State News

In 2014 an important appellate court decision was decided on whether all cases involving the interpretation of employee status must be referred to the Division of Workers’ Compensation.  On June 11, 2015, the New Jersey Supreme Court reversed the Appellate Division in Estate of Myroslava Kotsovska v. Saul Liebman (A-89-13) (073861). 

The facts were tragic.  Saul Liebman was living alone after the recent death of his wife in September 2008.  He was 89 years of age.  His daughter attempted to find someone who could help her father in his home and take care of his meals and daily activities. Myroslava Kotsovska, a 59-year-old Ukranian woman, was referred to Liebman. She met with Liebman through her son-in-law, who interpreted for her, and she agreed to do laundry, cooking, light housekeeping, and assisting with general tasks in exchange for $100 per day in cash.  She had no social security number and no checking account.  There were no discussions about whether she would be considered an employee or an independent contractor.  There were no formal agreements drafted and the only discussion of medical benefits was that the son-in-law would take care of any necessary medical bills.

On December 8, 2008, Liebman and Kotsovska ran some errands and stopped at the Millburn Diner for lunch.  Kotsovska exited the car and stood on the sidewalk while Liebman pulled into the parking space on front of her.  Liebman accidentally pressed the accelerator, causing the car to lurch over the parking block and onto the sidewalk where Kotsovska was standing.  The force of the car pinned Kotsovska against a low wall, severing her leg.  She died from the injuries within an hour.

The estate of Kotsovka filed a wrongful death action against Liebman in Superior Court. The estate never filed a workers compensation claim.  Liebman argued that the civil suit must be referred to the Division of Workers’ Compensation because the Division had exclusive jurisdiction over the issue of employee status.  The homeowner’s carrier stipulated that the accident arose from the decedent’s employment. 

The trial judge ruled for the estate and awarded it $300,000 for the decedent’s pain and suffering and $225,000 for her wrongful death.  The Appellate Division reversed, stating that the matter should have been transferred to the Division of Workers’ Compensation on the issue of whether Kotsovska was an employee or an independent contractor.  The New Jersey Supreme Court then reversed on June 11, 2015 in favor of the estate.

In ruling that the Superior Court has jurisdiction over employee status, the Supreme Court first distinguished several cases that seemed to suggest that this issue should be resolved in the Division of Workers’ Compensation.  The Court said that what makes this case different from prior cases is that the estate of Kotsovska never filed a workers’ compensation claim. The only claim that was filed was a wrongful death action. “Moreover, petitioner did not file a petition for workers’ compensation with the Division.  Thus, as the trial court noted, there was no claim pending before the Division over which it could assert jurisdiction.  Under these circumstances, we conclude that the Superior Court had jurisdiction to decide the question of decedent’s employment status.”

In ruling in favor of the estate, the Supreme Court did not reject the concept that the Division of Workers’ Compensation has primary jurisdiction on issues of compensability and related employment matters.  However, it said there is a four-part test that must be considered to determine if the Division has primary jurisdiction.

1) whether the matter at issue is within the conventional experience of judges; 2) whether the matter is peculiarly within the agency’s discretion, or requires agency expertise; 3) whether inconsistent rulings might pose a danger of disrupting the statutory scheme; and 4) whether prior application has been made to the agency.

On the second part of this test, the Supreme Court surprisingly said, “. . . theCompensation Court is in no better position to make the threshold determination of a worker’s employment status than the Superior Court.”  It also again noted that there was no risk of a conflicting decision between the Superior Court and Division of Workers’ Compensation in this case because the estate of Kotsovka only filed in Superior Court.  It upheld the decision of the trial judge that Kotsovska was not an employee but an independent contractor in spite of the apparent control over Kotsovska’s activities that Liebman had and the economic dependency that Kotsovska had on Liebman.  In the portion of the decision dealing with jury charges, the Court said, “A worker’s economic dependence upon the employer is a factor to be considered when a worker performs a function that constitutes a part of the employer’s business.”  It said in this case that Kotsovska’s employment was not in furtherance of Liebman’s business.

One is left to wonder what the result would have been had the estate of Kotsovska filed both a workers’ compensation claim and wrongful death action simultaneously.  Many lawyers do this to protect the statute of limitations from running in both actions.  If the Superior Court were to find employee status, the timely filing in workers’ compensation court would protect the rights of the employee.  There is certainly language in this decision suggesting that if the claimant files both a workers’ compensation claim asserting employee status and a civil claim for wrongful death, the Division should have primary jurisdiction to decide the employment status issue.  On the other hand, the Supreme Court also said that the Judge of Compensation is in no better position to decide on a worker’s employment status. 

What practitioners are likely to do in situations like this where it is unclear whether the worker is an independent contractor or an employee is to file in superior court and defer any filing in workers’ compensation until just before the statute of limitations should run. The most important comment from this Supreme Court decision is that the Superior Court is equally competent in making employment status determinations. 

The stakes are higher in civil law suits and that will favor filings in superior court over workers’ compensation, and the emphasis on social legislation which pervades workers’ compensation decisions may not play such a large role outside workers’ compensation court.  In this writer’s view, the decision inKotsovka will likely lead to a divergence in legal analysis on independent contractor status emerging from workers’ compensation and the superior court.  In the workers’ compensation arena, a finding of independent contractor status is very rare because using both the “control” test and the “relative nature of the work test” favors employee status.  For instance, babysitters who come to a home fairly regularly are found to be employees, and Kotsovka would likely have been found to be an employee in compensation court, contrary to the analysis used in the Superior Court decision.  In the last analysis, the rule now is that when it comes to the initial employee status interpretation, the Division does not have primary jurisdiction if the plaintiff only files suit in Superior Court.

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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.  

“The Calfee Corner” - Recent Successes Before the Industrial Commission of Ohio

William F (13-351333) - No “Substantial Aggravation” of Pre-Existing Conditions, (April 27, 2015)

A construction worker and former college football lineman had injured his right knee at work in 2000.  This Claim was eventually settled in 2011.  In 2013 while employed by a Calfee client, he slipped off a plank into a shallow trench.  He did not seek medical treatment until 9 days later.  The Claim was allowed for a “Right Knee Strain” and Calfee appealed.  The original independent medical examination had noted the badly degenerated condition of the worker’s knee and the likelihood he would require a knee replacement unrelated to the alleged injury.  The worker then alleged that the knee strain had caused him to alter his gait and as a result he had sustained a “Lumbar Sprain/Strain.”  Testimony established that his gait was unchanged and instead was due to his weighing 300 pounds.  The supposed back injury was denied and the worker appealed to the court of common pleas.  While a Motion to Consolidate was pending in court, the worker attempted to achieve his ultimate objective, having his knee replacement paid for by workers’ compensation.  “Substantial Aggravation” of 4 degenerative conditions of the right knee wasdenied by the Industrial Commission.

Glen K (13-826115) - Alleged Adjustment Disorder Due to Being Caught Stealing from EmployerNot Industrial Injury (May 19, 2015)

 A chemical worker on the first shift of a Sunday night/Monday morning arrived at work feuding with his ex-wife.  He failed to follow proper procedures in checking whether liquid chemicals had solidified.  When it turned out they had not, he sustained second degree burns to various body parts.  The worker returned to light duty 2 months later and then full duty 2 months after that.  The worker was changed to a new job which gave him access to the facility after hours.  He consulted a psychologist 13 months after returning to full duty and was diagnosed him with “Adjustment Disorder with Mixed Anxiety and Depressed Mood” supposedly due to the accident.  The Employer then discovered that the worker had been stealing sophisticated metal molds and selling them for scrap.  He was terminated and reported to the local authorities.  The worker was convicted of Aggravated Theft and given a 6 month jail sentence with work release privileges.  The Employer’s Psychologist and the State Psychologist found “...multiple non-occupational stressors” rather than the industrial injury responsible for the worker’s mental state.

Lesbia S (13-302988) - Temporary Total Disability Compensation Terminated Due to Claimant’s Refusal of Modified Duty Off Site Light Duty Job Offer (January 22, 2015)

Claimant’s request for temporary total disability compensation was denied based on Claimant’s refusal to accept a restricted duty work offer.  The Claimant had been paid salary continuation through August 18, 2015.  The Claimant filed a motion requesting temporary total commencing August 19, 2014.  The Employer did not have light duty available on-site, so it set up modified duty off site to accommodate the Claimant.  On September 8, 2014, Claimant was given a bona fide offer of light duty employment based on the restrictions given by the doctor who performed Employer’s independent medical examination. The light duty job offer letter was sent by U. S. mail and certified mail and in both English and Spanish.  The light duty job offer included the title of the position offered, the details of the job, Claimant’s restrictions, and the date Claimant was scheduled to return to work.  Claimant failed to appear.  At the administrative hearings before the Industrial Commission Claimant testified that her doctor reviewed the light duty job offer and told her that she could not work.  Calfee successfully argued the treatment notes of Claimant’s chiropractor and Pain Management Specialist included impairments and symptomsnot related to the allowed conditions.   

