State News

There is no limit on how much an air ambulance provider (or any other health care provider, for that
matter) can charge for its services or how often it can raise its charges. For example, one of the
largest air ambulance providers in Texas, PHI Air Medical, increased its base rate from $11,492.00
in 2010 to $26,177.00 in 2014, a 128% increase. At the same time, it increased its mileage rate from
$150.00 per mile to $290.00 per mile, an increase of 93%.

However, the lack of any restrictions on a provider’s billed charges is only a problem when it is held
that the provider is entitled to reimbursement of its billed charges. Since January 2014, the Division
has been doing just that, issuing medical fee dispute decisions holding that its medical fee guideline
does not cover air ambulance services and ordering payment of the air ambulance providers’ billed
charges on the grounds that they are “fair and reasonable.”

Many of the Division’s decisions have been appealed to the State Office of Administrative Hearings
(SOAH) where they have been assigned to Administrative Law Judge Craig Bennett. Judge Bennett
consolidated a group of early cases between PHI Air Medical and eight insurance carriers. These
lead cases will determine the legal issues for the remainder of the air ambulance cases pending at
SOAH. James Loughlin with the Firm represents seven of the eight carriers.

Judge Bennett issued a preliminary order on August 5, 2015 announcing his decision that “the
proper reimbursement rate for the air ambulance services in issue is 149% of Medicare.” This is a
great victory for the carriers because Judge Bennett has rejected the Division’s position that PHI’s
billed charges are fair and reasonable, he has concluded that reimbursement should be Medicarebased,
i.e., a percentage of the Medicare rate, and he has picked a percentage which is not much
higher in dollar terms than 125% of Medicare.

The carriers paid PHI at 125% of the Medicare rate based on their understanding that the Division's
fee guideline applies to ambulance services. The difference between the 125% paid by the carriers
and the 149% determined by Judge Bennett to be fair and reasonable is less than 13% of the amount
sought by PHI which was based on its claim that it is entitled to reimbursement of its billed charges.

Judge Bennett's decision and order which will explain his reasoning in detail is expected by the
second week of September. PHI's counsel has already indicated that PHI intends to appeal Judge
Bennett's decision to district court. Judge Bennett previously rejected PHI's argument that the
federal Airline Deregulation Act preempts Texas' workers' compensation laws governing
reimbursement to health care providers from being applied to it. This issue has national implications
for PHI.

The carriers will likely cross-appeal Judge Bennett's decision on the grounds that the fee guideline
applies and 125% is more than fair and reasonable. The carriers presented compelling, unrebutted
evidence at hearing that 125% is more than fair and reasonable. The sticking point on appeal may
boil down to the legal issue of whether the statutory standards for fair and reasonable
reimbursement, if properly interpreted, guarantee health care providers a profit.

Judge Bennett's decision will hopefully encourage the Division to move quickly to adopt a fee
guideline for ambulance services. Air ambulance fee disputes will continue to pile up at the
Division until it does so. Judge Bennett's decision will hopefully also cause the Division to
reconsider its approach to these disputes of ordering payment of the air ambulance providers’ billed
charges.

Medical Care After Maximum Medical
Improvement Still Requires Proof of Medical Necessity

That palliative care remains available to a claimant after reaching maximum medical improvement is well established in Florida. See, e.g.,Homler v. Family Auto Mart, 914 So.2d 1071 (Fla. 1st DCA 2005). However, in the recent case ofEchevarrria v. Luxor Investments, LLC, 159 So.3d 991 (Fla. 1st DCA 2015), the First District Court of Appeal ruled that the claimant must still establish by evidence that the palliative treatment is medically necessary, i.e. “medical service or medical supply which is used to... or treat an illness or injury, is appropriate to the patient’s diagnosis and status of recovery, and is consistent with the location of service, the level of care provided, and applicable practice parameters. The service should be widely accepted among practicing health care providers, based on scientific criteria, and determined to be reasonably safe. The service must not be of an experimental, investigative, or research nature.”The confirmation that medical necessity remains a required element for post-maximum medical improvement care is important in light of the fact that a zero impairment rating seems fundamentally at odds with any further need for medical treatment.

First District Court of Appeal Takes On Gamesmanship

Florida workers’ compensation law allows a claimant to secure a single one-time change of physicians pursuant to Florida Statute §440.13(2)(f). Provided that the employer/carrier responds to that request within 5 days after receipt of the request, the employer/carrier gets to choose the physician for claimant’s one-time change. If they do not timely respond, claimant gets to choose who the new physician will be. InGonzalez v. Quinco Electrical, Inc., 2015 WL 4256794 (Fla. 1st DCA 2015) (presently not released for publication in permanent law reports), the First District Court of Appeal addressed the issue of gamesmanship involving a one-time change request. According to the appellate opinion, claimant’s counsel first officially appeared of record via a petition for benefits. Three weeks later he filed a “Notice of Appearance.” The petition for benefits did not mention anything about wanting a one-time change. The Notice of Appearance, however, was described by the court as having, on the second page of the notice, “a request for a one-time change of treating physician pursuant to section 440.13(2)(f).” The court also noted that [c]ounsel admitted before the [judge of compensation claims] that he “took advantage of” his belief that adjusters do not always read in full every document they receive. Counsel for the employer/carrier did not catch the one-time change request until the sixth day after the Notice of Appearance was received. The judge of compensation claims rejected the assertion that the employer/carrier was late in responding given the circumstances. The First District noted that such gamesmanship is contrary to the legislative mandate of a self-executing system and rather firmly addressed the conduct in question.

