There is a fairly widespread belief that any injury that occurs at work must be covered under workers’ compensation.  But that is not true.  There are several categories of injuries that happen at work which simply are not compensable.  Injuries which do not arise out of employment are not covered in workers’ compensation.  Not only must an injury occur during work, but it must arise out of work. In every state there are a number of useful doctrines that help explain and expand on the definition of “not arising out of employment” for traumatic injuries.

*  Idiopathic Claims and Personal Risk Claims

These two doctrines are very similar.  The concept of idiopathic applies when the employee has a preexisting medical condition which is the true cause of the injury.  For example, an employee with severe osteoarthritis is walking down the corridor at work when his knee locks, without striking anything or falling.  The doctor examines and advises that further knee damage was caused by the act of walking on account of severe osteoarthritis. This is a classic idiopathic claim because the injury was entirely personal to the employee, not caused by work. 

Consider also an employee with prior shoulder dislocation issues who puts on her coat to go home after work and experiences a new dislocation of her shoulder. Although this happened at work, it was not caused by work.  All the petitioner was doing is something that we do when we leave work on a cold day:  namely we put on our coats.  The dislocation of the shoulder would be considered idiopathic and unconnected to the activities of work.  

The personal risk doctrine is very similar to the idiopathic claim doctrine but it better fits a situation where there is no prior medical condition.  One of the best cases for this doctrine is Coleman v. Cycle Transformer Corp., 105 N.J. 285 (1986).  The petitioner got a permanent wave solution in her hair, and the next day at work, she lit a cigarette prompting her hair to burst into flames and resulting in burns. The Supreme Court found this injury not compensable because the risk was personal to the employee due to her permanent wave solution, and the connection to work was negligible.

*  Deviation from Employment

This doctrine has two major applications.  The first applies to an activity that is either unconnected to work or so far afield that a reasonable person would never do it.  For example, a lawyer is outside his office and calls a colleague on his cell phone who is working at his desk, asking the colleague to come outside and help carry work files into the office. The colleague decides not to walk down the steps or take the elevator but instead opens his window and jumps 20 feet to the ground breaking his leg. This activity of jumping from one’s window is so hazardous that no reasonable person would do it.  The injury clearly happened during work but it would be a deviation from employment.  An employer should not have to insure against inherently dangerous activities that no reasonable person would undertake.

Similarly, in Money v. Coin Depot Corp., 299 N.J. Super. 434 (App. Div.), certif. denied, 151 N.J. 171 (1997), the petitioner was an armored truck security guard who began playing Russian Roulette with his gun while he and his colleagues were transporting money.  The gun discharged and killed the petitioner. The court found that this activity was a major deviation from employment because it was so inherently dangerous.

The second type of deviation from employment is found in connection with travel that is unconnected to work.  The leading case is Jumpp v. City of Ventnor, 351 N.J. Super. 44 (App. Div. 2002), aff’d, 177 N.J. 470 (2003).  In that case the petitioner worked as a pumping station operator, driving throughout the city.  He got permission from his supervisor to stop and get his mail in the morning as he was driving along the main road in town to the next pumping station.  He fell and fractured his pelvis returning to his municipal vehicle parked in the post office lot after getting his mail.  The court considered petitioner’s injury to be a major deviation because the activity of getting his own mail, even it if it was permitted, had no connection to his work.

*  Intentional Self Injury

Employees who deliberately injure themselves will almost always be denied compensation.  If an angry employee punches a wall in an argument at work and breaks her hand, that injury would not be compensable because the action of punching a wall is highly likely to cause self injury.  In the same way, if Employee A assaults employee B and Employee A is injured in that process, courts will almost always find this to be self-inflicted and not compensable.  The injury to Employee B, of course, would be covered as the victim of an assault.

*  Recreational Activities

Suppose an employee decides during a break in the morning to pull out some rope, moves away from his desk, and begins to jump rope for a few minutes, only to get her foot tangled up in the rope leading to an injury.  Would this be covered in workers’ compensation?  It did happen at work, right?  Under New Jersey law this would not be compensable because recreational activities that just promote the health of the employee are not covered.  For a recreational activity to be covered it must create a benefit to the employer greater than health and morale and must be a regular incident of employment.  Few recreational activities can meet this test of promoting a benefit to the employer greater than health and morale.  The same is true of social activities.

However, if two employees are fooling around at work and kidding each other, and then one throws a pencil at the other as a joke, but the pencil strikes the other employee in the eye, the judge will probably view this activity as horseplay  – – not a recreational activity.  Unlike the law in many states, horseplay is NOT a defense in New Jersey.  Horseplay is always compensable as to the victim and sometimes compensable as to the instigator. There is a line between horseplay and assaults/altercations, and outcomes may differ depending on whether that line is crossed.