Court Decisions of Note

Intentional Tort

“Transfer cars” operated by workers had safety bumpers which cut power  when compressed.  A maintenance worker investigating a malfunctioning conveyor motor  was struck by a transfer car whose operator’s view was obstructed.  The worker alleged the transfer car  safety device must have malfunctioned and was entitled to the malfunctioning safety device presumption in Pixley v. Pro-Pak Industries, Inc. 142 142 Ohio St. 3d 203 (Dec.2014).  The trial court granted Pro-Pak summary  judgment but the court of appeals reversed.

The Ohio Supreme Court reversed, finding that the Claimant failed to prove that Pro-Pak deliberately removed or disabled the transfer car safety bumper.  Pro-Pak utilized extensive post-accident testing of the transfer car bumpers.  The Claimant’s experts relied on OSHA video footage showing dragging bumpers which failed to halt transfer cars.  The  Court never reached the question of  whether  the intentional tort statute  creating the presumption for safety device removal was restricted to machine operator injuries or  also applied to nonoperators.  Failure to address this issue led three justices to dissent.

VSSR

In State ex rel. Richmond v. Indus. Comm'n, 139 Ohio St. 3d 157 (Apr. 2014), the Claimant sought an additional award for a violation of a specific safety requirement (VSSR) after he fell from a ladder that he improperly secured. As a defense to the VSSR allegation, the Employer pointed to OSHA regulations in order to show that the safety gear was indeed appropriate.  The Hearing Officer denied the VSSR. The Claimant then argued that the Industrial Commission abused its discretion by relying on the OSHA regulations when deciding the VSSR.  The Claimant contended that the appropriate specific standard to be applied in deciding  a VSSR  was whether or not Ohio's specific safety requirements (SSR) were violated.

The Ohio Supreme Court disagreed with the Claimant’s position explaining that "although the Industrial Commission may not adopt external standards as thesole basis for a violation of a SSR award, it may look to those standards asrelevant factors to inform its interpretation of a SSR and its determination whether the employer violated that SSR." (emphasisadded).  The Court ruled that the Commission's use of the OSHA regulation was appropriate.

Temporary Total

In State ex rel. Floyd v. Formica Corp., 140 Ohio St. 3d 260 (Aug. 2014), the  Industrial Commission denied a claim for Temporary Total Compensation applied for by a Claimant in 2010, almost ten years after the Claimant left his employment with the Employer.  During the intervening time, the Claimant had several surgeries and went through alternating periods of Temporary Total  and Maximum Medical Improvement.  The Commission determined that, based upon the fact that the Claimant never looked for work and applied for Social Security, the Claimant was no longer eligible to receive Temporary Total because he had abandoned the entire job market when he left the Employer and retired. The Claimant argued that the Industrial Commission's order was not supported by the evidence as he was not required to look for work while he was receiving Temporary Total and when he was not receiving compensation he still was not medically able to work.

The Ohio Supreme Court found that the Industrial Commission’s Order was indeed supported by the evidence. The Court noted  the Claimant was not required to apply for Social Security benefits; rather, this was a personal choice. If the Claimant intended to return to the workforce after leaving the Employer, he had no reason to file for retirement at that time.

In State ex rel. Bailey v. Indus. Comm'n of Ohio, 139 Ohio St. 3d 295 (May 2014), the Claimant contended that the Ohio Industrial Commission erred in relying on an older medical report to deny her temporary total compensation. The report, written  in 2009, stated that the Claimant had reached maximum medical improvement, and "...can perform without significant limitations at this time. However, this does not take into account the physical allowances in this claim ... and/or high levels of exaggeration and malingering measured on objective psychometric testing."   The Claimant asserted that the Commission abused its discretion when it failed to acknowledge later reports which were contrary to the 2009 report. The Franklin County Court of Appeals reviewed the reports and noted that the Claimant had given a different version of his medical history and withheld certain information from a different doctor. Additionally, no psychological testing was performed in preparing the second doctor’s report; instead, the doctor seemed to have based her opinion only on the Claimant’s history and complaints. The Court of Appeals overruled the Claimant’s objections.

On appeal, the Ohio Supreme Court affirmed the judgment of the Court of Appeals, noting that the Commission "is exclusively responsible for determining the weight and credibility of the evidence." The Court rejected the notion that the 2009 report was stale, explaining the "content of the report and the question at issue are more relevant than the date the report was issued." The Court ruled that the later report failed to establish any new and changed circumstances that would lessen the probative value of the earlier report, so it was appropriate for the Commission to rely on it.

In State ex rel. McCormick v. McDonald's, 2015-Ohio-123 (Jan. 2015), a Claimant  asserted that her Temporary Total was improperly terminated based upon an incomplete medical report stating she had reached Maximum Medical Improvement.  The Claimant believed her physician's request for authorization of three additional steroid injections after the original report rendered the medical report incomplete and unreliable based on the reasoning of State ex rel. Sellards v. Indus. Comm., 108 Ohio St.3d 306 (2006). 

The Court refused to extend the reasoning ofSellards to this case, explaining:"Sellards was narrowly decided based on its unique facts. This  Court's conclusion that the doctor's opinion was premature was narrowly based on two factors:  the bureau's error or delay in paying for Sellards' psychiatric prescriptions and Dr.Levy's lack of awareness of the contemporaneous approval of Dr. Spare's treatment plan when he issued his report. Those factors do not appear in this case." The Court ruled that the subsequent request for and approval of a treatment plan does not automatically render a doctor's opinion on maximum medical improvement premature.

PTD

In State ex rel. Sheppard v. Indus. Comm'n, 139 Ohio St. 3d 223 (May 2014), the Claimant suffered a work-related back injury in 1997. Subsequent MRI results indicated that the condition was resolved, and an intervening injury occurred in 2002.  In 2006, the Claimant filed a motion to reactivate his claim in order to pay for additional medical treatment. The Industrial Commission determined that the treatment was related to the Claimant’s degenerative disc disease, a non-allowed condition, and denied his motion. 

In 2010, the Claimant filed an application for Permanent Total Disability.  Following a hearing on the application, a Staff Hearing Officer granted it without addressing the intervening injury.  Eventually the Ohio Industrial Commission exercised its continuing jurisdiction and reversed the Staff Hearing Officer's ruling. The Claimant contended that the Ohio Industrial Commission’s action was an abuse of discretion, asserting that the hearing officer was not required to address the intervening injury. The Ohio Supreme Court ruled that, since the Ohio Administrative Code requires the hearing officer to specifically determine whether the Claimant established proximate cause, the Industrial Commission has the right to exercise its continuing jurisdiction to determine proximate cause.  The Court contended that an intervening injury could eliminate the industrial injury as the proximate cause of the inability of the Claimant to work and thus destroy the Claimant’s eligibility for Permanent Total Disability compensation. The Court held therefore that there was no abuse of discretion by the Ohio Industrial Commission.

Loss of Use/Amputation

In State ex rel. Varney v. Indus. Comm'n of Ohio, 2014-Ohio-5510 (Dec. 2014) a Claimant had four fingers on his left hand amputated in a work-related accident in 1983.  Three of the Claimant’s fingers were completely reattached, and a fourth was partially reattached.  Because the fingers did not regain their full function, the BWC awarded the Claimant compensation for the amputation of his fingers.  Twenty years later, the employee sought an additional award for the total loss of use of three of his fingers. The Industrial Commission denied the claim, concluding that there was no legally valid medical report in the record supporting the loss of the functional use of these fingers.

Upon appeal, the employee argued that,  when analyzing the loss of use of his fingers, the Industrial Commission should have applied the standard for the loss of use of a thumb articulated inState ex rel. Rodriquez v. Indus. Comm'n.,2009-Ohio-4834 (10th Dist.). In a split decision, the Court of Appeals concluded that the reasoning inRodriguez regarding the loss of use of a thumb did also apply to the loss of use of a finger.

The Ohio Supreme Court, however, held that "in the absence of a statutory numerical measure for the total loss of a finger, the Industrial Commission must apply the accepted and mandated method for measuring loss of use—a physician's opinion on impairment or extent of loss."  The Court found that it was entirely appropriate for the Industrial Commission to rely on a physician's report that stated the employee had some functional use of his fingers.

