Legislative Update by Attorney Alison Stewart

In a recent decision by Iowa Workers’ Compensation Deputy Erin Pals, Reiter v. Incorporated City of Remsen,the agency determined it is appropriate to apply the upper extremity functional rating to shoulder injuries now that shoulders have been identified as a scheduled member injury under the post July 1, 2017 workers’ compensation legislation. Deputy Pals reasoned that the table consulted by the rating physician could be found in Chapter 16 of the5^th Edition AMA Guidelines, which is entitled “The Upper Extremities,” and historically the agency has not utilized whole person impairment ratings for a single scheduled member injury. The full decision can be found here:http://decisions.iowaworkforce.org/2018/October/Reiter,%20Craig-5059413d.pdf.

In light of this decision, it is prudent to take the upper extremity rating and multiply it by the 400 week value of the shoulder in order to determine permanency entitlement for employees who sustain work-related shoulder injuries post July 1, 2017. 

Legislative Update by Attorney Kathryn Johnson

In a 6-1 decision, the Supreme Court in Brewer-Strong v. HNI Corporation,913 N.W.2d 235, (Iowa, 2018), held as matter of first impression, an employer could regain control of the employee’s medical care and assert an authorization defense, even though the employer initially denied liability. The Court stated, “Holding otherwise would run contrary to the very purpose of Iowa Code chapter 85 to resolve ‘workplace-injury claims with minimal litigation’ by forcing employers to reach a conclusion about their liability for an employee’s injury without thoroughly performing their duty to investigate the claims, potentially creating more litigation and expenses in the process.”

In this case, a workers' compensation claimant, Brewer-Strong, contends the workers’ compensation commissioner wrongly denied her healing period benefits under Iowa Code section 85.34(1). Brewer-Strong filed a petition seeking workers’ compensation benefits after developing bilateral carpal tunnel injuries allegedly arising out of and in the course of her employment with the employer, HNI. HNI originally denied liability for the claimed injuries. Brewer-Strong filed a petition for alternate medical care that was dismissed on procedural grounds because HNI contested liability for the injury. A physician chosen by HNI examined Brewer-Strong, and the physician confirmed that the claimed injuries were work-related. HNI subsequently amended its answer to admit liability and authorized Brewer-Strong to undergo medical care with its chosen medical providers. However, Brewer-Strong sought medical treatment from a different, unauthorized physician who proceeded to perform two surgeries on her. HNI refused to pay Brewer-Strong healing period benefits for the time she was recovering from the unauthorized surgeries.

At the agency level, the workers’ compensation commissioner decided Brewer-Strong was not entitled to healing period benefits. Specifically, the commissioner found that HNI provided a valid authorization defense, and Brewer-Strong did not meet her burden to prove that her unauthorized care resulted in a more favorable outcome than the care she would have received from the authorized physician. On judicial review, the district court affirmed this decision on the same grounds.

The Supreme Court reviewed the commissioner’s interpretation of Iowa Code section 85.34(1), which deals with healing period benefits for work-related injuries. Brewer-Strong argued the district court erred in ruling that HNI could regain its right to control her medical care and treatment by admitting liability for her work-related injuries after it had initially denied liability. The Court noted that where the employer disputes compensability and the commissioner denies the claimant’s petition for alternate care on procedural grounds, “there can be no implicit finding that the employer has satisfied its duty to furnish reasonable medical care and has no obligation to furnish alternate care.” However, an employer is barred from asserting an authorization defense where the commissioner’s denial of the employee’s request for alternate medical care was based on substantial evidence in the record demonstrating the employer denied compensability for at least a portion of the employee’s injury for which she sought alternate medical treatment.

Thus, the workers’ compensation commissioner and the district court correctly found HNI acquired its authorization defense and the statutory rights and obligations to provide and choose appropriate medical care pursuant to Iowa Code section 85.27 once it amended its answer to accept compensability for the injury. HNI then retained its right to control medical care throughout the course of treatment for the compensable injury since it did not subsequently contest whether the injury was work-related or withdraw its authorization of care, and the commissioner did not order alternative care for Brewer-Strong.

