State News

The Alabama Court of Civil Appeals recently released an opinion in In re: Laura Register v. Outdoor Aluminum, Inc. wherein it reversed summary judgment in favor of the employer in a retaliatory discharge case.  While the decision itself did not create any new legal precedent, or narrow, or expand prior holdings, it did highlight the importance of communication between the employer and the workers’ compensation claim handler. 

In Register, the non-retaliatory reason asserted as the basis for the termination was absenteeism. In the usual case, assuming the employee was absent more than what would typically be allowed, such a reason would be considered legitimate and not pre-textual.  In Register, however, since the employee had not yet been medically released to return to work, the Court of Appeals determined that there was a contradiction between the work status and the alleged absenteeism.  As such, the Court held that there were material issues in dispute that needed to be decided by a jury. 

My Two Cents: As the prison captain said to Paul Newman’s character in Cool Hand Luke, “What we’ve got here is a failure to communicate.”  The effective handling of a workers’ compensation claim involves a partnership between the employer and the claims handler.  As with any good partnership, communication is the key to success.  In many cases, years of litigation and the time and expense associated with it can be avoided with a single e-mail or phone call.

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This blog submission was prepared by Karen Cleveland, 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 Cleveland by e-mailing her at kcleveland@fishnelson.com or by calling her directly at 205-332-1599.

Written by: Tracey Jones

The tripartite relationship refers to the relationship between the insurer, the insured, and the attorney arising out of the insurance contract.  Each party to the relationship has their own respective duties and roles, which will be discussed in turn.  In litigation, it is critical for each member of the tripartite relationship to understand its role and responsibilities.  .

• Insurer: The insurer’s role includes the duty to defend, and right to select defense of the claim, control the defense of the claim, and negotiate and settle the claim (if provided for).

*The role between the insured and the insurer is defined by the insurance contract, with any ambiguities being interpreted by the courts in favor of the insured.

• Insured: The insured’s role includes the duties to give timely notice of the claim and cooperate with the defense of the claim.
• Attorney: The attorney’s role is defined by the North Carolina Revised Rules of Professional Conduct.[1] The Rules govern the attorney-client relationship, and create requirements that a defense attorney must follow regarding competence, confidentiality, conflicts of interest, and receiving fees from persons other than the client.

The tripartite relationship is formed with the primary objective of achieving a successful result in litigation.  This relationship, while seemingly simple on the surface, can create numerous, and often complex questions depending on the peripheral goals and interests of the parties, which are not always mutual. Understanding the roles and each role’s responsibility is critical throughout the claims process.

If you have questions about the tripartite relationship or other workers’ compensation topics, reach out to Teague Campbell’s team of workers’ compensation attorneys.

[1] N.C. Admin. Code, Tit.27, Ch2, Canons I-VIII.

Attorney Adam Bates obtained a complete defense verdict for his client in front of the Iowa Workers’ Compensation Commission. Claimant had alleged an injury to his low back and claimed entitlement to significant industrial disability as a result. The injury was denied by Mr. Bates’ client as non-work related and a failure to timely report the injury. Mr. Bates successfully argued to the Commission that Claimant’s injury was not work-related based upon medical evidence, witness testimony, and Claimant’s failure to timely report his injury as work-related.

The Deputy Workers’ Compensation Commissioner agreed with Attorney Bates’ arguments, dismissing Claimant’s case in its entirety. A copy of the decision can be found here.

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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.

Written by: Luke West

As 2020 unfolded and the COVID-19 pandemic set in across the world, it altered our way of life. In addition to closing schools and borders, the U.S. economy essentially shut down. Some businesses and industries were better equipped than others to handle the economic and public health fallout, and directed employees to work from home indefinitely. However, millions of workers, who provide services critical to the functioning of society, did not have the option to work from home.

According to the National Conference of State Legislators, these workers, who have been labeled “frontline” or “essential,” were in industries such as food and agriculture, health care, emergency services, transportation and delivery, energy, water and wastewater management, and critical manufacturing. These workers were, and still are, reporting to work every day.

COVID-19 has proved to be something of a moving target with the lockdown measures, new variants, and impact of vaccinations. The question of whether workers’ compensation covers communicable diseases, such as COVID-19, looms large. For carriers, employers, and workers’ compensation practitioners, the pandemic also begs other questions, such as:Are all communicable diseases the same? What are the critical factors for determining compensability of communicable diseases? Does the designation of an epidemic or pandemic change the way statutes are interpreted? Is there a way to reduce risk from these relatively common yet silent threats?

Are all communicable diseases the same?

Yes and no.

Communicable diseases are also known as infectious or transmissible diseases. The Wisconsin Department of Health reports that communicable diseases result from the infection and growth of pathogenic (disease causing) biologic agents in a human or other animal host. These types of diseases include Hepatitis A, B, and C, HIV, measles, salmonella, and COVID-19. Some communicable diseases have been found to be compensable, such as serum hepatitis in a lab worker.Booker v. Duke.