Due Process

In State ex rel. Evert v. Indus. Comm'n of Ohio, 2015-Ohio-120 (Jan. 2015), the Claimant alleged that she had been denied due process of law when a Commissioner on the Ohio Industrial Commission who did not attend the Claimant’s hearing voted on the Claimant’s Motion for Reconsideration.  The Court found that the Commissioner was not required to attend the hearing in order to vote on the matter being heard, as the issue presented by the Claimant was a purely legal one that could be settled as a matter of law without judging a witness' credibility.   The Commissioner had discussed the matter with an experienced Staff  Hearing Officer who had been present at the hearing and who summarized the testimony and arguments presented.  The commissioner had reviewed the entire claim file.   The Court determined the Commissioner had conducted a meaningful review of the matter sufficient to satisfy due-process concerns.

RECENT DECISIONS OF THE FULL INDUSTRIAL COMMISSION

Injured Worker Denied Wage Loss for Not Verifying On-Line Searches as Required

The Full Commission vacated the SHO Order granting Wage Loss Compensation to an Injured Worker working part-time and denied Wage Loss Compensation.  The Injured Workers had not verifyied any of her on-line job searches as required by Ohio Adm. Code sections 4125-1-01 (D)(1)(d) and (E)(1)(c).  The Injured Worker was restricted to only working 30 hours per week and worked part-time within this restriction.  She documented 42 job contacts during the requested wage loss time period.  Twenty-two job contacts were through the internet, which had to be verified with a copy of the on-line posting and the application submission.  The Injured Worker did not verify any of her on-line searches as required.  The Commission found the limited number of contacts (20) over a seven-week period insufficient to constitute a consistent, sincere and best attempt to obtain suitable employment.

Failing to Complete Required Post-Accident Drug Test Constitutes Voluntary Abandonment Terminating Temporary Total Disability Compensation

Injured Worker’s claim was allowed for cervical strain.  Injured Worker’s employment began on November 4, 2013 and prior to the start of his shift, he verified acknowledgment of the Employer’s Substance Abuse Policy.  The Acknowledgement included a “Statement of Understanding,” which notified Injured Worker that his employment was contingent upon the successful completion of drug and alcohol screen tests. Injured Worker was terminated on November 5, 2013.  He had sought treatment on November 5, 2013 and was asked to submit a urine sample for drug testing.  Affidavits were submitted confirming that Injured Worker provided a sample of insufficient quantity, which precluded temperature verification.  The Injured Worker refused a second sample.  The Commission found that a suitable sample was implicit in the Employer’s Substance Abuse Policy.  By providing a urine sample that could not be verified, the Commission found that Injured Worker failed to successfully complete the required post-accident drug test.  Specifically, the Commission found that the Employer’s written work rules and policies clearly required post-accident drug testing and appropriately warned Injured Worker that failure to successfully complete such testing was grounds for termination.  Injured Worker acknowledged his receipt of the policies.  Accordingly, Injured Worker’s  termination constituted a voluntary abandonment of the workforce and temporary total disability compensation was denied.

Psychiatric Consultation Denied When Hearing Officer Manual Memo M1 Criteria Not Met

The Full Commission denied a request for authorization and payment for psychiatric consultation.  Hearing Officer Manual Memo M1 states that psychiatric consultative fees are payable in claims withno allowed psychiatric condition when the consultation is necessary for pre-operative work-up or as a resource in planning future treatment.  Injured Worker did not submit evidence of either criteria and the request was denied.

NEWS FROM OHIO BWC

CSI Ohio Style

Ohio’s CSI -- Common Sense Initiative, was established in Executive Order 2011-01K.  Under this initiative, agencies, including the Bureau of Workers' Compensation, are directed to balance the critical objectives of all regulations with the costs of compliance by the regulated parties, and use plain language.  Every proposed rule under CSI is accompanied by a business impact analysis.

On 5/22/2015, under the auspices of the CSI, O.A.C. 4123-3-36, the Provisional Treatment Pilot Program, became effective.  Based on “common sense,” this provision allows the BWC to immediately allow claims for specific medical conditions which have a historical record of being allowed whenever requested in a claim and also having low medical costs in relation to that diagnosis.” The diagnoses and their ICD 10 codes that fall within this program are listed in Appendix A, which runs five (5) pages!

To prepare medical providers for this new program, also called “The Enhanced Care Program,” the BWC began provider education programs in April.  In addition to education, the BWC has promised enhanced fee payments.  Also, the Physician of Record (POR) will have greater treatment latitude in the first 60-days of the claim along with a reduced administrative burden.   On the other side, the BWC will require participating providers to take a more active role in managing these claims.

A provider in this pilot program is allowed to consider the claimant in a more “holistic view” -- and can develop a care plan which can include other medical providers such as the claimant’s own primary care physician, specialists and perhaps physical therapists to address issues/injuries not officially allowed in the claim but that the physician of record believes to be causally related to the workplace injury. And, last but not least, the POR can consider the Claimant’s general health issues that may impact the Claimant’s optimal path back to work.  This plan would need to be submitted to the appropriate Managed Care Organization (MCO)  within 5 days but the POR could begin treatment and expect appropriate reimbursement if the care plan falls within the ODG treatment guidelines.  The Bureau of Workers' Compensation expects the physician of record to serve as “quarterback” for managing claimant’s care to receive the enhance compensation.

BWC ICD-10 changeover

The changeover from ICD-9 to ICD 10 codes is set for October 2015.  The Bureau of Workers' Compensation is on-track to be compliant with this mandate.

NEWS FROM INDUSTRIAL COMMISSION

Industrial Commission Happenings:  Really New!

After being on the 7th Floor of the Office Building since 1979, the Cleveland Industrial Commission has moved to the 5th Floor.  Among the heralded features of the 5th Floor is handicapped accessibility.  The hearing rooms are spacious.  The corridors are wide enough to accommodate at least 2 wheelchairs at the same time.  The most important innovation is restrooms on thesame floor as the Industrial Commission.  This removes the necessity of having to descend to the Plaza level (you can guess how this is designated on the elevator button) in order to respond to calls of nature.  (The status of a couch in the Women restroom remains unclear.)  Although the 5th Floor started holding hearings on May 19, 2015, the official grand opening was June 3, 2015 with cake, punch, and Industrial Commissioners.  From a decorative perspective, the color scheme is bright orange (perhaps inspired by the Cleveland Browns) with windows providing views of Lake Erie, the Cuyahoga River, and downtown Cleveland.  The aesthetic compares favorably with an airport waiting room, quite an improvement after 36 years on the 7th Floor.

LEGISLATIVE NEWS

Mental-Mentals Mired in Legislature

Bills recognizing Post-Traumatic Stress Disorder without a physical injury for “first responders” (police, fire, emergency medical, etc.) are currently on hold.  A first problem was defining the eligible class of workers and whether this created equal protection problems for those who were ineligible but witnessed the same kind of event.  A second was the government entities who employ first responders became concerned about the potential costs.

Legislative Bill and Rumor Mill

Various bills heard by the House Insurance Committee proposed tweaks to Ohio’s unique Workers’ Compensation System such as providing health care more quickly to Injured Workers and assisting them with return to work after 45 days of missed work.  Among these bills was one which turns out to be the latest iteration of cyclical attempts over the years to privatize the system.  Whether privatization ever makes it out of committee will be dependent on support in the dominant Republican Caucus.  As to the politics, one legislator was quoted as saying: “Everybody’s a fiscal conservative and a lot of people ran on the concept that they wanted to do some type of privatization of workers’ comp...”  It is not clear at present if this will become a legislative priority.

A Special Contribution to the “Calfee Update” by Michael F. Brown, Account Executive, Benefits 1 Group

mikeb@benefits1group.com

Ohio Workers’ Compensation – A New Way of Paying Premium

 Prospective Premium Payment

As previously communicated in our prior updates, the dominating story for Ohio employers for Summer 2015 is that the Ohio BWC has now begun their transition to having employers pay premiums in advance, consistent with most other insurance payment schedules.  

Included in the BWC’s transition to this new payment method is providing Ohio employers a total of 8 months of free WC premium, offered in the form of credits for the premium which would otherwise be due for the period January 1, 2015 through August 31, 2015.

·        As an aside, BWC’s posture is that payment is not complete until posted by BWC, even if payment is made online via EFT.  As posting may take “a few days”, BWC recommends paying premiums at least 3 days before the stated deadline, to avoid lapses in WC coverage.

 A brief summary of the key points in the prospective premium timeline is included below:

 May 2015

·        The BWC will send a letter to all private state fund employers, explaining the new processes.  This communique will also include an estimated payroll that BWC will use to generate the invoices issued for the 2015-16 rating year. (Public employers are on a different schedule; their transition to prospective premium payment will occur in Spring 2016)

·        The payroll used to estimate premiums for the 2015-16 rating year will be the amount that the employer reported from the period July 1, 2013 through June 30, 2014. If an employer believes their 2015-16 payroll will be significantly different than the BWC’s estimate, they may request the BWC to adjust the premium (either up or down.) 