Castellanos & Westphal

No decision from the Florida Supreme Court on either case. In Castellanos claimant’s appellate counsel continues to file Notices of Supplemental Authority in what is most likely an effort to push their agenda. InWestphal a single Notice of Supplemental Authority has been filed in 2015. Otherwise, there is no discernible activity.

 WHAT IS WORKERS’ COMPENSATION?

Workers’ compensation is an insurance program that provides compensation for disability, and medical and rehabilitation benefits, for employees injured on the job.  In the case of accidental death of an employee, it includes benefits to the employee’s dependents.  Under workers’ compensation, both workers and employers are protected.  Each covered worker has a right to benefits for a compensation injury.  In return, employers are protected from liability lawsuits outside the workers’ compensation system.

DEFINITIONS

“Compensable injury" means any injury or occupational illness, causing internal or external harm to the body, which arises out of and in the course of employment if such employment was the major cause of the specific injury or illness. An injury, other than cumulative trauma, is compensable only if it is caused by a specific incident and is identifiable by time, place and occurrence unless it is otherwise defined as compensable in this act. A compensable injury must be established by objective medical evidence. The employee has the burden of proof to establish by a preponderance of the evidence that such unexpected or unforeseen injury was in fact caused by the employment. There is no presumption from the mere occurrence of such unexpected or unforeseen injury that the injury was in fact caused by the employment.

"Compensable injury" means a cardiovascular, coronary, pulmonary, respiratory, or cerebrovascular accident or myocardial infarction causing injury, illness, or death, only if, in relation to other factors contributing to the physical harm, a work-related activity is the major cause of the physical harm. Such injury shall not be deemed to be a compensable injury unless it is shown that the exertion of the work necessary to precipitate the disability or death was extraordinary and unusual in comparison to the usual work of the employee, or alternately, that some unusual incident occurred which is found to have been the major cause of the physical harm.

"Consequential injury" means injury or harm to a part of the body that is a direct result of the injury or medical treatment to the part of the body originally injured in the claim. The Court shall not make a finding of a consequential injury unless it is established by objective medical evidence that medical treatment for such part of the body is required.

"Cumulative trauma" means a compensable injury which is repetitive in nature and engaged in over a period of time, the major cause of which results from employment activities, and proved by objective medical evidence.

"Light duty" describes the status of an employee when a physician has declared the employee available for work with specific temporary physical restrictions.

"Maximum medical improvement" means that no further material improvement would reasonably be expected from medical treatment or the passage of time.

"Permanent partial impairment" means any anatomical abnormality or loss of use after maximum medical improvement has been achieved which can be evaluated by a physician. Any examining physician shall only evaluate impairment in accordance with the method prescribed in Section 33 of this act. All evaluations of permanent impairment must be supported by objective medical evidence.

"Permanent total disability" means incapacity, because of accidental injury or occupational disease, to earn wages in any employment for which the employee may become physically suited and reasonably fitted by education, training or experience, including vocational rehabilitation. Loss of both hands, or both feet, or both legs, or both eyes, or any two thereof, shall constitute permanent total disability.

"Temporary partial disability" describes the status of an injured worker who is under active medical care that is expected to improve his or her condition and who is unable to perform some of the normal activities of his or her work or is limited to a portion of his or her normal hours of employment.

FOR INJURIES OCCURRING 11-1-13 to 1-31-14

MAX RATES:                       TTD                        PTD                        PPD

                                                $801                       $801                       $323

FOR INJURIES OCCURING 2-1-14 to 10-31-14

MAX RATES:                       TTD                        PTD                        PPD

                                                $561                       $801                       $323

FOR INJURIES OCCURRING 11-1-14 to 10-31-15

MAX RATES:                       TTD                        PTD                        PPD

                                                $571.55 $816.50 $323

OPT-OUT

 In 2013, Oklahoma became the second state to pass opt-out, official the Oklahoma Employee Injury Benefits Act (OIBA).  The statute allowed employers to become a “Qualified Employer” and develop their own benefit plan.  The statute also required the Insurance Commissioner to scrutinize opt-out plans to make certain that they provide the same type of benefits and the same statute of limitations as regular compensation.