According to the Centers for Disease Control and Prevention (CDC), communicable diseases are spread through direct contact with a sick person, breathing in airborne viruses and bacteria, contact with blood and bodily fluids, contact with a contaminated surface, or insect or animal bites. All communicable diseases are not the same, and COVID-19 is a particularly insidious disease with specific peculiarities that we are just beginning to understand. The easy transmission and resulting widespread nature of COVID-19 creates increased chances of contracting the disease in public when compared to other communicable diseases. 

Person-to-person spread is most likely to occur during close contact with infected persons and is mainly effectuated via droplets of respiratory secretions produced when an infected person cough or sneezes. It is also widely believed that COVID-19 can be transmitted by infected people who are asymptomatic. According to the Occupational Safety and Health Administration (OSHA), jobs that require sustained or frequent close contact with co-workers, customers, and/or members of the public who may be infected places them at an increased risk of contracting the disease.

By that standard, certain essential workers may be at an increased risk of contracting COVID-19 by virtue of their employment. However, OSHA’s guidance on control and prevention of COVID-19 also states that most types of workers have a similar risk of contracting COVID-19 as the general public. In fact, a recent study[1] suggests healthcare professionals actually have a greater risk of contracting the virus outside of the workplace, rather than at work.  This may be due to the strict prevention controls present in the healthcare setting. 

The problem of tracing the source of a COVID-19 infection is an important emerging issue in the workers’ compensation arena, especially considering the evolving medical guidance regarding prevention, the various vaccines available, and the effect on community spread. All of these issues have a direct bearing on whether a particular COVID-19 infection is compensable.

Does the designation of an epidemic or pandemic change the way statutes are interpreted?

There have been questions around whether the designation of COVID-19 as a worldwide pandemic puts it in a completely different category than how communicable diseases are typically defined within legal statutes.

The short answer is no.

There is no cannon of state statutory construction or interpretation that kicks in once a pandemic is declared. While we have seen in several states, the designation of a pandemic has had an impact on the back end by prompting some state legislatures to introduce bills modifying laws or issuing special directives making it easier for frontline or essential workers to have their COVID-19 claim covered under the workers’ compensation system.

Within North Carolina, a legislative push to streamline COVID-19 workers’ compensation claims for specific categories of essential workers did not cross the goal line. Last year, House Bills 1056 and 1057 proposed adding a presumption of workplace exposure and compensability for COVID-19 (and other pandemic) infections in a number of specific industries such as police, healthcare, fire, and anyone designated essential.  However these bills appear to have stalled in Committee. As denied COVID-19 workers’ compensation claims in North Carolina reach the Industrial Commission, it will be essential to monitor the opinions and tailor your business operations and legal practice with respect to COVID-19 accordingly.

What are the critical factors for determining compensability of communicable diseases?

In most states, workers’ compensation injuries fall into one of two categories:

(1) Accidental injuries that can be traced to a specific time, place, and work-related cause (an injury by accident); and

(2) Occupational diseases to which the worker was exposed because of their employment.

The very nature of communicable diseases such as COVID-19 makes it difficult to fit particularly well into either category. In a state-by-state survey of COVID-19 compensability compiled by the National Workers’ Compensation Defense Network (NWCDN), Mimi Metzger of Ritsema & Lyon, LLC, reported that a survey of Colorado case law revealed claimants would typically bring communicable disease claims under both injury by accident and occupational disease categories. However, in most jurisdictions, Colorado included, it appears a potential claimant would have a better chance of proving compensability by pursuing an occupational disease claim. In particular, because COVID-19 is spread from person to person, rather than from exposure to some fixed aspect of the workspace, such as the presence of asbestos, satisfying the requisite causation element may be a difficult proposition.

In North Carolina, the burden for proving the causation requirement for occupational disease claims falls under the  so-called “increased risk” rule (also the majority rule), where the employee must prove the risk of contracting the disease was inherent in the employment and that the employment presented an increased risk of contraction when compared to the general public.

Under this category, occupational diseases are not generally compensable if the risk of contracting the illness is common to the general public. If the disease is not the result of a risk specific to the workplace, there is a chance it would not compensable. The problem for Workers’ Compensation Boards, the Industrial Commission, and practitioners is that communicable diseases, such as COVID-19, are spread in the community and something to which the general public is easily exposed. How does one prove when, where, or how they contracted a virus when there is community spread? How does one defend against these claims and seek to prove a negative:that the worker did not contract the virus at work?

In North Carolina, an increased risk state, a COVID-19 infection would generally not be considered compensable because you would arguably be just as likely to contract the disease out in public as you would be at your job. That said, occupational disease claims are extremely fact-specific, so an important factor to consider is whether the job in question regularly exposes the worker to COVID-19 positive persons, such as certain workers in the healthcare field.