There are certainly other doctrines that overlap some of the above examples. There are a few cases which discuss the doctrine of “abandonment of employment.” In my view that doctrine is really synonymous with deviation from employment.  The differences are subtle.  One can say safely say that when a  traumatic claim is denied for an activity which occurred at work, one of the above doctrines will constitute the legal basis for the denial under the broad heading of not arising from the employment.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

By: Brenna Hampton (Office Managing Partner - San Diego), Kelsey Paddock (Partner - San Francisco), Richard Berryhill (Attorney - San Francisco), Bill Davis (Attorney - Santa Rosa)

California has a long history of legislation and case law dealing with AOE/COE presumptions, the newest of which is the Governor’s Executive Order N-62-20 (the COVID-19 Presumption), which established a rebuttable presumption in favor of finding that COVID-19was contracted in the workplace. While this presumption is rebuttable, there is not yet any case law addressing how this presumption can be rebutted. Nevertheless, we know from experience that there are defenses to rebuttable presumptions, such as those based upon the latency period of the disease. Some of these defenses may have significant relevance to the defense of COVID-19 cases.

The Executive Order 5/06/2020: “The COVID-19 Presumption”

The COVID-19 Presumption extends a temporary, rebuttable presumption of AOE/COE for employees who worked on their employer’s premises at the direction of the employer between March 19, 2020 and July 5, 2020. The presumption shifts the burden to employers to show that it was more likely the employee sustained COVID-19 outside of work, otherwise the employer is liable for COVID-19 related indemnity and medical treatment.

As the medical community develops a better understanding of COVID-19, the workers’ compensation community will be sorting out how to apply existing legal principles, and perhaps creating a few new ones. Until there is specific case law addressing this new legislation, parties will need to argue by analogy to existing cases regarding other presumptions. There is good reason to believe that the legal principals in those cases will govern and be applied regarding whether the COVID-19 presumption has been rebutted.

Rebuttable Presumptions – The Blais Decision

There is a general notion that rebuttable presumptions (like some of those found in Labor Code section 3212) cannot ever be defeated.  However, as with the COVID-19 Presumption, the defense community must be prepared to develop and litigate the appropriate evidence.  While rebutting the presumption may not be easy, and may not always be successful, it is certainly worth the fight where the circumstances support a valid defense.

The Board issued a panel decision in one such case on May 13, 2020 in Robert Blais, Jr. v. State of California (PSI) (“Blais”)ADJ10840422, 2020 Cal. Wrk. Comp. P.D. LEXIS ____.  In this decision, the Board found the defendant rebutted the seemingly insurmountable cancer presumption inLabor Code Section 3212.1 through the reporting and deposition testimony of the panel qualified medical evaluator (PQME).  What can the defense community learn from this case to use in its defense of the COVID-19 cases? As it turns out, quite a bit.

Blais involves a safety officer cancer presumption in which the officer had a pre-existing cancer award with a prior employer, but the cancer manifested during the defendant’s employment and is subject to anti-attribution clause of Labor Code section 4663(e) if held to be presumptive.  The case hinged on medical evidence from the PQME, who found on a medical basis that the cancer should not be attributed to the current employer.

The Blais decision noted that the defendant successfully rebutted the cancer presumption through PQME reports and testimony because this evidence demonstrated there was no reasonable link between the exposure to the claimed carcinogen and the cancer. One factor the Board relied upon in reaching its decision was the latency period between exposure and manifestation. As the Board explained, if the medical evidence shows that the latency period is long enough to preclude exposure at the employer’s workplace, then there is no reasonable link between the cancer and the industrial exposure. InBlais, the presumption was held to be rebutted on medical grounds, which may have interesting implications in our post-COVID-19 environment, particularly if the Legislature were to adopt (as it appears) a permanent rebuttable presumption. (Note: the current Executive Order extends through 7/05/2020).

The medical evidence was key in the Blais verdict for the defense in finding that the current employer was not responsible for the employee’s cancer, despite the presumption. TheBlais decision also held that rebuttal of the presumption does not require showing the absence of a possible link between the cancer and the industrial exposure, but thatdefendant should show that such a link was not reasonable. There is a crucial distinction between proving there is no reasonable link versus showing clearly that there is no link to exposure in the workplace at all. But what does it mean for there to be “no reasonable link” in these cases? As the Blais court explained in quotingGarcia: “A link that is merely remote, hypothetical, statistically improbable, or the like, is not a reasonable link.” (Id., at p. 316, citingCity of Long Beach v. Workers’ Comp. Appeals Bd. (Garcia) (2005) 126 Cal.App.4th 298.)

Thus, while courts will no doubt hold defendants to as strict a standard as possible,Blais and Garcia show that it may be possible to rebut a presumption by showing there is no reasonable link without necessarily having to prove that the exposure happened only outside of the workplace.

