On August 24, 2018, Governor Murphy signed a bill that for all practical purposes ends the right of employers to make bona fide offers of permanent partial disability free of counsel fees.  The statute that enabled employers to make bona fide offers within 26 weeks of maximal medical improvement, or return to work, whichever is later, without the offer being feeable, was passed on April 3, 1928.  For almost a century, employers made such voluntary offers to tide injured employees over while their workers’ compensation cases were pending.  The inducement to employers was the savings on counsel fees.  Neither petitioner nor respondent paid a counsel fee on the amount of a timely voluntary offer.

Under the new law signed by the Governor, counsel for petitioners are entitled to a fee on all benefits paid to the petitioner if those payments occur after the date of a signed agreement between counsel and the injured worker.  An employer can still make an offer of permanency if the employer so desires and get a dollar credit, of course, but for practical purposes there will be no way to know whether the voluntary offer will be feeable.  There is no obligation on the part of the injured worker to disclose to the employer or carrier whether he or she has a signed agreement with counsel.  In many cases the adjuster may be well aware that the injured worker has an attorney and can therefore infer that there is an attorney-client relationship.

One question practitioners have is whether an attorney for the injured worker can still agree with the employer or carrier not to take a fee on a voluntary offer of permanency as an inducement for such an offer to be made.  Voluntary offers of permanency are popular with injured workers because they help with the employee’s finances while the case is pending.  This sort of agreement by petitioner’s counsel to waive a fee on an amount offered would almost certainly be honored by a Judge of Compensation, even if there is a written agreement predating the offer of permanency.

One other important legislative development in New Jersey is the potential loss of the “reverse offset.”  New Jersey is one of 15 states that has an agreement with the Social Security Administration giving the offset for total disability payments to the employer.  In most states the offset goes to the Social Security Administration.   In a reverse offset state like New Jersey, workers’ compensation benefits in total disability award cases are reduced by the amount of SSDI benefits in certain circumstances.

The proposed 2019 federal budget eliminates the reverse offsets in the 15 states that currently are permitted to offset against SSDI benefits.  There is a formula that limits the employee to 80 percent of the employee’s average current earnings between workers’ compensation and SSDI benefits.  In New Jersey, the benefit from workers’ compensation is reduced rather than SSDI in achieving the 80% limit.  This has saved employers and carriers countless millions of dollars over the years.  The current budget proposal would eliminate this practice in all 15 states that have a reverse offset.  The reason for the budget proposal is that it will allegedly save the federal government $164 million over 10 years.

Thanks to Craig Livingston, Esq. for bringing this budget proposal to our attention.  Employer groups need to speak to their federal legislators about opposition to this budget proposal.  This would be a very costly change for New Jersey employers, and such a change will generate much more litigation in total disability claims.

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

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.

We hear the term “idiopathic claim” quite frequently in workers’ compensation, but what does it really mean?  To begin with, “idiopathic” is a combination of two Greek words:  “idio” relating to “one’s own” and “pathic” suggesting suffering or disease.  It has come to mean any disease or condition of unknown cause.  Lawyers and practitioners have borrowed this term to argue in workers’ compensation that if a condition is idiopathic, it must be considered not causally related.  Yet the word “idiopathic” does not appear anywhere in the New Jersey Workers’ Compensation Act, and there are precious few New Jersey cases that even refer to it.

A more useful way to understand the defense is to think about the two fundamental requirements for any workers’ compensation claim:  the injury must occur during the course of employment, and the injury must arise from employment.  So a police officer is walking down steps at work and feels sudden pain in his knee.  He does not fall; he does not strike the ground.  A piece of bone broke off in the knee spontaneously for no known reason.  Is this compensable?  No, according to Meuse v. Egg Harbor Township Police Department, No. A-4553-90 (App. Div. May 6, 1992).  It is idiopathic, or more precisely, the injury did not arise from the employment.

Another way of restating this is that for an injury to be work related, it must occur during work and the premises at work must contribute to the injury.  In the above Meuse case, work had nothing to do with the injury.  It could have happened anywhere and it was pure accident that the bone broke off while walking at work.  The act of walking which the officer was doing was no different than his walking anywhere else.

Another example:  Iesha is getting ready to go home on a snowy winter day.  Her shoulder has been painful for weeks from heavy shoveling at home.  She puts on her winter coat, and as she raises her right arm, she feels a tear in the shoulder.  She is diagnosed with a rotator cuff tear.  This happened at work, but did work cause the injury to occur?  Arguably no, because Iesha puts on her winter coat all the time, whether at home or at work.  She did not slam into a door or bump into another employee when she was putting on the coat.  The shoulder just spontaneously tore while she was putting her coat on.  This is similar to the Meuse case.  The injury did not arise from work and would be considered idiopathic.