 Oklahoma Insurance Department

http://www.ok.gov/oid

                                                              FOR INJURIES OCCURING PRIOR TO 2-1-14

OKLAHOMA COURT OF EXISTING CLAIMS
L. Brad Taylor, Presiding Judge
J. Michael Harkey, Court Administrator
Katrina Stephenson, Court Clerk

SIX JUDGES

www.cec.ok.gov

                                                                 FOR INJURIES OCCURING AFTER 2-1-14

                                             OKLAHOMA WORKERS’ COMPENSATION COMMISSION

COMMISSIONERS

                                                                                     ROBERT GILLILAND

DR. LEOY YOUNG

MARK LIOTTA

TROY WILSON, SR

FIVE ADMINISTRATIVE LAW JUDGES 

                                                                                   www.ok.gov/wcc

Oklahoma Department of Labor

                                                                                http://www.ok.gov/odol

Arkansas is not unlike many states in that a compensable injury is one that arises out of and in the course of employment, but it does not include one that is inflicted on an employee at a time when employment services are not being performed.  However, the Arkansas Workers' Compensation Act does not define the phrase “in the course of employment” or the term “employment services.”  Rather, the Arkansas appellate courts must define these terms in a manner that is compatible with the strict construction required of the Workers' Compensation Act.  The courts have held, a number of times, that the test is whether the injury occurred within the time and space boundaries of the employment, when the employee was carrying out the employer's purpose or advancing the employer's interest directly or indirectly. The inquiry depends on the particular facts and circumstances of each case.

In fleshing out this issue, and because of the fact intensive nature of the inquiry, Arkansas courts and the Workers’ Compensation Commission, have been all over the board.  In most instances, one can find case law to support both sides of a given “employment services” case.  However, there certainly seems to be trend toward expanding the activities that are considered to be within the boundaries of employment. A recent opinion inRazorback Concrete v. Perkins, 2015 Ark. App. 368 (2015), reh'g denied (July 22, 2015) illustrates this point.

Perkins was a ten year employee of Razorback. At approximately 4:30 a.m. on March 11, 2013, Perkins reported to his job as a tanker-truck driver. He was dispatched from the company's West Memphis facility, and drove to a Memphis facility to be loaded with raw cement. From there, Perkins drove to the company's Blytheville facility for unloading, arriving shortly before 6:35 a.m. The employee responsible for unlocking the facility gates had not arrived to open them.

While waiting for the facility to be opened, Perkins drove a half mile to the only convenience store in that area. Perkins was not required to clock out. He was on paid company time and was not breaking any company policy by going to the convenience store. Perkins parked the truck on the shoulder of the road, directly across a five-lane highway from the store. He crossed the highway on foot, entered the store, bought a breakfast sandwich, and left to return to his truck. As Perkins attempted to cross the highway, he was struck by a vehicle and died a few hours later. The police report and death certificate recited the time of the accident as 6:44 a.m.  The death certificate also listed this as an accident occurring at work.

Perkins was responsible for the security and maintenance of the truck and its load while he was driving.  Razorback's area manager testified that the Blytheville plant opens between 6:30 and 7:00 a.m., not a set time. The manager stated that Perkins was never advised to refrain from stopping on his driving route and was actually allowed to stop as needed. Perkins was not instructed on what to do if he found the facility gates locked. The manager explained that Perkins was not doing anything prohibited by going to the convenience store that morning.

On appeal, Razorback argued that Perkins was not back in his truck or on company property at the time he was killed. Razorback also argued that Perkins was on a purely personal deviation from his work at the time of his injury. The Court of Appeals did not agree.  The Court found that the Commission’s determination that Perkins was on paid company time, responsible for his truck during his workday, a half mile away from the employer's locked and gated facility, and returning to work after this permissible deviation had been completed was not erroneous because reasonable minds could conclude as the Commission did.  “Whatever ‘employment services’ means must be determined within the context of individual cases, employments, and working relationships, not generalizations made devoid of practical working conditions.”

ABOUT THE AUTHOR

This article was written by R. Scott Zuerker, a partner with Ledbetter, Cogbill, Arnold & Harrison, LLP. Ledbetter, Cogbill, Arnold & Harrison is a law firm located in Fort Smith, Arkansas dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and liability matters. Zuerker and his firm are members of the National Workers’ Compensation Defense Network (NWCDN). If you have questions about this article or Arkansas workers’ compensation issues in general, please feel free to contact the author at rsz@lcahlaw.com or (479)782-7294.

Menard, Inc. and Zurich Ins. Co. v. Kenneth Fenton, Court of Appeals of Iowa, No. 14-1924

Claimant, Kenneth Fenton, sustained a back injury in November 2010 while working as an operator on an assembly line at Menard, Inc. A deputy commissioner determined Fenton experienced “a 50 percent loss of earning capacity or industrial disability.” The deputy awarded him permanent partial disability benefits. The commissioner affirmed the arbitration decision and adopted it in full.