The Court also reaffirmed the standard set out in Bell Bros. Heating & Air Conditioning v. Gwinn, 779 N.W.2d 193 204 (Iowa 2010), establishing that an employer can be ordered to pay for unauthorized care received by the employee only if the employee “prove[s] ‘by a preponderance of the evidence that such care was reasonable and beneficial’ under the totality of the circumstances,” with “beneficial” defined as “provid[ing] a more favorable medical outcome than would likely have been achieved by the care authorized by the employer.” The Court rejected Brewer-Strong’s claim that the burden of proof set an impossible standard, concluding the burden “respects the balance between the employer’s rights to control medical care and the employee’s right to seek alternative medical care under the statute. The mere fact that this creates a heightened burden for the employee does not require a modification of the test. This is all part of the balancing found within our workers’ compensation statute.” Justice Hecht dissented on this point, and would have overruled the Bell Bros. as a “flawed standard requiring proof based on sheer speculation.”

The Court further held that an employer is not required to pay healing period benefits when an employee is off due to unauthorized care, and stated that, “Iowa Code section 85.34(1) does not explicitly state that an employee cannot receive healing period benefits for unauthorized care.” The Court nonetheless concluded that “[a]n interpretation that requires an employer to provide injured employees with healing period benefits for their unauthorized care when they knowingly abandoned the protections of Iowa Code section 85.27 would be inconsistent with the overall intent of the statute.”

Today when I turned on my computer to start the day, I was alerted by LinkedIn that a good friend and client was celebrating 11 years with her employer.  I remember when she first took that job.  It was a third party administrator that had just opened an office in Birmingham and they handpicked my friend from a list of very capable applicants.  She was very excited and we went to a local steak establishment to celebrate.  Within the next year, she adopted a brand new baby boy.  He was her world and she was his.  Several years later, my wife and I were blessed to bring a son into the world.  We would occasionally get our families together.  Although there was an age difference, the two boys got along wonderfully, just like their parents.  My friend had more than her share of medical issues but we all thought they were behind her.  Unfortunately, that was not the case.  Recently, my friend passed away in her sleep.  Her son found her the next morning.  Every child’s nightmare became his reality.  We have set up a trust fund for her son that will provide future assistance as needed.  If you would like to make a contribution to the fund, please e-mail me (mfish@fishnelson.com) and I will provide you with the necessary information to do so.  No contribution is too small and all will be greatly appreciated.  May all your family and friends be safe and well over this Holiday Season and beyond.

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About the Author

This blog submission was prepared by Mike Fish, an attorney with Fish Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Fish Nelson & Holden is a member of the National Workers’ Compensation Defense Network. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Fish by e-mailing him at mfish@fishnelson.com or by calling him directly at 205-332-1448.

One of the most significant cases to be decided by the Appellate Division with respect to subrogation rights was issued on December 4, 2018 in New Jersey Transit Corporation v. Sanchez, A-0761-17T3 (App. Div. December 4, 2018).  The case will have an impact on how employers deal with a very common scenario in New Jersey.

David Mercogliano was injured in a motor vehicle accident during the course of his employment. NJ Transit owned the vehicle driven by Mercogliano and paid workers’ compensation benefits to Mercogliano in the amount of $33,625.70 (comprising $6,694.04 in medical benefits, $3,982.40 in temporary disability benefits, and $22,949.26 in permanent partial disability benefits).  Mercogliano did not sue the driver of the other vehicle, Sanchez, or the owner of the vehicle, Smith.  Instead, NJ Transit filed a subrogation action pursuant to N.J.S.A. 34:15-40(f) against the third party defendant carriers.  That provision allows the workers’ compensation carrier or employer to file a suit after one year against a tortfeasor, if the tortfeasor has not filed suit.

The trial judge ruled against NJ Transit on the ground that the verbal threshold barred any such subrogation claim since Mercogliano himself could not meet the verbal threshold because he did not sustain a permanent injury as defined by N.J.S.A. 39:6A-8(a).  In essence, the trial court held that NJ Transit stood in the shoes of Mercogliano.   NJ Transit appealed.

