, and the claimant only
sought interpretation of a statute. It held that the claims against the Commissioner did not allege an
ultra vires act, as they challenged a discretionary act only – the decision to deny the claim for
compensation, and were thus barred. It held that, even ignoring sovereign immunity, the remedies
sought by the declaratory judgments were redundant, and in fact identical, to the relief sought in the
judicial review action. Lastly, the Court held that a declaration sought regarding when any worker
becomes a covered employee is not ripe for adjudication, as it concerns the rights of other workers
not before the Court. All claims against the Division and the Commissioner were dismissed.
Texas Dept. of Ins. v. Brumfield, 2016 WL 293380 (Tex. App.—San Antonio 2016).

The Labor Code limits an injured worker’s eligibility for income benefits to 401 weeks from the date
of injury. The injured worker in this case did not receive a certification entitling him to IIBs until
423 days after the date of injury. The carrier argued that he was thus ineligible to receive any IIBs.
The injured worker argued that the statute should be interpreted to mean that an injured worker
cannot receive more than 401 weeks of income benefits total. The Court sided with the injured
employee and found that the maximum number of weeks of income benefits, including TIBs, IIBs,
and SIBs, that an injured worker can receive is 401, but that benefits can be paid after 401 weeks
from the date of injury.
Tex. Mut. Ins. Co. v. McGahey, 2016 WL 2753981 (Tex. App.—San Antonio 2016).

The time limit to seek judicial review is mandatory, and failure to seek judicial review before the
deadline with deprive a court of jurisdiction to hear the claim. The claimant appealed an adverse
Decision & Order to the Appeals Panel, who affirmed the Hearing Officer. The claimant then filed
a bad faith action in district court, which was dismissed. The claimant did not appeal the dismissal,
but several months later filed a new action seeking judicial review of the Decision & Order.
Because the claimant did not file her action for judicial review within 45 days from the date the
Appeals Panel’s determination was mailed to her, the trial court lacked jurisdiction to hear her claim
for judicial review.
Baldwin v. Zurich Am. Ins. Co., 2016 WL 2907939 (Tex. App.—Austin 2016).

The exclusive remedy defense is alive and well. An injured worker won an $8.7 million judgment
at trial against his employer. The plaintiff was hired by Job Link, who assigned him to work for
Tractor Supply. He was injured and brought suit against Tractor Supply. The Court found that he
was a temporary employee of Tractor Supply, as he was working on their premises in the furtherance
of their day-to-day business, his injury was caused by his work for Tractor Supply, he was trained
by, supervised by, and received his assignments from Tractor Supply employees.
The Court next considered whether Tractor Supply, who did not carry their own policy for their
permanent employees, was covered under Job Link’s policy. The court found that they were
covered, because Job Link’s workers’ compensation policy contained a blanket Alternate Employer
Endorsement and they provided the carrier with a list of covered client companies to the carrier
listing Tractor Supply and describing the Plaintiff’s job duties. The Court reversed the award of
damages and held that Tractor Supply was entitled to the exclusive remedy defense.
Tractor Supply Co. of Texas, LP v. McGowan, 2016 WL 1722873 (Tex. App.—Waco 2016).

Multiple Guaranty Associations brought claims for breach of contract stemming from unpaid policy
deductibles. The trial court granted Defendant Hill Bros.’ summary judgment concluding the
Associations’ claims were time-barred. After determining that various Guaranty Associations had
standing to bring suit on the underlying policy issued by an impaired carrier, the Third Court of
Appeals reversed the trial court and remanded the case for further proceedings.
The appellate court held that the statute of limitations on a breach of contract claim for failure to
reimburse deductibles does not accrue until a demand is made to the insured and the insured fails
to pay on demand. Because large deductible endorsements do not specify the time period within
which demand must be made by the carrier, the court concluded that demand for payment must be
made “within a reasonable time.” A “reasonable time for demand,” the Court explained, is
coincident with the four year limitations period for a breach of contract claim. In other words, in
Texas, a carrier has up to four years to make a demand for reimbursement of a deductible, and the
statute of limitations begins to accrue once the insured fails to make payment on demand.
Applying this rule to the Guaranty Associations’ claims, the court reversed the trial court’s judgment
on limitations and remanded the case for further proceedings.
Cal. Ins. Guar. Assoc., et al. v. Hill Bros. Transp. Co., 2016 WL 2991081 (Tex. App.—Austin
2016).

