On June 2, 2021, the Supreme Court of South Dakota released its opinion in the matter of Hughes v. Dakota Mill & Grain, 2021 S.D. 35, which addressed the Court’s interpretation of the causation standard of “a major contributing cause.”.  Although this opinion addresses aspects of the causation standard (i.e., what a claimant does not have to prove), it does not give clear direction regarding how medical experts should interpret the causation standard when there are multiple causes for the condition from which the injured worker complains.

Claimant, Taylor Hughes, worked various construction and heavy labor jobs from the time he left high school in the ninth grade (2004) until his employment with Dakota Mill & Grain (the “Employer”) in 2017.  In 2010 and 2011, prior to his employment with Employer, he underwent two back surgeries that he related to his work activities with a prior employer Hughes reported no real back issues between 2014 and 2017.  Hughes began working for the Employer in 2017.  Before being cleared to work for the Employer, Hughes underwent a physical examination.  At the physical, Hughes reported no back problems and was approved by the examining doctor to start work.  Hughes’ job duties with the Employer included heavy labor.  Several months after starting with the Employer, Hughes claimed that he injured his back when he fell off a skid-loader but did not report the injury.  Five days after the injury, Hughes went to the emergency room complaining of back pain similar to the pain experienced from his prior injury with his previous employer.  An MRI after the work injury in 2017 detected a herniated disk in Hughes’ back, and Hughes complained of shooting pain down his legs.  Hughes filed a worker’s compensation claim against the Employer.

The South Dakota Department of Labor (the “Department”) held an administrative hearing.  At the hearing, conflicting expert testimony was submitted regarding whether Hughes’ symptoms were the result of degenerative back conditions from the prior injuries sustained while working for his previous employer, or whether they were caused by Hughes’ fall from the skid-loader and related to the work injury of June 26, 2017, reported to the Employer.  The Department determined that Hughes failed to show that his disability was caused by a workplace injury and failed to show that his work activities with the Employer were a major contributing cause of the injury.  The Department’s decision was appealed.  The decision was appealed to the Sixth Judicial Circuit in Hughes County, South Dakota.  The Circuit Court reversed the Department’s decision, finding that the Department committed clear error in reaching the decision, and the matter was then appealed to the South Dakota Supreme Court (the “Court”).

On appeal, the Court addressed two issues.  The first issue was whether the Department erred in determining Hughes failed to establish that he sustained an injury that arose out of his employment. The Court identified three instances where an injury is said to “arise out of” the employment under South Dakota law: (1) the employment contributes to causing the injury; (2) the activity is one in which the employee might reasonably engage; or (3) the activity brings about the disability upon which compensation is based.  The Court determined that an employee need only show that the employment was “a contributing factor” to the injury to establish this element.

The Court agreed with the Circuit Court and overturned the Department’s determination that Hughes’ disability was not “caused by” a workplace injury. The Court held that the correct standard to determine whether an injury “arose out of” Hughes’ employment should have been whether Hughes’ work activities “contributed to” his injury.  The Court held that, under the correct standard, Hughes established that his injury arose out of and in the course of his employment with the Employer by a preponderance of the evidence because Hughes reported that he felt “100 percent” before beginning work with the Employer, Hughes informed his supervisor that his back was sore the day he fell off the skid-loader, and the work Hughes performed with the Employer included activities that would aggravate one’s back.

The second issue determined by the Court was whether Hughes established that his’ work activities were a major contributing cause of his condition.  The Court determined that, under SDCL 62-1-1, the test for causation when a person has a pre-existing work injury is whether the injury was a major contributing cause of the injury.  Relying on Orth v. Stoebner & Permann Constr., Inc., 2006 S.D. 99, 724 N.W.2d 586, the Department found that a major contributing cause was “a cause which cannot be exceeded.”  The Department determined that because 60% of Hughes’ condition was caused by other factors, any of which could have exceeded 40%, Hughes did not meet the causation threshold.