 ·        The BWC will also default all employers to a six payment plan, which can also be altered to anywhere from 1-12 installments, by requesting same from the BWC.  Employers should carefully consider their options as each additional payment cycle establishes another deadline for making payment to avoid lapses in WC coverage.

 Jun 2015

·        In June 2015, invoices will not be issued because the BWC’s transition credit will cover this installment for this rating year only.  Going forward in June 2016 and beyond, an invoice will be issued, and payment will be due prior to July 1, 2016. 

 ·        In the future, an Ohio employer will be required to pay at least part of their annual estimated WC premium prior to the beginning of the rating year (July 1, or January 1 for public employers).

 Aug 2015

·        This invoice covers the period September 1, 2015 to October 31, 2015. Payment is due by August 31, 2015. At this time, employers must also report payroll for 6 months ending 6-30-15 by 8-31 (but pay $0). 

 ·        Timely reporting of payroll for the first half 2015 is extremely critical, as all premium credits (8 months’ worth) being offered as part of the transition will be forfeited if payroll for this period is not reported by the last business day of August 2015.

 Oct 2015

·        This invoice covers the period November 1, 2015 to December 31, 2015. Payment is due by October 31, 2015.

Dec 2015

·        This invoice covers the period January 1, 2016 to February 29, 2016. Payment is due by December 31, 2015 to avoid a lapse in WC coverage.

 Feb 2016

·        This invoice covers the period March 1, 2016 to April 30, 2016. Payment is due no later than February 29, 2016.

 Apr 2016

·        This is the final invoice for the July 2015 rating year, presuming that no changes to the BWC’s default billing schedule were requested.  The invoice covers the period May 1, 2016 to June 30, 2016, and payment is no later than April 30, 2016.

Aug 2016 // Filing & Reconciliation

·        Prior to August 15, 2016, employers must report actual payroll for the year ending June 30, 2016 to reconcile their WC account. 

·        If a credit balance results due to reporting less than the BWC’s estimated payroll, a credit to the employer’s WC account will accrue and be applied to future payments.  If additional premium is due to BWC, any amount due must be paid by the same August 15, 2016 date (note prior comment about BWC’s posting philosophy).

·        Timely reporting of this annual payroll is extremely important, as significant penalties apply to non-compliant employers.  Should actual payroll and any associated payment not be made by the August 15 deadline, the employer will be removed from any and all BWC programs for which they have enrolled for the July 2016 rating year.  This includes all group rating, deductible, retrospective rating or other alternative financing programs, as well as the BWC’s multiple incentive rebate programs.  Hence, the consequences of failing to comply with this deadline could amount to tens or hundreds of thousands of dollars.

Premium Rates Decreased 10.8%

In more good news for Ohio employers, the Bureau of Workers’ Compensation (BWC) will adopt a 10.8 percent overall rate reduction for Ohio private employers with approval from the BWC Board of Directors today. The change, effective July 1, is expected to bring a decrease in projected annual premium of $153 million, and bring private employer rate levels 21.4 percent lower than the rate levels in effect January 1, 2011.

"The environment for employers operating in Ohio is improving along with the state's economy, and BWC is certainly part of that story," said BWC Administrator/CEO Steve Buehrer. "We’ve targeted improvements that will yield positive improvements to Ohio's workers' compensation system, and are conducive to business growth. Lower rates, along with a focus on workplace accident prevention and care for those who are injured, all support the state’s continued economic recovery."

The reduction is possible due to a number of factors, including lower expected claim frequency, the impact of positive investment results on the State Fund, as well as the upcoming adoption of a prospective billing system. Details on prospective billing and the resulting one-time premium credit totaling $1.2 billion for private employers and local governments are available at bwc.ohio.gov.

The reduction is an overall statewide average. The actual premium paid by an employer will depend on expected future costs in their industry segment, their recent claims history, and participation in various premium credit and savings programs.

Revamped pharmacy program protecting health and safety of Ohio's injured workers

A new report details the success of the Ohio Bureau of Workers' Compensation (BWC) first-ever outpatient medication formulary, as well as future steps BWC will take to protect injured workers from deadly drug regimens.

Injured workers were prescribed 15.7 million fewer opiate doses in 2014 than in 2010, representing a 37 percent decrease. BWC implemented the closed formulary in 2011 to improve the efficiency and effectiveness of treatment, limit inappropriate uses of medications and lower prescription costs.

"Our goal is to ensure injured workers in Ohio are receiving effective, clinically grounded treatments that help them heal while protecting their well-being so they can regain their footing and return to work whenever possible," said BWC Administrator/CEO Steve Buehrer. "Prescription medications should assist in recovery following a workplace injury, and we’ve put safeguards in place because no one should suffer from addiction or an unintentional overdose while trying to get back on their feet."

The report was delivered by JohnHanna, BWC's pharmacy program director, during the fourth annual National RX Drug Abuse Summit in Atlanta, Georgia.Hanna provided the national audience an overview of the BWC formulary, and discussed the impact it’s had on drug and opiate use by injured workers since it went into effect in September 2011.

After implementing the formulary, BWC began refining coverage for opiates as well as coverage of muscle relaxants and anti-ulcer agents, which are also commonly overprescribed and misused. Over that period of time, prescriptions for muscle relaxants and anti-ulcer medications decreased by 72 percent and 83 percent.

"Our focus when implementing the formulary and making subsequent changes has been on the clinical rationale, and BWC's goal of ensuring the medications injured workers receive following their injury do not ultimately hinder their recovery," said Hanna.

Hanna stressed that injured workers can face risks beyond those posed by opiates. Moving forward, BWC will be targeting dangerous combinations of medications prescribed by multiple physicians. After detecting those at the highest risk, BWC will work with their physicians or make referrals to managed care organizations to ensure injured workers aren’t receiving medication combinations that can be deadly. BWC will be studying its data about injured worker medication and hopes to present early findings to its pharmacy and therapeutics committee this summer.

Ongoing improvements to the pharmacy program have also produced dollar savings. In 2014, BWC's total drug costs were 16 percent, or $20.7 million, less than in 2010. Opiate costs were down 36 percent ($19.9 million); muscle relaxant costs were down 78 percent ($3.3 million); and anti-ulcer costs were down 95 percent ($6.4 million).

With 859,000 open claims, BWC is the largest state fund workers' compensation insurer in the country. The agency paid $1.7 billion in total benefits during fiscal year 2014, including $662 million in medical spending and $109 million in pharmacy benefits.

San Allen Update

At press time, it appeared that the first payments related to theSan Allen v. Ohio BWC class action suit were beginning to arrive in employer mailboxes.  This is welcome news as the final step in settling the long-standingSan Allen v. Ohio BWC matter. 

Claim forms were issued last Fall to members of the class of employers who were not in a group rating program between 2001 and 2008.  The completed forms, once verified, entitled employers to their share of the $420 million settlement agreed to by the BWC. 

Michael F. Brown, ARM is an Account Executive with Benefits 1 Group.  Michael has been in the workers’ compensation and risk management industry for over 35 years. In addition to experience as a claims examiner and hearing representative, Michael has consulted with employers to develop and maintain best-in-class strategies to workers’ compensation cost-containment and risk financing.

In his past experience, Michael served as a workers’ compensation and employee benefits manager for a multi-facility, self-insured employer.  Certified as an Associate in Risk Management (ARM), Michael applies an in-depth evaluation process to develop tailored solutions to the most complex workers’ compensation challenges.

Every New Jersey workers’ compensation practitioner must evaluate the benefits of a Section 20, (which is a lump sum full and final payment), versus an order approving settlement, (which involves an award of a percentage of disability under Section 22).  About twice as many cases settle under orders approving settlement in New Jersey than under Section 20 settlements.

Here are the main features of a Section 20:

            * A lump sum payment  -- not weekly payments over time

            * No admission of liability by the employer

            * Not a workers’ compensation payment except for insurance rating purposes

            * The petitioner cannot reopen the case in the future

            * The petitioner and respondent must agree to the Section 20, and the Judge must also approve the settlement.  If any party rejects the Section 20, this option is out

            * There must be a genuine issue of causation, liability, jurisdiction or dependency; otherwise, there is no possibility to close the file under a Section 20

Here are the main features of a Section 22 order approving settlement:

             * The employee receives a percentage of disability, such as 20% of the arm

            * The employee can apply to modify the award within two years of the last payment of benefits and seek additional medical, temporary or permanent disability benefits

            * The employer accepts a specific medical condition or conditions, such as a torn rotator cuff or herniated cervical disc

            * If there is a reinjury to that body part in the future resulting in an increase in disability, the employer gets a credit for the percentage paid

Employers generally prefer Section 20 settlements because they close the particular file at issue for good.  However, Section 20 settlements are not obtainable where the accident is admitted and there is permanent disability resulting from the accident.  Carriers and third party administrators often as the following question:

If the employee has returned to work, does a Section 20 settlement make sense?