In a decision that will surely lead to the filing of more subrogation suits, the Appellate Division reversed in favor of NJ Transit.  This decision has been published, so its impact will be great. First, the Appellate Division observed that the verbal threshold contained in so many drivers’ automobile policies does not apply to economic loss.  Rather, it applies to non-economic loss.  The Court said that an “injured worker may recover medical expenses from the third-party tortfeasor and N.J.S.A. 39:6A-12 does not apply,” citing Lambert v. Travelers Indemnity Co. of America, 447 N.J. Super. 61 (App. Div. 2016).  Since Mercogliano could have sued the tortfeasor to recover medical expenses, the Court reasoned that it follows under Section F of the workers’ compensation subrogation statute that the workers’ compensation employer could sue after the one-year waiting period.

The Court flatly disagreed with the reasoning of another published Appellate Division case, namely Continental Insurance Co. v. McClelland, 288 N.J. Super. 185 (App. Div. 1996).  The Court noted that the Continental case has not been followed by other court decisions in recent years.  The Court highlighted the fact that NJ Transit was seeking to recover benefits paid to Mercogliano for economic loss (medical expenses and wage loss), not noneconomic loss.  The Court said:

To be clear, Mercogliano’s automotive insurer paid him no benefits and incurred no costs, and the workers’ compensation carrier does not seek reimbursement from Mercogliano’s automotive insurer.  On the contrary, NJ Transit seeks reimbursement from the negligent third-party tortfeasors pursuant to Section 40.  If successful, NJ Transit’s workers’ compensation carrier would be reimbursed by the tortfeasors, subject to their right to indemnification from their own automotive insurers.  Therefore, allowing NJ Transit to pursue reimbursement does not conflict with AICRA’s collateral source rule, N.J.S.A. 39:6A-6.

This case provides a road map for employers to pursue tortfeasors for reimbursement of medical and temporary disability benefits paid in workers’ compensation arising from car accidents where the injured worker cannot sue due to a verbal threshold policy.

One key question is whether this decision is limited to payments of medical and temporary disability benefits as opposed to permanency benefits.  William T. Freeman, Esq. of Brown & Connery, whose colleague Shawn C. Huber, Esq. argued the case successfully for NJ Transit, notes that the Court cited language in Lambert that is very broad:  “As long as the employee’s injuries were caused by a third-party and not the employer, the WCA gives the workers’ compensation carrier an absolute right to seek reimbursement from the tortfeasor for the benefits it has paid to the injured employee.”  This language certainly supports the view that permanency benefits may be sought.

On the other hand, the NJ Transit opinion did not really focus on permanency benefits.  The Court initially framed the issue to be decided as follows: “In this appeal, we consider whether a workers’ compensation carrier can obtain reimbursement of medical expenses and wage loss benefits it paid from tortfeasors who negligently caused injuries to an employee in a work-related motor vehicle accident, if the employee would be barred from recovering non-economic damages from the tortfeasors because he did not suffer a permanent injury.”  Future cases will no doubt settle the question whether this important decision includes the right to sue for permanency benefits.

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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. 

Just six years ago, former Governor Chris Christie signed into law a bill which vested exclusive jurisdiction within the Division of Workers’ Compensation over any disputed medical charge arising from any claim for compensation for a work-related injury or illness.  That was the beginning of what we now call “Medical Claim Petitions” or MCPs filed by providers and medical facilities.  In the early years following the passage of the bill, perhaps one or two percent of all workers’ compensation claims were MCP cases.

Fast forward to 2018:  20% of all formal claim petitions filed in the Division this year are MCP cases!  You read that right: one out of every five formal claim petitions filed in 2018 in the Division of Workers’ Compensation is a petition filed by a medical provider or medical facility disputing a payment. Already through November 2018, over 6,300 MCPs have been filed in the Division in the first eleven months.

The Judges of Compensation have learned a great deal over the years about how to deal with provider disputes. They ably manage not only a high volume of formal claim petitions filed by petitioners but an ever escalating volume of MCP cases.   If the current rate of growth of MCP cases continues, one can project that in a few years one in three formal claim petitions will be an MCP case.

Why are there so many MCP cases in New Jersey when New Jersey employers have control over medical care?   That is the question this practitioner put to Kelly Royce, Senior Vice President of Managed Care Operations for First MCO, a leading managed care and medical repricing company in New Jersey.  Royce said that the key for New Jersey employers and carriers is to have robust physician and facility networks.  In that case, MCPs do not generally get filed. “You look at the contract, and that ends almost all such disputes,” she said.