What about an employee who wears three inch platform heels to work.  While walking down the corridor, she turns right to go to the cafeteria for a cup of coffee. As she turns right, her right foot falls out of the platform shoe and she badly sprains her ankle at that very moment.  She does not fall and hit the ground.  Defense would concede that this meets the first test: it happened at work.  But did it arise from work?  Arguably no.  Work did not cause this to happen at all.  The bad sprain was produced by the act of walking with three inch platform heels.

Suppose in the above example that the employee with the platform heels slips and falls as her shoe is coming out.  She braces herself with her right hand, and she fractures the hand in two places while trying to protect herself from the fall on a tile floor.   Is the hand injury compensable?  Well, the injury occurred during work hours, and employees are generally covered while going for a cup of coffee on premises.  The act of falling and striking the hard ground caused the employee to fracture her hand.  This not only happened during work but the work premises – the hard tile floor – caused the hand to fracture in two places.  The floor is part of the work premises, and this hand injury is likely to be found work related.

In short, when we think of idiopathic claims, the better analysis is whether the injury arises from work or just from personal activities that could have happened anywhere.

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

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. 

Last month we reported on fraud investigations pertaining to healthcare providers and pharmacies.  According to a recent Dallas Morning Newsarticle, such investigations are intensifying and expanding. The FBI is conducting raids of medical businesses in the hunt for further proof of illicit kickback arrangements in which doctors refer patients to specific pharmacies in return for remuneration. 
 
Most recently, Next Health, a Dallas-based network of labs and pharmacies, and its successive owners, Critical Health Care Management, were subject to search following a $100 million lawsuit filed by United Healthcare that the companies were involved in a kickback scheme. The owners of both businesses are already charged with health care fraud in another federal case involving Forest Park Medical Center. 
 
Among the allegations leveled against Next Health: that their pharmacies issued animal drugs, that they manipulated the ingredients of compounds to increase costs, and that unnecessary genetic and drug tests were administered as part of a “wellness study.” 
 
Other healthcare companies facing federal scrutiny include Medoc Health Services, Southwest Laboratories, Trilogy Pharmacy, and the ADAR Group.  However, the eight defendants from Ability Pharmacy may be the most impudent of all.  They are charged with committing a $158 million fraud for inflating the costs of so-called compound pain creams: on at least one occasion, one container of the miracle cream cost them $15.00 to produce; they charged $28,000.00 for it. That’s a mark-up of 186,667%. 

-  Copyright 2018,Dan Price, Stone Loughlin & Swanson, LLP

The Division of Workers' Compensation recently held hearings on the DWC proposed rules intended to provide guidelines for  penalties for Carrier administrative violations. The proposed rules, required by the Legislature, grew out of complaints by stakeholders that the Division's current method of levying penalties were inconsistent of overly harsh with little explanation of how a penalty was derived.

In Senate Bill 1895, the Legislature amended the Texas Labor Code Section 415.021, to require the Division to adopt rules to provide a degree of consistency and fairness to the administrative penalties imposed by the Division:
 

A series of criminal actions announced this month by both State and Federal authorities demonstrate the criminal justice system is taking workers' comp fraud seriously in Texas. The following are a few of the recent actions which seek to end the practice of double-dipping, i.e., earning unreported post-injury wages while collecting workers' compensation indemnity benefits based on an inability to work.
 

• Texas workers' compensation claimant Gary Hunt  was convicted and recently sentenced by a Travis County District Court for a "double-dipping" scam. Mr. Hunt alleged he was injured in the course and scope of employment for employer Reliant Plumbing Services, Inc., and filed a claim for workers' compensation benefits with the employer's carrier, Texas Mutual. Texas Mutual paid indemnity benefits to Mr. Hunt based on his inability to work as a result of the alleged compensable injury. As it turns out, Mr. Hunt could -- and did -- work as a comfort counselor earning wages without reporting those wages to the Carrier. The TDI-DWC prosecutor embedded in the Travis County District Attorney's office prosecuted the case and obtained the Class A misdemeanor conviction and  sentence of 1 year deferred adjudication.

• John E. Carroll, a federal workers' compensation claimant, was convicted and sentenced by the U.S. District Court for the Western District of Texas (Waco) of collecting federal benefits while working and earning wages in Botswana. Mr. Carroll was sentenced to 8 months home confinement and 1 year of probation.