This is a complicated issue with many considerations, but the answer is that most of the time, it makes more sense to do a Section 20 even if the employee has returned  to work rather than admit the specific medical condition and deal with reopener rights.  

There are two main objection that are raised to the notion of effecting a Section 20 on someone who has returned to work:

1) What if the employee gets injured in the future?

2) Can the employer still get a credit if there is a future injury to the same body part and the case has already  been resolved on a Section 20?

Let’s deal with question one first:  can’t the employee get reinjured in the future injury?  Yes, but this is not really a valid consideration.  Assume the employee has a herniated disc and has returned to work.  There is an issue of causation or liability which raises the potential for a Section 20.  The employer has two choices: pay the case under Section 22 for perhaps 22.5% permanent partial disability and accept that the herniated disc is compensable, or, pay a lump sum on a Section 20 admitting nothing.  Whichever option the employer chooses, the employee may have a future injury.  There is no way to predict that or stop that.  So when it comes to the potential for reinjury given that the employee is back to work at the time of settlement, it makes no difference whether the settlement was done under Section 20 or Section 22.  The manner of settlement will not prevent a future injury.

Question two is more complex and raises legitimate considerations: namely,will the employer get a credit for the prior payment if the prior payment was a Section 20 and not a percentage of disability?  There is no question that it is simpler to get a credit for a prior payment under Section 22.  If the employer settles the case for 22.5%, and the employee reinjures his back in three years, raising the disability percentage to 32.5%, the employer will get a credit for 22.5%.  So isn’t this the better way?  No, not really, because there are two ways of getting a credit in New Jersey:  one is for a prior payment or an award by subtracting the percentage paid, and the other is under theAbdullah case andN.J.S.A. 34:15-12(d), both of which permit employers to get credits for previous established disability even if there is no prior percentage award.

So how does an employer get a credit where the prior settlement was under Section 20 and the employee had a herniated disc at that time?  In the event of a new injury to the low back at some future date, the employer will send the prior medical records to the examining doctor, who will be asked to apportion the disability between that which existed before the new accident and that which exists after the new accident.  Sometimes this is not even necessary, as the parties can often negotiate the credit in court.

Skilled practitioners are aware that often it is very costly for an employer to have settled a case under an order approving settlement with a percentage of disability when the employer had a chance to do a Section 20 -- particularly when the employee remained at work following the initial settlement. The following scenarios illustrates this point:

SCENARIO ONE

Let’s assume the employer chooses not to do a Section 20 on herniated disc back case and settles for 25% permanent partial disability at 2014 rates because the employer is worried about the fact that the employee has returned to work.  The settlement at 25% cost the employer $38,340.  The employer is thinking about future credits and decides to go for 25% rather than do a Section 20.  Three years from now the employee reinjures his back and now the judge feels that the new percentage of disability is 10% more or  35%. While that is only a 10% increase, the problem is that rates rise after 180 weeks.  That pushes the settlement of 35% to $82,530 with the credit for 25% being merely $38,430. That 10% increase cost the employer $44,100!!!

Now consider if the employer settled the original case on a Section 20 for $40,000.  It paid a about $1,600 more to get the Section 20 on the 2014 case. 

SCENARIO TWO

Assume there was an issue of causation or liability and all parties agreed on the Section 20 settlement in 2014 for $40,000.  The employee remained at work and a reinjury occurs in 2017 to the low back.  Remember, under the Section 20 there was no award percentage on the record -- and that is a very good thing.  The parties agree that the petitioner’s back is 10% worse than it was in 2014. But because there was no prior percentage award, it is harder for the petitioner’s attorney to argue that the new award should be 35%.  The employer has a much better chance of negotiating a lower credit (which benefits the employer) precisely because there was no set percentage established in 2014.  The employer’s strategy is to settle the case for 30% credit 20%, which is $49,554 credit $28,992.  That is $20,562, or about $24,000 less than the scenario in which the employer paid under an order approving settlement! 

In this situation, the employer saved over $22,000.  It paid slightly more for the original settlement but saved $24,000 when the reinjury occurred. Why did this happen?  Because the Section 20 gave the employer’s lawyer more flexibility in negotiations on the credit.  The lower the credit percentage, the better for the employer in this situation.

The lesson is that the employer is almost always better off with a Section 20 over an order approving settlement with a percentage of disability, particularly on significant cases.  To recap, the main advantages of the Section 20 over Section 22 are clear, even if the employee is back to work doing the same job for the employer:

* The employer has not admitted liability for the condition at issue

* The employer can still get a credit in the event of a future reinjury

* The old case is closed forever and that case cannot be reopened

* The employer has more flexibility in the future to argue for a lower credit, which is a critical advantage to employers 

Having said all that, there is one last wrinkle in this analysis.  If the employee wants a huge premium for the Section 20 over the Section 22 settlement, that may not make sense for the employer.  In the example above, the order approving settlement at 25% cost the employer $38,430, and the Section 20 was only about $1,600 more to obtain at $40,000.  But if the employee wanted an additional $15,000 for the Section 20, that would negate the benefit for the employer.  So the amount of the premium that the employer pays to get a Section 20 is an important factor in this calculus.

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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.  

Iowa Insurance Institute, Iowa Defense Counsel Association, Iowa Self-Insurers’ Association, Property Casualty Insurers Association Of America, National Association Of Mutual Insurance Companies, And Iowa Association Of Business And Industry, v. Core Group Of The Iowa Association For Justice; Christopher J. Godfrey, Workers’ Compensation Commissioner, Division Of Workers’ Compensation; And The Iowa Department Of Workforce Development, Supreme Court of Iowa, No. 13-1627

On April 20, 2012, the Workers’ Compensation Core Group of the Iowa Association for Justice (Core Group) filed a petition for declaratory order with the commissioner. The petition sought a determination whether Iowa Code section 85.27(2) mandates that employers or insurance carriers defending workers’ compensation claims must immediately provide copies of surveillance videos, photographs, and reports concerning the claimant’s physical or mental condition upon receiving a properly phrased discovery request. Four professional and trade associations, including the Iowa Insurance Institute, intervened.

On June 26, the commissioner held a hearing on the petition for declaratory order. At the hearing, Core Group asserted section 85.27(2) applies to surveillance materials because surveillance footage, photographs, and reports are “information . . . concerning the employee’s physical or mental condition relative to the claim.” Iowa Code § 85.27(2). The Institute, on the other hand, asserted that if the commissioner ruled on the petition, he should conclude section 85.27(2) does not mandate that employers disclose surveillance materials before deposing a claimant.

On October 23, the commissioner ruled on the petition for declaratory order. The commissioner concluded section 85.27(2) applies to surveillance materials and waives the work product privilege except to the extent that requested materials contain “mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.” He further concluded employers or insurers must produce surveillance materials upon request from a claimant and may not withhold the materials until after deposing the claimant.

The Institute sought judicial review in the district court. The district court affirmed the commissioner’s ruling in its entirety. The Institute appealed. The court of appeals likewise affirmed the commissioner’s declaratory order. The Institute sought, and the Supreme Court of Iowa granted, further review.

The Supreme Court concludes the commissioner erroneously interpreted Iowa Code section 85.27(2) as requiring the production of postclaim surveillance to the employee before the employee’s deposition.

In its decision, the Supreme Court first concludes that surveillance constitutes work product under the Iowa Rules of Civil Procedure because surveillance materials are documents or tangible things, prepared in anticipation of litigation, by or for another party or that party’s representative. Iowa R. Civ. P. 1.503(3). The Court therefore agrees with the prevailing view that surveillance materials are protected work product that is only “discoverable upon a showing of substantial need and undue hardship.” The Court also notes that the consensus seems to be that surveillance loses the status of protected work product once a determination is made that the surveillance will be used at trial.

In interpreting section 85.27(2), the Court’s analysis centers on the phrase “all information . . . concerning the employee’s physical or mental condition relative to the claim.” Iowa Code § 85.27(2). In the view of Core Group, it applies to any information that may bear upon the employee’s physical or mental condition, including otherwise protected work product. According to the Institute, it applies only to information that addresses the employee’s physical or mental condition directly, as a health care provider record would, rather than inferentially.