But Royce pointed out that there are many situations where emergency care is provided, and the doctor and facility would not likely be in network.  When the employer or carrier receives the bills, they may be repriced based on reasonable and customary charges in the geographic area, but the provider or facility often disagree on the determination of reasonable and customary, leading to the filing of an MCP.  The amounts in dispute are often tens or even hundreds of thousands of dollars.

Royce also pointed out that even if the physician is in network, the medical facility where the procedure or surgery takes place is often not in network.  That means that the physician’s charge will be covered by the network agreement, but the facility charge may not be.  She recommends that employers spend time trying to determine where network physicians operate and making sure that these facilities are in network.

Linda Woods, VP of Bill Review Operations for First MCO, added that the determination of reasonable and customary is not uniform.  There are many different data bases such as Fair Pay and Wasserman which may have different criteria on what is reasonable and customary.  She added that Medicare has its own schedule, and PIP has its own schedule, and sometimes these schedules are also considered.  The determination of reasonable and customary may vary significantly depending on the resource that is used.

There are a number of cases that have been decided on what constitutes reasonable and customary charges.  The leading case at the Division level remains Burn Surgeons of St. Barnabas v. Shoprite, C.P. # 2009-16548, 2011 N.J. Wrk. Comp. LEXIS 10 (August 26, 2011).  In that case the physicians who were contesting the level of reimbursement by the carrier were co-surgeons, and they testified in court in support of their charges.  Each surgeon felt that he should have been paid 87.5% of usual and customary charges.  The amount in dispute was very significant.

Attorney Ann DeBellis, Director/Supervising Attorney for New Jersey Manufacturers, successfully represented NJM and argued that her company was correct in paying each co-surgeon 73.6 percent of the charged amount in this case, which was a percentage in line with payments made by other commercial carriers and well above payments from government programs.  The late Honorable Virginia Dietrich, Administrative Supervising Judge of Compensation, rejected the argument by the burn surgeons that additional monies should be paid to account for the difficulty of the procedures, the severe illness of the patient and the expertise required.  The judge ruled that all of these considerations were taken into account when the codes were prepared.

When MCP cases do get filed, the data relied on by the parties are often complicated to understand, requiring defense counsel to master obscure terminology.   On the claimant side, there are several law firms which specialize in this area of law and generally work on contingent fees.  Because of the contingent nature of the representation, the providers and facilities incur no cost in filing MCPs.  They only pay counsel if there is a recovery.

Capehart Scatchard decided several years ago to create an MCP team headed by partner Claire Ringel, Esq., to oversee these increasingly complicated claims which often involve hundreds of thousands of dollars in dispute.  One claim petition that Ms. Ringel resolved this year involved a charge by a New Jersey medical provider for $960,000 for a complex surgery.  She resolved this claim for less than 10% of the charge.  Ms. Ringel has also filed more than 50 motions to dismiss MCP cases this year where all contacts are in the State of New York (hiring, injury and work), but the MCP cases were filed in New Jersey simply because the medical procedure occurred in New Jersey and the provider was unsatisfied with the New York fee schedule.

The reality is that MCP cases are here to stay and the volume is sharply rising.  There are complicated issues of appropriate levels of payment as well as many claims with jurisdiction as the principal issue.  Defense firms need to develop the expertise to successfully represent employers, and employers need to work with companies that have great networks and repricing skills.

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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. 

By now all workers’ compensation practitioners know of the law change in 2018 with respect to voluntary offers or bona fide offers of permanency.  The new law amended the 1927 law that allowed employers to make voluntary offers within certain time limits free from counsel fee.  The law passed in 2018 provides that if there is an established attorney-client relationship when an offer is made, the offer is feeable, meaning that both petitioner and respondent pay a counsel fee on the amount offered when the case settles.

The main incentive for employers to make voluntary offers for the past 90 years has been the savings on counsel fees.  Those savings were often significant.  If the employer offered a percentage equal to $10,000 by way of voluntary offer, the respondent would save $1,200 by not having to pay a counsel fee on that offer.  The petitioner would save $800.  But with the new law, why would employers or carriers ever make a voluntary offer going forward?  Are there still situations where voluntary offers make sense?  The short answer is that there may yet be limited situations that argue in favor of a voluntary offer.