Most employers put limits on light duty and do not allow permanent light duty.  That was the case of the employer in the matter of Frazier-White v. David Gee, 2016 U.S. App. LEXIS 6318 (11th. Cir. 2016).  Plaintiff Frazier-White worked as a community service officer for the Hillsborough County Sheriff’s Office (HCSO).  She was responsible for security at a detention center.  She was injured in a work-related accident on July 29, 2010, when a heavy metal door closed on her right arm, pinning her against a door frame.  She was placed on light-duty status and temporarily assigned to a position as a records desk clerk. The HCSO policy limited light duty to 270 days in a two-year period.

During the period of time that plaintiff was on light duty from August 2010 to June 2011, she saw several doctors who found she was at maximal medical improvement and had no restrictions.  Plaintiff sought another evaluation in March 2011.  Her physician ordered an MRI of the neck, which showed degenerative abnormalities which the doctor thought were not caused by work but may have been aggravated by the work incident.  He too put Frazier-White at MMI with no restrictions but he did recommend a neurosurgical consult.

The sheriff’s department wrote to plaintiff several times as she approached the 270-day light duty limit.  In April 2011, plaintiff wrote to Gee saying she was still having problems with her neck and requested “an extension to continue to receive care.”  She did not specify the length of time she would need; nor did she suggest any accommodations that would allow her to return to full duty by April 24, 2011.

The HCSO Risk Management Director Richard Swann wrote to plaintiff on April 11, 2011 advising her that she had been on light duty for 256 days as of April 11, 2011.  He encouraged plaintiff to contact him about potential ADA accommodations that she may be requesting or to make applications for other civil service full-duty jobs.  Plaintiff did not respond,  leading HCSO to take disciplinary action.  A hearing was scheduled once plaintiff passed the 270-day light-duty limit.  By the time of the hearing, plaintiff had been on light duty for 299 days.  Swann asked plaintiff in the hearing whether she would return to full duty within a reasonable period of time.  Plaintiff replied that her most recent MRI showed serious spinal damage.  Her doctor was recommending a spinal fusion surgery.  She said she could not estimate when she could return to full duty.  She did not request any accommodations that would allow her to perform the essential functions of her job, and she did not apply for any other full-time jobs.  HCSO therefore terminated plaintiff’s employment as of June 20, 2011.

Following her termination, plaintiff sued under the ADA and the Florida Civil Rights Act alleging disability discrimination.  The federal court granted summary judgment to HCSO.  The Court of Appeals affirmed.  First the Court said, “To the extent Plaintiff intended to request a permanent light-duty position, it is undisputed that no such position existed.  SOP 213.00 provides that every HCSO employee is essential to its efficient operation, and that eligibility for light-duty status is thus limited to 270 days during a two-year period.  Defendant was not required by the ADA to create a permanent light-duty position especially for Plaintiff.”

Plaintiff produced records showing numerous vacancies in the HCSO during the time she was on light duty.  However, the Court pointed out that she never requested any of the positions.  Further, the Court observed that plaintiff’s testimony was that she could not have physically returned to any full-time work given her serious neck problems.  The Court concluded, “Plaintiff’s only response was to request an indefinite extension of her light-duty status, an unreasonable accommodation as a matter of law.”

This case is relevant for employers because most employers have policies that end light duty based either on a specific time limit or on reaching maximal medical improvement.  Such policies must be flexible enough to consider requests for reasonable accommodation under the ADA or state civil rights law even after the time limit has ended.  In this case HCSO wrote several times to the employee asking her if she was requesting accommodations or other positions that would allow her to return to work full duty.  The plaintiff in this case, as is quite common, simply wanted an indefinite leave extension.  Courts in just about every state believe that indefinite leave is simply an unreasonable request.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com.