Many police officers work outside assignments that are approved through their police department.  What happens if an injury occurs to the officer in the approved outside assignment?  What are the ramifications for workers’ compensation and civil liability purposes?  This issue arose in Dutcher v. Pedro Pedeiro and Black Rock Enterprises, LLC., A-1088-16T3 (App. Div. October 25, 2017).

Black Rock Enterprises approached the Township of Woodbridge Police Department for permission to hire police officers for traffic control while its workers performed a road milling project in town.   The Company specified how many police officers would be required for the job and paid the Township for their services.  The Township assigned the police officers and then in turn paid them directly.  Officer Dutcher, the plaintiff in this case, was approved by the Township to do work for Black Rock Enterprises.  The company assigned him to a specific intersection of Woodbridge Center Drive and Plaza Drive.

On the day of the accident, Dutcher reported to the site, and was instructed by the company on his duties.  He followed all the construction company’s policies.  Dutcher reported to the company’s supervisor, which had control over his work.  The company directed Dutcher in how to direct traffic, depending on the progress and status of the milling work.  The Township had no authority over Dutcher’s duties at the work site.  The company also had the power to discontinue Dutcher’s services if his work was unsatisfactory.

Dutcher was injured when a vehicle driven by Pedeiro, an employee of the construction company, struck him while performing his traffic control work.  Dutcher received workers’ compensation benefits from the Central Jersey Joint Insurance Fund, of which Woodbridge Township was a member.  Dutcher also attempted to sue the construction company for negligence.   The Central Jersey Joint Insurance Fund took the position that Dutcher had two employers, and that Black Rock Enterprises was equally responsible for the workers’ compensation claim.

The trial judge ruled that Dutcher was a special employee of the construction company and therefore could not sue the construction company.   The Appellate Division agreed stating that “a ‘special employment relationship’ where the ‘special employer’ is also responsible for workers’ compensation exists ‘when a general employer lends an employee to a special employer.’”

There are five factors to consider in establishing a special employment relationship.  First, the Court noted that there must be consent for contracting:  “Here, plaintiff signed up for the Extra Duty Services knowing the Township would hire him out to a second employer and would expect him to perform his duties for that employer.” Consent was therefore established.

Second, the Court said that the work being done must be essentially that of the second employer.  That was easy to show because the construction company specified how many officers it needed and the date, time and location of the work.   The company specified the requirements of the job, and traffic safety was essential for the safety of the construction workers.

The most significant factor is the third, namely the right of control.  The Court said it was clear that the construction company controlled Dutcher’s activities, as it could direct his work and get rid of him if it wanted to do so.  There was a foreman on the site in control of the operation.

The fourth factor involved payment by the construction company to Dutcher.  The Court said that it really amounted to the same thing when the company paid the Township, which in turn paid Dutcher.

The fifth factor pertained to the right of the company to hire or discharge the special employee.  Even though the company did not hire Dutcher personally (the Township assigned him), the company clearly had a right to dispense with Dutcher’s services if it wanted to do so.

For all these reasons, the Appellate Division held that Dutcher could not sue the construction company, as Black Rock Enterprises was his special employer.  New Jersey has a powerful exclusive remedy provision which states that an employee cannot sue his or her own employer for personal injuries in a civil action except in truly rare cases of intentional harm.

This case follows prior case law on this issue.  There are many joint employer and special employee situations in New Jersey.  Where the parties to the joint employment or special employment relationship have not clearly established liability for workers’ compensation, a Judge of Compensation has the power to assess responsibility for workers’ compensation equally between the employers.  The issue in this case focused more heavily on the corollary principle, which is that the injured worker cannot sue either company in a joint or special employee situation.

It makes good sense for employers like police departments, which routinely assign officers to outside companies for approved work, to get written agreements signed in advance regarding the responsibility of the special employer to pay for workers’ compensation injuries.  Most employers who request police officers or special employees do not realize that they are responsible for workers’ compensation injuries in whole or in part.  That leads to unnecessary and expensive litigation.  The easy solution is to address this issue right up front.

