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In the past month three clients have asked what they should do when there is a third party award larger than the comp award and the adjuster needs to pay a permanency award.  For example:  the claimant recovers $750,000 in a third party law suit.  The total medical and temporary disability benefits are $150,000, and the permanency award is 50% of partial total at 2013 rates or 300 weeks at $551 per week for a total of $165,300.  The claimant has already repaid $100,000 minus $750 for costs of suit to resolve the lien on the medical and temporary disability benefits. Now only the permanency award needs to be paid.  Does the adjuster pay the permanency award over 300 weeks or does the adjuster pay one lump sum to the claimant?

            This situation happens quite frequently, and the answer to the question can be found in the case ofOwens v. C&R Waste Material, 76 N.J. 584 (1977).  That case involved an award in workers’ compensation for total and permanent disability benefits; however, the third party recovery was higher than the total workers’ compensation payments.  The employer argued that the payments for permanency should be made over 450 weeks.  The employee argued that the adjuster should pay one third of the permanency amount due in one check. 

First, the New Jersey Supreme Court made clear that in a situation where the third party award is larger than the total workers’ compensation benefits,the employer is relieved of all liability to the claimant, other than to pay the employer’s share of the attorney’s fee in the third party case.  That percentage is usually one third.  That point must be emphasized because it means that the employer is not really paying workers’ compensation benefits in this situation:  the employer is just reimbursing petitioner for counsel fees.

Next, the court dealt with the argument that it is unfair to require the employer to accelerate the permanency payments in one lump sum because the employee might die during the period of the payments of total and permanent disability.  The employer further argued that if the employee should die during the period of permanency payments and not be survived by dependents, then all the employer would have to pay is a contribution to funeral expenses. 

The Supreme Court rejected the employer’s argument:

We disagree and conclude that the legislative intent as expressed in N.J.S.A. 34:15-40 is that the computation of the employer’s pro rata share of the attorney’s fee in the third party recovery should be based on the potential compensation liability from which it has been released and does not depend on the happenstance of whether such liability were to terminate prematurely.

The Court added, “Since the obtaining by the employer of this tangible benefit coincides with the third-party recovery, it follows that the obligation to share legal expenses attributable to that recovery should be satisfied at the same time those expenses are borne by the employee.”

So, let’s go back to the initial example above.  Does the employer pay $551 per week over 300 weeks reduced by two thirds or does it just issue one lump check in the amount of $55,100, which is  one third of $165,300?  Under the rationale ofOwens, the answer is the employer pays one lump sum check for $55,100.  It does not make the payments over a period of 300 weeks.

While it is true that Owens was a claim for total and permanent disability, the rationale should be the same whether the award is for partial or total permanent disability.  The point is that the employer is not paying the employee workers’ compensation benefits.  It is reimbursing the employee for its share of counsel fees, and the Supreme Court felt that this should be done

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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.  

Key City Transport, Inc. and Great West Casualty Co. v. James Delire, Court of Appeals of Iowa, No. 14-1755

 Claimant, James Delire, was hired by Key City Transport as an over-the-road driver and commenced work on May 23, 2008. During his third week, Claimant was injured while unloading large windows.

 Dr. Setter diagnosed Claimant with a severe right shoulder sprain and cervical and thoracic sprains. Dr. Mendel then diagnosed Claimant with a possible slap lesion with a labral injury or impingement. Dr. Mendel proposed arthroscopic surgery. Surgery was performed in February 2009. Following additional treatment and therapy, Dr. Mendel recommended a second shoulder surgery, which he performed in February 2010. Dr. Mendel also performed a right carpal tunnel release, a right cubital tunnel release, a right arthroscopic glenohumeral joint and labral debridement and synovectomy, a right shoulder bio-tenodesis, and another subacromial decompression. Claimant met with Dr. Mendel in August 2010. Dr. Mendel opined Claimant had reached MMI and released him without any work restrictions.