Analyzing COVID-19 cases in light of Blais and Garcia

In finding for Defendant in the Blais case, the Board looked to prior cases includingCity of Long Beach v. Workers’ Comp. Appeals Bd. (Garcia) (2005) 126 Cal.App.4th 298.  In theGarcia case, the Court of Appeal set up two alternative standards under which a cancer presumption can be rebutted:

1. It could be demonstrated that it is highly unlikely that the cancer was industrially caused becausethe period between the exposure and the manifestation of the cancer is not within the cancer’s latency period;or

1. The nature of the manifestation, or other medical evidence, may be sufficient to show thelack of connection. (Id., p. 317)

As applied to COVID-19, either standard would require development of the medical evidence. In the first case, latency, the evidence must show when COVID-19 manifested and provide a reasonable chronological history to identify the latency period based on current scientific understandings of COVID-19.  This would show that the injured worker’s exposure to COVID-19 could not have occurred while at work because exposure was either too soon or too late compared to when they worked.  In the second case, lack of connection, a more traditional AOE/COE medical opinion is required to demonstrate that the COVID-19 exposure, diagnosis, and manifestation are not reasonably connected to work.

First – Does the COVID-19 Presumption Apply?

To argue for the applicability of other presumption cases, the wise practitioner must first discern whether the COVID-19 Presumption applies because this will determine whether the injured worker or defendant carries the burden of proof.  Remember, the COVID-19 Presumption creates a temporary, rebuttable presumption of industrial injury for employees who claim to have contracted COVID-19 at work between 3/19/2020 and 7/5/2020.  The presumption itself became effective 5/06/2020, but applies to dates of injury as early as 3/19/2020.

For the COVID-19 Presumption to apply, the employee must meet all four of the following factors:

1. A positive test or diagnosis within 14 days after the employee performed labor or services at their place of employment.
2. The labor or services were performed after 3/19/20.
3. The location where the labor or services were performed was not also the employee’s home or residence.
4. If the presumption was based on a diagnosis (as opposed to a positive test), the diagnosis must have been done by a physician who holds a physician and surgeon license issued by the California Medical Board, and confirmed by further testing within 30 days of the diagnosis.

If the defendant can demonstrate that any of the above four factors do not apply, then they might prove that the presumption does not apply and the employee retains the burden of proof to demonstrate industrial causation.

Second – Once It is Determined That Defendant Has the Burden of Proof,Identify Evidence to Rebut the Presumption.

Once it has been determined that all four factors have been met, the COVID-19 Presumption applies and the burden shifts to the defendant to rebut it. Defendant could look to presumption cases likeBlais and Garcia for a defense.  Applying the defenses below will require a detailed factual inquiry and consultation with a workers’ compensation attorney is highly recommended before denying any such cases.

Employees may argue that COVID-19 does not have an established latency period, but the defense can argue by analogy that the incubation or “pre-symptomatic” period should be used, similar to those used to establish latency period in cancer claims. The “incubation period” is the time between exposure to the virus (becoming infected) and symptom onset.

Note: Medical evidence may support a shorter latency period of 5-11.5 days, but the executive order states 14 days so that will be the legal standard unless rebutted by competent medical evidence in a particular case. According to the World Health Organization (WHO), the incubation period for COVID-19, is on average 5-6 days, however can be up to 14 days.[1]  According to the American College of Cardiology, the median incubation period from infection with COVID-19 to onset of symptoms is approximately 5 days and 97.5% of people infected with COVID-19 will exhibit symptoms by 11.5 days.[2]

Time of Exposure at Work Was Not Within the Latency Period (Too Soon or Too Late)

One way to defend a COVID-19 presumption would be to demonstrate that it is highly unlikely that the employee’s COVID-19 was industrially caused because the period between the claimed exposure and the manifestation of the COVID-19 (symptoms or positive test or diagnosis) is not within the known “latency period.” This defense requires the defendant to (A) obtain medical evidence of the COVID-19 latency period and then (B) show that the period during which the employee worked was not within a reasonable latency period.

The employee’s symptoms manifested too soon before any work exposure: “Too early.”

An employer could alternatively seek evidence that the employee was displaying COVID-19 symptoms or was exposed to / lived with a COVID-19 positive individual 5 – 11.5 days (even up to 14 days) before their alleged workplace exposure.  The argument would be that they were still in the incubation or pre-symptomatic period when they were allegedly exposed at work, while the testing merely happened after being at work.  Again, the defendant’s position would be that there was no workplace “injury” because the exposure occurred somewhere other than at work. Medical and factual evidence supporting this defense needs to be developed through timely investigation and diligent pursuit of a medical opinion based on that investigation.

Even if the employee was back to work for up to 5 days before demonstrating symptoms, a medical opinion should be developed to show that COVID-19 takes at least 5 days to manifest, meaning the symptoms are the result of exposure before the employee started working. The argument would be that the period between the exposure and the manifestation of COVID-19 is not within COVID-19’s incubation or “pre-symptomatic” period.  Given this, the onset of symptoms (aka manifestation) was too soon following any potential work-related exposure.  In short, the injury (the exposure) occurred prior to coming to work. A medical opinion confirming the period between the exposure and the manifestation would likely be required. It would also be helpful to establish that the employee was not exposed to any known COVID-19 cases while working and that no other employee was positive at that time.