Menard, Inc. and its insurance carrier, Zurich American Insurance Company (“Menard”), sought judicial review of the agency decision. The district court affirmed. On appeal, Menard contends the fifty percent industrial disability determination is not supported by substantial evidence and is an irrational, illogical, and wholly unjustifiable application of law to fact. Menard specifically asserts “[t]he commissioner failed to compare the condition of the Claimant’s low back before the work injury with the condition of his low back after having undergone surgery” or his earning capacity before and after the injury.  

The Court of Appeals affirms the commissioner’s workers’ compensation decision in favor of Fenton. Having found substantial evidentiary support for the commissioner’s key determinations, the Court concludes the commissioner’s application of law to fact was not irrational, illogical, or wholly unjustifiable.

Specifically, the Court noted that the deputy commissioner summarized Fenton’s medical history, including his back problems, and found “no evidence [Fenton] had any permanent impairment prior to this 2010 injury.” The deputy also enumerated Fenton’s earnings in the year of his injury and in ensuing years. The deputy found Fenton had been moved to a “floater” job, which “was not a permanent position at the time of the hearing.” These findings are supported by substantial evidence.

Menard, Inc. and Praetorian Insurance Company v. Dale Simmer, Court of Appeals of Iowa, No. 14-2078

Claimant, Dale Simmer, had been employed by Menards since 2003. In his positions at Menards, Simmer was often required to carry goods throughout the store and to customers’ cars in the parking lot. These loads sometimes reached up to three hundred pounds.

In late 2008 and early 2009, Simmer began to experience pain in his feet that spread up into his thighs while working. He was seen by Dr. Riesen to manage the pain through various treatments. He continued to work without restrictions. By April 2010, Simmer’s pain had spread to his lower back, and Dr. Riesen referred Simmer to Dr. Mehbod at the Minnesota Back Institute. He learned for the first time that he had scoliosis. Simmer again returned to his position at Menards without restrictions.

By early 2012, Simmer’s pain had returned and intensified. On February 9, 2012, Dr. Mehbod explained that Simmer’s employment may have had a causal connection to Simmer’s worsening condition. Dr. Mehbod advised Simmer to undergo surgery, which was performed on March 7, 2012.

Simmer went to work on June 4 without restrictions, but after one hour he experienced intense pain and was unable to continue working. June 4 was Simmer’s last day working at Menards. He filed a petition for workers’ compensation benefits on June 27, 2012.

A hearing on the petition took place on May 15, 2013. The parties presented as evidence several doctors’ opinions as to the cause of Simmer’s injuries and whether the injury was work-related. Dr. Mehbod wrote, “[W]orking 12 or more hours per day in the paint department at Menards standing and walking on concrete with heavy lifting aggravated, accelerated or [sped] up the degenerative process in [Simmer’s] back.” Dr. Mendoza wrote, “Mr. Simmer’s condition of degenerative scoliosis is an osteoarthritic condition caused by wear and tear and occurs regardless of the type of occupation.” Simmer’s counsel retained Dr. Miller, who wrote, “[Simmer’s] work was a significant aggravating factor for the pre-existing condition of lumbar scoliosis with degenerative change making the back pain progressive symptomatic.” Menards’s counsel retained Dr. Boarini, who wrote, “There is no indication that work was a specific aggravating factor for the progress of his degenerative disease.” Dr. Mooney wrote, “there is no direct evidence that his work . . . at Menards has been a direct contributor or a material aggravator of this idiopathic medical condition.”

The deputy commissioner who heard the case determined Simmer had provided Menards with the requisite notice within ninety days of reasonably recognizing the serious and compensable character of his injury. The deputy further found Simmer’s injury was a “cumulative injury arising out of and in the course of his employment,” which entitled Simmer to benefits. Menards appealed to the workers’ compensation commissioner, who affirmed the deputy’s order. Menards then filed for judicial review, and the district court affirmed the commissioner. Menards now appeals.

First, Menards asserts there is not substantial evidence to support the commissioner’s finding that Simmer provided timely notice of the injury to his employer. The Court of Appeals holds that the record contains substantial evidence that supports the agency’s determination: Simmer, acting as a reasonable person and including all knowledge that could imputed to him, discovered the seriousness of his injury on June 4, 2012. He therefore gave timely notice of the injury to his employer, and his claim is not barred by Iowa Code section 85.23. The Court noted that the medical advice Simmer received from Dr. Mehbod indicated Simmer would have a lengthy recovery period but did not foreclose him from eventually returning to his job in a comparable capacity. A reasonable person in receipt of such advice from a medical specialist would believe he could make a substantial recovery from his injury and surgery.

Second, Menards claims there is not substantial evidence to support the commissioner’s finding that Simmer’s injury arose out of and in the course of his employment. The Court of Appeals finds that Dr. Mehbod’s and Dr. Miller’s expert opinions constitute substantial evidence supporting the agency’s causation determination. It noted that it did not need to consider whether the expert opinions of the other doctors contradict those of Dr. Mehbod and Dr. Miller or offer alternative theoretical causes.