The Court found that a claimant does not need to reach a 50% threshold to establish causation or show that the work activities were the sole cause of the injury.  Instead, the Court determined that the injury only needs be determined to be a major contributing cause.  Although both experts agreed that from 2012 through 2017 Hughes’ showed an increasing disc bulge in his back, the Court ultimately sided with Hughes’ expert and found that the work activities were a major contributing cause of his condition and he had proven this by a preponderance of the evidence.  In doing so, the Court adopted the opinion of Hughes’ expert determined that because Hughes was symptom-free before working for the Employer; because he had worked full-time for months without complaint prior to his injury with the Employer; and, because he had not been utilizing pain medication or back injections for years prior to the injury, his work activities were a major contributing cause of his condition.

As noted above, this decision gives direction from the Court on what “a major contributing cause” standard is not.  However, the Court left open the definition of “a major contributing cause” by adopting the definition provided by Hughes’ expert stating that “a major contributing cause” is “not the only cause, not the most significant cause, just a major contributing cause.”  When reviewing cases for causation, this new direction from the Court should be taken into consideration.

Workers’ compensation laws vary in each of the 10 Canadian provinces and 3 territories. Each of the distinct regimes are government-administered within each jurisdiction.  While some mandate coverage to all employers operating in the province or territory, some impose it only within certain industries.

Even though the particularities of the legislation and their corresponding health and safety regulations vary from one province to the next, it is possible to foresee  certain similar issues that will be of interest to all employers as we start this new year.

While we have no crystal ball, we envision that the five following topics will be trending across Canada in 2022:

1.       COVID-19 Workers’ Compensation Litigation

The upcoming months will undeniably be filled with contestation of claims relating to COVID-19 as a compensable injury. While the appeals process before the various administrative organisations are now exhausted, we predict a trend of cases behind tried [ not sure what this means ?]. Some of these cases will involve complex medical evidence regarding pre-morbid conditions, in provinces which allow for an associated cost-relief. The months to come will build a foundation for these cases that will need to be monitored closely and will vary from one province to the next. Presumptions integrated into applicable legislation may facilitate the demonstration that a COVID-19 spread in a given community may have in fact be contracted [ at work ?]

2.       Teleworking Workers’ Compensation Litigation and application of OHS rules in this setting

During the pandemic, a large proportion of the workforce was suddenly compelled to work for home, sometimes in inadequate settings. Some employers have  decided not to recall certain employees to their establishment and will keep them in their remote settings on a permanent basis, either on a hybrid mode or on a full-time basis. When injuries occurred in that context, some workers brought compensation claims and the upcoming months will clarify the boundaries applicable to them and the resulting worker entitlements and liabilities/costs for employers.  Given the unique circumstances of the pandemic, existing precedents are simply insufficient to anticipate these rulings. As an example, when an employee logs off their computer, they  are immediately ”off”  of work, unlike in the workplace where they still have to walk to the break room or leave the premises. How will tribunals rule on these claims, where the private and professional sphere of the worker overlap, in an environment over which the employer clearly has no control? Similarly, how far will employers need to improve their control over the worker’s private residence to prevent the risks of injuries? As some provinces are amending their laws or extending their definitions of the workplace, accordingly the balance between the employee’s right to privacy and the employer’s exercise of due diligence in view of preventing compensable injuries will be increasingly challenging to strike. As our view of what is and what is not the “workplace” has changed, so too will the laws regarding this issue.  

3.       Coverage of employees working outside their province of origin

As the pandemic raged on, some workers elected to work remotely outside their “home” province  during ,  some even internationally. Several claims were not recognized under these conditions as being compensable under applicable provincial laws. Case law arising from these claims will be another legacy of the pandemic to be expected this year.

4.       Mandatory Vaccine Policy Challenges

Following the Canadian government’s mandate to have all federally-regulated employers enact a vaccination policy by the end of Fall 2021, several employers have adopted such policies and imposed them on their sub-contractors and  as well. Several provincial governments also imposed on their healthcare sector employees' similar policies, as well as to all subcontractors’ employees entering the premises.  As a result, we may anticipate numerous and varied claims filed by employees who were negatively impacted by these policies to be heard in the upcoming months.