The difficulty in proving exposure can pose an issue for essential workers and others who are regularly exposed to the general public in the course and scope of their employment, but who are also human beings outside of work who, despite social distancing, mask regulations and even vaccines, could just as easily be exposed to COVID-19 outside of work. OSHA has tacitly recognized this proposition in its COVID-19 guidance by acknowledging that jobs requiring close contact with others may place those workers at a higher risk of contracting COVID-19 and that occupations which do not require that level of close contact may place those workers at a risk level akin to the general public. The fundamentally altered landscape in the United States during intense lockdown measures seems to cut against a defense that a worker could have just as easily contracted the disease by being out in public. However, as states begin to re-open, the likelihood of establishing increased risk at work when compared to the general public seems to decline. 

The following are things to consider when determining whether there will be enough of a causal connection between employment and the contraction of COVID-19:

(1) The employee is a healthcare worker or other frontline worker who regularly comes into contact with COVID-19 positive persons;

(2) Evidence the employee was in direct contact with a COVID-19 positive person at work;

(3) Reliable expert evidence that their employment placed them at a greater risk of contracting the disease when compared to the general public;

(4) A plausible source of contraction at the workplace and incubation period that fits within the infection timeline; and/or

(5) A lack of equally plausible infection sources outside of the workplace. This would also require the demonstration of additional factors, such as:

·         How many people the employee was in close contact with on an average day for 14 days prior to diagnosis;

·         Whether the employee was provided with safety precautions, such as PPE, at work;

·         Whether the employee used PPE outside of work;

·         Hand sanitizing/washing stations at work;

·         Hand sanitizing/washing practices outside of work;

·         The extent to which the employee was or was not engaging in social distancing; and,

·         Other measures that were present both inside and outside the workplace to reduce the risk of contracting the disease.

At this time, there are still questions within North Carolina on how COVID-19 compensability claims will be addressed by the Industrial Commission and the appellate courts. It is critical for an employer to be aware the employee’s burden of proof in regards to increased risk and to take steps to mitigate that risk to the extent practicable.

Now that we have an idea of how COVID-19 workers’ compensation claims are handled in North Carolina, let’s look at some of the steps that an employer can take to reduce their risk of an employee contracting COVID-19 while on the job.

Ways of Limiting Workers’ Compensation Risk for COVID-19

On an almost weekly basis, new research is published on the long-term health outcomes for COVID-19 survivors. An increasing body of research suggests that more serious long-term complications can include inflammation of the heart muscle (cardiovascular disease), lung function abnormalities (respiratory disease), acute kidney injury (renal disease), sensory problems and concentration/memory difficulties (neurological disease), and even psychiatric complications.  While the pandemic data is starting to show some encouraging trends (at least, domestically) in terms of infection and death rates, the need for realistic exposure mitigation strategies should remain a priority for employers.

OSHA initially developed guidance for organizing worker exposure risk into various levels of risk and has provided specific guidance for each level in their “Guidance on Preparing Workplaces for COVID-19,” which is available on their website. (OSHA No. 3990-03, 2020). Additionally, the CDC’s National Institute for Occupational Safety and Health (NIOSH) provides guidance in the form of factsheets directed toward specific industries such as airports, banks, construction, critical infrastructure, manufacturing, meat and poultry processing, and transit workers. This information is available on the CDC’s website. These are good starting points for businesses looking to limit the risk of COVID-19 exposure and potential workers’ compensation claims.

Some general guidance from OSHA for employers seeking to reduce the risk of COVID-19 exposure includes:

·         Promptly investigate any COVID-19 claim and take immediate steps to protect the infected employee and remainder of the workforce;

·         Enhance ventilation by increasing air exchanges in rooms;

·         Modify workstation layouts to ensure all employees remain six feet apart;

·         Close common areas where employees are likely to congregate;

·         Increase the frequency of cleaning frequently touched surfaces;

·         Encourage sick employees to stay home;

·         Send sick employees home immediately;

·         Follow CDC-recommended guidance;

·         For non-healthcare workers, the CDC recommends cloth face coverings in public and where social distancing measures are difficult to maintain;

·         The EEOC indicated that employers could require employees to wear PPE to reduce the transmission of COVID-19, though OSHA leaves the determination of whether to require masks to the employer based on its assessment of risk factors to employees, recommending PPE for anyone in the medium or greater risk groups; and

·         Educate employees about how they can reduce the spread of COVID-19.

OSHA has continued to update their recommendations for mitigating the risk of workplace exposure.  To the extent practicable, employers are encouraged to:

·         Develop an infectious disease preparedness plan;

·         Implement basic infection prevention measures, detailed above; and

·         Develop policies and procedures for prompt identification and isolation of sick employees, if appropriate;

As we continue learning more about this disease, and as more claims work their way through the state systems, we should be able to better assess the relevant workers’ compensation risks. In the meantime, the compensability analysis for COVID-19 in many states, including North Carolina, will continue to be fact-specific and will vary depending upon what is going on in the state in terms of rate of infection, the type of work being performed, comorbid health conditions of the particular infected employee, and the impact of vaccinations. 

If you have questions or wish to discuss this further, please contact Heather Baker, Luke West, or your Teague Campbell workers’ compensation attorney.

This article, in its original format, appeared in the 2020 Larson Series, “Workers’ Compensation Emerging Issues Analysis: COVID-19 in the Workplace”.