Let’s apply this defense to a hypothetical case. Employee Isabel had her first symptoms of COVID-19 on May 10, 2020.  The employer records show she worked from May 8, 2020 through May 10, 2020.  She was sent home immediately when the symptoms started, having worked a total of three days on May 8th, May 9th, and May 10th.  If the defendant proves her symptoms manifested on May 10th, and obtains medical evidence that the reasonable latency / incubation is at least 5 days, the defendant may be able to rebut the presumption because Isabel’s work from May 8-10 was too close in time to her symptoms starting.

In sum, if medical evidence showed that Isabel had not worked after April 26th (i.e.: during the fourteen day period before symptoms started) and that the latency period is at most 14 days, then the defendant could argue that the presumption should not apply because, from a medical perspective, she must have been exposed before working for this employer.

The employee’s symptoms manifested too long after any work exposure, i.e.: “Too late.”

An employer could seek to rebut the COVID-19 Presumption by developing factual evidence that the employee did not become symptomatic or receive a positive test / diagnosis within 14 days after last performing labor or services for the employer and thus the exposure is outside the normal incubation or asymptomatic period.

Let’s apply this defense to our hypothetical case: employee Isabel had her first symptoms of COVID-19 on May 10, 2020.  However, this time factual investigation at the employer level demonstrates Isabel had not worked for this employer for some time, as her employment there ended April 15th, far more than 14 days before her symptoms arose. On these facts, it is more likely the defendant will be able to obtain a medical opinion that her COVID-19 was not related to her work that ended April 15th because the symptoms arose too late in relation to any alleged work exposure and are thus outside of the latency period.

Notably, if the defense tries to argue lack of industrial exposure when the employee last worked less than 14 days after the development of symptoms, this argument might be a tougher sell given that the COVID-19 Presumption allows for positive testing / diagnosis within 14 days and the WHO currently allows for up to 14 days. However, the law is still catching up to the science in this unprecedented pandemic. Further scientific refinement of the incubation period may allow employers to make this argument, so close calls should be carefully documented and considered.

Lack of Connection to the Workplace

An alternative defense is to prove exposure occurred outside of the workplace.  As noted by the court inBlais and Garcia “A link that is merely remote, hypothetical, statistically improbable, or the like, is not a reasonable link.”  This might allow the COVID-19 presumption to be rebutted without clearly establishing causation elsewhere.

The argument in any of the latency scenarios above is that the workplace was not the source of the exposure, but the affirmative defenses asserted in Labor Code sections 3600(a)(2) [injury did not arise out of nor in the course of work] and 3600(a)(3) [injury not proximately caused by work] are implicated, should be plead in an Answer, and remain the defendant’s burden to prove.

If the presumption is applicable, it is not sufficient to merely assert that the employer does not believe it to be work-related. The substantial evidence standard applies to evidence submitted by either party.

Strategic discovery should be undertaken to prove there is no reasonable link to work-related activities. An employer who could develop the evidence to show a link of COVID-19 to the workplace is not reasonable would have an even stronger case if they could additionally demonstrate a more likely link between COVID-19 in a particular employee and a non-work-related source. PerGarcia, the nature of this manifestation may also “be sufficient to show the lack of a connection” to a workplace exposure.  This is particularly true if there are no other known cases at the workplace and evidence could point towards outside exposure. Thus, the inquiry is both factual and medical in nature.

Conclusion

While it is relatively easy for an applicant to claim the benefits of the presumption in Executive Order N-62-20, there are several key factors that we can take away from theBlais panel decision and its predecessor, Garcia. Do not think rebutting the COVID-19 presumption is an insurmountable task. Defendants can and do rebut AOE\COE presumptions, as the panel decision inBlais illustrates.  There is no reason that COVID-19 presumption cannot be rebutted as well.  Analogizing to standards established in earlier presumption cases is a good place to start. The next step is working strategically to develop factual and medical evidence to support the development of appropriate case law to serve as precedent in COVID-19 presumption cases for the workers’ compensation community moving forward.

___________________________________________________

[1]WHO Coronavirus disease 2019 (COVID-19), Situation Report – 73, April 2, 2020

https://www.who.int/docs/default-source/coronaviruse/situation-reports/20200402-sitrep-73-covid-19.pdf?sfvrsn=5ae25bc7_4#:~:text=The%20incubation%20period%20for%20COVID,occur%20before%20symptom%20onset.

[2]American College of Cardiology, Estimated Incubation Period of COVID 19, 5/11/2020

https://www.acc.org/latest-in-cardiology/journal-scans/2020/05/11/15/18/the-incubation-period-of-coronavirus-disease

KY SUPREME COURT EXPANDS OFFSET FOR PRE-EXISTING CONDITIONS Wetherby v. Amazon.com, 580 S.W.3d 521 (Ky. 2019)

H. Douglas Jones, Esq. and Margaret Menefee, Esq., Jones Howard Law, PLLC

The Supreme Court of Kentucky has rendered a significant decision regarding the ability to claim a permanent partial disability offset for a pre-existing condition.