Therefore, the Court of Appeals affirms the district court opinion and finds that substantial evidence in the record supports the agency’s findings. 

Monte M. Thompson v. ATI Products, Inc., Court of Appeals of Iowa, No. 14-1765

Claimant, Monte Thompson, was employed by Aventure Staffing and Professional Services, LLC. Aventure is a labor broker that assigns its employees to perform work on a temporary basis for its customers. On July 29, 2010, Thompson was seriously injured on his first day of work at A & I Products, the corporate predecessor of ATI Products. Thompson had been placed at ATI’s facility by Aventure.

Thompson filed a claim for and received workers’ compensation benefits through Aventure. He filed this suit against ATI for negligence arising out of the workplace injury. ATI moved for summary judgment on the grounds it was Thompson’s “special employer” as a matter of law and Thompson’s negligence claim was thus barred by the exclusive remedy provision in the workers’ compensation code. The district court granted ATI’s motion for summary judgment. Thompson timely filed this appeal.

The limited issue before the court is whether the district court erred in concluding the summary judgment record established ATI and Thompson had an employer-employee relationship as a matter of law.

Iowa’s workers’ compensation scheme provides “the exclusive and only rights and remedies of the employee” arising out of a work-related injury “against the employee’s employer.” Iowa Code § 85.20. An employee is precluded from maintaining “any other action other than workers’ compensation against the employer . . . for injury arising while the employee is acting in the course of his employment.”Jones v. Sheller-Globe Corp., 487 N.W.2d 88, 90 (Iowa Ct. App. 1992).

“[T]he threshold determination in deciding whether a worker falls into the workers’ compensation scheme is whether the worker entered into a contract of hire, express or implied.”Parson v. Procter & Gamble Mfg. Co., 514 N.W.2d 891, 893 (Iowa 1994). “The question of whether a contract of hire exists is ordinarily one of fact,” and “in cases involving the question of whether an employee of a general employer became the employee of a special employer, the presumption is that the general employer continues as the sole employer.”Id. at 893-94.

Based on the controlling Parson decision, the Court of Appeals concludes that a reasonable juror could find Thompson was the exclusive employee of Aventure and not a special employee of ATI, and therefore, the district court erred in granting the defendant’s motion for summary judgment.

The Court looked at the legal relationship between the labor broker and its customer. The language in the contract between Aventure and ATI supports an inference that Thompson remained exclusively an Aventure employee even while performing work at ATI’s facility. The division of responsibility between Aventure and ATI with respect to the employee’s compensation and benefits also supports an inference that Thompson was exclusively an employee of Aventure. The Court also considered the documents between the employee and the labor broker, which would bear on the employee’s intent. Thompson signed a release of workers’ compensation claims with Aventure. When viewed in the light most favorable to Thompson, the documents defining the relationship between Aventure, ATI, and Thompson all support an inference that Thompson was exclusively an employee of Aventure and not ATI.

Additionally, the Court considered Thompson’s testimony and his understanding of his relationship with Aventure and ATI. When Thompson was assigned to work at ATI, he “considered [himself] to be employed by Aventure not [ATI], where [he] was merely a temporary worker.”

ATI argues the “overwhelming majority of jurisdictions have determined customers of labor brokers/temporary employers are protected by the state’s workers’ compensation act from common law tort liability” and cites more than thirty decisions from jurisdictions around the country as support for that argument. However, the Court of Appeals notes that this weight of persuasive authority does not allow it to disregard controlling authority. TheParson decision provides that the question presented typically is one of fact. On the summary judgment record in this case, in light ofParson, the Court concludes reasonable minds could differ on the question whether Thompson and ATI both had the intent to enter into an employment relationship.

Accordingly, the Court of Appeals reverses the district court’s grant of summary judgment and remands this case for further proceedings.

Call Mark Bosscher or Lee Hook with any questions @ 515-243-2100.  We’d be happy to help, whether it be a quick or a complex issue!

For all injuries occurring on and after July 1, 2015, the maximum workers’ compensation payable was raised to $813 per week, and the minimum was raised to $224 per week. This change was based on the Commissioner of Labor’s determination that the State’s average weekly wage for 2014 was $812.96.

—————————————–

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.

In a surprising decision that is particularly topical with various states facing similar issues with the popular company UBER, the Appellate Division held inBabekr v. XYZ Two Way Radio, A-3036-13T3 (App. Div. August 6, 2015) that a limo driver was not an employee when his vehicle was involved in a crash during the course of his work.

Babekr provided chauffeuring services to XYZ, a car limousine service, since 1988.  The company had about 430 drivers and 50 other employees doing administrative duties in its office. XYZ is made up of individual drivers, including Babekr, who own shares in XYZ.  The drivers elect the “board members,” who make decisions on operations.