Written by Tracey Jones

Workers’ compensation claims based on alleged psychological and mental impairments, including anxiety disorders, depression, and/or post-traumatic stress disorder (PTSD), are becoming increasingly prevalent, and understanding the differences between them is key in being able to adequately defend against them.

Psychological Claims Resulting From Physical Injury

When psychological claims are being asserted as the direct result of a physical injury, the psychological component of the claim can be hard to defend against.  

Typically, Courts will find physical injuries that result in chronic pain with associated depression and anxiety to be compensable without strong expert testimony refuting the mental component of the claim.Powell v. O’Reilly Auto Parts, Inc., 259 N.C. App. 251, 812 S.E.2d 408 (2018) (Unpublished). InPowell, the Full Commission determined that plaintiff’s pre-existing psychological conditions were compensable aggravations from her fall because even though she didn’t tell anyone about it before her accident, she was still credible, and the treating doctors’ testimony was sufficiently specific, and therefore competent, on causation.

When trying to combat a psychological component of a physical injury claim, there are three best practices to keep in mind:

1.       It is imperative to hire an expert to perform an evaluation of plaintiff. This expert should use diagnostic neuropsychological testing to support his or her opinions about the lack of causation between plaintiff’s mental disabilities and his or her physical injuries.

2.       Surveillance can be a very useful tool when trying to defend against these types of claims. Multiple days of surveillance will probably be necessary in order to combat the assertion that on “the day in question” plaintiff was having a “good day.”Kirby v. Mission Hospital, 848 S.E.2d 754, 2020 WL 6140500 (2020) (Unpublished).

3.       Finally, even though the psychological component usually arises later and does not present itself immediately after the injury by accident, we strongly encourage carriers to include questions in the recorded statement regarding the name of the plaintiff’s primary care physician as well as whether the plaintiff has previously suffered from a mental illness and received treatment for the same, including anxiety and depression. Primary care physician records can offer a wealth of knowledge about past problems and treatment that sometimes get overlooked or simply forgotten by a plaintiff. 

Psychological claims resulting from physical injury are typically the most difficult to defend in North Carolina, and are found compensable more often than psychological claims where there is no physical injury present. Good investigative practices at the outset of a physical injury claim are critical to the defense of psychological assertions down the road. A mental health expert and other investigative means should be utilized strategically to ensure the best possible chance of prevailing. 

Non-Physical Injury By Accident Psychological Claims

Over the last several years, the increase in non-physical psychological workers’ compensation claims matches an overall increase in anxiety and depression in members of the general public. Nevertheless, true psychological claims, without a precipitating physical component, are much harder for a plaintiff to prove. The North Carolina Workers’ Compensation Act allows for recovery of psychological and mental disorders which are proven to be an “occupational disease” or the result of a compensable “injury by accident.” There are two ways to prove that a “mental claim” is compensable under the Workers’ Compensation Act:

1.       Claiming that a discrete stressful event resulted in an injury by accident; and

2.       Asserting that the claimant suffers from a stress-related occupational disease under N.C.G.S. § 97-53(13).

The North Carolina Workers’ Compensation Act defines an “accident’ as an unlooked for and untoward event which is not expected or designed by the injured employee. Davis v. Raleigh Rental Ctr., 58 N.C. App. 113, 116, 292 S.E.2d 763, 766 (1982). The essence of an accident is its unusualness and unexpectedness. Id. 

The injury by accident theory does not appear as frequently in appellate cases as the occupational disease theory with respect to mental and psychological illnesses. In any event, like the cases brought under the occupational disease theory, the cases brought as injuries by accident have had varying outcomes. 

Whether a psychological impairment should be considered a compensable injury by accident depends heavily on the underlying facts of each specific case.The “incident” that leads to the alleged psychological impairment must be unusual and not part of the employee’s normal work routine.

For example, Courts have held that a performance review, or a routine, problem-solving meeting is an ordinary incidence of employment, and a nervous breakdown and stress-induced anxiety following thereafter does not constitute an injury by accident.Pitillo v. N.C. Dep’t of Envtl. Health and Natural Res., 151 N.C. App. 641, 566 S.E.2d 807 (2002). On the other hand, being falsely accused of stealing from the company was considered unusual and rose to level of an accident. SeeBursell v. Gen. Elec. Co., 172 N.C. App. 73, 616 S.E.2d 342 (2005). 

These claims are also subject to an analysis of pre-existing conditions and often require expert medical testimony. Expert witnesses must give an opinion to a reasonable degree of medical certainty that the medical condition and accident are related. It is not sufficient to say that just because the medical condition was absent before the injury, but was present thereafter, that the two are linked. 

Non-physical psychological workers’ compensation claims are not as straightforward as psychological claims directly resulting from a physical injury. The plaintiff still has the burden of proof, and use of expert witness testimony can assist in determining whether the psychological impairment should be considered a compensable injury.