5.       Litigation Surrounding Misclassification or Defective Coverage of Dependant Workers under provincial workers’ compensation regime

With the rise of the gig economy comes unpredictable liability: Some provincial regimes with mandatory coverage require employers to cover their “dependent workers” as if they were regular employees. The conditions applicable to these requirements  vary from one province to the next and we expect that in the  months and years to come  a greater number of verification notices from  workers compensation boards raising these issues. Where applicable this may also give rise to substantial backdated premiums owed by employers.. Close analysis to the regime applicable in the provinces where an employer operates in Canada should be undertaken to evaluate whether this risk is a materi alone. 

Legal Update by Attorney Alison Stewart and Law Clerk Jordan Gehlhaar

Happy Holidays from Peddicord Wharton!

We have a few recent updates concerning workers’ compensation matters:

• Commissioner Cortese filed the most recent supervisory order concerning COVID-19 impact on November 29, 2021. All in-person hearings are now suspended through April 29, 2022. Hearings are to be held in an online format, unless the parties are in agreeance and the Deputy, in their discretion, grants a timely joint motion for an in-person hearing.
  
  
• The Iowa Supreme Court recently interpreted their COVID-related supervisory orders in the context of a workers’ compensation case in Askvig v. Snap-On Logistics Company. The order provided that due to the pandemic, the statute of limitations “or similar deadline for commencing an action in district court” was tolled—in essence, parties could add an additional 76 days to their filing deadline. A Deputy Commissioner ruled Claimant Askvig did not sustain a shoulder injury, and the Commissioner did not act on her application for rehearing. As such, she had thirty days to file a petition for judicial review. See Iowa Code §§ 17A.19; 86.29. When Claimant’s counsel missed the deadline, he argued that the supervisory order applied, extending the deadline to file such applications for judicial review of Agency action. The Iowa Supreme Court rejected this argument on appeal. The Court reasoned that these are intended to be short appellate deadlines, so they are a continuation of an existing action, not “commencing an action.” Additionally, these deadlines are different because workers’ compensation is an administrative process entrusted to the executive branch, unlike litigation between private parties. Therefore, the Court’s extension did not “deny finality to the actions of [the Agency].”
  
  
• In Foster v. East Penn Manufacturing Company, the Iowa Court of Appeals ruled on penalty benefits for delay. The employer accepted Foster’s injury and paid for initial treatment and benefits. However, when the first surgery did not resolve the condition, the employer refused to authorize a second surgery or pay for temporary total disability (TTD) benefits. A Deputy Commissioner imposed penalty benefits and the district court affirmed. The employer appealed, arguing: (1) the delay was necessary to investigate; (2) there was a reasonable basis to delay; and (3) there was a good faith basis to dispute entitlement. The Court of Appeals likewise affirmed the penalty, finding that even if entitlement was “fairly debatable,” the employer “missed a step.” In addition to a reasonable basis for denial or delay, the statue requires an employer to “contemporaneously convey” the basis for the same. See Iowa Code § 86.13(4). The employer had sent an email to Claimant’s counsel requesting they hold off on filing a petition for alternate medical care, but did not notify the Claimant of their reasoning until months later. Further, there was no evidence in the record showing that the employer did in fact conduct a timely investigation during their delay.

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NOTICE TO THE PUBLIC

The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise. This disclosure is required by rule of the Supreme Court of Iowa.

Peddicord Wharton Legal Updates are intended to provide information on current developments in legislation impacting our clients. Readers should not rely solely upon this information as legal advice. Peddicord Wharton attorneys would be pleased to answer any questions you may have about this update. ©2021 Peddicord Wharton. All Rights Reserved.

