Supreme Court Appears to “Flip” on Coming and Going Rule in Vicarious Liability Case
On April 13, 2018, the Supreme Court reversed the judgment of the Court of Appeals inPainter v. Amerimex Drilling - a negligence case involving an MVA that occurred while a drilling company employee was driving his coworkers from a drill site to housing provided by the employer at the end of their shift.  The Supreme Court held that the employer was not entitled to summary judgment on the injured employee’s vicarious-liability claim.  The injured crew members and the families of the crew members killed in the accident filed suit against Amerimex, alleging vicarious liability for the driver’s negligence. The trial court granted summary judgment for Amerimex, and the Court of Appeals affirmed. The Supreme Court reversed, holding that Amerimex was not entitled to summary judgment on either no-evidence or traditional grounds on the crew members’ vicarious-liability claim.
 
In a dissenting opinion, Justices Green and Brown disagreed with the ruling, noting that, two years earlier, the Supreme Court found in favor of Sandridge Energy (the company that hired Amerimex to drill the well from which the crew members were being transported) in a suit arising out of the same accident.  The dissenting opinion opined that the Supreme Court in the Sandridge Energy case found that the driver was not Sandridge’s employee, as a matter of law, “at least with respect to transporting the crew” and Sandridge was therefore entitled to summary judgment in the vicarious liability claim against Sandridge.  The dissenting justices believed that the same legal rationale should hold true for the drilling company, Amerimex, because the driver was not (as a matter of law) the employee of the drilling company either. 
 
The majority in the Amerimex litigation disagreed and found that there were fact questions to be resolved regarding the driver’s employment status at the time of the MVA.
 
Adding Assault to Injury
The claimant, a special education diagnostician, was assaulted by a parent of one of her students and sustained injury.  During the time she was unable to work, she received assault leave pay from her employer in an amount equal to that of her pre-injury wage.  The Appeals Panel, in Decision No. 180294 (decided March 29, 2018) determined that, because the claimant had performed no personal services for the employer in exchange for the assault leave pay she received, the pay was not properly considered wages under the Texas Workers' Compensation Act.  Therefore, the Appeals Panel reversed the decision by the Administrative Law Judge that the claimant had no disability while receiving assault leave pay.
 
There’s a Reason It Wasn’t the Season
In APD No. 180270, decided March 28, 2018, the Appeals Panel concluded that the claimant, a professional football player, did not qualify as a seasonal employee, even though his salary was only paid in 17 installments during the actual football season.  For the remainder of the year, the claimant was required by contract to further the business affairs of the employer by way of mandatory participation in charitable events, maintenance of his physical condition, production of memorabilia for auctions, cooperation with news media, and protecting the reputation of his team.  The Appeals Panel determined that the claimant's employment does not demonstrate "a pattern of seasonal, cyclical employment," and therefore no adjustment to the claimant's average weekly wage applied.
  
Splitting Headaches
Appeals Panel decisions have been known to cause headaches, but this is ridiculous.  The Administrative Law Judge decided that the claimed headaches were not part of a compensable injury based on a designated doctor's assessment that "the claimant's minor head contusion would not result in ongoing headaches, and this diagnosis should not be considered compensable."   In APD No. 180458, decided March 29, 2018, the Appeals Panel drew a distinction, stating that "headaches" and "ongoing headaches" are two separate injurious conditions.  Because the condition appears sans adjective in the issue, the Appeals Panel concluded that the designated doctor had not considered the proper diagnosis and reversed the ALJ's extent of injury determination.

—Stone Loughlin & Swanson, LLP

According to the US Department of Labor’s Inspector General, Dallas attorney Tshombe Anderson and his family stole patient information from over 200 federal workers and then used the information to fraudulently bill the federal workers’ compensation system over $30 million.  Anderson enlisted his entire family in the scheme, including his 84-year-old mother.  Several of those family members have entered guilty pleas and are awaiting sentencing.  Anderson received a 10-year maximum sentence in federal court on April 19, 2018, and his law license has been suspended by the State Bar of Texas.

—Stone Loughlin & Swanson, LLP

Effective immediately, the DWC has announced a plan to hold designated doctors accountable for their work product. Performance factors that will be considered include evaluating the number of closed complaints with warning letters issued by DWC, closed complaints with a letter of education, the number of complaints referred for a medical quality review or referred directly to Enforcement, the number of instances wherein a DD agrees to a consent order or receives a default judgment from SOAH related to a violation of the Texas Workers’ Compensation Act or DWC rules, the number of letters of clarification approved by DWC, the number of MQRP reviews where the outcome is “referral to enforcement” or “refer subject to the appropriate medical licensing board,” the number of Presiding Officer Directives (PODs) issued for re-examination, and the number of reports not adopted at a contested case hearing.
http://www.tdi.texas.gov/wc/hcprovider/documents/ddperform0418.pdf

—Stone Loughlin & Swanson, LLP

Chief Administrative Law Judge (ALJ) Lesli G. Ginn has found herself in the crosshairs of SOAH staff, administrative law professors, and lawmakers alike, after requesting and receiving the resignation of ALJ Hunter Burkhalter “in lieu of termination.” ALJ Burkhalter issued a contested case ruling against the Texas Medical Board, who complained to the Chief ALJ, which resulted in the controversial termination. Ginn’s action has been widely criticized as violating the integrity of SOAH’s administrative hearing process, long perceived as “an independent forum” respected for its fair process and objectivity. Reaction has been strong, both inside and outside of the agency, and there have been calls for Ginn’s removal as Chief ALJ. Her term is set to expire at the end of April.

—Stone Loughlin & Swanson, LLP

The DWC is combining its annual educational and safety conferences this year, and is promising an interesting lineup of topics to include challenges in the gig economy, first responder claim handling, telemedicine, safety for the millennial generation, and disaster recovery.  Speakers include folks from Uber and the National Safety Council.  Two hours of ethics credits have been approved for adjusters.  Conferences are in San Marcos (May 15-17) and Irving (June 27-29).

—Stone Loughlin & Swanson, LLP

The DWC has announced several rule changes and proposed rule changes in the past 30 days.  Here is a rundown of what you need to know:

New Adopted Rules
 
Preauthorization Required for Compound Drugs
Rules 134.500, 134.530 and 134.540 have been amended to require preauthorization for compounded drugs in both network and non-network claims and to exclude from the closed formulary prescription drugs created through compounding. 
https://www.tdi.texas.gov/wc/rules/adopted/documents/ao1340418.pdf 
 
Fewer Reporting Requirements and Removal of Private Vocational Rehab Registry
HB2112 mandated changes to certain reporting and notification requirements.  DWC made changes to those rules and repealed a couple of others.  Employers may now submit a notice of termination of coverage to DWC by any means; and, certain building and construction contractors, contractors and subcontractors, and motor carriers and owner-operators are no longer required to file certain agreements with the DWC.  The SIBs rules and definitions were also changed to remove the requirement for private providers of vocational rehabilitation services to register with the DWC. That registry has been removed and the DWC is no longer required to review and determine the unemployment/underemployment status of injured employees.
https://www.tdi.texas.gov/wc/rules/adopted/documents/ao136rpt0318.pdf.
 