• Christopher Colligan, a truck driver from Baytown, was also prosecuted by the TDI-DWC prosecutor in Travis County. Mr. Colligan alleged he was injured while driving a truck for his insured employer. The carrier, Texas Mutual, paid indemnity benefits to Mr. Colligan based on his inability to work.  Of course, Mr. Colligan was able to work. While continuing to collect benefits, Mr. Colligan began driving for another trucking company and earning wages. This double-dipper was convicted of a Class A misdemeanor and sentenced to 1 year probation. Restitution to the carrier was also ordered.

We are also please to announce that six CWK attorneys have been selected for inclusion in "Best Lawyers in America".

·     Jim Waldhauser

·     Tom Kieselbach

·     Mark Kleinschmidt

·     Richard Schmidt

·     Jennifer Fitzgerald

·     Tom Coleman

This is an extraordinary accomplishment, especially given that CWK has 18 lawyers. We congratulate our attorneys and staff for their excellent work!

Jim Waldhauser of Cousineau. Waldhauser, & Kieselbach, P.A., has been selected by his peers as the 2019 Minnesota Lawyer of the Year - Workers' Compensation-Employers. This is a singular and well-deserved honor. 

Jim is a tremendous advocate who has contributed greatly to the profession.

For more information, please visit our website. 

Roller-Dick vs. CentraCare Health System, A17-1816 (Minn. August 8, 2018): 

ISSUE: ARISING OUT OF & IN THE COURSE OF

Procedural History of Case

In this case, Employee sustained an injury to her ankle after falling down a set of stairs located on the employer’s premises. The stairway had handrails on both sides as well as nonslip treads on the steps. However, Employee was not using the handrails because she was holding a personal plant from her desk as well as her handbag. She ended up falling on the stairs and injuring her ankle.

The matter proceeded to a Hearing. The sole issue before the compensation judge was whether her injury “arose out of” the employment. Relying onDykhoff v. Xcel Energy, 840 N.W.2d 821 (Minn. 2013) and Kirchner v. County of Anoka, 339 N.W.2d 908 (Minn. 1983), the compensation judge held that the injury did not arise out of employment because Employee failed to establish that the stairs were more hazardous than stairs she might encounter in everyday life or that her work duties in some way increased her risk of falling. The WCCA reversed and clarified that the issue is whether the stairs posed an “increased” as opposed to a “neutral” risk. The WCCA determined the stairs were inherently hazardous and not a neutral condition like the floor inDykhoff.

The Minnesota Supreme Court recently affirmed the WCCA’s decision.

Minnesota Supreme Court’s Analysis

For an injury to “arise out of employment,” there must be some “causal connection” between the injury and the employment. The Court noted that the case turns on whether the Employee faced a hazard that originated on the premises as a part of the working environment. In analyzing the Kubis and Hohlt decisions, the Court affirmed the core principles underlying the conclusion inDykhoff: “for an injury sustained on an employer’s premises to arise out of employment, the employee must have faced a hazard that originate on the premises as part of the working environment, thus supplying the requisite causal connection between the injury and employment.”

The Court compared this case to the Kirchner case, in which the Employee fell down stairs without using a handrail because persons ascending the staircase occupied the only side with the handrail. In this case, the Employee was not using the handrails as she was descending the stairs because she was carrying a plant as well as her handbag. The Court held that these circumstances created an increased risk that the Employee would fall and injure herself, thus satisfying the requisite causal connection between the workplace and her injury.

The Court goes on to explain that in workers’ compensation cases, it does not inquire whether the circumstances that led to an employee’s injury were attributable to either the employee or the employer. The Court notes that the dissent’s opinion that the fall is not compensable due to the Employee’s decision to not take advantage of the handrails returns the case to the negligence standard that the Workers’ Compensation Act expressly rejects. In a footnote, the majority opinion expressly states “we do not hold… that stairs themselves are workplace hazards exposing employees to an increased risk of injury. Rather, we conclude that the now-undisputed factual circumstances surrounding Roller-Dick’s injury… amount to an increased risk as a matter of law.”

Dissent

Justice Gildea, in the dissenting opinion, states that there is no dispute that the Employee satisfies the “in the course of” requirement of the statute, but that because the Employee did not establish a causal connection between her injury and her employment, she does not meet the “arising out of” element. The dissent points out that by failing to require a connection to the Employee’s actual job duties, the majority opinion effectively does away with the “arising out of” element of the statute. The dissent felt that carrying a personal plant and not holding the handrail was not sufficient for an increased risk connected to the employment.

Why this case matters

Failure to use handrails on employer-maintained staircases can lead to compensable injuries, even if the employee’s reason for not holding the handrail is purely personal in nature (i.e. carrying personal items). Notably however, this decision explicitly declined to provide a bright-line rule that stairs are inherently hazardous. There likely will be more cases to come addressing this issue of employer staircases.