Legal Update by Attorneys Alison Stewart and Chris Spencer, and Law Clerk Jordan Gehlhaar

Use of medicinal cannabis is legal in narrow cases in Iowa. The Medical Cannabidiol Act was first passed in 2014 and has historically been very restrictive and slow to expand. Today’s Act provides that individuals determined by a health care practitioner to have a qualifying “debilitating medical condition” may legally obtain cannabis from a licensed dispensary. Qualifying conditions include cancer (producing certain symptoms), multiple sclerosis, seizures, AIDS, PTSD, chronic pain, or any terminal illness (producing certain symptoms). The Cannabidiol Act provides that it does not give rise to any employment law claims, which is consistent with Iowa law allowing employers to set conditions of employment. A separate provision states that workers’ compensation carriers are not required by the Act to reimburse for costs associated with medicinal marijuana use. See Iowa Code § 124E (2020).

Due to its medical relation, workers’ compensation claimants or providers may seek authorization for use of cannabis as a treatment option. This is likely to come as a petition for alternate medical care by the claimant. In the most recent Iowa case, an Iowa treating provider recommended referral to a provider who could prescribe medicinal cannabis, due to the claimant’s history of intolerance to oral medication. The employer and insurance carrier refused to authorize the referral and the claimant filed an alternate care petition under Iowa Code 85.27. The Deputy Commissioner found the refusal to be reasonable and therefore denied the alternate care.

The Deputy reasoned that:

(1) the Iowa Board of Pharmacy considered marijuana a schedule I drug with "no medicinal use,” and
(2) since marijuana and cannabis are illegal under federal law, the Defendants would put themselves at risk by paying for the treatment.

It was determined inappropriate for the Agency to recognize medicinal value prior to the Iowa Board of Pharmacy or Congress. See Presson v. Freiburger Concrete & Topsoil, Inc., File No. 5049542 (2018). This reasoning still applies today, meaning employers and insurance carriers have a reasonable basis and case law support for denying such care.

Currently, marijuana is a controlled substance in Iowa, and the possession of any amount is a misdemeanor offense in the state. Under Iowa Code Section 85.16, compensation is not allowed for work injuries caused by intoxication, if the intoxication was a substantial factor in causing the injury. This is known as the “intoxication defense” claimed by employers. It is presumed that the employee was intoxicated at the time of injury, and that the intoxication was a substantial factor in causing the injury if the employer shows a positive drug test at the time of or immediately following the injury. Therefore, if marijuana or cannabis is shown to be present in an employee’s system at or immediately after a work injury, the employee is not entitled to workers’ compensation benefits unless they overcome the presumption, a heavy burden. The closer a test is to the time of the injury, the more likely it is to be admissible. Additionally, toxicologists or similar expert witnesses are often required in these types of cases.

These sources lead to several conclusions:

(1) employers are free to adopt their own drug policies, even against legal use of medicinal cannabis;
(2) compensation may be denied for injuries caused substantially by intoxication; and
(3) Iowa law does not require workers’ compensation coverage of medicinal marijuana or cannabis.

Peddicord Wharton will continue to monitor statutory and case law on this topic.

If you'd like to sign up for our e-newsletter, please click here.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

NOTICE TO THE PUBLIC

The determination of the need for legal services and the choice of a lawyer are extremely important decisions and should not be based solely upon advertisements or self-proclaimed expertise. This disclosure is required by rule of the Supreme Court of Iowa.

Peddicord Wharton Legal Updates are intended to provide information on current developments in legislation impacting our clients. Readers should not rely solely upon this information as legal advice. Peddicord Wharton attorneys would be pleased to answer any questions you may have about this update. ©2021 Peddicord Wharton. All Rights Reserved.

Employers and Insurers in Minnesota are currently not legally required, under Minnesota Workers’ Compensation law, to reimburse employees for medical cannabis treatment based on the recent decision from the MN Supreme Court summarized below.

On October 13, 2021, the Minnesota Supreme Court issued two major decisions regarding medical cannabis. See Musta v. Mendota Heights Dental Center, A20-1551 (Minn. Oct. 13, 2021) and Bierbach v. Digger’s Polaris, A20-1525 (Minn. Oct. 13, 2021). The Court treated the two decisions as companion cases, and the majority of the analysis is contained in the Musta case.