Petitioner worked as a driver 10-12 hours per day, six days per week.  He decided the days and hours he wanted to work, generally from early evening to 6:00 a.m. He did not have to work at all; it was up to him.  He used his own car to chauffer passengers and paid for his car insurance.  No evidence was offered that he was reimbursed for gasoline or other expenses.

The company gave each driver a computer to install in his car.  Drivers would log on when they were ready to work.  Most communications between XYZ and a driver came through the computer.  When a driver was in a zone, he could alert XYZ that he was available to pick up a passenger but he would have to get in line behind other drivers in that zone.  The driver could reject any offer to transport a passenger but if that happened, he could not receive any communications from XYZ for 30 minutes.

Passengers had accounts with XYZ and paid their fares directly to it. XYZ then forwarded to drivers a percentage of the fares generated by the driver. The company issued each driver a 1099 form and took out no deductions for taxes.  The company did require drivers to dress a certain way.

After petitioner was injured in a car accident on October 21, 2011, he filed a motion for medical and temporary disability benefits.  XYZ denied that he was an employee.  The Judge of Compensation ruled for XYZ and the Appellate Division affirmed the dismissal of petitioner’s case.  It said:

XYZ exercised very little control over the means and manner of petitioner’s performance.  While petitioner had to dress in a certain way and drive a particular kind of car, these were hardly exacting, controlling measures and he was otherwise left on his own and was largely unaccountable to XYZ.  XYZ located passengers for him when he chose to log onto the computer and, in return, he transported the passengers for a percentage of the fare.

The Court said that petitioner could work when he pleased and that he did not lose the right to log on if he limited his hours or did not work at all.  The Court interpreted this to mean that he could not be terminated from his job for not showing up for work.  The Court also emphasized that XYZ did not need to provide any direction over how petitioner drove passengers to their destinations.  It said that petitioner supplied his own equipment but for the computer that XYZ installed.  He used his own car, insured it himself and did not get reimbursed for expenses. It also said that petitioner was free to use or not use XYZ as a source to locate passengers.  Petitioner had no retirement benefits or annual leave.

The more dominant test is the relative nature of the work test.  The Court admitted, “Here, to be sure, transporting passengers was an integral part of XYZ’s business.  But those who transported the passengers were not employees but co-owners of XYZ.  The understanding between XYZ and the drivers was that, in exchange for producing passengers for the drivers, the drivers would transport the passengers and take a percentage of the fare.”

The Court seemed to misapply the concept of mutual dependency.  “Moreover, the evidence indicated that XYZ was never dependent upon any one particular driver to carry out the job of transporting passengers.  If one driver were not available to pick up and transport a passenger, another was waiting in line ready to do so.  No one driver was ever so essential to the effective functioning of the business to become a cog in its wheel.” In prior cases, this test has not focused on the company’s relationship to any one person but on the relationship of alleged workers generally with the company. InRe/Max v. Wausau Ins. Cos., 162 N.J. 282 (2000) the Supreme Court found that real estate agents were employees even though they could choose their own hours of work and used their own vehicles, as well as running their own advertisements. In that case, the Supreme Court said, “We hold that the innovative structure created by the Re/Max agreement is simply another sophisticated attempt to thwart the employer-employee relationship…”Id. at 288.

The decision in Babekr should not be seen in isolation.  While it appears to depart from prior case law holding that cab drivers were employees of cab companies and real estate agents were employees of real estate agencies, this case is now the second one this year to find in favor of the independent contractor defense.  The other case of great importance isKotsovska v. Liebman previously discussed in this Blog where the Supreme Court ruled this year that a personal caretaker for an elderly gentleman was not an employee, reversing the Appellate Division’s holding. The tide may be turning in favor of the independent contractor defense, but it is hard to square the reasoning of these recent cases with prior case law.

In sum, the rumors of the death of the independent contractor defense in New Jersey appear to be rather premature.

----------------

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.  

Colleen Pizzo worked as a custodian for the Lindenwold Board of Education in Camden County, New Jersey.  She went out of work beginning June 19, 2012 for depression.  She filed the formal FMLA request on June 26, 2012.  The Board approved the leave beginning June 19, 2012.  While she was out, Pizzo requested an extension of her FMLA leave until September 10, 2012.

The Board policy stated that an employee’s twelve-month FMLA cycle begins “after the request for leave.”  However, in actual practice, the Board used a method measuring FMLA forward from the date an employee actually began leave. In this case, the difference was about seven days between the date Pizzo left work and the date she requested FMLA leave. The Board advised Pizzo that her 12 weeks of FMLA leave would expire on September 10, 2012.  The Board also advised Pizzo that she used up all sick, vacation and personal leave time as of August 20, 2012.