For the full decision, click the link below:

https://mn.gov/law-library-stat/archive/supct/2018/OPA171816-080818.pdf

Summary completed by Bryan Wachter and Parker Olson, CWK Associate Attorneys 

Hufnagel v. Deer River Health Care Center, A17-2064 (Minn. July 18, 2018)

In this case, Employee sustained an admitted injury to her low back in 2009 while working for Deer River. Deer River then became Essentia Health-Deer River and changed its insurer in 2013. Employee continued to work there, and sustained aggravations to her low back in 2014 and 2015. Employee then filed a Claim Petition; however it was solely against the 2009 Deer River injury. Attorney for Deer River asked Employee’s attorney to join the 2014 and 2015 Essentia Health injuries to the matter, but he refused. Subsequently, Deer River filed a Motion for Joinder to add Essentia Health to the case. This was granted. At the Hearing, Employee’s attorney indicated that he did not believe there were any injuries in 2014 or 2015, which was contrary to the opinion of an Independent Medical Examiner. Judge Kohl instead found that there were injuries in 2014 and 2015 and ordered Essentia Health to make payment of wage and medical benefits. There were no benefits awarded against the 2009 injury and Deer River.

Employee subsequently claimed attorney fees under Roraff/Irwin and Minn. Stat. §176.191 in the amount of $31,120.00. In support of the claim for .191 fees, Employee asserted that the primary dispute in the case was between the two insurers, even though both insurers had denied primary liability. At the hearing for attorney fees, Employee’s attorney was found to be entitled to $8,000 inRoraff/Irwin fees. The compensation judge concluded that Employee was not entitled to recover attorney fees for the time her attorney spent in re-establishing the 2009 injury. Additionally, it was noted that since Deer River was actually the entity to join Essentia Health, which ultimately gave rise to compensation for Employee, that Employee’s attorney fee claim should be reduced. The compensation judge denied any additional fees under Minn. Stat. §176.191, as he found that the primary dispute was not between the insurers, but rather between the employee and the insurer(s).

The WCCA reversed this decision, holding that the compensation judge failed to fully consider the extent to which each employer sought to shift liability to the other employer and that it was error to deny the motion for fees under Minn. Stat. §176.191, subd. 1. They also held that Employee’s attorney was entitled to recover additional attorney fees underRoraff/Irwin.

Essentia Health appealed the decision to the Minnesota Supreme Court. The Minnesota Supreme Court affirmed the WCCA. The Court addressed two issues: (1) whether the compensation judge erred in concluding that there was no dispute between the two employers that would entitle her to fees under Minn. Stat. §176.191, and (2) whether the Employee is entitled to recover attorney fees for the time spent in establishing the 2009 injury.

With regard to the .191 fees, the Court concluded that it was error for the compensation judge to determine the dispute in this case was not primarily between the insurers. The Court held that whether the 2009 injury was a substantial contributing factor in the Employee’s ongoing physical condition was, at its heart, a dispute about which employer was liable for the benefits the Employee would be entitled for 2014 and 2015 injuries. The efforts by each employer to shift responsibility to the other employer greatly increased the burden on the Employee’s counsel to provide effective representation, and therefore the Court held she was entitled to receive reasonable attorney fees under Minn. Stat. §176.191, subd. 1. Even though the Employee had not been guaranteed any compensation for herself going into the Hearing as both insurers denied liability, the Court still found that the primary dispute was between the insures.

With regard to the issue of Roraff/Irwin fees, the Court held that although the case before the compensation judge was not itself about an award of benefits specific to the 2009 injury, some amount of time and effort was still necessary to adequately prepare for and respond to the argument the employers raised regarding the 2009 injury and its relationship to the 2014 and 2015 injuries. The Court discussed its expectation that attorneys thoroughly prepare to represent their clients and that an award of reasonable fees should be adequate to compensate an employee’s attorney for the value of representation provided, including for the time reasonably necessary to thoroughly prepare.

One key takeaway from this decision is that the standard for .191 attorney fees is not a bright-line rule. In a situation where there are two insurers (who even both deny primary liability), Employee’s attorney may be found to be entitled to fees under Minn. Stat. 176.191 if there is enough “finger pointing” between the two insurers. Such situations require a full case-by-case analysis of all the facts to make a determination.

For the full decision, click the link below.

https://mn.gov/workcomp-stat/sup/Hufnagel-sup%2018.html

Summary completed by Bryan Wachter, CWK Law Associate Attorney