Thanks to Ron Siegel, Esq. for bringing this appellate division decision to our attention.

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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. 

December 2017

Tennessee Workers’ Compensation Update

The Tennessee Workers’ Compensation Law underwent sweeping changes in 2014, including a new formula for permanent disability, a new administrative court system, and a new causation standard. Since then, the Tennessee legislature, the Tennessee Bureau of Workers’ Compensation, and the new administrative court system have been busy fleshing out the new system. Indeed, 2017 brought several critical changes to the Tennessee Workers’ Compensation Law.

I.                 2017 Legislative Changes by Tennessee General Assembly

We will begin our review of the 2017 revisions by focusing on the actions of the Tennessee General Assembly.

With regard to medical panels, the basic rule is that employers must provide to the injured worker a panel of three or more independent physicians, surgeons, chiropractors, or specialty practice groups, if available in the employee’s community, from which the employee may choose the authorized treating physician. The 2017 changes impact situations in which there are not three or more independent physicians, surgeons, chiropractors or specialty practice groups available in the employee’s community.  In such circumstances, medical panels must now contain three or more independent providers or specialty practice groups not associated in practice together within a 125 mile radius of the employee’s community. In this context, the phrase “not associated in practice together” means that at least one provider or specialty practice group is not associated in practice with another provider or specialty practice that is on the panel. Essentially, where there are not three or more options in the local community, and an employer is expanding beyond the usual range of the community, only two of the providers can be associated in practice.  At least one of the options on the panel must be independent of the other two. This will be particularly important for employers located in rural areas where the choices for medical providers is limited. This change was effective May 18, 2017.

Another important legislative change is the creation of a vocational rehabilitation program within the Tennessee Bureau of Workers’ Compensation. Specifically, the “Second Injury Fund” has been renamed the “Subsequent Injury and Vocational Recovery Fund.”  The Fund now has a new responsibility to determine the appropriateness of applications for vocational recovery assistance and to pay out such benefits.  Vocational recovery assistance may include vocational assessments, employment training, job analysis, vocational testing, GED classes and testing, and education through a public Tennessee community college, university, or college of applied technology, including books and materials. Assistance is capped at $5,000.00 per employee per fiscal year and must not exceed the total sum of $20,000.00 per employee who participates in this program for all years.  The total aggregate amount to be paid from the Subsequent Injury and Vocational Recovery Fund is limited to a total of $500,000.00 in any calendar year. This new vocational recovery assistance is applicable only to injuries occurring on or after July 1, 2018, and a sunset provision prohibits it from applying to injuries on or after June 30, 2021.  

The Tennessee legislature also made a small but important change for death benefits. Under prior law, recoverable burial expenses were capped at $7,500.00. Under the new law, the cap has now been increased to $10,000.00 – an adjustment to reflect the ever-increasing costs for funerals. This change was effective May 18, 2017.

The recent legislative changes further alter the utilization review system.  Employers are now restricted from sending certain medical recommendations to utilization review in the early days of a workers’ compensation claim. For instance, utilization review may not be used for diagnostic procedures ordered in accordance with the Medical Treatment Guidelines by the authorized treating physician within the first 30 days after the date of injury. Likewise, utilization review may not be used for diagnostic studies recommended by the treating physician when the initial treatment regimen is nonsurgical, no diagnostic testing has been completed, and the employee has not returned to work. The clear intent of these two provisions is to prevent medical treatment at the outset of the claim from being hindered by what the legislature views as unnecessary disputes over medical necessity. This change was effective May 18, 2017.

II.                New Regulations Enacted by Tennessee Bureau of Workers’ Compensation

In 2017, the Bureau of Workers’ Compensation was quite active updating several sets of workers’ compensation regulations.