In Kentucky, historically, pre-existing conditions were put in one of two categories: 1) pre-existing dormant condition aroused into a disabling reality by the current injury; or 2) pre-existing active condition. In the seminal case,Finley v. DBM Technologies, 217 S.W.3d 261 (Ky.App 2007), the Court held that a pre-existing active condition (subject to an offset) must be impairment ratable pursuant to the AMAGuides, 5^th Edition (“Guides”), and symptomatic immediately prior to the work injury. This standard made it very difficult to obtain an offset for most pre-existing conditions.

Finally, the Supreme Court in Wetherby rendered a decision finding that because Kentucky uses theGuides as a basis for permanent partial disability awards, it cannot ignore a pre-existing impairment and ratable condition simply because it did not meet the pre-existing active standard set forth inFinley.

Background

In 2012 while working at Amazon, Wetherby experienced pain and numbness in his neck and right arm after moving heavy boxes from a pallet to a conveyor belt. Wetherby underwent cervical surgery in 2014. Wetherby remained symptomatic following the 2014 surgery. Due to a 1980 injury, Wetherby previously underwent cervical fusions in 1980 and 1985.

It was undisputed that Wetherby was asymptomatic after the 1985 surgery, until the 2012 work injury. However, every physician who examined Wetherby acknowledged he had a pre-existing impairment pursuant to theGuides due to the earlier 1980 injury and related surgeries.

The Administrative Law Judge (ALJ) found that Wetherby had a total impairment rating of 31%. Determining that Wetherby had a 25% pre-existing cervical impairment (offset) due to his prior injury and associated surgeries, the ALJ awarded Wetherby a 6% impairment due to his 2012 Amazon injury.

Holding in Wetherby

Appealing to the Supreme Court of Kentucky, Wetherby maintained the ALJ improperly deducted a pre-existing active condition. Rejecting this argument, the Court analyzed language in theGuides regarding deductions for pre-existing conditions in the assessment of permanent impairment for spinal injuries.  The Court determined the 25% pre-existing impairment offset made by the ALJ did not constitute a “carve out” for a pre-existing active condition pursuant to Finley but, instead, was required by the Guides. The Court concluded the ALJ properly excluded the 25% impairment related to Wetherby’s two prior surgeries.

Ultimately, the Court found that Wetherby’s case did not fall within the confines ofFinley because the pre-existing condition was neither dormant nor active. The Court held that in order to be classified as dormant, all of the employee’s permanent impairment must have arisen after the current work injury. Wetherby’s prior condition was not dormant because the physicians assessed a pre-existing impairment rating under theGuides. It also was not active as Wetherby was not symptomatic immediately prior to the work injury. Therefore, the ALJ’s failure to perform an analysis underFinley was not in error.

Conclusion

This is a major “victory” for Kentucky employers. For the first time employers have an argument for a pre-existing impairment offset without having to prove a pre-existing “active” condition pursuant toFinley, i.e., a condition symptomatic immediately prior to an injury.

Employers and workers’ compensation professionals are very familiar with reopener petitions or applications for modification of awards.  A reopener may be filed by the petitioner within two years of the last payment of indemnity benefits or the last authorized treatment date, but not many workers’ compensation professionals realize that employers can also apply for modification of awards.  The pertinent statute, which is N.J.S.A. 34:15-27, allows both employees and employers to file such applications for modification.

When would a respondent move to reopen an award? Suppose the petitioner receives an award of 100% permanent and total disability benefits for physical injuries asserting that he or she can never work again.  Six months after the award is entered, respondent becomes aware that the petitioner is in fact working in a very physical job and can document this fact.  What can the employer do?  The proper step would be to file an application to modify the award, suspend benefits altogether, and pursue any other remedies such as a potential finding of fraud.  That is why Section 27 is so important.  An employer cannot simply stop making payments when there is a court order to do so.  The remedy is to reopen the prior award under Section 27 and file a motion for specific relief.

Consider also a situation where an injured employee receives a very large partial permanent disability award, perhaps 60% paid over 360 weeks.  The large award was influenced by testimony at trial that the injured employee was not able to return to work.  Subsequent investigation reveals that the injured employee has returned to a physical job with even higher wages than at the time of the accident.  Just because the prior award was not for total and permanent disability benefits does not mean that the employer cannot move to modify the award of 60% to a lower percentage.  It is important for workers’ compensation professionals to understand that reopeners can work both ways:  the percentage of award can rise or it can fall.

Lastly, consider a case where the reason for the relatively high award is that the judge is concerned with the employee’s need for ongoing narcotics to reduce pain.  From the date of the accident to the date of the award the employee has been taking prescription narcotics for pain, and the award provides for ongoing use of prescription opioids.  Thereafter respondent’s pain medicine physician does testing noting that the injured worker is not even taking opioids.  The urine tests show no evidence of any narcotics in the petitioner’s system, and the petitioner advises that he or she feels much better and does not need the narcotics any longer.  This would also be an appropriate case to file a modification downward of the prior award.