Who Needs Personal Touch? Not Injured Workers
New Rule 133.30 permits health care providers to bill and be reimbursed for telemedicine or telehealth services, regardless of where the claimant is located at the time the services are provided. The new rule will be effective September 1, 2018.
https://www.tdi.texas.gov/wc/rules/adopted/documents/ao1340418m.pdf
  
New Proposed Rules
 
Hearing Officers Are Now Administrative Law Judges and Other Hearings Changes
The folks formerly referred to as DWC “Hearing Officers” will now formally be acknowledged as “Administrative Law Judges” (ALJs), not only in the hearing room but also in the proposed rules.  New informal rules also proposed changes to the way parties practice in front of those ALJs.  Those changes include a requirement that the parties include a certificate of conference on any motions presented to the DWC, and make changes to the ”no-show” procedures which would allow the ALJ to issue a decision on a finding of no good cause or failure to respond, rather than convening a second hearing.  The DWC is also clarifying that the automatic reset of a BRC upon a request within 10 days of receiving notice is limited to the first scheduled session.  The informal comment period had a relatively short window: April 9, 2018 through April 20, 2018, and is now closed. 
https://www.tdi.texas.gov/wc/rules/documents/dralj0418m.pdf
 
PAs to OK 73s
Proposed Rule 129.5 will permit treating doctors to delegate authority to complete work status reports to a physician’s assistant.
https://www.tdi.texas.gov/wc/rules/documents/drdwc0730418m.pdf
 
TDI Tightens Up Rules to Regulate Sales of Comp-like Insurance Products
TDI has posted an informal draft that would amend rules regulating the sale of insurance products that could be misrepresented or misunderstood as substitutes for workers' compensation insurance.
http://www.tdi.texas.gov/rules/pc/documents/wcsubtext.pdf

—Stone Loughlin & Swanson, LLP

Court Decisions of Note

Subrogation

BWC v. Verlinger, 2018-Ohio-1481 (April 19, 2018).

In a very recent ruling by the Ohio Supreme Court, it was held that the Ohio Bureau of Workers’ Compensation (BWC) must be notified of potential third-party settlements that would compensate an injured worker for an injury, even when an application for workers’ compensation benefits has been denied and is under appeal.

In this case, Ms. Verlinger was involved in a motorcycle accident while working for her employer. She applied for worker’s compensation benefits, but the BWC initially denied her claim. While her appeal was pending, she reached a settlement with the relevant insurance companies. Verlinger incorrectly believed she did not have to inform the BWC or the Ohio Attorney General’s Office (AGO) about her insurance settlement because it had been reached during the period when her claim was denied by the BWC. However, the Court held that she remained a claimant eligible to receive workers’ compensation benefits during the appeal period, and therefore, was required to notify the BWC and AGO of their rights under R.C. § 4123.931. (Her claim was eventually allowed by the Industrial Commission of Ohio through the administration hearing process).

Therefore, the Verlinger Court tells us through its opinion that (1) a claimant, for subrogation purposes, is any party who is eligible for compensation, medical benefits, or death benefits from the BWC; and, (2) a claimant is “eligible” for BWC benefits unless and until a final determination has been made indicating a claimant is not eligible for such; and, (3) employers can be penalized if the BWC and/or AGO are not notified of third-party payments made to a claimant in their employ.

Constitutionality

Ferguson v. State, 2017-Ohio-7844 (September 28, 2017).

In 2006 the legislature amended the statute governing appeals to the courts of common pleas to require the Plaintiff-Claimant to obtain the Defendant-Employer’s consent to a Civil Rule 41(A) voluntary dismissal when the Employer had initiated the court appeal. Ford had filed the court appeal, and, when Ferguson sough to voluntarily dismiss, it refused to agree. The trial court then pended the original appeal and proceeded with a declaratory-judgment action regarding the employer consent provision’s constitutionality.

The trial court found the employer consent provision unconstitutional for three reasons. First, by overriding a Civil Procedure Rule, the legislature had violated separation-of-powers by intruding on the court’s power to govern trials. Second, the creation of two different classes of Plaintiff-Claimants, those who filed their own appeals and those whose employers appealed, ran afoul of equal protection. Finally, Plaintiff-Claimants were inhibited from adequately presenting their cases, a violation of the Ohio Constitution’s Due Course of Law Clause. The Cuyahoga County Court of Appeals (Cleveland) affirmed.

A unanimous Ohio Supreme Court reversed. There was no violation of separation of powers because the General Assembly may create procedural rules for “specialty statutory proceedings” like workers’ compensation court appeals. Furthermore, equal protection and due process were not violated because a suspect class had not been created. Differentiating injured workers based on whether they, or their employers, initiated the court appeal survived rational basis review. This standard was sufficient, especially given the differences between workers’ compensation and the civil justice system.

Permanent Total Compensation

State ex rel. Gulley v. Industrial Comm’n., 2017-Ohio-9131 (12/21/17)

In this case, Mr. Gulley was injured on November 9, 2009 when he slipped off a piece of heavy equipment at work. His claim was allowed for various physical conditions and also later for psychological conditions. Mr. Gulley had not worked since the date of injury, and when the BWC approached him in 2010 and 2012 with opportunities for rehabilitation and retraining, he refused in both instances. Subsequently in 2014, Mr. Gulley’s attorney referred him to “assertive vocational services” for rehabilitation, where the assessment by Ms. McCoy, a rehabilitation counselor, resulted in a finding that Mr. Gulley did not appear to be a feasible candidate for vocational-rehabilitative services. Mr. Gulley then applied for permanent total compensation (“PTD”), and in doing so, his attorney hired Ms. McCoy to opine that Mr. Gulley was not employable. The Ohio Industrial Commission, through its staff hearing officer, denied his application in part because of his refusal to participate in vocational rehab and also rejected Ms. McCoy’s reports on the basis that she had conflicts of interest in that she had reviewed the matter for the BWC prior to being engaged by Mr. Gulley. The hearing officer concluded that Mr. Gulley was medically capable of performing sedentary work. Mr. Gulley filed a complaint seeking a writ of mandamus.

The 10th District Court of Appeals determined that permanent total compensation should not be denied based primarily on Mr. Gulley’s refusal of rehab services (in 2010 and 2012) when he later attempted to use such services in 2014 (and was deemed not feasible after the assessment). The court issued a limited writ requiring the Commission to address the merits of Mr. Gulley’s PTD application without relying on the earlier refusal of rehab services.

On appeal before the Oho Supreme Court, there was no dispute that Mr. Gulley was medically capable of performing sedentary work, but the issue was the Commission’s analysis of Mr. Gulley’s non-medical factors, particularly the impact of the evidence of vocational rehabilitation in the record. The Commission argued that it may consider an injured worker’s lack of participation in vocational rehab and that Mr. Gulley’s refusal to participate was “some evidence” that supported its decision in denying PTD. The Court held that the Commission did not abuse its discretion when it considered that refusal to participate in rehab when he was deemed eligible in 2010 and 2012. However, the Court disagreed with the Commission’s act of summarily rejecting the report of Ms. McCoy on an alleged conflict of interest. The Court held that although the commission is not bound to accept all vocational evidence in the record, it is required to review the evidence to determine whether the claimant is foreclosed from sustained remunerative employment. The Court ruled that the Commission failed to do so here, and ordered the Commission to review all the vocational evidence before determining whether Mr. Gulley was entitled to PTD.

Temporary Total Compensation

State ex rel. Cordell v. Pallet Companies, Inc., 149 Ohio St. 3d 483, 2016-Ohio-8446 (12/29/16).

The Cordell case is important for understanding the current status of the voluntary abandonment doctrine in the context of a positive post-injury drug test. Here the Supreme Court narrowed the circumstances that would make an injured worker ineligible to collect temporary total under the voluntary abandonment doctrine. The employer, Pallet, had a typical drug-free-workplace policy which prohibited the use of illegal substances “at any time whether on or off duty.” Mr. Cordell broke his leg in the course and scope of his employment at Pallet and subsequently failed a routine post-accident drug screen which was positive for marijuana. Mr. Cordell was terminated immediately after Pallet became away of the positive drug screen.

At the Industrial Commission, Pallet did not contest the allowance of the claim itself, conceding that the drug use had not caused the accident itself (it was due to a fall off a tow motor that occurred when a truck pulled away from a loading dock too quickly). The Commission denied TTD to Mr. Cordell finding that he had voluntarily abandoned his employment. In a divided panel decision by the Commission, it was found that the Staff Hearing Officer had failed to apply State ex rel. PaySource USA, Inc. v. Industrial Comm’n, 10th Dist. Franklin No. 08AP-677(June 30, 2009), wherein the Tenth District had found the injured worker abandoned his employment when he used drugs prior to the injury, which severed any connection between the workplace injury and the loss of wages. The panel found that Mr. Cordell “sustained an injury in the course of and arising out of his employment on 2/16/12,” but he voluntarily abandoned his employment by use of marijuana prior to the industrial injury making him ineligible for TTD. The dissenting commissioner argued that PaySource had been discredited and urged granting the award of TTD under the decision of State ex rel. Gross v. Industrial Comm’n, 115 Ohio St. 3d 249 (2007) (“Gross II”).