For instance, the regulations governing utilization review were amended in January 2017. For the most part, the time requirements of a utilization review have remained unchanged. An employer shall submit a case for utilization review within three business days of the notification of recommended treatment.  Once sent, the utilization review organization must render a determination about medical necessity within seven business days of receipt. However, a regulatory change for 2017 provides that a utilization review decision to deny a recommended treatment shall remain effective only for a period of six months from the date of the decision without further action by the employer. Thus, any requests that come from the treating physician with regard to the same type of treatment remain prohibited under that initial utilization review denial for a period of six months.  However, there can be circumstances in which the treating physician documents some material change that supports a new review or other pertinent information that was not used by the utilization review organization in making its initial determination. The new regulations also clarify that treatment recommendations shall not be denied if they follow the Bureau’s adopted Medical Treatment Guidelines.

Another important set of regulatory changes from June 2017 involved the implementation of new procedures for penalty assessments and contested hearings. The new regulations clarify that a Bureau employee may accept information concerning possible non-compliance or a possible rule violation from another Bureau employee, from within the Bureau, from within the Department of Labor, from other governmental agencies, through an investigation or inspection, from governmental records, or from any lawful source. Unsurprisingly, this represents a great expansion of the possible sources where a penalty referral can originate. The new regulations also outline a comprehensive and detailed procedure for the initiation, investigation, hearing, and appeal of penalty assessments. While an in-depth discussion of these new procedures is not appropriate for this article, a definite conclusion may be drawn from the fact that the Bureau has invested so much time and energy in building this procedural structure – namely, that employers and carriers should brace up for the ramped up assessment of penalties in 2018 and beyond.

III.              New Cases from the Administrative Court System

Our third source of updates for the Tennessee Workers’ Compensation Law is the administrative court system. Since their creation in 2014, the Court of Workers’ Compensation Claims and the Workers’ Compensation Appeals Board have been busy.

One place where the courts have been focusing their attention is penalties. For instance, inBerdnik v. Fairfield Glade Community Club, the Workers’ Compensation Appeals Board referred the employer to the Penalty Program for determination of whether a penalty was appropriate for the failure to provide a medical panel.  Likewise, inJohnson v. Stanley Convergent Security Systems, a single Appeals Board judge in a concurring opinion referred the employer to the Penalty Program for investigation of Employer's actions in failing to provide Employee a panel of physicians.  Interestingly, in both cases, the employers were referred to the Penalty Program despite prevailing on the issue of whether substantive workers’ compensation benefits were owed. Again, this sends a clear message to employers that in 2018 the Bureau may heighten its enforcement efforts for the many potential penalties that exist under the Tennessee Workers’ Compensation Law.

The Appeals Board also addressed an interesting application of the Recreational Activity defense. InPope v. Nebco of Cleveland Inc., a car salesman injured his knee participating in a “mud run,” which was a recreational charity event sponsored in part by his employer, a car dealership. The employee argued that his participation was “impliedly required” by the employer, due to pressure from a co-worker and general manager. The Appeals Board rejected this argument, reasoning that although the employee may have felt peer pressure to participate, such pressure does not by itself amount to an express or implied requirement to participate. The employee also argued that participation in the event was during working hours and part of his work duties. The Appeals Board also disagreed with this argument. While the mud run did occur during normal working hours, the employee was not paid for his time away from the dealership, he was not required to sell any cars while there, and he was not required to wear any clothing to identify him as an employee of the dealership. Based on these facts, the injury was found to be not compensable.

IV.              Conclusion

While 2017 did not bring any radical changes for Tennessee Workers’ Compensation Law, we did see several important additions and clarifications to the sweeping 2014 changes that are still in the process of unfolding. Stay tuned for more changes in 2018 as the system continues to evolve.

Fredrick R. Baker, Member
Wimberly Lawson Wright Daves & Jones, PLLC
1420 Neal Street, Suite 201
P.O. Box 655
Cookeville, TN 38503-0655
(931) 372-9123
fbaker@wimberlylawson.com
www.wimberlylawson.com

We must bid a sad farewell to Judge Carolyn Cheu Mobley, who retired from the Division of Workers’ Compensation on December 22, 2017.  As the sole Hearing Officer in Austin since 2010, Judge Mobley handled a heavy docket with courtesy and professionalism.  No word yet on what endeavors she will undertake following her departure from the DWC, but we certainly wish her well.  Judge Mobley’s replacement will be Judge Rabiat Ngbwa, heretofore one of three traveling Administrative Law Judges from the Division’s central office.