1.      Obviously, if an injured worker has no attorney at the time the offer is made, the offer remains free of any counsel fee. Here is the problem:  there is no way for an employer or carrier to be sure that the worker has no written agreement with a lawyer.  A question may be put to the injured worker about having counsel, but there is no obligation for the worker to reveal this information to the employer or carrier.  The injured worker may not feel comfortable at all with this question. Nonetheless, the employer can always make the voluntary offer, understanding that it may not know until the end of the case whether the offer is considered bona fide for purposes of being free of counsel fee.  The proof will be the written counsel fee agreement offered in evidence at settlement. The date of the agreement will decide whether the offer is feeable.

2.      The injured worker’s lawyer may on occasion make a request for a voluntary offer and give consent that the offer will not be feeable. This could happen in a situation where the employee has reached maximal medical improvement but the case is nowhere close to settlement.  The employee’s lawyer may request a voluntary offer at this point to tide his or her client over pending the resolution of the case and may propose that the amount of the offer will not be feeable.  These kinds of hardship offers by consent are likely to occur from time to time.

3.      Another situation that happens concerns overpayments of temporary disability benefits. When a carrier or third party administrator has overpaid temporary disability benefits, one way to recapture the overpayment, subject to approval of the Judge of Compensation, is to make a voluntary offer of permanency and then reduce the offer by the amount of the overpayment in temporary disability benefits.   The offer may still be feeable at the end of the case depending on whether there was a written attorney-client relationship, but at least this approach may remedy the overpayment issue.

4.      In some cases it is not clear whether the employer or carrier owes temporary disability benefits. There may be causation or legal issues over the question whether temporary disability benefits are due and owing.  In this case, the parties may discuss making an open-ended offer at a certain rate while the issues are being litigated.  Once the causation issue gets resolved, the Judge will decide whether the voluntary payment will be deemed to be a payment of temporary disability benefits or a voluntary offer of permanent partial disability.   Either way the employer will get a dollar credit.  The advantage for the employer is that this approach may avoid penalties and perhaps counsel fees related to a motion for medical and temporary disability benefits.

5.      Some carriers believe that a voluntary offer made early on in a case at the time of MMI, before it is known whether the employee has a lawyer, may deter the injured worker from filing a permanency claim petition. It is impossible to know whether this theory is valid because it is hard to prove a negative, namely that the injured worker would have filed a claim petition but for the voluntary offer.  Some carriers do subscribe to this approach and may therefore continue to make voluntary offers with the hopes that such an offer will deter the filing of formal claim petitions.

In short, the new law does not eradicate all rationales for voluntary offers.  Such offers will still happen from time to time but nowhere near as often as they were made over the past 90 years.  Voluntary offers will be few and far between in all likelihood, and practitioners will need to weigh the plusses and minuses in each case.

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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. 

Legislative Update by Alison Stewart

On November 16, 2018, the Iowa Supreme Court issued a ruling addressing the compensability of idiopathic falls. Previously the Court said, “The workers’ compensation statute is not a general health insurance policy that extends to all injuries that happen to occur while on the job.” In Bluml v. Dee Jay’s Inc., d/b/a Long John Silvers and Commerce & Indus. Ins. Co., the Court held that there is no blanket rule rendering certain categories of workplace idiopathic falls non-compensable, so long as the employee proves that a condition of the employment increased the risk of injury.

The specifics of Bluml involve an employee who experienced a seizure while working, which caused him to fall straight backward onto the ceramic floor and strike the back of his head. He had been experiencing seizures for many years, but had been non-compliant with anti-seizure medication and there was a record of alcohol abuse. The Iowa Workers’ Compensation Commissioner deputy who heard the case denied benefits reasoning that idiopathic falls to level surfaces are not compensable under Iowa law.  On appeal to the Iowa Workers’ Compensation Commissioner, the Commissioner affirmed, but noted it was undisputed the employee’s injuries were worsened because he fell on a ceramic tile floor.

Ultimately the Supreme Court held that these types of cases should be factually analyzed on a case-by-case basis. With this decision on the books, there is no hard and fast rule in Iowa whether idiopathic falls onto level floors are compensable. An employee may recover when they prove a condition of their employment increased the risk of injury. To read the full decision,click here.