The Tenth District agreed with the dissenting commissioner and granted Mr. Cordell’s writ. The Ohio Supreme Court affirmed and its decision has narrowing consequences on eligibility for TTD after a post-accident drug test. The Court held that an injured worker fired after their injury “for conduct prior to and unrelated to” the injury does not lose eligibility for TTD if (1) the discovery of the dischargeable offense occurred because of the injury; and (2) at the time of the termination, the employee was incapable of returning to work as a result of the allowed conditions in the claim.

Therefore, in practice, the Court has extended the Gross II rationale to pre-injury conduct, holding that the fact that Pallet had the right to fire Mr. Cordell does not change the fact that Mr. Cordell was injured in the course and scope of his employment and that at the time of his termination, he was temporarily and totally disabled.

Violation of Specific Safety Requirements (“VSSR”)

State ex. rel. Sunesis Constr. Co. v. Industrial Comm’n., Slip Opinion No. 2018-Ohio- _____; on appeal from the 10^th District Court of Appeals in Franklin County (2/2/18)

In this case, the employer, Sunesis Construction Company (“Sunesis”) filed a writ of mandamus with the 10th District Court of Appeals alleging that the Commission abused its discretion when it issued an award for the violation of specific safety requirements (“VSSR”). The alleged violations concerned the regulation of trenches and excavations. The court of appeals held that the Commission supported its decision with some evidence and denied the writ of mandamus.

The underlying workers’ compensation claim involved an employee, Timothy Roark, who was killed in a collapsed trench. Roark was working at the bottom of a 20-foot trench when one of the sides of the trench collapsed and he died from a head injury and traumatic asphyxia. Roark’s dependents filed an application for an VSSR award on regulations that apply to shoring, shorting and bracing the sides of trenches and excavations. Sunesis properly shored up three sides of the trench but it attempted to shore up the fourth side with a steel plate at the top pf the wall and slipped the rest of the wall.

The Commission found that (1) the fourth wall was not sufficiently supported, (2) the attempted shorting did not meet appropriate engineering standards, and (3) Roark did not disregard any instructions about working in the trench. The court of appeals held that some evidence supported the Commission’s decision, which included relying on engineering specifications noting that wet soil requires “special” treatment. This information was corroborated by testimony from four other employees.

The Ohio Supreme Court affirmed the court of appeals’ decision and denied Sunesis’ writ of mandamus. First, Sunesis should have supported the fourth wall with sufficient means because four employees testified that the trench was more than five feet high and consisted of soft or unstable material. Although Sunesis provided support for the top portion of the fourth wall, the remaining bottom portion was left unsupported. Second, the fourth wall did not meet accepted engineering standards. Sunesis attempted to argue that certain engineering standards were met, but the Court rejected that argument because wet soil required “special” treatment per engineering standards that Sunesis relied upon. Third, the Court rejected the unilateral negligence defense that states that an employee’s deliberate circumvention of a safety device will defeat a VSSR claim. However, the Court noted the employer must first comply with a VSSR for an employee to circumvent it. As a result, there was insufficient evidence that Sunesis complied with the safety requirement in the first place and insufficient evidence that Roark circumvented any precautions.

State ex rel. Ohio Paperboard v. Industrial Comm’n., 152 Ohio St.3d 155, 2017-Ohio-9233 (12/28/17)

Mr. Ruckman was performing maintenance on a conveyor belt that transported wire-bound recycled paper bales to a pulper for shredding. Along the conveyor, overhead saws cut the wire surrounding the bales. Some of those wires get wrapped around the shafts and gears of the conveyor, which requires weekly maintenance to remove. During this routine maintenance, the machine is placed into “maintenance mode” and de-energized. In this case, however, Ruckman decided to turn the machine back on to loosen some jammed wires. While reaching in to remove the wire, the conveyor caught Mr. Ruckman’s hand and crushed it. He filed a workers’ compensation claim that was allowed for left hand amputation and replantation, major depressive disorder and total loss of use of the left hand.

Ruckman alleged that Ohio Paperboard violated three safety rules regarding (1) means shall be provided to disengage the conveyor from power where exposed to contact; (2) conveyor pinch points shall be guarded or means provided at the pinch point to disengage the power; and (3) means shall be provided at each machine, within easy reach of the operator, to disengage the power. Two conditions must be met for these rules to be applicable: (1) the claimant must be an operator, which means “any employee assigned or authorized to work at the specific equipment; and (2) the conveyor must be “exposed to contact” which means “during the course of operation, the conveyor is accessible to an employee in the course in performance of an employee’s regular or assigned duty.”

The Industrial Commission awarded Mr. Ruckman an award for violation of specific safety requirements, and Ohio Paperboard filed for a writ of mandamus. The 10th District Court of Appeals denied the writ and the employer appealed the matter to the Ohio Supreme Court. The Court agreed with the Commission and the court of appeals that Mr. Ruckman was an operator because he was authorized or assigned to work on the equipment. However, the Court found that Ohio Paperboard complied with the safety requirements in question because it had emergency stop buttons within easy reach of the operator in the control shack and the pinch points were guarded in the normal operation. The Court disagreed with the Commission’s order because it failed to acknowledge that the employee was performing maintenance while the machine was disengaged from the power. The actual cause of the injury was due to Rickman’s disregard of the employer’s safety procedure and not the violation of any safety requirements. Thus, the Court granted Ohio Paperboard’s writ ordering the Commission to deny the application for an award.

State ex rel. 31, Inc. v. Industrial Comm’n., 2017-Ohio-9112 (12/21/17)

31, Inc. processes rubber to make products that are used to repair tires. Mr. Ashworth was employed at 31 as a “calendar” operator. A calendar is defined in Ohio regulations as “a machine equipped with two or more metal rolls revolving in opposite directions and used for continuously sheeting or plying up rubber or plastic impounds and for fractioning or coating fabric with rubber or plastic compounds.” Ashworth operated a calendar with three rolls and on one day grabbed rubber to pull it off a roll and it caught the fingers on his right hand and pulled his hand into a three-inch space between the rolls. He filed a claim for an award for violation of a specific safety requirement (“VSSR”) alleging that 31 had violated an Ohio safety requirement for “nip points” at workshop and factories. This specific regulation provided an exception when the machinery is covered expressly by requirements contained in other codes of specific requirements.

31 argued that the exception to this alleged requirement applied because the calendar was expressly covered under another code regulation, a rule that provides specific safety guidelines for calendars in the rubber and plastic industry. Before the Industrial Commission, 31’s argument was rejected by the hearing officer who argued that both regulations applied to the calendar, citing State ex real. Hartco, Inc. v. Industrial Commission, 38 Ohio St.3d 181 (1988), in which the Ohio Supreme Court held that provision on nip points for workshops and factories applied to a pre-roll machine used in the rubber and plastic industry. The Staff Hearing Officer granted the VSSR application and rejected 31’s argument that the exception to the nip point regulation applied, finding that the administrative rules for the rubber industry supplement - but do not supplant - the workshop and factory rules, citing Hartco. On appeal before the 10th District Court of Appeals, 31’s request for a writ was denied.

The Ohio Supreme Court agreed with 31’s argument that there are specific safety requirements for calendar machines in the Ohio administrative code that apply to the rubber industry. The rule requires that employees protect employees by either providing safety rip cords that immediately stop the calendar’s rolls when the cord is pushed or pulled or by locating the calendar where employees cannot come into contact with the roll bites. 31 argued that because this rule expressly covers calendars, the exception to the workshop and factory rule applies, and the Court agreed. For the Commission to require 31 to comply with the nip-point rule, it must ignore the rule that expressly covers the safety controls for calendar machines in the rubber industry.