Non-Physical Occupational Disease Psychological Claims

As stated earlier, a plaintiff can recover for psychological or mental claims under an occupational disease theory. Occupational disease claims are governed by N.C.G.S. § 97-53. Although anxiety disorders, depression, and PTSD are not specifically enumerated in this statutory list of compensable occupational diseases, they are included in the “catch-all” provision of subsection 13.Smith-Price v. Charter Pines Behavioral Ctr., 160 N.C. App. 161, 584 S.E.2d 881 (2003) (holding that post-traumatic stress disorder is a compensable occupational disease).

The North Carolina Supreme Court in Rutledge v. Tultex Corp., 308 N.C. 85, 301 S.E.2d 359 (1983) explained what is required to prove an “occupational disease.” The three elements are: 

1.       The disease must be characteristic of, and peculiar to, the plaintiff’s particular trade, occupation or employment;

2.       The disease must not be an ordinary disease of life to which the public is equally exposed outside the employment; and

3.       There must be proof of causation (proof of a causal connection between the disease and the employment). “[T]he first two elements are satisfied if, as a matter of fact, the employment exposed the worker to a greater risk of contracting the disease than the public generally.”

North Carolina Appellate Courts have both upheld and rejected mental and psychological illness claims brought under an “occupational disease” theory of recovery. These cases typically turn on whether the plaintiff can show that his job responsibilities placed him at an increased risk of contracting the mental or psychological illness than the general public. Even if the plaintiff is successful in showing that his job placed him at an increased risk of developing the disease over the general public, he still has the burden of proving a causal nexus between the mental or psychological condition and his employment. Rutledge, 308 N.C. at 94, 301 S.E.2d at 365. 

Often times the plaintiff has a pre-existing mental or psychological condition. It is imperative that prior medical history be obtained and investigated early on in a case. Although the Act allows for recovery when a pre-existing condition is materially aggravated or accelerated by one’s employment, it is crucial to determine whether it is a new or different condition which the plaintiff is experiencing rather than a mere continuation of a pre-existing condition. Anderson v. Nw. Motor Co., 233 N.C. 372, 64 S.E.2d 265 (1951) (holding that in North Carolina, an injury arising out of and in the course of employment which materially accelerates or aggravates a pre-existing disease or infirmity is compensable).

In addition to establishing that there was an aggravation or acceleration of his pre-existing condition, the plaintiff must also “show that the employment placed him at a greater risk for contracting the condition [than the general public], even where the condition may have been aggravated but not originally caused by the [claimant’s] employment.”Chambers v. Transit Management, 360 N.C. 609, 613, 636 S.E.2d 553, 555 (2006).

Unless the plaintiff is in the public sector and provides aid to the community, such as a law enforcement officer, EMS worker, firefighter, or some other community servant, most jobs do not place individuals at an increased risk of developing psychological claims. Bad bosses, poor work reviews and severe and extreme work related stress and pressure have historically not been found compensable.Day v. Travelers Insurance Co., 845 S.E.2d 208, 2020 WL 4462171, (2020) (holding that an adjuster’s job, while very stressful, does not place her at an increased risk of developing depression and anxiety as opposed to the public generally).

Most of these claims are decided on the underlying facts and each must be analyzed on a case by case basis. Regardless, the plaintiff retains the burden of proof. He must prove every element of the claim, whether an accident or an occupational disease, and meet the criteria for the same under the North Carolina Workers’ Compensation Act to receive an award of benefits. 

Claims Handling Tips for Psychological Workers’ Compensation Claims

The burden of proof for a psychological workers’ compensation claim lies with the plaintiff. However, to prepare a proper defense, there are some key claims handling tips to take into account, which include:

1.       Ensure a thorough recorded statement is taken as soon as notification of a claim is received. The recorded statement should:

·         Address the plaintiff’s regular, normal job duties;

·         Identify anything new or unusual with the plaintiff’s job and the length of time or duration of the new or unusual activity;

·         Identify the plaintiff’s prior medical history including whether he or she has ever treated for depression, anxiety, or any other psychological illness. If so, pin down the exact illness diagnosed; the type and frequency of psychiatric treatment received before and after; any difference in the plaintiff’s complaints or intensity level with regards to his psychological illness; and, the name of the medical professional providing treatment;

·         Always request the contact information for the plaintiff’s primary care physician so you can obtain the records before accepting the claim;

·         Identify the plaintiff’s supervisor and the co-workers plaintiff interacted with on a daily basis (so that interviews and fact investigation can occur with these individuals); and,

·         Identify the plaintiff’s hobbies and activities (if plaintiff is going to baseball games and/or concerts on a regular basis then it is unlikely that he or she has an inability to function in society or at work).

2.       Conduct surveillance, if warranted, to investigate the plaintiff’s physical activities and demeanor outside of his treating relationship with medical providers.

3.       Perform extensive employer interviews in the early stages of the case. These interviews should also involve the plaintiff’s co-workers so that any pre-existing problems or complaints can be identified as compared to the new complaints that may have arisen.

4.       Retain a psychological professional to analyze the issues, the type of job the plaintiff performs, and elicit opinions on causation. 