The Minnesota Supreme Court made two major rulings regarding medical cannabis. First, it held that the Workers’ Compensation Courts, including the Workers’ Compensation Court of Appeals (WCCA), lack jurisdiction to decide whether federal law preempts Minnesota law requiring an employer or insurer to reimburse an employee for medical treatment in the form of medical cannabis. Second, the Minnesota Supreme Court held that the Minnesota Workers’ Compensation Act is preempted by the Federal Controlled Substance Act (CSA). As such, Employers/Insurers are not required to reimburse employees for medical cannabis used to treat a work injury.

As background, the employee in Musta worked as a dental hygienist when she suffered a work-related neck injury in February 2003. She received conservative care, underwent surgery in November 2003 and August 2006, and was ultimately prescribed medication to manage the continuing pain, including Vicodin and Fentanyl. In late 2009, the employee discontinued using narcotics to treat her pain because of the side effects. By April 2019, she began using medical cannabis in compliance with the THC Act (Minn. Stat. §§ 152.21–.37 (2020)) to treat her consistent pain. The employee then requested reimbursement for said medical cannabis from the employer, Mendota Heights Dental Center (Mendota Heights).

The employer opposed the request for reimbursement because cannabis possession is prohibited by federal law under the CSA. Cannabis is a Schedule I controlled substance, which is the most restrictive level, and cannot be lawfully prescribed under federal law. However, the Compensation Judge ruled that the employer must reimburse the employee for medical treatment, including medical cannabis. See Minn. Stat. § 176.135, subd. 1(a) (2020). The Compensation Judge declined to resolve the issue of preemption. On remand, the Compensation Judge found that the use of medical cannabis is legal under Minnesota law, and nothing in Minnesota workers’ compensation law would prohibit reimbursement for medical cannabis when used to treat a work-related injury. Therefore, the employer was required to reimburse the employee for medical cannabis expenses. The employer appealed.

The WCCA held that it lacked subject matter jurisdiction over the preemption issue and stated that it could not address whether the CSA preempts Minnesota Law as it relates to medical cannabis in workers’ compensation cases. The WCCA then affirmed the Compensation Judge’s decision, requiring the employer to reimburse the employee for medical cannabis expenses. The employer appealed the WCCA’s decision to the Minnesota Supreme Court.

The Minnesota Supreme Court held that: (1) the WCCA lacks jurisdiction to decide whether federal law preempts Minnesota law that requires an employer to provide medical treatment when the treatment sought is medical cannabis; and (2) because it is impossible to comply with both state and federal law, the Workers’ Compensation Court orders are preempted by the CSA. In a footnote, the Minnesota Supreme Court noted that its decision was limited to “a claim for reimbursement of medical expenses, incurred to treat a work-related injury, where the treatment for which the expense is incurred is the purchase and use of medical cannabis, with the reimbursement liability determined in a legal proceeding.” They expressed “no opinion on whether the CSA preempts any component of Minnesota’s medical cannabis program, nor does our preemption decision here extend to any other form of medical treatment."

Summary by Attorney Andrew Carballo

By: Kelsey Paddock (Partner - San Francisco)

Written by: Tracey Jones and Luke West

Originally appeared on Teague Campbell Dennis & Gorham LLP website

We saw during March 2020 the great migration for businesses to a mainly, and at times exclusively, work from home model. While businesses have re-opened their offices to their employees, data from the Pew Research Center shows that many Americans are still working from home and would want to continue to work from home even after the Coronavirus outbreak ends.

For businesses, there are benefits to having a work from home model from employees. It can be cost-effective in reducing overhead with less need for office space and lower energy costs. However, there are also risks employers should consider when allowing employees to work from home.

Workers’ Compensation Considerations

From a workers’ compensation perspective, for a work from home injury to be compensable, Plaintiff must prove that an accident occurred which arose out of and in the course and scope of employment.

• Accident: An unlooked-for, untoward event. An interruption of the normal work routine.
• Arising out of employment: The accident must have a causal connection to the employment.
• In the course of employment: The injury must occur:
  1. during the period of employment,
  2. at a place where the employee’s duties are calculated to take them, and
  3. under circumstances where the employee is engaged an authorized activity that is calculated to further (directly or indirectly) the employer’s business.