Injury/ Idiopathic Injuries

Clendenin v. Girl Scouts of Western Ohio, 2017-Ohio-2830 (5/18/17).

In this case, Ms. Clendenin was injured in 2008 in the course of her employment with the Girl Scouts and her claim was allowed for various conditions, including substantial aggravation of preexisting dermatomyositis. In 2013, the BWC moved to terminate Ms. Clendenin’s benefits and compensation arguing that the condition dermatomyositis had returned to its baseline, pre-injury status. The Commission evaluated the BWC’s medical report on the issue and agreed.

Ms. Clendenin filed an appeal in the Hamilton County Court of Common Pleas arguing that the condition had not returned to pre-injury status and that the order should be vacated. The BWC sought dismissal of the case arguing that the issue was one of “extent of disability” and not a “right to participate” case and therefore the appeal to the common pleas court was improper. The Hamilton County Court agreed with the BWC and dismissed the appeal. On mandamus before the First District, that order was reversed. The First District Court of Appeals opined that when the BWC decides the condition is no longer impacted by the workplace injury, then the BWC is in effect terminating the injured worker’s right to participate for that condition in the workers’ compensation system. Therefore, the First District held, such an appeal would be properly in the common pleas court.

The Ohio Supreme Court, however, reversed the First District’s decision. The Court held that an Industrial Commission’s decision that a preexisting condition substantitally aggravated by an injury at work which has returned to “pre-injury status” involves “extent of disability.” Therefore, an appeal under Ohio Rev. Code § 4123.512 (i.e., “a right to participate appeal”) was not proper, but instead must be challenged by mandamus. Simply put, the Court found that since the dermatomyositis was already an “allowed condition” it was not a right to participate issue. The real matter was one of the amount of compensation and benefits to be paid for such condition, and that called for a challenge in mandamus and the Hamilton County Court of Common Pleas was not permitted to hear the matter.

White v. Buehrer, 2^nd District No. 27295, 2017-Ohio-8254 (10/20/17)

Ms. White was injured in a fall at work and broke her right hip. She testified at the Industrial Commission that the exam room floor where she fell had been “tacky” causing her fall. She also presented an expert report from someone who had examined the floor two weeks after the accident and opined that the floor may have been stripped but not yet relaxed at the time of White’s fall. Fiver Rivers Health Center, the employer, offered testimony from a senior nurse who worked in the exam room the day before, the day of and the day after White’s fall and said the floor was not “tacky” or otherwise hazardous. Five Rivers also offered testimony on the maintenance of the floors and that it had not been stripped or relaxed for more than a year prior to White’s fall. Ms. White’s claim was denied at all levels of the Ohio Industrial Commission, and she filed a complaint in the Montgomery Court of Common Pleas. The court granted Ms. White’s motion for summary judgment and Five Rivers appealed to the 2nd District Court of Appeals.

The issue before the court of appeals involved idiopathic causes of workplace accidents, and ruled that the trial court erred in refusing to allow the BWC to challenge White’s motion for summary judgment on the basis that the claimant bears the burden of eliminating idiopathic causes of a workplace injury. White had asserted in her motion that idiopathic causes are an “extremely limited exception” to the compensability of injuries and the existence of such a condition constituted an affirmative defense to a claim. She provided no evidence aimed at eliminating an idiopathic cause for her fall. The medical evidence in the claim and offered by Fiver Rivers and the BWC in response to her motion presented facts that there may have been an idiopathic factor that contributed to her fall (diabetic neuropathy, foot pain and noncompliance with medication).

The court of appeals ruled that, pursuant to Waller v. Mayfield, 37 Ohio St.3d 118 (1988), because the cause of the fall was not clear, White bore the burden of eliminating idiopathic conditions as the cause of her fall and the burden did not rest with Five Rivers or the BWC to disprove the effects of these conditions. The trial court’s judgment granting White’s motion for summary judgment was therefore reversed.

Evidence for Summary Judgment

Coleman v. KBO, Inc., 2^nd District No. 2017-CA-82, 2018-Ohio-763 (3/2/18)

Ms. Coleman was involved in an accident at her workplace, KBO, Inc., in 2009 as a result of which she sustained physical injury to her right wrist. Her claim was allowed for a sprain, right wrist synovitis and ulnocarpal abutment syndrome. More than five years later, Ms. Coleman sought additional allowances for psychological conditions. The Commission, at the district hearing officer level, denied the requested conditions and the staff hearing officer affirmed. Coleman filed a complaint in the Clark County Court of Common Pleas, where KBO filed a motion for summary judgment arguing there was no genuine issue of material fact whether Coleman’s depression arose from the previously allowed physical conditions and that KBO was entitled to judgment as a matter of law.

The trial court granted KBO’s motion and concluded that, due to the five years between the physical injury and the diagnosis of the psychiatric condition and to Coleman’s assertions that she was not suffering from depression during the intervening period, reasonable minds could only conclude that the psychiatric condition did not arise from the physical injury. Upon review before the 2nd District Court of Appeals, the court noted that in her opposition to the summary judgment motion, Ms. Coleman offered the affidavit of Dr. Drown who opined that her depression was “directly caused by her workers’ compensation injury.” KBO had argued that Coleman’s admissions that she had not experienced depression in the several years following her injury undercut her assertion that there was a causal connection, but the court of appeals disagreed and indicated she need not have continuously experienced depression from the time of her physical injury to establish that the depression she experienced years later was caused by the injury. Further, the court of appeals held that Dr. Drown’s affidavit created a genuine issue of material fact as to whether her depression was caused by the injury. The court found that the trial court improperly concluded that it could not consider the affidavit because the affidavit “contradicted” Coleman’s “former deposition testimony” without sufficient explanation. The trial court distinguished cases offered by KBO supporting a court’s non-consideration of an allegedly contractor affidavit in deciding summary judgment by noting that Dr. Drown did not make the contradictory statements and was not a party to the case.

The court of appeals states that the trial court concluded, based on the passage of time and without further elaboration or reasoning, that reasonable minds could not conclude that Coleman’s 2015 condition arise from the 2009 injury. This finding would imply the existence of a “bright-line” rule as to the time for filing claims for psychological injuries, when no such rule exists.

“The Calfee Corner” – Recent Calfee Cases Before the Industrial Commission and Courts of Ohio

City of Cleveland v. Bureau of Workers’ Compensation, 8^th District Court of Appeals Case No. CA 17-105604

Calfee represented the City of Cleveland as the Plaintiff in an “unjust enrichment”/premium overcharge case against the Ohio Bureau of Workers’ Compensation. Based on expert actuarial testimony presented at trial, the trial court awarded $4.5M in restitution to the City. BWC appealed to the 8^th District Court of Appeals (Cuyahoga County) alleging numerous errors. On March 8, 2018, the Court of Appeals rejected all assignments of error and upheld the trial court’s judgment in full (relying onSan Allen, Inc. v. Buehrer, 2014-Ohio-2071 (May 15, 2014)).

An appeal to the Ohio Supreme Court is expected. Issues upon appeal likely will include proper venue (trial court versus Court of Claims), exhaustion of administrative remedies, and Statute of Limitations applicability.

Claims 14-872004 and 16-837301. – Strong preparation of evidence and testimony continues to defeat attempts of independent contractor drivers – here Mr. R and Mr. B - to be recognized as “employees”.

Mr. R was a delivery driver who was injured in a car accident while performing his deliveries near Bellefontaine, Ohio. He had entered into an Owner/Operator Agreement in 2012 under which he agreed to provide delivery services which entailed picking up automobile parts from an Advanced Auto parts hub in one Ohio city and delivery of those auto parts to three other cities on a daily route. Mr. R. argued that he was the employee of the other party to the Agreement, the Alleged Employer. In support of its defense against the claim, the Alleged Employer offered both documentation of the manner and means of Mr. R’s performance of his work, as well as testimony of a witness with knowledge of the operations.