So Section 27 modifications are premised on this equitable concept:  when the claimant’s condition has worsened, he or she can apply for a higher award; when the condition has improved, the employer can apply for a lower award.

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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. 

As the COVID-19 pandemic rages on, governors in various states have issued executive orders which purport to create a presumption that COVID-19 is a compensable occupational illness for certain employees.  In most states where this has occurred, such presumption is limited to healthcare workers, first responders, and some employees in the public transportation sector.  However, Connecticut Governor Ned Lamont just issued an executive order that creates a rebuttable presumption that COVID-19 is a compensable occupational disease for any employee who  worked outside the home at the direction of the employer and was diagnosed with COVID-19 and missed work between March 10 and May 20.   Connecticut’s order is unique not only because it covers a much broader spectrum of workers, but also because it is retroactive in nature.  This of course begs a few questions: Is such an order valid?  If so, could Governor Ivey do the same thing in Alabama?

Alabama is one of the only states where disputes between employers and employees over workers’ compensation claims are decided by the courts, rather than an administrative body.  Over the years, many states have taken workers’ compensation cases out of the courts in favor of administrative proceedings before a board or administrative law judge.  Generally, the administrative body that is responsible for the administration of workers’ compensation in those states is part of the executive branch of government.  The state legislature actually delegates authority to the executive branch to create an administrative agency responsible for administering workers’ compensation benefits, and those agencies are allowed to promulgate their own rules and regulations.  Governors are the head of the executive branch, and therefore have the power (either express or implied) to direct the administrative agencies under their control to act in a certain way.  Therefore, in states where disputes between employers and employees are decided by an administrative body, rather than the courts, governors have much more authority to levy what may or may not be considered a compensable illness.  Assuming Connecticut is such a state, Governor Lamont’s order may be a permissible exercise of authority under Connecticut law.  The biggest question is whether the retroactive nature of the order violates due process.

In Alabama, an executive order such as the one issued in Connecticut would not be valid.  The Alabama Workers’ Compensation Act was passed by the Alabama legislature, and was codified in the Alabama Code.  A key part of the Act vests jurisdiction for determining disputes between employers and employees regarding workers’ compensation benefits solely in the circuit courts.  In other words, Alabama has a balanced form of government, where laws are passed by the legislative branch, interpreted by the judicial branch, and the executive branch’s role is one of enforcement only.  The governor has no authority to pass laws; nor does she have the authority to tell the courts how to interpret laws that the legislature has passed.  Therefore, it is not likely that Governor Ivey will try to implement an executive order similar to that of Governor Lamont. 

About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

By: Curtis Wheaton (Associate Attorney - Oakland Office)

Furious advocacy from both supporters and opponents of AB5 throughout its legislative pendency underscored the significant stakes of the legislation. However, it is important to remember that the bill codified a new legal test. It did not define specific results. Those classified as independent contractors did not receive an embossed state certificate entitling them to the rights and benefits of employees. Instead, they received the intangible legal right to hold their employers to the “ABC test” and the considerably more challenging standard it prescribes.[1]

To that end, AB5 was also endowed with an expanded scope of agencies authorized to enforce its provisions, vesting the Attorney General and city attorneys statewide with the authority to bring actions for injunctive relief to correct alleged misclassification. The California Labor Commissioner (authorized to enforce all provisions of the Labor Code) and workers themselves (those claiming harm by alleged misclassification) also remain entitled to bring actions of their own.

Seven months following AB5’s implementation, its expanded enforcement mechanism is already apparent.   On May 5, Attorney General Becerra (joined by the city attorneys of Los Angeles, San Francisco and San Diego) filed a complaint seeking injunctive relief, damages and penalties for misclassification against Lyft and Uber.[2] On July 16, San Francisco District Attorney Boudin filed a complaint on the same basis against DoorDash.[3] Most recently, the California Labor Commissioner targeted “Mobile Wash Inc.,” a gig-based car washing company, with a complaint for allegedly making a “business decision” to misclassify car washers as independent contractors.[4]

Another indicator of the priority being given to enforcement of AB5 is the 2020-21 State budget. Despite being created subject to unprecedented fiscal challenges resultant from the COVID-19 pandemic, over 20 million dollars is allocated specifically for the enforcement of AB5 by the Department of Justice and State agencies. [5] California voters will also play a pivotal role. The consortium of Uber, Lyft, DoorDash, Instacart and Postmates (recently acquired by Uber) raised the requisite signatures for the “Protect App-Based Drivers and Services Act” to appear on the November 2020 ballot as “Proposition 22,” a measure would exempt ride-share and delivery companies from AB5 entirely.[6]

Overall, the takeaway from this surge in prosecution is that various state agencies are watching.  Whether there will be enough results from the initially sacrificed lambs to prevent slaughter of the entire herd is yet to be seen. Business operators and owners who could be deemed “employers” should carefully review their procedures and consult with appropriate employment counsel as to proper classification. If those workers are deemed employees, they are eligible for workers’ compensation benefits as well.  Coverage is required in the state of California for workers’ compensation for any business with even just a single employee. Failure to appropriately misclassify an entire rank of workers could lead to significant exposure for an otherwise uninsured employer.