The 85^th Legislature amended the Act to change the title of the Division’s “Hearing Officers” to “Administrative Law Judges.” To implement the change, the Division is updating its forms to now refer to “Administrative Law Judges.” We recommend our clients consult the Division’s website to confirm they are using the most recent version of the form.

Touting its efforts to reduce costs through workers’ compensation healthcare networks, a drug formulary, and by encouraging safe workplaces, the Division recently announced that Texas workers’ compensation premiums are down 63% since 2005. The reduced cost of coverage have encouraged more employers to join the system and provide workers’ compensation for their employees. The full press release is availablehere

Responding to Hurricane Harvey, Gov. Abbott declared a state of disaster in several Texas counties. Following the declaration, the Division issued a bulletin extending certain deadlines for workers’ compensation processes and procedures residing in the disaster affected counties. Effective January 10, 2018, the Division will lift the bulletin and all standard workers’ compensation deadlines and procedures will go back into effect. The Division bulletin is availablehere.

The Supreme Court recently confirmed the exclusive jurisdiction of the Division extends to claims made against a workers’ compensation carrier, Accident Fund General Insurance Company and its adjuster Kriste Henderson (collectively, Accident Fund) arising out of the bona fide offer of employment process. In In re Accident Fund Insurance Company, injured worker Rick Sayaz was presented with two bona fide offers of employment by the Employer. Sayaz failed to respond to the offers and failed to seek dispute resolution in the Division to determine the validity of the offers. Sayaz sued the Employer for retaliatory discharge under section 451.001 and for defamation. The injured worker also sued Accident Fund alleging it aided and abetted the Employer’s retaliatory discharge, tortiously interfered with Sayaz’s employment relationship, and conspired with the Employer to wrongfully terminate Sayaz. According to Sayaz, Accident Fund’s participation in the bona fide offer of employment process was a pretext for the retaliatory discharge.
 
In the trial court, and citing the Supreme Court’s opinions inIn re Crawford & Co. and Texas Mut. Ins. Co. v. Ruttiger, Accident Fund filed a plea to the jurisdiction arguing that Sayaz’s claims are within the exclusive jurisdiction of the Division. The plea was denied, and Accident Fund filed a petition for writ of mandamus with the court of appeals. The appellate court denied the petition, and Accident Fund sought relief from the Texas Supreme Court.
 
In aper curium opinion, the Supreme Court held that Sayaz’s claims are within the exclusive jurisdiction of the Division. The Court explained that the Act and Division rules provide the Division with exclusive jurisdiction to determine whether an offer of employment is bona fide for purposes of the Act. In this case, all of the claims alleged against Accident Fund arise from its participation in the bona fide offer of employment process and Sayaz’s complaints about that process. The question of the validity of the offers – and whether they were in fact “bona fide” – was a threshold factual determination for each of Sayaz’s claims. Therefore, Sayaz’s claims asked the trial court to make a determination on a matter within the exclusive jurisdiction of the Division. Citing Ruttiger, the Court concluded, “Sayaz’s claims against Accident Fund arise out of the statutory claims-handling process and, as a result, ‘the current Act with its definitions, detailed procedures, and dispute resolution process demonstrate[s] legislative intent for there to be no alternative remedies.’” Because the Division has exclusive jurisdiction over the bona fide offer of employment process, and Sayaz failed to exhaust his administrative remedies in the Division, the trial court lacked jurisdiction over Sayaz’s claims. The Court granted mandamus relief to Accident Fund and Ms. Henderson and directed the trial court to withdraw its orders denying their plea to the jurisdiction and dismiss all claims against them.In re Accident Fund General Insurance Co., No. 16-0556 (Tex. Dec. 15, 2017).
 