Based upon the evidence and testimony at the hearing, the Ohio Industrial Commission denied the claim and found that Mr. R. had failed to establish the existence of an employer-employee relationship with the Alleged Employer, and to the contrary, the Commission found Mr. R. to be an independent contractor on the date of his injury. The Commission found that the evidence and testimony established these facts: Mr. R. controlled the manner and means of providing his delivery services; Mr. R. provided his own vehicle, paid for his own fuel and maintenance; the Alleged Employer did not dispatch Mr. R. on any particular route; Mr. R. controlled which hours he worked and was free to work for other entities; Mr. R. was free to terminate the relationship at any time and was also free to reject any assignments; Mr. R. was paid “per route/delivery” not by a wage; and Mr. R. was issued 1099 statements from the Alleged Employer and filed his taxes as self-employed.

Similarly, Mr. B. also alleged an employer-employee relationship with the company with which he entered into an independent contractor agreement. Mr. B., a delivery driver, was injured when unloading materials from his truck and was struck with a heavy box that was unsecured. In defense of Mr. B’s claim of employment, this Alleged Employer also supplied the Industrial Commission with documentary evidence of the independent contractor relationship, as well as two witnesses with personal knowledge of the day-to-day operations of the relationship.

The Industrial Commission disallowed Mr. B’s claim finding that he was not an employee of the Alleged Employer, but an independent contractor. The Alleged Employer offered evidence and testimony to establish the defense that it insufficient control over the manner and means of Mr. B’s performance of his work, failing to establish an employment relationship under Ohio law for workers’ compensation purposes. The commission determined that Mr. B was paid a percentage of each load delivery – not a wage; Mr. B was free to accept or reject each and every load offered; the equipment used, including the truck, was owned by Mr. B.; Mr. B set his own hours subject only to the delivery deadline set by the customer (not the Alleged Employer); and Mr. B was not told what specific route he had to take for his deliveries.

Allegations of employment relationships in truck delivery matters are very fact specific. However, diligent preparation of documents and testimony establishing the control factors on the performance of the work rest with the driver (or some third party) and not the Alleged Employer. Successful results before the Ohio Industrial Commission reflect this diligent preparation. The denial of Mr. R’s claim is now in Court on Mr. R’s appeal on the denial of an employment relationship. Mr. B. did not appeal the Commission’s final order denying his claim.

Claim 15-851474. On October 19, 2015 the IW fell off an eight (8) foot ladder while performing asbestos abatement. She sustained multiple rib fractures and soft tissue injuries to her fingers. A year after the injury the IW had surgery to her left hand. She returned to work. Some twenty (20) months after the accident she stopped working, claiming she also had developed “Right Hip Trochanteric Bursitis; Right Hip Labral Tear.” These conditions weredenied administratively both by the District and Staff Hearing Officers. The IW appealed to the court of common pleas.

In August, 2017 Ph.D. M diagnosed the IW with “Major Depression, Recurrent, Severe without Psychotic Features” as a direct and proximate result of her work injury. Ph.D. M’s history included sexual abuse as a child, adolescent, and in her first marriage. The Bureau of Workers’ Compensation sent the IW to Ph.D. Ko who supported the causal relationship to her work injury, omitting any history of her being a victim of sexual abuse and other stressors including her current marriage. Ph.D. Ka conducted a thorough psychological examination, including objective testing, something which hadnot been performed in the two prior psychological examinations.

Ph.D. Ka diagnosed a “Major Depressive Disorder, Recurrent, Moderate Severity” unrelated to the work injury. He also was aware that current Ohio Lawrequires that an additional psychological condition be caused by the work injury. Since both the labral tear and the bursitis had beendenied in the Claim, the District Hearing Officer disallowed the psychological condition being alleged.

Claim 17-208220. On September 4, 2017, the IW injured his low back while closing a truck tailgate door in loading a lawnmower in the course of his landscaping work. His claim was allowed for a lumbar sprain. On October 19th, the IW had returned to work full duty and was part of a crew performing landscaping services at a customer apartment complex. The manager of the complex called the employer’s main office with a resident’s complaint of a broken patio door caused by a rock striking the door in the area where the IW was using the industrial mower. The employer’s manager came to the complex and discussed the incident with the manager and agreed to repair the broken door. The IW disputed that he was involved in the accidental damage with the manager, but the manager and advised the work crew, including the IW, that the matter was handled and not to dispute the matter with the complex or resident and leave the work site.

Unbeknownst to the employer, the IW returned to the worksite moments later and paid a visit to the resident who reported the damage and began to dispute the incident and his role in it. The manager of the complex called the employer to express the deep disappointment in one of its residents feeling threatened by the IW. When the IW next returned to the employer’s office, the manager discussed with the IW the extremely problematic behavior of approaching the resident and terminated the IW on October 23rd. Subsequently, the IW filed for temporary total compensation alleging he was unable to work between November 4th and December 3rd, allegedly as a result of his allowed physical conditions.

Before the District Hearing Officer, evidence was prepared and offered in the form of documentation and testimony that the IW was not entitled to disability compensation because he had voluntarily abandoned his employment. The DHO noted that the employer had provided evidence that the Separation Report revealed that the IW had been terminated for “Misconduct,” and specifically for “Insubordination and violation of or failure to follow work rules and procedures” and “abusive conduct toward employees and/or customers.” Evidence was provided that the handbook clearly classified this conduct as an immediately terminable offense.

The employer was successful in establishing that the IW was terminated for a written work rule related to insubordination and abusive conduct toward customers, this rule was known to the IW or should have been known and constituted voluntary abandonment of his employment precluding temporary total compensation pursuant to theLouisiana-Pacific case decided by the Ohio Supreme Court.

Claim 14-820563. On March 11, 2014 the IW tripped over a vacuum cleaner cord and fell, fracturing her elbow. It was surgically repaired and she returned to light duty, eventually taking a different light duty job with another employer. Approximately two (2) years after the injury the Claim was additionally allowed for “Complex Regional Pain Syndrome/Reflex Sympathetic Dystrophy (CRPS/RSD) Left Upper Extremity.”

The IW stopped even limited duty work and started collecting Temporary Total Compensation effective July 1, 2016. She began treatment at The Cleveland Clinic Pain Clinic where she received a series of stellate ganglion blocks. By Summer. 2017 it appeared that she could return to a limited duty position but her attending family physician continued to keep her off work. The IW claimed her symptoms had migrated to her right lower extremity and that she needed to be treated with a spinal cord stimulator. The Employer became suspicious, in part due to the insights of the nurse case manager who felt the IW’s symptoms had become inconsistent.

Surveillance was undertaken which showed the IW using her left upper extremity to close a SUV door, carry an umbrella, make calls and take pictures with her cell phone, clap her hands at her middle school aged son’s football game, and so forth. A new independent medical examination was scheduled with M.D. H, a physical medicine specialist. After he completed his examination, he was sent the surveillance tape. Further highlights showed the IW walking normally with her right lower extremity across stadium bleachers holding a soda pop bottle with her supposedly symptomatic left upper extremity.

On cross-appeals from the District Hearing Officer, the Staff Hearing Officerdenied right lower extremity CRPS/RSD and the spinal cord stimulator. The IW was declared to have reached Maximum Medical Improvement.

Claim No. 17-185318: The Ohio Industrial Commission granted the Employer’s appeal and vacated a prior order allowing a long-time assembler employee’s carpal tunnel/cubital tunnel claim. Evidence presented at the appeal hearing included a summary of Claimant’s work activities that minimized the time spent with vibrating tools and repetitive tasks. We also highlighted Claimant’s pre-existing risk factors of diabetes and high body mass. Finally, we pointed out that Claimant had worked for years at the assembler position without issue, and then had been removed from the assembler position for months with no abatement of hand/wrist/elbow symptomology.