The court used the tools of statutory construction to interpret the ambiguous phrase. The court first focuses on the wording of section 85.27(2) itself. It notes that Core Group justifiably attaches significance to the words “all information.” Iowa Code § 85.27(2). However, courts have long recognized that statutes should not be interpreted in a manner that leads to absurd results. Applying this principle in the case at hand reveals a problem with Core Group’s reading of the statute. If “all information” means all information and not merely, in context, all health care provider information, Core Group’s interpretation would eliminate all privileges and protections—e.g., work product, attorney work product, attorney– client, priest–penitent—to the extent the item refers to the employee’s physical condition. The Court believes that is an absurd result that could not have been intended by the legislature.

The Court also notes that most jurisdictions to have considered this issue allow the responding employer to withhold production of surveillance until after the employee’s deposition—while requiring the surveillance to be produced before the hearing. The Court concludes that allowing an employer or an employer’s attorney to withhold surveillance until after the employee’s deposition does not undermine the policies behind workers’ compensation including the high value placed on getting benefits in the hands of injured workers.

The Court concludes that reasonable arguments can be made for and against the commissioner’s interpretation of Iowa Code section 85.27(2). In the end, however, the Court is persuaded that the section is directed at health care provider records and not at any information that might have any bearing on an employee’s physical or mental condition, including work product surveillance. The Court specifically notes that Section 85.27(2) does not refer to attorneys, does not mention discovery barriers other than “privileges” (which the work product immunity is not), and falls within a code provision that is otherwise limited to health care services. Most importantly, the commissioner’s interpretation has no limiting principle. If all means all, then even an attorney–client privileged email from a claimant to her attorney discussing her impairment would have to be produced—an outcome that even the commissioner is unwilling to countenance. Hence, the Court finds the declaratory order erroneously determined that Iowa Code section 85.27(2) applies to surveillance.

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!

Des Moines Area Regional Transit Authority and United Heartland v. Arbreina Young, Supreme Court of Iowa, No. 14-0231

Claimant, Arbreina Young, was employed by the Des Moines Area Regional Transit Authority (DART) as a bus driver. On June 2, 2009, the bus she was driving collided with an empty vehicle on DART premises. She sought medical treatment for a back injury and returned to work on June 8, 2009.

Claimant was sent by DART to an orthopedic surgeon, Dr. Daniel McGuire. Dr. McGuire referred Claimant to Dr. Donna Bahls for pain management. Dr. Bahls treated Claimant from August 2009 to November 2011. On March 18, 2010, Claimant went to Dr. Jacqueline Stoken for a medical examination. The examination was not authorized by DART, but arranged independently by Claimant. In Dr. Stoken’s report, she concluded Claimant reached maximum medical improvement (MMI) on March 11, 2010, and suffered a permanent disability to her back. She assigned Claimant a fifteen percent body-as-a-whole impairment rating and also imposed work restrictions.

On April 16, Claimant underwent a functional capacity evaluation. The evaluation found she should be limited to light to medium categories of work. On May 18, Dr. Bahls determined Claimant had reached MMI, suffering a permanent disability to her back, and assigned her a five percent body-as-a-whole impairment rating. She also adopted the restrictions recommended by the functional capacity evaluation.

Claimant filed a workers’ compensation claim on December 29, 2010, and the case proceeded to a hearing before a deputy workers’ compensation commissioner. At the hearing, Claimant submitted the report from Dr. Stoken as evidence. Following the hearing, the deputy commissioner found Claimant suffered a permanent partial disability to her back resulting in a twenty-five percent reduction in earning capacity. The deputy commissioner also taxed as a cost against DART the expense of Dr. Stoken’s examination and report under the administrative rule governing the assessment of costs in a hearing.

The commissioner affirmed the decision of the deputy commissioner. DART filed for judicial review. The district court affirmed the decision of the commissioner. DART appealed. The sole issue raised on appeal concerned the award as a cost of the examination and report by Dr. Stoken. The court of appeals reversed the district court’s ruling. It found the practice of assigning the expense of an examination as a cost under the rule would defeat the statutory requirements governing the reimbursement of an independent medical examination. Further, the court of appeals determined that Dr. Stoken’s bill was a charge for the examination, not a report, as required by the language of Iowa Administrative Code rule 876—4.33. Clamaint sought and the Iowa Supreme Court granted further review.

The Iowa Supreme Court rejects Claimant’s argument that hearing costs include the expenses of an independent examination because the examination is necessary to obtain a report on the results of the examination for a hearing. The Court agrees that a physician’s written report of an examination and evaluation under Iowa Code section 85.39 would be a reimbursable expense under section 85.39, just as an unreimbursed written report of an examination and evaluation, like deposition testimony and witness fees, could be taxed as hearing costs by the commissioner. Yet, a physician’s report becomes a cost incurred in a hearing because it is used as evidence in lieu of the doctor’s testimony. The underlying medical expenses associated with the examination do not become costs of a report needed for a hearing, just as they do not become costs of the testimony or deposition. The logic of Claimant’s argument is not supported by the language of the governing statutes or the overall workers’ compensation scheme.

The Iowa Supreme Court further concludes section 85.39 is the sole method for reimbursement of an examination by a physician of the employee’s choosing and that the expense of the examination is not included in the cost of a report. Moreover, even if the examination and report were considered to be a single, indivisible fee, the commissioner erred in taxing it as a cost under administrative rule 876—4.33 because the section 86.40 discretion to tax costs is expressly limited by Iowa Code section 85.39. Our legislature established a statutory process to govern examinations of an injured worker in order to obtain a disability rating to determine the amount of benefits required to be paid by the employer. Neither courts, the commissioner, nor attorneys can alter that process by adopting contrary practices. If the injured worker wants to be reimbursed for the expenses associated with a disability evaluation by a physician selected by the worker, the process established by the legislature must be followed.

In sum, the Iowa Supreme Court concludes the commissioner erred in interpreting Iowa Code sections 85.39 and 86.40 (2009) and Iowa Administrative Code rule 4.33. The Court therefore affirms the decision of the court of appeals. The Court remands to the district court to remand the case to the commissioner for further proceedings consistent with this decision. Only the costs associated with the preparation of the written report of Dr. Stoken can be assessed as costs of the hearing.

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!

Sanctions against an employer in workers’ compensation are rather rare, and the case ofPschunder-Haaf v. Synergy Home Care of South Jersey, A-3138-13T3, (App. Div. May 12, 2015) provides some guidance on conduct that may lead to such sanctions.

The petitioner, Pschunder-Haaf, a home health aide, injured her low back when a patient fell on her.  She filed a workers’ compensation claim, and the Judge of Compensation entered an order requiring Synergy to provide medical and temporary disability benefits to her.  The Judge also required an evaluation byDr. Luis Cervantes, a neurosurgeon. An order dated September 7, 2010 ordered  treatment with Dr. Cervantes and continuing temporary disability benefits until either Dr. Cervantes cleared petitioner to return to work or until the company offered light duty authorized by Dr. Cervantes.

Synergy did not pay certain medical bills and terminated temporary wage benefits.  There is no indication in the decision to suggest thatDr. Cervantes cleared petitioner to return to work or that petitioner returned to light duty work.  Petitioner therefore filed a motion to enforce the prior court order.  That led to a second order awarding petitioner temporary disability benefits, medical care, and counsel fees assessed against Synergy.

Fusion surgery followed, and petitioner alleged that she injured her left shoulder during the fusion surgery.  Synergy did not accept the left shoulder injury alleged to derive from surgery, leading to another motion for medical benefits.  Once again the Judge of Compensation ordered the company to provide treatment for the shoulder.

The petitioner amended the original claim petition to include injuries to her left shoulder and left knee.  When Synergy failed to provide additional medical treatment, petitioner filed yet another motion.  Her expert,Dr. Rosen, argued that her right leg gave way as a result of instability caused by radicular pain from her spine, and that in turn caused left knee problems. 

The Judge of Compensation accepted the testimony of Dr. Rosen, petitioner’s expert, over that ofDr. Maslow, respondent’s expert, on the question of causation of the left knee condition.  She ordered that Synergy provide treatment for the petitioner’s primary and derivative injuries.  She denied Synergy’s motion for reconsideration and assessed sanctions of $5,000 and $10,000 against Synergy.  She awarded petitioner $7,500 in counsel fees and $5,654.14 in reimbursement for expenses, including the cost ofDr. Rosen’s testimony, which was $4,500.

Synergy appealed both the order in respect to the derivative shoulder and knee claims and the sanctions.  First, the Appellate Division found that there was credible evidence to support the judge’s decision that the derivative claims arose from work. 