Written By: Courtney Britt

Discussion of workplace harassment reached a fever pitch last Fall when media reports streamed seemingly endless claims against Hollywood moguls and corporate giants alike.  The #MeToo movement has added force to the discussion, no doubt leaving employers feeling exposed.

Although harassment allegations are often handled in civil courts, certain allegations can be litigated in workers’ compensation claims.  Decisions in the past few years by our appellate courts and federal courts interpreting North Carolina law seem to indicate that whether alleged workplace harassment will be treated exclusively through workers’ compensation may depend on how it is pled.

It is well established in North Carolina that an injured worker can be compensated under the North Carolina Workers’ Compensation Act (“the Act”) for a mental injury.   Jordan v. Cent. Piedmont Cmty. Coll.  This is true for both mental injuries resulting from a compensable occupational disease or an injury by accident. See id; Pulley v. City of Durham.

Our Court of Appeals considered the viability of a workplace harassment claim inHogan v. Forsyth Country Club Co., decades before #MeToo.  Hogan involved former female employees of the defendant country club who brought a civil lawsuit alleging that a chef at the club was verbally abusive, made sexual advances and sexually derogatory remarks.  Their claims included intentional infliction of emotional distress (IIED) and negligent infliction of emotional distress (NIED). 

On appeal, the club argued that the employees’ claims for IIED were barred by the exclusivity provision of the Act.  The Court of Appeals disagreed, noting that the damages alleged by the employees included losses that would not be covered under the Act and that the wrongs alleged fell outside the scope of workers’ compensation.

In a more recent case, the Court of Appeals reached a different outcome in Shaw v. Goodyear Tire & Rubber Co.  Shaw claimed she was harassed by her male supervisor, including verbal abuse and intimidation, but the court specifically noted that no physical contact or sexual harassment was alleged.  Shaw filed a civil complaint including claims for wrongful discharge and NIED, the only claims that went to trial. 

After a jury verdict in Shaw’s favor, her employer appealed, arguing that the trial court lacked subject matter jurisdiction over Shaw’s NIED claim because it fell exclusively under the Act.  The Court agreed, vacating the jury verdict, explaining that Shaw’s central allegations in the NIED claim were that she complained to her employer about the harassment by her male supervisor; her employer negligently handled her complaint; and her employer’s negligence led to emotional distress and, eventually, her wrongful discharge.  The Court also specifically declined to extend the exception, allowing employees to bring a civil action against a co-employee for willful, wanton and reckless conduct, to employers accused of similar conduct.   

Interestingly, the Court also concluded Shaw’s NIED claim was an “accident” under the Act which arose out of and in the course and scope of her employment.  However, it noted this holding is limited to the unique circumstances of the case, emphasizing that it was “crucial” to Shaw’s allegations that the claimed emotional distress was due to the employer’s mishandling of her claims, not the actual harassment by her supervisor itself. 

Since Shaw, courts reviewing workplace harassment claims have come down on both sides.  InLingle v. Pain Relief Centers, P.A. (unpublished), three former employees of a medical practice alleged a physician at the practice sexually harassed them and had inappropriate physical conduct, including NIED claims.  The defendants argued, in part, that the employees’ claims for NIED were barred by the exclusivity provision of the Act.

The federal court reviewing the case disagreed, ruling that the employees’ NIED claims could proceed to trial.  It emphasized that the emotional injuries alleged by the employees were unrelated to their employment and, quotingHogan, that sexual harassment was a risk, “to which the employee could be equally exposed outside the employment.” 

The federal court in Hall v. Rockinham County (unpublished), reached the opposite conclusion regarding an employee’s NIED against her employer.  Hall was employed as the Director of 911 Communications and alleged harassment by her supervisor, making several employment law claims and NIED against her employer and supervisor.  The Court ruled that the NIED claim against Hall’s employer was exclusively under the jurisdiction of the Industrial Commission and should be dismissed from civil court, stating that Halls’ injury arose out of her employment, which included the risk that her employer would not properly supervise her workplace or handle her complaints.  However, multiple other claims were allowed to proceed in civil court.

A federal court reached a similar outcome in Baldwin v. Trademen International, Inc. (unpublished). Baldwin involved claims by two employees that their supervisor sexually harassed them and created a hostile work environment.  The Court held that the employees’ negligence claims directly against their employer were barred by the exclusivity provision.  In its ruling, the Court explained that, based on Shaw, negligence claims based on an employer’s mishandling of sexual harassment complaints falls within the Act.