Industrial Commission Update

The Industrial Commission has issued several Memoranda over the past year, two of which are based on noteworthy court decisions discussed above. These Memoranda are designed to provide “guidance” to Hearing Officers in applying the law as interpreted by the Ohio Supreme Court.

Memo B2. Substantial Aggravation (Effective 08/25/2017).

In light of the Clendenin case, the Industrial Commission instructed Hearing Officers to be especially clear on the bases of decisions for substantial aggravations. The “substantial aggravation” standard only applies to claimsafter August 25, 2006, the date on which this legal provision became effective. Similarly, “abatement” of the substantially aggravated condition is only possible with these claims.

By legal definition, a substantial aggravation must be evidenced by objective diagnostic findings, objective clinical findings, or objective test results. Whether a substantial aggravation has occurred is alegal rather than medical determination. “...(A)lthough it is necessary that the hearing office rely on medical evidence that provides the necessary documentation pursuant to the statute, it is not necessary that the relied upon medical evidence contain an opinion as to substantial aggravation.”

Consistent with Clendenin, finding that a substantially aggravated condition has abated, or returned to baseline, is an extent of disability decision which isnot appealable to common pleas court. The claim remains allowed for the substantial aggravation. “Hearing officers are to handle requests for additional compensation or treatment after an abatement finding as they do requests for a new period of temporary total disability after a finding of maximum medical improvement.”

The Industrial Commission has issued two Memoranda in the past year. These Memoranda are designed to provide “guidance” to Hearing Officers in applying the law based on recent developments in Ohio.

Memo C1. Firefighters’ and Police Officers’ Occupational Disease (Effective 8/25/2017).

This Memo, which the Commission adopted in the aftermath of Ohio Senate Bill 27, discussed more thoroughly below in the BWC update, looks to guidance hearing officers in the application of a rebuttable presumption in dealing with cancer-related claims filed by first responders like police and fire fighters. The Memoranda sets fort the affirmative evidence that would be used to rebut the presumption that the disease he or she suffers from was contracted or induced in the course of and arising out of the employment, and therefore, is compensable.

Memo D5. Voluntary Abandonment (Effective 05/17/2017).

This Memo is based on the Cordell case. It differentiates three (3) logical types of voluntary abandonment. The most straightforward is voluntary retirement from the workforce. If the retirement is based on the “voluntary” choice of the worker then future temporary total or permanent total benefits are precluded. If the retirement is due to the allowed conditions in the claim, then it is not considered “voluntary.” Future compensation for being off work is possible if the appropriate criteria for compensation have been met.

Closely related to voluntary retirement is “abandonment of the entire workforce.” This may or may not be a result of the industrial injury. When it does result from an industrial injury, the correct inquiry centers on whether the worker has sought other employment. A typical scenario would be an injury followed by some period of temporary total, an end to the temporary total, and future medical treatment. If there has beenno attempt to re-enter the workforce, future wage replacement benefits are precluded regardless of whether or not the worker could return to the former position of employment.

The third type of voluntary abandonment is described by Cordell and requires review on a case-by-case basis. In pursuing this inquiry, theCordell test should be addressed: off-work benefits may not be denied where: (1) the worker remained medically incapable of returning to work due to the injury; and (2) discovery of the dischargeable offense occurredbecause of the injury.

Memo M7. Treatment Requests (Effective 8/25/2017).

This Memo simply sets forth the providers who may submit treatment requests in a BWC claim for physical and psychological conditions. For physical conditions, the Memo guides the Hearing Officer that such treatment requests may be submitted by a Medical Doctor, a Doctor of Osteopathy, Chiropractor, Advanced Practice Nurse, Nurse Practitioner, Clinical Nurse Specialist, Physician Assistant, Physical Therapist, Occupational Therapist, Optometrist and Audiologist.

For psychological conditions, the treatment request would need to be submitted by a Psychologist, Medical Doctor, Doctor of Osteopathy, Licensed Clinical Counselor or a Licensed Independent Social Worker.

Ohio Administrative Code Revisions

Two provisions of the Ohio Administrative Code that govern proceeding before the Ohio Industrial Commission were also revised. Ohio Administrative Code 4121-1-02 and 4121-1-03 (Effective February 8, 2018), were revised to clarify the rules for public meetings and non-adjudicatory meetings of the Industrial Commission.

Bureau of Workers’ Compensation News

Another Billion Back

On April 24, 2018, Ohio Governor John R. Kasich and Ohio Bureau of Workers’ Compensation (BWC) Administrator/CEO Sarah Morrison proposed giving Ohio employers another $1.5 billion in premium rebates this summer. The rebate was proposed to BWC’s board of directors and the board will take up a vote at its May 24th meeting. If approved, rebate checks would likely be mailed in July and August. The proposed rebate equals 85% of the premiums paid for the policy year that ended June 30, 2017 (calendar year 2016 for public employers). With this rebate, BWC will have saved employers $8 billion in workers’ compensation costs since 2011 after considering other rebates, credits, greater efficiencies and several rate reductions, including two this year.

In the past year, many changes to the Ohio Workers’ Compensation system were implemented and/or have recently become law. A summary of some of the more intriguing updates follows:

Changes Affecting Ohio State Fund Employers
Another Round of Refunds

The financial position of the Ohio State Fund continues to be quite healthy. Strong investment returns and reductions in claims cost allocations continue to outpace the BWC’s recent rebates and premium transition credits totaling over $3 billion, increases in safety grant funding, and reduction of employer premium rates.

As a result of the BWC’s net surplus of $9.6 billion, the BWC announced in Spring 2017 yet another round of “Billion $ Back” refunds, the 3^rd such rebate in the last 4 years. An estimated total of over $1 billion is on track to be refunded to State Fund employers by late October 2017. The rebates are based on premiums paid for 2015 policy years, and will provide employers with a refund of 66% of premiums calculated for that year.

A few interesting tidbits about this rebate:

• Public employers, since they already received a 50% credit as part of the transition to paying premiums in advance, are getting refunds ~16% higher than the amount they actually paid to BWC.

• Public employers enrolled in group retrospective rating programs are potentially adding rebates, payable in Spring 2017 through Spring 2019, to this “profit” position.

• Private employers, since they received a 16.67% credit as part of the transition to paying premiums in advance, are seeing net premiums of 17.34% versus the calculated premium for the July 2015 PY.

• Private employers enrolled in group retrospective rating programs are potentially adding rebates payable in Fall 2017 through Fall 2019, and could ultimately realize a “negative net” premium for the July 2015 policy year.

Expanded Handicap Recovery

Currently the Ohio handicap reimbursement provision permits reduction of medical and “total

disability” costs charged to an employer, including associated reserves if applicable, based on the impact of a defined listing of pre-existing conditions on the complexity and costs of a claim.

Settlement amounts, since they are not disability compensation per se, have historically not been reducible by the handicap recovery. In fact, when a claim with a handicap recovery also has a settlement, a rather complicated allocation-type calculation is required to derive the total claims cost reduction resulting from the handicap recovery.

House Bill 27 has changed the handicap rules so that the handicap recovery also will be applied to settlement payments.

BWC has not finalized how they will implement this change, but they plan to propose to apply the new rules only when the settlement effective date or handicap recovery determination is after the September 29, 2017 effective date of the Bill.

Changes Affecting All Employers

Firefighters Cancer Claim Rebuttable Presumption

In Spring 2017, Ohio Senate Bill 27 expanded the scope of claims of work-related cancer filed by firefighters.