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[1] To satisfy the ABC test, a hiring entity must demonstrate that: (1) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and (2) the worker performs work that is outside the usual course of the hiring entity’s business;and (3) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

[2] https://oag.ca.gov/system/files/attachments/press-docs/2020-05-05%20-%20Filed%20Complaint.pdf

[3] https://sfdistrictattorney.org/sites/default/files/Document/DoorDash%20complaint.pdf

[4] https://www.dir.ca.gov/DIRNews/2020/2020-61.html

[5] http://www.ebudget.ca.gov/budget/2020-21EN/#/BudgetSummary

[6] https://www.sos.ca.gov/elections/ballot-measures/qualified-ballot-measures/

One of the most significant cases for employers in many years is N.J. Transit Corp. v. Sanchez, 2020 LEXIS 520 (N.J. May 12, 2020).  This decision is really a game changer for employers, carriers and third party administrators.  The conventional wisdom has always been that if an injured worker cannot sue for personal injuries in a motor vehicle accident on account of having the limitation-on-lawsuit option (aka “verbal threshold”), then the employer cannot pursue subrogation rights.  The argument has always been that the employer stands in the shoes of the worker.  But the Appellate Division and Supreme Court opinions in Sanchez have upended conventional wisdom.

The key facts were that David Mercogliano was driving a vehicle during the course of his employment when he was rear-ended by a vehicle driven by Sandra Sanchez and owned by Chad Smith.  N.J. Transit owned the vehicle Mercogliano was driving and paid $33,625.70 in workers’ compensation benefits.  Mercogliano never sought or received PIP benefits under his personal automobile policy.  He also never sued Sanchez because he could not meet any of the exceptions under the limitation-on-lawsuit option.

N.J. Transit filed a complaint against Sanchez and Smith to recoup its payments under N.J.S.A. 34:15-40 relying on Section (f), which allows employers which have paid workers’ compensation benefits to injured employees to pursue subrogation rights after a one-year period.  Sanchez and Smith argued in part that N.J. Transit was barred from recovery because Mercogliano could not bring his own suit. The Appellate Division disagreed with Sanchez and Smith, allowing N.J. Transit to recover its payments in the civil suit because Mercogliano had not received PIP benefits and N.J. Transit was trying to recover its own economic losses.  The Supreme Court took certification and came down equally divided in its decision.  When that occurs, it represents an affirmance of the Appellate Division decision.

Why is this a game changer? Because most New Jersey drivers opt for the limitation-on-lawsuit option since that option lowers car insurance premiums.  So the precise situation in this case happens all the time.  The verbal threshold policy means that injured workers in car accidents cannot bring a civil suit against a negligent third party unless they can show one of six exceptions, the main one being a permanent injury.  Unlike workers’ compensation law, permanent injury is defined very strictly under AICRA (Auto Insurance Cost Reduction Act). Sometimes even a herniated disc may not suffice to prove a permanent injury under AICRA.

The Supreme Court found no evidence that when the Legislature enacted AICRA, it intended to bar employers and insurers that have paid workers’ compensation benefits from seeking reimbursement from third-party tortfeasors where the injured worker did not seek or receive PIP benefits.  Normally injured workers who receive medical benefits and temporary disability benefits in workers’ compensation would not also seek or receive PIP benefits.

Another key fact for employers to consider is the percentage of recovery.  An employer’s lien is typically limited to two thirds (the other third represents the contribution to the plaintiff’s counsel fee). But there is no plaintiff bringing suit here, so the employer can recover the entire amount of its payments reduced only by whatever contractual arrangement the employer has with its own subrogation counsel. 

This decision has generated both interest and surprise among employers, carriers and third party administrators.  Frankly, the scope of the decision is just beginning to be fully appreciated in the employer community, and the case has not gotten all the attention it deserves.  Kudos to N.J. Transit and their counsel for taking a creative position that has essentially carved out new law for the benefit of employers.  For large employers, carriers and third party administrators, the decision is huge:  it will literally mean over time millions of dollars in recovery for economic payments made under workers’ compensation. 

In response to client interest, Capehart Scatchard has established a subrogation recovery team comprising partners Betsy Ramos, Chris Carlson and Voris Tejada. Interested clients can email bramos@capehart.com. ccarlson@capehart.com, vtejada@capehart.com or the undersigned for more information and for copies of the decisions of the Appellate Division and Supreme Court.

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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. 

Chronic condition or new injury?

Two cases recent cases decided by the West Virginia Supreme Court of Appeals address the frequent debate in claims management of whether an injured employee's disabling condition was caused by a preexisting chronic condition or a new injury.