Pizzo returned to work but continued to miss work sporadically due to her depression.  She missed five days of work in December 2012 and January 2013 combined.  She missed three days of work in February 2013.  The Board did not terminate Pizzo for these additional absences.  However, after Pizzo accumulated eight more absences in March 2013, the Board terminated her employment on March 28, 2013.  Before the termination occurred, Pizzo submitted a request for a “sick bank” for “work-related stress.” The Board denied her sick bank request (where employees donate their unused paid sick days to another employee) due to past abuse of attendance over the years. 

The circumstances regarding termination are important.  Pizzo called out sick on March 21, 2012 and told her supervisor that her doctor would fax a letter to the Board.  She did not say anything about what specific condition she had and did not say when she would return to work.  The supervisor said Pizzo told him she would be out indefinitely, but Pizzo denied this in her law suit.  The Board made the decision to terminate employment partly because Pizzo said she would be out indefinitely and partly because of excessive use of sick time. Prior to her termination, Pizzo had never been disciplined for her absences.  After termination occurred, the Board received a letter from Pizzo’s doctor stating that Pizzo requested leave for an indefinite period of time.

Pizzo sued alleging violations of the FMLA and NJLAD.  The Board filed a motion for summary judgment on all of Pizzo’s claims.  The federal court found that the Board’s FMLA policy was equivocal in stating on the one hand that FMLA begins after a request for leave but in practice starting FMLA at the beginning of leave.  However, the court felt summary judgment was appropriate for the Board because Pizzo failed to give sufficient notice to her employer that she was requesting leave under the FMLA in March 2013.  Merely calling out sick is not sufficient for FMLA notice. 

Nor is there any evidence that Defendant received other notice from Plaintiff in the days after March 21^st.  Plaintiff did not return to work after that day and she specifically testified that her physician never sent her employer a doctor’s note about her ailment.  Although Defendant eventually received a letter from Dr. Murphy excusing Plaintiff for her absence, the letter was dated March 28^th, the same day Plaintiff was fired, and was not received by Defendant until April 8^th.

The court held that calling out sick did not provide enough information to the Board that Pizzo was suffering from a serious medical illness. Nor did the phone call provide enough information to trigger the Board’s obligation to ask for additional information to determine if the absence was FMLA protected. Similarly, because the Board had no idea that Pizzo was invoking her FMLA rights, the court dismissed the claim for FMLA retaliation as well.

One other interesting aspect of this case pertained to the request of Pizzo for a sick bank. Pizzo argued that the failure of the Board to consider this request violated the New Jersey Law Against Discrimination.  Failure to make reasonable accommodation constitutes a potential violation of the law.  The court denied the Board’s request for summary judgment on this claim because the court believed that a reasonable jury could find that the Board failed to accommodate Pizzo when it denied her request for a sick bank, where other employees donate their unused paid sick time.   The court noted that the request for a sick bank was made on March 12, 2013, a mere 16 days before her termination.  Pizzo never heard back from the Board and never had a chance to even discuss her request with the Board prior to her termination.  This issue was therefore permitted to go to a jury.

This case is important for employers for a number of reasons.  First, it is aNew Jersey federal court case that deals with key provisions of the FMLA, particularly the quality of notice that must be given by employees for an employer to know that absences from work are FMLA protected.  Second, it is one of the few published FMLA cases pertaining to school boards.  Third, it deals with issues pertaining to measuring the FMLA period and problems when there is inconsistency between a written policy and the actual implementation of the policy.  In this case, Pizzo was arguing she was entitled to more FMLA time because technically her request for leave was not transmitted until a week after she went out of work.  Finally, the case also deals extensively with the requirements on employers to engage in an interactive dialogue when dealing with reasonable accommodation requests. 

 This decision is very well written and easy to follow.  Readers who are interested can request a copy from the undersigned. The cite isPizzo v. Lindenwold Bd. Of Educ., No. 1:13-cv-03633 (D. N.J. March 31, 2015).

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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.  

Taylor Industries, Inc., a/k/a Hussmann Corp, and Indemnity Insurance Co. of North America v. Brent Lepley, Court of Appeals of Iowa, No. 15-0243

Claimant, Brent Lepley, sustained an injury on July 31, 2012, while working for the employer. The initial treatment was to Lepley’s left shoulder; however, several weeks later, Lepley began complaining of pain in his right shoulder as well. The employer denied liability for the right shoulder injury, and the matter proceeded to a workers’ compensation hearing. The deputy commissioner determined Lepley’s right shoulder condition was not work related. On intraagency appeal, another deputy commissioner, hearing the appeal by designation of the commissioner, reversed this decision, concluding Lepley carried his burden to prove his right shoulder injury was causally related to the work injury. Because Lepley was not at maximum medical improvement for either shoulder injury, the employer was ordered to pay for past and future treatment for both shoulders.

The employer filed a petition for judicial review with the district court, challenging the evidence supporting the finding of causation for the right shoulder injury. The district court upheld the agency’s decision under a substantial evidence review pursuant to Iowa Code section 17A.19(10)(f) (2011). The employer appealed.