Under this Bill, “cancer contracted by a firefighter who has been assigned to at least six years of hazardous duty as a firefighter constitutes a presumption that the cancer was contracted in the course of and arising out of the firefighter's employment, if the firefighter was exposed to an agent classified by the international agency for research on cancer or its successor organization as a group 1 or 2A carcinogen.” The law states this presumption is rebuttable if there is evidence that:

• The firefighter was not exposed to an agent classified by the international agency for research on cancer as a group 1 or 2A carcinogen;

• The firefighter has been exposed to cigarettes, tobacco products, or other conditions presenting an extremely high risk for the development of the cancer alleged, or was probably a significant factor in the cause or progression of the cancer;

• The firefighter incurred the type of cancer alleged before becoming a member of the fire department;

• It has been more than 20 years since the firefighter was last assigned to hazardous duty as a firefighter.

• The firefighter is 70 years of age or older.

Statute of Limitations for Filing Claims

Currently in Ohio a workers’ compensation claim is considered timely if it is filed within 2 years of the date of injury or other defining date of occupational disease. House Bill 27 reduced that statute of limitations, for injury or death claims only, to 1 year, for all new claims occurring on or after September 29, 2017. The statute of limitations for filing occupational disease claims remains at 2 years.

This could seemingly have an impact on motor vehicle accidents claims where the filing of the workers’ compensation claim were purposefully delayed until insurance and other recoveries have been obtained. The subrogation process and associated recoveries under such circumstances could also be impacted.

Extended Time for Appeals to the Common Pleas Court

Currently an appeal to the Court of Common Pleas is due within 60 days from the Industrial Commission’s final order. New Ohio law extends appeal timeline to 150 days, but only if the claimant or employer files notice of intent to settle the claim and other party does not object to that intent.

This change should help to facilitate settlement of claims without the costs of legal activity surrounding the filing of/response to the Court actions. This applies to new claims occurring on or after September 29, 2017.

The legislation also increases the maximum award of attorney’s fees for a successful court challenge from $4,200 to $5,000.

Incarcerated Dependents Cannot Receive Compensation

It has long been the case that incarcerated Ohio workers’ compensation claimants could not receive compensation payments. However, this rule did not prevent a dependent (ie widow/child in a death claim) from receiving compensation payments during a period of incarceration. The new law corrects this situation and bars payment to incarcerated dependents as well.

90 Day Extent of Disability Examinations

Per statute, the BWC is required to examine claimants who are collecting temporary total disability every 90 days. These examinations are currently scheduled “automatically” by BWC (but in practice often require prodding of the BWC by employers or their representatives). Per the new law, the BWC may now waive the 90-day examination for good cause. However, if the employer objects to the waiver, the BWC shall be required to schedule the examination.

Permanent Partial Examination No-Shows

Currently if a claimant repeatedly does not show for scheduled BWC examinations related to a filing for percentage of permanent partial benefits (C92), the BWC may suspend the claim until the claimant formally promises to comply. However, over the years this has resulted in ~20,000 claims statewide being suspended for this reason, and remaining in that status. The new law empowers the BWC to dismiss the C92 application entirely due to a failure to appear for BWC examination(s).

July 2018 Policy Year Rates Announced

The BWC will be reducing private employer premium rates by an average 12% for the July 1, 2018 policy year. This reduction would save private employers $163.5 million over the current policy year's premiums, according to BWC’s analysis.

The current policy year’s rates, according to the BWC, are already at their lowest rates in at least 40 years.

BWC experienced 86,290 allowed claims in 2017, nearly an 18% drop from 2011. This is the lowest number of claims dating back to at least 1997, when there were more than 277,000 claims.

BWC's efforts to promote safe and healthy workplaces, increased safety funding and more employers putting safety education and resources to work, have contributed to this decrease in claims and premiums.

From 2010 through 2015, BWC's Division of Safety & Hygiene, which provides a wide array of no cost safety and other assistance to Ohio employers, saw a 71% increase in the number of employers using its safety programs and services.

BWC's private employer rates have decreased or remained unchanged every year since 2007, with the last reduction occurring in 2016. Public employer rates have fallen as well, including a 6.1% cut that took effect January 1, 2018.

Of course, rate adjustments for an employer’s particular manual classifications vary widely between the BWC’s self-imposed caps of +14% to -36%. Additionally, expected loss rates, which drive experience calculations, also saw an overall decrease, which could result in higher experience modifiers that would at least partially offset base rate reductions.

Employers’ third-party administrators or other resources should be consulted to determine how their individual premiums may be affected by these BWC rate changes.

Motor Vehicle Accidents Not Chargeable – Practical Observations

As a result of the passage of House Bill 207, if a State Fund employer can establish that an employee’s claim is a result of a motor vehicle accident involving a third party in which the employee was not at fault, BWC may exclude the cost of the claim from the employer’s future premium rating calculations. This policy is effective for accidents occurring on or after July 1, 2017.

The law, as currently written, requires that the third party at-fault driver have active insurance coverage, or the employer has active uninsured motorist’s insurance coverage,and the at-fault driver must have been issued a citation as a result of the accident, to obtain the claim cost exemption.

Initial experiences with this new procedure have revealed that the issuance of a citation can prove to be a stumbling block in gaining BWC approval of the exemption. Since issuance of a citation tends to be discretionary, we are finding that they are not always available. BWC thus far has adhered to the letter of the law as currently written, and is denying relief absent an actual citation.

Failure to meet all the requirements of this new statute, however, does not prevent the BWC from pursuing their rights to subrogate against a third party, and provide proportional relief to the employer’s rating experience based on the amount they recover.

Proposed Rating Experience Changes / Premium Credits for July 2019 Policy Year

BWC analyses suggest that premiums for individually rated State Fund employers (those who are not in group experience rating programs or involved with PEOs) may not be adequately aligned to their actual claims costs. As a result, BWC is proposing a number of changes to the core factors which govern BWC’s experience rating calculations, and the resulting premiums charged to this set of employers.

The proposed changes, which are in the process of review and approval, include:

• Introducing a Premium Size Factor to reduce the premiums of individually rated employers who pay in excess of $5,000 in annual premium. The current proposal recommends:

o A 15% discount on premiums between $5,000 and $100,000

o A 20% discount on premiums between $100,000 and $500,000

o A 25% discount on premiums above $500,000

• Reduce the maximum chargeable claims losses and experience credibility factors for the smallest Ohio employers

o The current $12,500 per claim maximum in place for very small employers would be scaled to between $2,000 and $8,000, depending on size (as measured by expected experience period losses)

o Increase experience credibility factors for medium to large employers

▪ Credibility factors applied to larger employers would rise towards the 53% maximum more quickly under the current proposal

▪ This should result in a more significant influence of loss ratios on experience modifiers and resulting premiums

• Introduce an experience modifier adjustment factor for individual employers. The current proposal recommends:

o An experience modifier adjustment credit of 5% for EMRs 0.90 and lower

▪ ie a 0.80 EMR would be adjusted to 0.76

o No adjustment factor for EMRs 0.91 to 1.99

o An experience modifier adjustment penalty of 5% for EMRs 2.00 and higher

▪ ie a 2.25 EMR would be adjusted to 2.36

• Revise group retrospective rating program basic premium factors to compensate for the impact of above changes

o Base premium factors would increase by 4-6% for most currently available group retrospective rating programs

▪ This would reduce the potential performance-based refunds available to participating employers

As mentioned, these proposals have already evolved from their original form, and may change further before final approval by the BWC’s Board of Directors. However, the BWC seems intent on making these changes effective for the July 1, 2019 policy year.

The changes mean that long-standing rating program selections should be closely examined to determine if they still provide optimum results, especially for employers with larger premium and/or moderate loss ratios.

Employers’ third-party administrators or other resources should be consulted to determine how their premiums and alternative rating program options may be affected by these proposed changes.

BWC Wellness Initiative

Through their recently announced “Better You, Better Ohio” program, BWC is taking steps to introduce wellness resources and services to workers who work for small employers (50 or fewer workers).

At present, this program is limited to the following high-risk industries: Agriculture; automotive repair and service; construction; firefighters; health care; manufacturing; police and public safety; public employers; restaurant and food service; transportation and trucking; trash collection; wholesale and retail.