Second the court noted that there was substantial evidence in the record to support the judge’s conclusion that the shoulder was injured during the fusion procedure, and the left leg was injured because the right leg kept giving out due to radicular pain from petitioner’s work-related back condition.

On the sanctions issue, however, the Appellate Division took issue with some of the court orders.  First, it noted that the Administrative Rules of the Division of Workers’ Compensation allow fines and penalties in an amount not to exceed $5,000 for unreasonable delay or continued noncompliance. The Court vacated the $10,000 sanction because it exceeded the amount contained inN.J.A.C. 12:235-3.16(h)2.  Next, the Court focused on the award for costs of $800 and $4,500, the latter being the expense ofDr. Rosen’s testimony.  It cited N.J.S.A. 34:15-64(a), which limits the fee to an evaluating physician likeDr. Rosen to $400 for the report and another $400 for testimony.  It found that the order for costs was in excess of the amounts allowed by the statute.

The Court did affirm the $5,000 sanction against Synergy and the assessment of counsel fees of $7,500. 

The case is important for practitioners because it is one of a very few appellate decisions that focuses on sanctions and costs as well as the statutes and rules that apply. Employers run the risk of sanctions if they choose to disregard a court order as opposed to filing a motion to be relieved form the court order.  

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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. 

Alphonso Myers worked as a security guard and was injured in that position.  He applied for and received social security disability benefits.  In his application, he advised the Social Security Administration that he was in pain all the time during the period of his application, he could only stand for twenty minutes and could only walk for 10 to 15 minutes.  He said sometimes his pain was so severe that he needed to remain at home and lie down.  Since 2005 he was unable to lift more than 10 pounds.

While Myers was applying for social security disability benefits, he was also applying or a job withKnight Protective Service for a position as an armed security guard.  As part of the post-offer process, Myers indicated he had no relevant disabilities. A supervisor noticed that Myers seemed to be in pain on the job.  Myers admitted that he had undergone neck and back surgeries and had recurrent pain.  The supervisor became concerned that Myers was not fit for the job of a security guard because someone might grab his weapon or even take him hostage.  Myers was told that the company wanted him to pass a fitness examination.

For reasons that are unclear, the company never set up the fitness examination, and Myers felt that he was effectively terminated by the company.  He sued under theADA and claimed that he was discriminated against based on disability.  The trial court rejected his suit, and Myers appealed.  The U.S. Court of Appeals, 10^th Circuit, affirmed the dismissal of the law suit.

First, the court said Myers was not able to show that he was qualified for the position that he sought atKnight Protective Service.  “As he acknowledged in his written application with Knight, the essential functions of his job as an armed security guard required him to engage in frequent and prolonged walking, standing, and sitting; to react quickly to dangerous situations; to subdue violent individuals; and to lift heavy weights.”

The court emphasized that Myers represented to the Social Security Administration that he was in pain frequently and could often only stand for 20 minutes. “When a plaintiff makes seemingly inconsistent statements like those before us he must offer a ‘sufficient explanation’ for the apparent contradiction.”  The court made clear that every plaintiff should have an opportunity to explain apparently contradictory statements on a social security application under the case ofCleveland v. Policy Mgmt. Sys. Corp., 526U.S. 795, 805 (AD Cases 941) (1999).  But in this case Myers was unable to reconcile his statements to the Social Security Administration with his assertions in court that he could do his job.  In fact, there was no dispute that since 2005 Myers had been unable to lift more than 10 pounds.

The lessons from this case are worth remembering.  First, there is great value in post-offer medical examinations.  Fitness-for-duty examinations are also invaluable, but the mistake the company made in this case was not setting up the examination.  Secondly, employers who face workers’ compensation or disability discrimination suits should always pursue the records of any social security application.  In the workers’ compensation context, employers who may be confronted with fitness issues should always read the claimant’s statements to the various IME physicians as well as the statements that the claimant makes in court regarding limitations in work or non-work activities.  Sometimes claimants make statements in workers’ compensation court or to IME physicians that suggest that the job is continuing to injure them or that they cannot perform the duties of the job safely.  All too often this information does not get to the insured. 

This case can be found at Myers v. Knight Protective Serv., Inc., U.S. Court of Appeals, Tenth Circuit, No 12-6056 (December 22, 2014).

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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. 

I reported last year on the cases summarized below and all three in one way or another have involved an attack on the constitutionality of all or portions of Florida’s workers’ compensation laws.  Since the last report these cases have made their way through the appellate process and we now await the decisions of the Florida Supreme Court for all three.  The current status is summarized below.

Florida State Circuit Court Judge Determines the Exclusive

 Remedy Provision of the Workers Compensation Act Is Unconstitutional

On August 13, 2014, a circuit civil court judge in Miami-Dade County entered an Order on Amended Motion for Summary Final Judgment in the case ofFlorida Workers’ Advocates & Elsa Padgett v. State of Florida.  Procedural issues resulted in what was essentially an unopposed lawsuit filed by the injured worker’s attorney.  The order declared Florida’s workers’ compensation law in its entirety (Chapter 440, Florida Statutes) to be unconstitutional so long as §440.11 remains a constituent part of the law as a whole.

Plaintiffs’ argument in Padgett is neatly distilled by their own words: “Your movant's main complaint is that if an injured worker, after reaching maximum medical improvement has a loss of wage earning capacity that is not total in character it will go uncompensated under the 2003 Florida Act. The injured worker would have had to wait until he reached maximum medical improvement and tested the labor market before he knew that he not only had the right to be compensated for his disability but that he would not get any benefit for his loss in the workers' compensation scheme. Padgett, FWA and WILG pray for a judgment holding the exclusive remedy provision ins. 440.11 Fla. Stat. 2003 invalid and unconstitutional so that all injured workers in Florida may have the option of either a tort or a workers' compensation recovery at the outset.”

Unimpeded by the absence of a defense, the Padgett trial court concluded that the legislative changes to Chapter 440 that began a shortly after Florida’s 1968 Constitution was enacted and continued sporadically through the 2009 legislative session have removed rights without offering equivalent alternatives thereby violating the mandate of Florida’s 1968 state Constitution.  This resulted in the court’s declaration that:

 “As a matter of law, Chapter 440, effective October 1, 2003 is facially unconstitutional as long as it contains §440.11 as an exclusive replacement remedy.  I find that the Florida Workers’ Compensation Act, as amended effective October 1, 2003, does not provide a reasonable alternative remedy to the tort remedy it supplanted.  It therefore cannot be the exclusive remedy.  §440.11 is constitutionally infirm and invalid.  IT IS ORDERED AND ADJUDGED, that Declaratory Relief is GRANTED.  Judgment is entered for Petitioners/Intervenors. §440.11 Fla. Stat. 2003 is unlawful, invalid and unconstitutional.” 

With no defense to better inform the trial court judge, the outcome was probably inevitable.

Normally an appeal of a case involving workers’ compensation benefits would go to Florida’s First District Court of Appeal as it is the intermediate appellate court to which all appeals from decisions of a judge of compensation claims must go for review.  However, because this case was not specifically about particular workers’ compensation benefits but rather an effort to wage an attack on the constitutionality of legislative changes to Chapter 440 (including attorney’s fees payable to claimant lawyers in workers’ compensation claims), the appeal from the trial court was to Florida’s Third District Court of Appeal instead.  The case number is 3D14-2062.  The appeal has been fully briefed as of March 13, 2015 and oral argument was held on March 30, 2015.  Participation in the appeal was, as would be expected, considerably more populated than in the trial court with numerous amicus appearing on behalf of one side or the other.  We anticipate a decision within the next six months.

Rob Grace, however, has twice prevailed in trial court on similar claims, including one brought by the same plaintiff attorney in the same jurisdiction asPadgett was brought.  Rob secured a dismissal of the claims both times and his victory inDigrius v. Anchorage Resort & Yacht Club (16th Judicial Circuit Case No. CAP13998 / 442013CA000998A001PK) is now on appeal with the very same Third District Court of Appeal that has thePadgett case.  The appeal was filed March 31, 2015 and thus remains in infancy stages.  We expect that various amici will appear for both sides and that resolution will be later this year or early next year.

Employers Be Careful About Denials Based on

Course and Scope, Employment Relationship or Inconsistent Positions

The attacks on Florida’s workers’ compensation exclusive remedy provision are not limited to cases likePadgett where the objective is a wholesale destruction of Chapter 440.  As with most if not all workers’ compensation systems, Florida law requires that the accident and resulting injury(ies) arise out of the course and scope of employment for Chapter 440 to apply.  When the employer/carrier responds to a claim with the assertion that the accident and/or injury is not connected to the course and scope or they assert denials that are inherently at odds (i.e. no course and scope coupled with defenses based on employment), they can be relatively certain that a civil suit will follow and that an estoppel analysis will be undertaken by the trial, and most likely later the appellate, court.