When an injury occurs at home, it is imperative to collect as much information as possible about the event. Knowing specific details of the injury, like the location of the injury, the layout of the workspace, the time the injury occurred and normal work from home routine are essential in determining the compensability of a claim.

Mitigating Risk

A few considerations for employers who intend to utilize a work from home model, wholly or partially, should include:

• drafting revised job descriptions for employees,
• providing a technology stipend,
• setting specific hours for employees who telework, and
• specifying work from home terms and parameters within an employee handbook and/or a signed telecommuting agreement.

Because each and every claim is fact-specific, feel free to contact one of our workers’ compensation attorneys with any questions.

Written by: John Tomei

Originally appeared on Teague Campbell Dennis & Gorham website

Ordinarily, bad faith claims against insurance carriers are brought in the Superior Court in the General Courts of Justice in North Carolina. These claims are based upon the law of contracts and torts. The law provides that there is an implied covenant between an insured and a carrier for the carrier to act in good faith. A carrier’s failure to do so can subject that carrier to liability, including punitive damages. However, when dealing with workers’ compensation coverage and bad faith claims, other issues regarding jurisdiction and venue arise.

Specifically, who has jurisdiction over a claim asserted against a workers’ compensation insurance carrier for bad faith? Is it the North Carolina Industrial Commission or the Superior Court in the General Courts of Justice?

The general rule is that all claims arising from an employer’s or insurer’s processing and handling of a workers’ compensation claim fall within the exclusive jurisdiction of the Industrial Commission, regardless of whether the alleged conduct was intentional or merely negligent. Bowden v. Young, 762 S.E. 2d 622, 625 (N.C. Ct. App. 2015) While the North Carolina Workers’ Compensation Act provides the exclusive remedy for work-related injury matters, the Act has also been construed to give the Industrial Commission jurisdiction not only over those work-related injury claims but also any claims “ancillary” to the original injury—including those against insurance carriers. Ancillary claims have included those related to fraud, bad faith, civil conspiracy, unfair and deceptive trade practices, and intentional infliction of emotional distress. Johnson v. First Union Corp., 131 N.C. App 142, 144, 504 S.E. 2d 808, 810 (1998).

There are some rare exceptions to the general rule. Three of those exceptions include:

1. 1. After a complete Industrial Commission hearing and award of benefits to an employee from his sub-contractor employer, a subsequent action by an employee seeking a declaratory judgment of his rights with respect to an insurance agreement between a sub-contractor employer and its general contractor is beyond the scope of the “employer-employee” relationship ordinarily governed by the Act, and jurisdiction for that claim would lie with the Superior Court. Lowery v. Campbell, 185 N.C. App. 659, 649 S.E. 2d 453 (2007).
   2.  The Act does not confer upon the Commission expressly or by implication jurisdiction to determine, in a proceeding in which plaintiff asserts no claim against the insurance company, a plaintiff’s asserted right to reform a policy and to recover from the insurance company the amount of plaintiff’s award. Clark v. Gastonia Ice Cream Co., 261 N.C. App. 234, 134 S.E. 2d 254 (1964).
   3. If, after the Commission awards the injured worker benefits, an employer’s insurance company knowingly provides false information to police to frame him for insurance fraud, resulting in his arrest, incarceration, and indictment on felony charges, then the worker’s claims for malicious prosecution, abuse of process, and unfair and deceptive trade practices (“UDTP”) exceed the scope of the Act and are properly before the General Court of Justice. Seguro-Suarez v. Key Risk Insurance Co., 261 N.C. App 200 (2018).

There are pitfalls for the unwary in defending bad faith claims. When dealing with a bad faith claim in the context of a workers’ compensation insurance policy, it is important to be aware that the North Carolina Industrial Commission will likely have jurisdiction over those claims. Having attorneys who are experienced in dealing not only with coverage and bad faith claims, but also with appearing before the Industrial Commission, is vitally important in successfully defending these bad faith and other coverage-related matters.