Dan Price represented Accident Fund and Ms. Henderson in this case.
 
-Dan Price, Stone Loughlin & Swanson, LLP.

Also in State Office of Risk Management v. Martinez, the Texas Supreme Court held that, to preserve their case on judicial review, workers’ compensation litigants are only required to appeal the ultimate conclusions of the Division and not the underlying findings of fact supporting those conclusions. In Martinez, the injured worker presented the Court with a cross-petition in support of the court of appeals’ dismissal of the case alleging that SORM waived its right to judicial review by not expressly appealing the Division’s findings of fact. The Supreme Court noted that the courts of appeal were split on whether each finding of fact must be appealed to avoid forfeiture of the right to judicial review. Ultimately, the Court determined that each finding of fact did not have to be appealed. The Labor Code defines incorrect findings of fact as “errors” and not appeals. The parties are entitled to a modified de novo proceeding without deference to the findings of fact of the hearing officer. For this reason, it is not the findings of fact that must be appealed. But rather, the ultimate conclusions of the hearing officer are what must be appealed. In the case of Ms. Martinez, the ultimate conclusions were whether Martinez sustained a compensable injury and whether she had disability. SORM was not required to appeal each finding of fact the hearing officer relied on in coming to these ultimate conclusions. State Office of Risk Management v. Martinez, No. 16-0337 (Tex. Dec. 15, 2017).
 
-Dan Price, Stone Loughlin & Swanson, LLP.

A litigant is entitled to judicial review of a final decision of the Division of Workers’ Compensation, but judicial review is limited to the “issues” decided by the DWC Appeals Panel. In the case ofState Office of Risk Management v. Martinez, the Texas Supreme Court explained what an “issue” is for purposes of judicial review.
 
Edna Martinez was an employee of the State of Texas, who was injured at her home. The disputed issues defined by the benefit review officer were whether Martinez sustained a compensable injury and whether she had disability. At the CCH, Ms. Martinez alleged the injury occurred while working from home. The State Office of Risk Management (SORM), on behalf of the State agency, argued the injury was not in the course and scope of employment because Martinez violated an agency policy by working from home and because the injury did not involve an instrumentality of the employer. The DWC Appeals Panel reversed the hearing officer, determining the injury did occur in the course and scope of employment. SORM filed a petition for judicial review, alleging it is relieved from liability because Martinez violated a statute by working from home. Both SORM and Martinez filed motions for summary judgment. SORM argued Martinez did not sustain an injury in the course and scope of employment while at home because working from home was prohibited by law. Martinez argued that SORM could not raise this “issue” because it was not first presented to the Division and, as such, was not an “issue” on which judicial review was sought. The trial court granted SORM’s motion and denied Martinez’s. The San Antonio Court of Appeals reversed and determined the trial court had no jurisdiction over SORM’s petition because the statutory-violation ground was not first presented to the Division. The question for the Supreme Court was, for purposes of the Workers’ Compensation Act (the Act), what is an “issue” on which judicial review is sought by a party?
 
Citing the Act, the Supreme Court explained that the “final decision of the appeals panel regarding compensability or eligibility” describes the “issues” on which the trial court may render judgment. Those “issues” are defined by the benefit review officer at the outset of the dispute and proceed through the dispute resolution process with the same definition. Because the issue is defined at this early stage, the “issue” is not – and cannot be – a point of error as can be waived in an appellate context. Nor is an “issue” an argument that must be raised at this early stage. Applying this framework, the Court explained that the relevant “issue” on which judicial review was sought was whether the Claimant was injured in the course and scope of employment. The “issue” was not each argument refuting this point, such as the statutory-violation ground raised by SORM. Because the statutory-violation ground is an argument that Martinez was not in the course and scope of employment, SORM could present the argument for the first time on appeal. State Office of Risk Management v. Martinez, No. 16-0337 (Tex. Dec. 15, 2017).
 
-Dan Price, Stone Loughlin & Swanson, LLP.