5.       Enroll the plaintiff in counseling instead of simply approving medications for psychological or mental illnesses. A plaintiff’s depression may drastically improve with counseling on a regular basis. Treatment notes often provide helpful information for the claim as well.

6.       Control the claim by directing the plaintiff’s medical care. Make sure that only an approved, treating physician provides medications instead of allowing the plaintiff to go to his primary care physician for additional care for the same condition. 

By engaging in these best practices early, during the investigative phase of the claim, a stronger defense can be prepared against psychological workers’ compensation claims when litigation does ensue.

If you have questions or wish to discuss this further, please contact Tracey Jones or your Teague Campbell workers’ compensation attorney.

Written by: John Tomei

Are all workers who perform services for an employer, including owner, partner, member, or executive officer, covered as “employees” under the North Carolina Workers’ Compensation Act to the extent they may be seeking workers’ compensation benefits? 

How are those “employees,” if they are an owner, partner, member, or executive officer, included in or excluded from a standard Workers’ Compensation and Employers Liability Insurance Policy in North Carolina? 

The answer to the first question is covered by the provisions of the Act itself and, more specifically, its definition of an “Employee” under N.C.G.S. § 97-2(2). This issue often arises in the context of sole proprietors, partners of a business, or members of a limited liability company (LLC), as well as executive officers of a corporation (including nonprofit corporations), who may be seeking workers’ compensation benefits for themselves following an injury. Thus, a threshold determination is the nature of the employer’s organization and its treatment under the Act. The answer to the second question is addressed by the language in the policy provisions.

How owners, partners, members, and executive officers are covered under the Workers’ Compensation Act:

Sole Proprietors, Partners, and Members of Limited Liability Companies (LLC)

N.C.G.S. § 92-2(2) provides, in part, the following:

Any sole proprietor or partner of a business or any member of a limited liability company may elect to be included as an employee under the workers’ compensation coverage of such business if he or she is actively engaged in the operation of the business and if the insurer is notified of his election to be so included. Any such sole proprietor or partner or member of a limited liability company shall, upon such election, be entitled to employee benefits and be subject to employee responsibilities prescribed in this Article.

What this means for employers is that under the Act, a sole proprietor, partner of a business, or any member of a limited liability company (LLC) is presumed to be excluded from coverage, unless:

• He or she is actively engaged in the operation of the business; and
• The insurer is affirmatively notified of his or her election to be included.

As with many situations in the workers’ compensation and insurance coverage worlds, submission of proper documentation to the carrier is crucial.

For-Profit Corporations

N.C.G.S. § 97-2(2) further provides, in part, the following:

Except as otherwise provided herein, every executive officer elected or appointed and empowered in accordance with the charter and bylaws of a corporation shall be considered as an employee of such corporation under this Article. Any such executive officer of a corporation may, notwithstanding any other provision of this Article, be exempt from the coverage of the corporation’s insurance contract by such corporation’s specifically excluding such executive officer in such contract of insurance, and the exclusion to remove such executive officer from the coverage shall continue for the period such contract of insurance is in effect, and during such period such executive officers thus exempted from the coverage of the insurance contract shall not be employees of such corporation under this Article.

North Carolina case law has held that, where a corporate employer with less than the minimum number of employees to be subject to the Act procures a policy of workers’ compensation insurance, such employer is presumed to have accepted the provisions of the Act. Consequently, that policy covers its executive officers notwithstanding the premium on the policy being based on the compensation of a single non-executive employee and the parties intending to cover that employee only, unless notice of non-acceptance by the executive officer or officers is duly filed with the Industrial Commission. Laughridge v. South Mountain Pulpwood Co., 266 N.C. 769, 147 S.E. 2d 213 (1966).

For corporate executives, this portion of the Act dictates that, generally, executive officers of a corporation are considered to be employees of such corporations for workers’ compensation purposes, but they may specifically exempt and exclude themselves from workers’ compensation coverage. Keeping that in mind, for that exemption to be effective, they must notify the carrier in writing that they are exempting themselves from coverage.

Similar to the requirements for sole proprietors, partners of a business, or members of a limited liability company, submission of necessary documentation by for-profit corporations to the carrier is vital.

Nonprofit Organizations

With regard to nonprofit corporations, N.C.G.S. § 97-2(2) further provides the following:

“Employee” shall not include any person elected or appointed and empowered as an executive officer, director, or committee member under the charter, articles, or bylaws of a nonprofit corporation subject to Chapter 47A, 47C, 47F, 55A, or 59B of the General Statutes, or any organization exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code, who performs only voluntary service for the nonprofit corporation, provided that the person receives no remuneration for the voluntary service other than reasonable reimbursement for expenses incurred in connection with the voluntary service.