In West Virginia University v. Jess Shaffer, No. 18-1067, (W. Va. July 9, 2020) (memorandum decision), the West Virginia Supreme Court of Appeals reversed and remanded the October 30, 2018 decisions of the Board of Review with instructions to reinstate the December 9, 2016, January 16, 2017, and August 10, 2017 claims administrator decisions. The Court's decision demonstrates the importance of discovery of evidence of treatment for preexisting chronic conditions.

In a 6-0 Memorandum Decision, the Court found the Board of Review's decision was so clearly wrong even when all inferences are resolved in favor of the Board's findings, that there is insufficient evidence to support the decision. The Court found the medical evidence clearly shows the claimant had bilateral shoulder degenerative changes several years before the compensable injury, including MRI evidence showing degenerative joint disease with impingement of the rotator cuff causing tendonitis, treatment notes showing rotator cuff tendonitis on the left and degenerative joint disease and impingement on the right, and a physician's record review opinion these conditions indicate a predisposition to degenerative rotator cuff tears.

The court also pointed to the claimant's family physician's deposition testimony that it is difficult for him to determine if the rotator cuff tears are the result of degeneration or trauma. He testified he usually refers patients to a specialist to make a determination, and further stated he did not discuss prior shoulder issues with claimant. The Court noted the family physician was the only physician to opine the injury resulted in bilateral rotator cuff tears. The Court contrasted the opinion of an orthopedist who found chronic degenerative changes throughout both shoulders. The Court also noted two physicians reviewing the medical history had the same findings related to preexisting degenerative changes in the shoulders.

Another decision by the West Virginia Supreme Court demonstrates the importance of documenting preexisting chronic conditions in an injured employee. InKathleen J. Crockard v. Wheeling Hospital, Inc., No. 18-1026, (W. Va. July 9, 2020) (memorandum decision), the Court affirmed the October 29, 2018 decision of the Board of Review which affirmed the May 16, 2018 Administrative Law Judge Decision. The May 16, 2018 ALJ Decision had reversed the claims administrator's November 3, 2017 order rejecting the claim. The issue for appeal was compensability of the claim on a no-lost-time basis.

Claimant suffered a lumbar sprain injury lifting a box while at work. She was immediately taken to the emergency room and diagnosed with a lumbar sprain, but it was indicated she would not be off work for four or more days. While the specific reason for the claim administrator's rejection of the claim is not identified by the Court, it likely was due to evidence claimant had a prior low back injury and MRI evidence of a herniated lumbar disc that predated the injury. The ALJ reversed the claims administrator's rejection of the claim and held the claim compensable for lumbar sprain/strain on a no-lost-time basis. Relying onJordan v. State Workers' Compensation Commissioner, 156 W. Va. 59, 191 S.E.2d 497 (1972), the ALJ found that just because an employee has a preexisting condition, does not mean he or she cannot suffer a new injury in the course of employment. When there is evidence of a preexisting injury, a new claim is compensable when it is the result of a definite, isolated, fortuitous occurrence.

The ALJ determined that the evidence shows the claimant had at least two prior lower back injuries, one of which occurred in the course of her employment. She reported right lower extremity pain prior to the injury at issue, but had no complaints of lower back pain at that time. The ALJ determined that the evidence shows the claimant was lifting a box when she sustained a lower back injury and was escorted to the emergency room, satisfying the requirements of a definite, isolated, fortuitous event. Claimant was diagnosed with a low back strain, and it was indicated that she would not be off work for four days or more. The ALJ found that she eventually underwent L4-5 microdiscectomy surgery for a herniated lumbar disc. The disc was herniated prior to the compensable injury, as seen on MRI, and is therefore unrelated to the claim. The claimant's continued temporary total disability was determined to be the result of the non-claim-related surgery. The ALJ therefore found that while the claim was compensable for a lumbar sprain, temporary total disability benefits should not be granted. The Board of Review adopted the findings of fact and conclusions of law of the Office of Judges and affirmed its Order.

The Court noted that pursuant to West Virginia Code § 23-4-1, employees who receive injuries in the course of and as a result of their covered employment are entitled to benefits. For an injury to be compensable it must be a personal injury that was received in the course of employment, and it must have resulted from that employment. Barnett v. State Workmen’s Compensation Commissioner, 153 W. Va. 796, 172 S.E.2d 698 (1970). Temporary total disability benefits will be granted when the period of disability is greater than three days. W. Va. Code § 23-4-1c. A claimant must submit evidence that he or she is unable to return to employment as a result of the compensable injury.

In this case, the Court found it is clear that the claimant sustained a lumbar sprain in the course of and resulting from her employment. However, MRIs taken shortly before and after the injury show that the claimant's herniated lumbar disc preexisted the compensable injury and is therefore not compensable. The Court found the claimant's continued inability to work is the result of her lower back surgery, necessitated by the noncompensable herniated disc. Accordingly, the claim was properly held compensable on a no-lost-time basis for lumbar sprain.

Article by Dill Battle

If you have questions or need more information, please call or e-mail Dill Battle at 304.340.3823 ordbattle@spilmanlaw.com.

Spilman Thomas & Battle, PLLC
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