Claimant began to experience pain in his left shoulder from overcompensation. In June of 2011, Claimant was told by Key City to make a ten-hour trip to Michigan. Claimant became upset and emotional. Bitter told Claimant to obtain a letter from a mental health professional opining he was able to drive. Claimant attempted to obtain mental health treatment, but the workers’ compensation carrier did not approve the sought-after treatment. Claimant never performed any work for Key City after this time.

 On June 26, 2011, Claimant filed his arbitration petition for the injury occurring in 2008. On February 12, 2012, Claimant filed a petition for alternate care and requested another appointment with Dr. Mendel. Dr. Mendel recommended another MRI, which revealed a small full-thickness tear of the rotator cuff. Great West denied the claim as not being work related. Claimant followed up with Dr. Mendel, who did not recommend surgery at that time. Dr. Mendel noted Claimant seemed depressed, and Dr. Mendel recommended a psychiatric evaluation. Key City scheduled a psychiatric IME with Dr. Jennisch. Dr. Jennisch concluded Claimant had an adjustment reaction with a combination of depressive and anxious features. Claimant requested Great West authorize mental health treatment, but it was not authorized.

The deputy commissioner issued an arbitration decision in September 2013. The deputy found Claimant’s left shoulder injury was “a sequela from compensating for the right shoulder injury.” The deputy concluded it was not possible to evaluate Claimant’s industrial disability because it was “highly doubtful claimant has actually reached maximum medical improvement.” The deputy awarded running healing period benefits “until such time as the requirements for termination of healing period benefits are met.”

Key City appealed. The appeal decision adopted the arbitration decision except the commissioner recalculated Claimant’s weekly compensation rate. The commissioner explained the record did not contain evidence of any weeks of work representative of Claimant’s earnings, but Claimant had been told that similarly-situated drivers earned $70,000 to $75,000. Thus, the commissioner concluded that claimant’s weekly compensation rate should be based on an annual income of $70,000.

 Key City petitioned for judicial review, challenging the weekly benefit rate, medical causation, and the award of healing period benefits. Claimant filed a crosspetition, challenging the commissioner’s determination of the weekly benefit rate. The district court affirmed the agency’s findings regarding medical causation and the award of healing period benefits. The district court reversed the agency’s calculation of the weekly benefit rate, explaining the process used could not be upheld “as either rational, logical, or justifiable.” The court remanded to the agency “to undertake the proper analysis of the facts contained within the record already made in coming to a proper rate calculation.” Claimant timely appealed, and Key City cross-appealed.

 Key City contends the district court erred in affirming the deputy commissioner’s findings of fact and conclusions of law regarding medical causation and in affirming the deputy’s award of running healing period benefits.  The Court of Appeals emphasizes that the relevant question is not whether the evidence would support a different finding, the relevant question is whether substantial evidence supports the finding actually made. The Court concludes that it does. It notes that Dr. Robin Epp, who conducted an IME, found that Claimant’s cervical and thoracic spine injuries were causally related to his work injury and also that Claimant’s shoulder injuries were linked to the work injury. Also, the agency relied on Dr. Jennisch’s determination that Claimant’s work injury was a substantial factor in causing Claimant’s mental health condition.

 As to the healing period benefits, the Court of Appeals notes that the agency awarded Claimant healing period benefits for several periods, including running healing period benefits from and after June 15, 2011. The agency made the award based on several considerations. First, Claimant did not successfully return to work. His routes were limited in distance. He did not perform loading and unloading. His employer precluded him from driving without a release from a mental health professional. Second, the agency found that Claimant had not in fact reached MMI. The agency found Claimant had physical and mental health conditions untreated and relevant to an industrial disability determination. As such, the Court concludes the agency’s findings on the issue of healing period benefits are supported by substantial evidence and its application of the facts to the law was not irrational, illogical, or wholly unjustifiable. 

Claimant contends the district court erred when it overturned the commissioner’s weekly rate calculation. The Court of Appeals agrees with the district court in finding that the commissioner’s use of hypothetical annual earnings to obtain weekly earnings cannot be upheld as rational, logical, or justifiable when the acceptable methods of determining Claimant’s weekly earnings are set forth by statute. The record does not contain any evidence of the earnings of “other employees in a similar occupation.” Nor does it contain evidence of any representative week “had the employee worked the customary hours for the full pay period in which the employee was injured, as regularly required by the employee’s employer for the work or employment for which the employee was employed.” 