When a nonprofit corporation, as described herein, employs one or more persons who do receive remuneration other than reasonable reimbursement for expenses, then any volunteer officers, directors, or committee members excluded from the definition of “employee” by operation of this paragraph shall be counted as employees for the sole purpose of determining the number of persons regularly employed in the same business or establishment pursuant to G.S. § 97-2(1). Other than for the limited purpose of determining the number of persons regularly employed in the same business or establishment, such volunteer nonprofit officers, directors, or committee members shall not be “employees” under the Act. Nothing herein shall prohibit a nonprofit corporation as described G.S. § 97-2 herein from voluntarily electing to provide for workers’ compensation benefits in the manner provided in G.S. § 97-93 for volunteer officers, directors, or committee members excluded from the definition of “employee” by operation of this paragraph.

Where does the Act leave us with regard to nonprofit corporations? For those nonprofit corporations which fall under specified North Carolina General Statutes or which are otherwise exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code, their executive officers, directors or committee members are not considered to be “Employees” under the Act. However, those persons must be volunteers and cannot receive remuneration for the services they provide, other than reasonable reimbursement for expenses incurred in connection with their voluntary service.

If, on the other hand, an organization employs one or more persons who do receive remuneration, then any volunteer officers, directors or committee members, are nonetheless counted as employees for the sole purpose of determining the number of persons regularly employed so as to be subject to the Act under N.C.G.S. § 97-2(1).

Note to non-profit employers: The Act does not prohibit a nonprofit corporation from voluntarily electing to provide workers’ compensation benefits for its volunteer officers, directors or committee members who would otherwise be excluded as “Employees” under the Act.

How are these types of employees included in or excluded from a standard Workers’ Compensation and Employers Liability Insurance Policy in North Carolina? 

Coverage as “employees” under the standard Workers’ Compensation and Employers Liability Policy in North Carolina

The standard Workers’ Compensation and Employers Liability Insurance Policy in North Carolina does not specifically address the question of whether or how sole proprietors, partners or corporate officers are included or excluded as “employees” under a workers’ compensation policy.

Nevertheless, the Policy specifically states, under “H. Statutory Provisions,” that “this insurance conforms to the parts of the workers’ compensation law that apply to… [b]enefits payable by this insurance…“ Further, the Policy provides that “[t]erms of this insurance that conflict with the workers’ compensation law are changed by the statement to conform to that law.”

As a result of these conformation clauses in the Policy, the provisions of the Act are included in the Policy as to its treatment of sole proprietors, partners and corporate officers as “employees.” Consistent with that inclusion, the standard Workers’ Compensation and Employers Liability Insurance Policy in North Carolina has an Endorsement which provides for the exclusion of partners, officers and others from coverage as employees of an insured. Similarly, another Endorsement provides for the inclusion of sole proprietors, partners, officers and others as employees of an insured.

These Endorsements, along with the standard North Carolina Workers Compensation and Employers Liability Policy, can be found at the North Carolina Rate Bureau’s website.

To Put It All Together

North Carolina workers’ compensation policy provisions are consistent with the Act as to sole proprietors, partners, corporate officers, and others, and their inclusion or exclusion from coverage as “employees” of their insured entities under a policy. Even so, these persons need to remember to abide by the Act’s requirements as to their inclusion or exclusion as “employees,” including the submission of proper documentation as such, when applying for and receiving a policy of workers’ compensation coverage in North Carolina.

Jumping through these necessary hoops will then enable a carrier to include the proper Endorsement(s) when a policy is issued, and avoid any later disputes between a carrier and insured.

If you have questions about whether someone who provides services to an employer is an “employee” covered under the Workers’ Compensation Act, contact John Tomei or any member of the firm’s Workers’ Compensation or Insurance Coverage teams.

The Alabama Department of Labor (ADOL) requires all people handling lost time workers’ compensation claims to complete 8 hours of Continuing Education (CE) per calendar year. Medical only adjusters are exempt from this requirement.  

Typically, the 8 CE hours must be completed in person.  As the result of the pandemic and associated travel restrictions, arrangements have been and will continue to be made for virtual attendance.  Per ADOL Workers’ Compensation Division Director, Steve Garrett, the Division will make a mid to late year decision on whether to, again, offer a webinar option.  He further stated that no one will lose their Alabama WC Division claims handling privileges if their employer restricts their travel throughout 2021.

Lost time claims handlers must be in full compliance with the CE requirements in order to be able to submit first reports of injury electronically. 

In addition to the CE requirements imposed by the ADOL, depending on whether the claims handler is handling claims for a private insurer, a self-insured entity, or handling claims as an independent adjuster, he or she may also have to satisfy the licensing requirements of the Alabama Department of Insurance (ADOI).

A salaried employee of an insurer who adjusts only claims for that insurer (“company adjuster”) does not have to be licensed by the ADOI. Company adjusters are not required to have a license to adjust claims of any sort for their employing insurers. An adjuster that handles workers’ compensation claims for self-insured plans is also exempt from the ADOI’s licensing requirements. However, an independent adjuster who handles only workers’ compensation claims must be licensed through the ADOI.

Satisfaction of an adjuster’s home licensing state’s requirement will relieve an adjuster from his or her duty to complete the ADOI’s CE requirement (if the home state reciprocates and gives credit to Alabama residents on the same basis).