The Court of Appeals affirms the district court’s judicial review decision finding that substantial evidence supports the agency’s finding of causation with respect to the right shoulder injury. The Court noted that the district court correctly analyzed both the applicable law on judicial review and the facts of this case.

Helen L. Lampman v. Chrystal Inc. and First Comp Insurance Co., Court of Appeals of Iowa, No. 14-1983

Claimant, Helen Lampman, began working for Regency Care Center in July 2008 as a certified medication aide and certified nursing assistant. On May 9, 2009, Claimant was lifting a resident into bed when the resident pulled Claimant down by her ponytail. Claimant went to the hospital the next day with complaints of pain in her lower back and going down her legs. Regency fired Claimant on May 11, 2009.

Claimant received extensive medical treatment following her injury from a number of doctors. On May 14, 2009, Dr. Prevo diagnosed Claimant with low back pain. Dr. Miller believed Claimant reached MMI on August 14, and opined that Claimant had “a permanent partial impairment of 1% to 2% of the lumbar back.” Dr. Jones performed an independent medical examination (IME) on October 16, 2009, which rated Claimant’s permanent impairment at five percent, and stated “this problem will continue into the indefinite future.”

In January 2010, Dr. McGuire, an orthopedic surgeon, examined the Claimant’s MRI, and noted the beginning of degenerative spondylolisthesis. Dr. McGuire prescribed Claimant a cane and a walker and agreed she had sustained a five percent permanent impairment. Dr. McGuire stated further that Claimant’s lifting incident on May 9, 2009, was a substantial and primary cause of her back pain. Dr. McGuire also noted he had “access to absolutely none of her treatment records.”

Dr. Ransdell treated Claimant for pain from July to December of 2010. Dr. Ransdell stated in his deposition that he did not believe a single traumatic event in 2009 could cause Claimant the level of continuing pain she complained of, but indicated lifting events could exacerbate an underlying condition. Dr. Ransdell did not have access to Claimant’s medical records other than those received from Dr. McGuire. Dr. Boarini examined Claimant on June 16, 2010 for an IME, and stated she “exhibits some obvious exaggerated pain behavior.” On November 9, 2011, Claimant underwent a functional capacity evaluation by Dr. Mark Blankespoor who found that she should be placed in the sedentary category of physical demand characteristics.

Claimant filed a petition alleging a cumulative injury to her back and legs with an injury date of May 9, 2009. On May 3, 2012, a deputy commissioner held an arbitration hearing. The deputy commissioner awarded Claimant permanent partial disability benefits based on a five percent industrial disability. Claimant filed an appeal to the commissioner who adopted as the final agency decision the portions of the arbitration decision challenged on appeal. The commissioner found Claimant’s testimony was not credible in regard to her level of pain.

Claimant sought judicial review on July 2, 2013. Claimant argued she sustained a permanent total disability, or at least seventy percent industrial disability due to the May 9, 2009 injury. The district court decided substantial evidence supported the agency’s award of five percent industrial disability. Claimant appealed.

Claimant first contends the agency’s decision to award five percent industrial disability is factually flawed and not supported by substantial evidence. The Court of Appeals notes that it is not in a position to second-guess the commissioner’s credibility findings or to reweigh the expert evidence received by the agency. The commissioner decided any permanent restrictions on Claimant’s work activity were not due to her May 2009 back injury. In reaching that decision, the commissioner rejected the opinions of those doctors who believed the work injury resulted in permanent restrictions because Claimant provided them with an “incorrect history” of her back pain. Because the record contains substantial evidence to support the commissioner’s factual findings, the Court will not disturb the determination of five percent industrial disability.

Claimant next argues the agency decision is the product of reasoning so illogical as to require reversal under section 17A.19(10)(i). The Court of Appeals, like the district court, concludes the commissioner’s determination was not illogical or irrational. The commissioner explained why he determined Claimant’s industrial disability was only five percent. Specifically, the commissioner reasoned Claimant was not credible regarding her back pain related to the work injury and to the extent that she provided inaccurate information to her doctors, the commissioner discounted their opinions that she suffered permanent restrictions caused by the back injury at Regency.

Claimant also claims the commissioner’s finding of only five percent industrial disability was an abuse of discretion requiring reversal under section 17A.19(10)(n). The Court of Appeals reaches the same decision as the district court: the commissioner exercised the agency’s considerable discretion within tenable grounds and to a reasonable extent.

The Court of Appeals thus affirms the decision of the district court.

Call Mark Bosscher or Lee Hook with any questions @ 515-243-2100.  We’d be happy to help, whether it be a quick or a complex issue!

A recent workers’ compensation blog post warns, “As global warming increases, and changing
weather patterns become more pronounced, workers’ compensation insurance systems will be
stressed to limits never before imagined.” According to the post, extreme temperatures and
significant storms are already causing increased levels of occupational injuries and illnesses. So far,
there has been no word from the Division on how it intends to address global warming.