Upon being identified by Ohio’s WC Managed Care Organizations (MCOs), and agreeing to participate, injured workers can qualify for free services such as:

• Health and wellness awareness, education and training

• Health assessments & biometric screenings to better understand their health and well-being

• A website allowing them to develop health plans & track progress to achieve their health goals

• A state-of-the art mobile app for creating weekly action plans and getting health tips

• Digital coaching to help them on their journey to better health.

This program, still in its infancy, strives to extend the BWC existing Wellness Grants program, which offers up to $15,000 in refunds to employers (usually larger ones) who implement a comprehensive Wellness program including measurements and coaching to address at risk health behaviors.

Payment of Initial Compensation Expedited

Currently, if sufficient wage information is not on file, calculation of the Full Weekly Wage (FWW) cannot be accomplished, and therefore Temporary Total compensation cannot be initiated. The new law requires that in these cases, the FWW shall be established equal to 1/3 of the statewide average weekly wage, and compensation paid accordingly. When the necessary history of prior wages is filed, the compensation rate and amount due will be adjusted with either additional payment made, or in the case of a lower FWW, a declaration of overpayment will result.

BWC Funding Raid Averted

House Bill 49, among many other things, permitted the Ohio Office of Budget & Management (OBM) to transfer up to 2% of the annual BWC/Industrial Commission funding appropriation to the State’s General Revenue Fund.

In response to this unprecedented action, on July 7, 2017 a meeting between the Director of the OBM and Members of the Ohio Business Community was held. The result of this meeting was a signed Memorandum of Understanding between the Business Community and the OBM, including commitments that:

• The OBM will not exercise their authority to transfer funds before January 13, 2019;

• If the OBM intends to access the BWC/Industrial Commission’s funding, they will provide at least a 14-day notice to the Ohio Business Community’s counsel;

• The Ohio business community will not take legal action (prior to January 13, 2019) based on the authority granted under the Bill;

• The OBM will not oppose legislative efforts to remove or negate the offending language in the Bill.

About the Author

Michael Brown, ARM is an Account Executive with Paramount Preferred Solutions, a Third Party Administrator (TPA) recognized nationally for expertise in all aspects of Workers’ Compensation, Group Health, and Disability Management solutions. Michael has over 37 years’ experience in the Workers’ Compensation and Risk Management business since obtaining his mathematics & statistics degree from Miami University in Oxford, Ohio, and is also a licensed Health Insurance agent.

In addition to experience as a claims examiner and hearing representative, Michael has consulted with employers on the development and maintenance of best in class strategies, including evaluating the wide array of risk financing options available to employers. Michael has also served as a Workers’ Compensation and Employee Benefits Manager for a multi-facility self-insured employer. This experience and his certification as an Associate in Risk Management (ARM) affords him in-depth insight into creative and wide-reaching solutions to the most complex Workers’ Compensation challenges.

With his extensive experience in the field of workers’ compensation and other employee benefit matters, Michael consults with employers in a number of ways to allow them to save time and money by reducing the risk and costs of illness and injury. Please feel free to reach out to Michael at mike.brown@promedica.orgor (877) 765-4200 ext. 270.

DWC Commissioner Ryan Brannan announced his resignation, effective May 1, 2018. Commissioner Brannan was appointed by Governor Rick Perry in August 2014 and was reappointed twice by Governor Abbott. We wish him well in all his future endeavors!

New Jersey adjusters sometimes ask why future benefits under an order approving settlement with a percentage of disability cannot be paid in a lump sum to the injured worker.  In other words, why is there a requirement that future payments be paid out over a period of many weeks or even many years? This question goes to the foundation of the New Jersey system.  The New Jersey Act is social legislation, and Judges of Compensation are required to look out for the best interests of injured workers.  There is a legislative conviction that dependable weekly payments of permanent partial or total disability are almost always in the best interest of injured workers.  The right to reopen workers’ compensation cases is extended until two years from the last payment, (which benefits the employee), and the insistence on weekly payments avoids the temptation to risk a large sum of money in an exercise of bad judgment, perhaps gambling or betting on a hot stock.

If an adjuster were to mistakenly advance, for example, 100 weeks of future payments in one lump sum, this would amount to an impermissible commutation.  There is a procedure under N.J.S.A. 34:15-25 for employees to obtain a commutation of future payments, but an application must be filed with the Director of the Division for judicial permission to commute an award. Usually the Judge of Compensation who approved the settlement hears the commutation request.  The statute reads, “Compensation may be commuted . . . at its present value, when discounted at five per centum (5%) interest, upon application of either party, with due notice to the other, if it appears that such commutation will be for the best interest of the employees or the dependents of the deceased employee, or that it will avoid undue expense or undue hardship to either party. . .”

There are few published cases on commutations, but generally judges focus on whether there is an undue hardship on the injured worker or family or a compelling need that may justify a lump sum commutation.  One example comes from Harrison v. A & J Friedman Supply, Co., 372 N.J. Super. 326 (App. Div. 2004) where the applicant, a dependent spouse, applied for a commutation of a dependency award because the building she resided in was in default to the City of New York, giving her the opportunity to purchase her Manhattan residence for $370,000.  She could obtain a mortgage for about half that amount, but she needed to commute future permanency payments to raise the balance of the purchase price.

The Judge of Compensation reviewed the New Jersey Administrative Code provisions on commutations.  The relevant code provision provided, “No award for total disability or dependency benefits shall be commuted.”  The Judge of Compensation therefore denied the application, and the petitioner appealed.  The Appellate Division disagreed with the administrative code provision.  It said, “A plain reading of this statute, spurred by the absence of any limit on the types of compensation benefits that may be commuted, suggests that the discretion to permit commutation was intended to encompass all types of benefits, including the total disability and dependency benefits specifically referenced in N.J.A.C. 12:235-6.3 (d).”  The Court held that under certain circumstances a commutation may be made in dependency and total and permanent disability cases.

The Court did not order the commutation but it sent the case back to the Judge of Compensation for further proceedings.  “Certainly, upon remand, the parties should be afforded an opportunity to present information regarding the appellant’s financial status, her ability to maintain her lifestyle in the absence of the weekly benefits, the value of the property appellant is desirous of purchasing, the availability of funds other than the dependency benefits, and the availability of other financing that might render commutation unnecessary.”  As one can see from reading this quotation, commutations are not simple matters.  Judges must analyze many different issues and develop an understanding of the injured workers’ financial status before making an informed decision.  It is a case by case analysis often requiring substantial testimony. In actuality, there are surprisingly few commutation requests annually in the Division.

This legislative preference for weekly payments of permanency benefits also explains why annuity companies are less involved in New Jersey than in other state workers’ compensation systems.  In many states, an annuity company may offer an injured worker a stream of payments changing over time, perhaps increasing in future years at a higher rate. But in New Jersey payments must be made according to the statute.  If an award is entered for 60% permanent partial disability, it is paid out over 360 weeks at one set rate.  If an annuity company were to contract with the employer to make those 360 weeks of payments, the annuity company would be required to make the payments at the rate established in the court order.  The annuity company could not vary the rate or increase the rate while shortening the period of payments or make any other material change without the permission of a Judge of Compensation.

Over all, the New Jersey system makes good sense, even though injured workers may sometimes be disappointed that their payments must be spread out over many weeks.  Settlements by lump sum payments do happen frequently in New Jersey, of course, under N.J.S.A. 34:15-20, but these settlements are only available where there is a genuine issue of causation, liability, jurisdiction or dependency.  A smaller percentage of cases is settled under Section 20 than on a percentage basis under N.J.S.A.  34:15-22.

The New Jersey system is designed to provide protection for injured workers and their families by creating a steady and dependable stream of tax free payments over a period of weeks or even years, depending on the severity of the injury and its impact on the employee’s work or non-work life.  Permission to apply for a commutation is potentially available to any recipient of a percentage disability award paid out over future weeks, but the employee must prove to the Judge of Compensation that such a commutation is in his or her best interest.

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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.