Individuals licensed in the state of Alabama who are not exempt must satisfactorily complete courses as may be approved in accordance with regulation in the minimum number of 24 hours (3 of which should be ethics) per biennial reporting period. 

Excess credit hours earned in the previous biennial renewal period cannot be carried over to the next reporting period.

The 8 hours of CE required by the ADOL cannot be applied toward the adjuster’s 24 hours of required CE unless they are earned as the result of attending the 3-day Alabama Self Insured Association conference in San Destin, Florida or the 3-day conference put on by the Alabama Workers’ Compensation Organization.

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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.

On April 28, 2021, the Alabama Supreme Court issued Administrative Order No. 10 which extended its previous orders concerning workers’ compensation and taking witness testimony remotely during the pandemic.  This means that the following rules will be in effect through July 29, 2021:

1. Any workers’ compensation settlement hearing in any court may be conducted telephonically or by videoconferencing.
2. Any workers’ compensation settlement may be approved by an ombudsman of the Alabama Department of Labor (ADOL) or by a circuit judge. If a workers’ compensation case pending in a court is settled with written approval of an ombudsman from the ADOL, that settlement shall result in the dismissal of the workers’ compensation claim pending in court.

Interestingly, the Alabama Supreme Court declined to extend the emergency rule that provided for remotely swearing in and taking witness testimony.

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.

On Tuesday, April 20, 2021, New Jersey Governor Phil Murphy signed into law a bill co-sponsored by Senators Troy Singleton and Dawn Addiego.  The bill will provide weekly supplemental benefits to surviving dependents of essential employees who contracted COVID-19 through work.  The benefits will be paid by the New Jersey Second Injury Fund.

The prerequisites for a dependent to receive this supplemental benefit are that the decedent must have been an essential employee under New Jersey law, and there must be a court order in the form of a dependency award in the Division of Workers’ Compensation.  While the law itself does not mention the need for a dependency award, the Office of Special Compensation Funds advised Capehart partner Stephen Fannon, Esq. that dependency judgments must first be entered before the Second Injury Fund can pay the supplemental benefits. This is similar to the public safety law, N.J.S.A. 34:15-95.6.

The Office of Special Compensation Funds also advised that the petitioner must fill out several documents which are listed on the Office’s website before the supplemental payments will be made.  The expectation is that counsel for petitioner will fill out the calculation sheet also located on the website of the Office of Special Compensation Funds.  None of this is in the actual law.

The formula for the supplement requires that one should use the workers’ compensation weekly dependency benefit initially awarded as the numerator and use the state’s maximum workers’ compensation death benefit as the denominator.  In 2021 the maximum death rate is $969. Consider then a hypothetical case where an essential employee dies in 2021 from COVID-19. The employee’s wage was $830.57 giving rise to a dependency rate of $581.40, which is 60% of the maximum death rate of $969.  Every year as the maximum death rate rises, a supplemental payment will be made to the dependent so that the dependent’s benefits never drop below 60% of the maximum death rate in effect for subsequent years.  Without that supplement, the dependent’s rate would remain the same every year, as it does for almost all other dependents in New Jersey.

The notice provision of the law was not well thought out. The new law states that the Second Injury Fund must be notified by the insurance carrier or self-insured employer of the need to have the Second Injury Fund make supplemental benefit payments. That notice must be completed not later than the 60^th day after the “date on which it is determined that the payment of supplemental benefits is required pursuant to this section.”  That date clearly will be the date of the dependency award entered by the Judge of Compensation.

But the Office of Special Compensation Funds has already advised that petitioner’s attorney must complete certain forms on their website before payments will be made.  It would seem then that the notice will be coming from petitioner’s attorney.  Yet the law goes on to provide ominously, “If the insurance carrier or self-insured employer fails to notify the division and that failure results in the payment of an incorrect amount of benefits, the liability for the payment of the supplemental benefits shall be transferred from the Second Injury Fund to the employer until the time at which the insurance carrier or self-insured employer provides the required notice.”

The penalty language imposed on the carrier or employer makes absolutely no sense since the forms that need to be completed will be executed by petitioner’s attorney, who will be providing notice through those forms, and no payment can be made until the Fund receives those forms.  One may surmise that there was a communication failure between the bill sponsors and the Office of Special Compensation Funds.  If delays are occasioned by the failure of petitioner’s attorney to submit those forms, why would the insurance carrier or employer be penalized for not giving timely notice?  Given this legislative snafu, employers, self-insureds and their counsel will be well advised to provide notice to the Fund in writing by certified mail immediately after a dependency award has been executed by the Judge — even though the employer and carrier have no control over the submission of the necessary forms that will trigger the supplemental payments. 

What about all the cases that have already been accepted in the past year involving essential employees but have never gone through court?  The Office of Special Compensation Funds advised my partner, Steven Fannon, that court orders will need to be entered for dependents to receive the supplemental payments. Claim petitions will need to be filed to convert the voluntary tender of dependency benefits into a dependency order.

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John H. Geaney, Esq., is a Shareholder and Co-Chair 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.