 Picon v. Gallagher Bassett Services, Inc., 548 Fed.Apps. 561 (11th Cir. 2013) does an excellent job of reviewing eight Florida appellate court cases in which the exclusive remedy was involved.  Of the eight cases, six were decided favorably to the injured employee and two favorably to the employer/carrier.  The six cases that favored the injured employees involved assertions by the employer/carriers that no accident happened in the “course and scope of employment” either standing alone or combined with other defenses inconsistent with the course and scope of employment denial.  See, e.g.,Elliott v. Dugger, 542 So.2d 392 (Fla. 1st DCA 1989); Byerly v. Citrus Publishing, Inc., 725 So.2d 1230 (Fla. 5th DCA 1999);Schroeder v. Peoplease Corp., 18 So.3d 1165 (Fla. 1st DCA 2009); Coastal Masonry v. Gutierrez, 30 So.3d 545 (Fla. 3d DCA 2010);Mena v. J.I.L. Construction Group Corp., 79 So.3d 219 (Fla. 4th DCA 2012);Ocean Reef Club, Inc. v. Wilczewski, 99 So.3d 1 (Fla. 3d DCA 2012)(for case distinguishingOcean Reef see VMS, Inc. v. Alfonso, 147 So.3d 1071 (Fla. 3d DCA 2014)).

The two cases that favored the employer/carriers did not have such an assertion.  SeeTractor Supply Co. v. Kent, 966 So.2d 978 (Fla. 5th DCA 2007); Coca-Cola Enterprises, Inc. v. Montiel, 985 So.2d 19 (Fla. 2d DCA 2008).

Thus, it is fair to say that if/when an employer/carrier chooses to assert that the alleged accident was not connected to the “course and scope” of the employee’s employment there will likely be a tort suit following and the employer/carrier is equally likely to find themselves losing any motion for summary judgment based on the workers’ compensation exclusive remedy principle.  Instead, a judge or jury will make the decision after completion of a full blown trial because, as thePicon court noted, “[w]hen the record reveals multiple possible explanations for the denial, or the language in the denial document is ambiguous and gives rise to more than one interpretation, issues of material fact exist over whether the employer’s position is inconsistent so as to indicate possible estoppel.”

Landmark Attorney Fee Case Makes its way to Florida Supreme Court

 Marvin Castellanos vs. Next Door Company, Et Al.

Florida Supreme Court Case No. SC13-2082

Lower Tribunal Case Citation 124 So. 3d 392 (Fla. 1st DCA 2013)

This is the case which the Florida Supreme Court has for review on discretionary jurisdiction in which the 2009 attorney’s fee statute (Florida Statute §440.34) was declared constitutional by Florida’s First District Court of Appeal but certified to involve a question of great public importance.  The appeal was filed in October, 2013, briefed by the parties and various amicus, and oral argument conducted on November 5, 2014.  Since that time, notices of supplemental authority have been filed with the Florida Supreme Court, mostly providing additional one paragraph decisions from Florida’s First District Court of Appeal passing along similar cases with essentially identical opinions.  The approach in this case, as in others like it, is a broad deployment of various theories such as violations of constitutional rights of separation of powers, right to be rewarded for industry, free speech, free association, due process, and equal protection.  It also makes the argument akin to what was deployed in theFlorida Workers’ Advocates case summarized above, i.e. the cumulative effect of changes has stripped Chapter 440 of benefits in a way that no longer provides a reasonable alternative to common law negligence remedies.  Our firm handled the appeal on behalf of the Employer/Carrier in a similar case which has been stayed by the Florida Supreme Court, pending resolution ofCastellanos, after being affirmed per curiam by the First District Court of Appeal.

 With the appellate process having ended six months ago, other than the supplemental authority filings, we expect something to happen relatively soon.  There has been some discussion of convening a special legislative session aimed at trying to get the various parties to agree to a solution that would avoid the possibility of a constitutional ruling on §440.34.  As of this update, this possible effort remains ill-defined and uncertain.  If there is no legislative intervention, then the Court will ultimately issue its decision.  What that decision will be and what, if anything, the Court might do to cure any perceived constitutional infirmity is anyone’s guess.  It is most unlikely that the entire statute would be scrapped, and more likely that the Court might roll back to the latest version of the statute that the Court finds to not be problematic, to simply engraft Florida’s seminal case on reasonable attorney’s fees on to the current statute (Lee Engineering & Const. Co. v. Fellows, 209 So. 2d 454 (Fla. 1968)), or to fashion another remedy which does not visit chaos upon the system.  I represented the E/C/SA one of the many companion cases toCastellanos.

First District First Strikes, Then On Reconsideration Upholds, Florida’s

104 Week Limit On Temporary Benefits – Now Before Florida Supreme Court

Bradley Westphal v. City of St. Petersburg, Etc., Et Al.

Florida Supreme Court Case No. SC13-1930 & 1976

Lower Tribunal Case Citation 122 So. 3d 440 (Fla. 1st DCA 2013)

Florida’s workers’ compensation law provides for wage loss benefits comprised of (1) temporary partial disability benefits (TPD) payable when the employee cannot work regular duty but can work modified duty; (2) temporary total disability benefits (TTD) when the employee cannot work at all but is expected to be able to return to work; (3) permanent impairment benefits which were intended to provide monetary compensation for a permanent impairment of working skills; and (4) permanent total disability benefits (PTD) payable when an employee is unable to work at least sedentary duty within a 50 mile radius of his or her home.  See Florida Statute §440.15.  Benefits #1  and #2 are available onlybefore a claimant is at overall MMI and the claimant cannot get more than 104 weeks of these benefits combined.  Benefits #3 and #4 are available onlyafter a claimant is at overall MMI.

The same judge of compensation claims assigned to Mr. Westphal’s claim had previously been assigned a very similar claim and in the previous claim had concluded that “that the Legislature did not intend to leave a claimant such as Mr. Hadley out in the cold with no basis for indemnity benefits when that worker is totally disabled for more than 104 weeks.”  He therefore declared that claimant to be entitled to permanent total disability benefits even though the claimant was not at MMI.  This resulted in an appeal and ultimately an opinion from the First District Court of Appeal en banc reversing the judge of compensation claims and ruling that the benefits gap was not an infirmity.  SeeMatrix Employee Leasing, Inc. v. Hadley, 78 So. 3d 621 (Fla. 1st DCA 2011). 

Faced with the same issue in Mr. Westphal’s case the judge of compensation claims followed the mandate ofMatrix Leasing and denied PTD benefits to Mr. Westphal.  From this decision Mr. Westphal’s case moved to the First District Court of Appeal.  The First District initially issued an opinion that was consistent withMatrix Leasing.  The Court then reconvened en banc, withdrew the previous opinion, receded fromMatrix Leasing, and ruled that “a worker who is totally disabled as a result of a workplace accident and remains totally disabled by the end of his or her eligibility for temporary total disability benefits is deemed to be at maximum medical improvement by operation of law and is therefore eligible to assert a claim for permanent and total disability benefits.”  In so doing, theWestphal court said it was “unnecessary to consider the claimant’s argument that the statute, as we previously construed it inHadley, is unconstitutional as a denial of the right of access to the courts.”

The case is now with the Florida Supreme Court.  It was fully briefed as of March 26, 2014 and oral argument was held June 5, 2014.  Given the time the case has been pending before the Court post-oral argument, it would seem reasonable to expect a decision sooner rather than later.

David A. Lamont, Esquire

Workers’ Compensation Partner, The Bleakley Bavol Law Firm

Natalie K. Lund, Workers’ Compensation, andMichael D. Sharkey, Civil Litigation, have both been promoted to Officers at Cousineau McGuire effective June 1, 2015.

Ms. Lund began working at the firm in June of 2012 and focuses her practice on workers’ compensation litigation. She has successfully assisted and represented clients in all phases of claim management and subsequent legal proceedings, from formulating language in response to a reported injury, to obtaining favorable results at administrative hearings, in settlement and motion practice, and at hearings. She has also defended clients through the appeal process, including review by the Minnesota Supreme Court.

Mr. Sharkey has been with the firm since August of 2013 and represents both individuals and businesses in a wide variety of civil disputes, focusing primarily on product liability, premises liability, dram shop, and construction defect. He is also one of the few mortuary law attorneys in the country, with a growing practice representing funeral homes, crematories, and cemeteries.

Ms. Lund can be reached at nkl@cousineaulaw.com or (952) 525-6951 and Mr. Sharkey can be reached atmds@cousineaulaw.com or (952) 525-6990.