Reviewing Shaw, Lingle, Hall and Baldwin offers employers guidance on which allegations a civil court will deem workers’ compensation claims.  If a court concludes that the claim is one of negligent mishandling of harassment complaints or investigation by the employer, it is more likely to be within the exclusive jurisdiction of the Industrial Commission.  However, civil claims based on the negligence of a co-employee or injuries alleged to be caused by the harassment itself (as opposed to the mishandling of complaints) may be allowed to proceed in civil court.  Employers are advised to consult their employment law and workers’ compensation attorneys when workplace harassment issues arise to determine the best defense strategy. 

Richard Helmrich worked as an Assistant Director of Food and Beverage at Mountain Creek Resort.  He was a large man, six-feet-tall with a body mass index between 40.27 and 47.53, above the threshold for obesity.  During his employment with the Resort he informed his boss of his weight and heart conditions.  His doctor diagnosed him as medically obese.  He provided his boss with a note that his cardiologist prepared for him, restricting the amount of weight that he was medically permitted to lift.

Helmrich testified that several individual defendants at the Resort regularly made observations about his weight, some of them by the owner himself within earshot of other employees.  One comment was that Helmrich needed to lose weight; another was that he needed to work harder at the gym to lose weight.  Yet another comment was that he was still fat.  Some of the comments were made in front of others, who would laugh at Helmrich’s expense.

On one occasion Helmrich notified his supervisor of one of these incidents in accordance with the Resort’s harassment policy.  A chef at the Resort said that Helmrich was “too large” and not “attractive” enough to approach customers’ tables in the restaurant.  Notwithstanding these kinds of comments, Helmrich never filed a formal complaint with Human Resources.

Helmrich did receive a written warning in July 2014 for poor performance.  He believed that his boss, Mr. Polchinksi, was delegating additional duties to him beyond the scope of his job and holding him to a higher standard than his subordinates.  He did not, however, tell anyone in supervision that he was being treated differently because of his weight.

Matters came to a head in December 2014 when his boss was promoted, thereby opening up the position of Director of Food and Beverage.  Helmrich was not told about the vacancy or encouraged to apply.  An employee who used to work under Helmrich by the name of Heaps was chosen for the position.  When that occurred, Helmrich met with supervision to ask why he was not considered for the position of Director of Food and Beverage.  He argued that he had the qualifications, holding an associate’s degree in hospitality management from Art Institute of New York.

Helmrich did not allege that he was denied the position due to his weight.  The company advised Helmrich that he was not chosen for the promotion because he failed to improve his work performance after the July 2014 written warning. The company told Helmrich that he was a good asset and a “great second man in command.” He was assured that he would be trained for future growth.

Helmrich resigned from his position on December 29, 2014 due to his perception of a hostile work environment.  He sued under both the ADA and New Jersey Law Against Discrimination.  The District Court noted that the United States Third Circuit has not expressly adopted obesity as a disability that substantially limits a major life activity.  The Court said, “Without excluding the possibility that obesity may under other circumstances constitute a disability under the ADA, the Court finds that it does not here.”  The Court observed that Helmrich never claimed that his obesity “substantially limits one or more major life activities.”  The Court added that although Helmrich had a weight lifting restriction, he did not dispute that his weight does not make it more difficult for him to stand, walk, bend or complete other movements necessary for him to work.

The Court next considered whether the Resort regarded Helmrich as being disabled.  “There is no question, therefore, that Defendants ‘regarded’ Plaintiff as obese.” The Court said that is not enough because there was no evidence that the Resort perceived him as having an impairment.  “Plaintiff does not argue that his weight limited his ability to stand, walk, bend, or complete other movements necessary for him to work.” The Court said that none of the defendants perceived Helmrich’s weight as physically interfering with his ability to do his job.  The Court found that there was insufficient evidence to prove the Resort regarded Helmrich as having a disability under the ADA.

The case is instructive.  It may be found at Helmrich v. Mountain Creek Resort Inc.,(D.N.J. October 15, 2018).  It shows that unfortunate remarks like those directed at the plaintiff may not be actionable in court if the plaintiff never tells anyone about them in HR or supervision of files a formal complaint.

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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.