The Court of Appeals therefore affirms the judgment of the district court.

 Call Mark Bosscher or Lee Hook with any questions @ 515-243-2100.  We’d be happy to help, whether it be a quick or a complex issue!

Ex parte Ward International

Released September 4, 2015

The Employer, Ward International, filed a Petition for Writ of Mandamus after the Circuit Court of Mobile County entered and ordered, upon motion by the Employee, Wesley Shows, requiring the Employer to pay for erectile dysfunction (ED) medication order by the authorized treating physician.

The Employee and Employer had entered into a settlement related to a compensable lower back injury. The settlement left the issue of future medical benefits open. In March of 2015 the authorized treating physician, Dr. Wayne Cockrell, prescribed time release medication to be ingested every day to treat the Employee’s ED. The Employer deny the request and the Employee filed a motion with the trial court requesting that they enter an order requiring the Employer to pay for the ED medication. The motion included an opinion from Dr. Cockrell that the Employee suffered from chronic pain that required narcotic analgesics, and that ED can certainly be associate with chronic pain and the use of narcotic analgescis.

In its petition the Employer did not argue that it was entitled to an evidentiary hearing pursuant toEx parte Publix Supermarkets, Inc, 963 So. 2d 654 (Ala. Civ. App. 2007), nor did the Employer argue that the medication was reasonable necessary to treat the ED which resulted from the compensable accident/injury. The Employer relied solely on Rule 480-5-5-.15(15) of the Alabama Administrative Code, which is a regulation put into effect by the Alabama Department of Labor.

According to Rule 480-5-5-.15(15), which states it was promulgated pursuant to Ala. Code §25-5-293, the employer is responsible for ED medication when the employee suffers fromorganic ED that resulted from a compensable on the job injury. The rule further states that psychological or psychiatric ED are notorganic ED. The Department of Labor included 6 conditions that may cause organic ED: 1) Spinal cord injuries; 2) Injuries to genital and lower Urinary Tract; 3) Severe fracture fo the pelvis resulting in injury to the bladder or urethral pelvic nerve; 4) surgery of the genital or lower urinary tract; 5) removal of rectum causing injury to the nerves or vessels; or 6) any surgery that might interfere with the pelvic nerves or circulations. The Regulation goes on to state that the Employer is only responsible for 5 tablets per 30 days if treatment is for an accepted claim, one of the 6 conditions above are met, a urologist has evaluated the employee and determined he suffers fromorganic ED and a letter is received stating the medication for the ED is medically necessary.

The Alabama Court of Civil Appeals noted that, in this case, it was undisputed that the Employee did not suffer from one of the 6 conditions and a urologist had not evaluated him and determined he hadorganic ED. It was also undisputed that more than 5 tablets per 30 days was prescribed by Dr. Cockrell.

The Court of Civil Appeals first pointed out that while not clear, Rule 480-5-5-.15(15) appears to be a policy determination issued by the Department of Labor as to when ED will be compensable. The Court further noted that Rule 480-5-5-.15(15) was promulgated pursuant to §25-5-293, Ala. Code 1975, which states that insurance carriers and self-insured employers can adopt utilization review and engage in medical necessity determination, if conducted pursuant to policies, guidelines and regulations approved by the Department of Labor and Workers’ Compensation Medical Services Board.. In Overnite Transp. Co. v. McDuffie, 933 So. 2d 1092, 1098 (Ala. Civ. App. 2005), the Alabama Court of Civil Appeals ruled that a regulation promulgated pursuant to §25-5-293 which required an employer’s approval of all proposed referrals by the authorized treating physician did not override §25-5-77(a), which states employer’s are responsible for reasonably necessary medical treatment for injuries resulting from an accident that arose out of and occurred in the course of the employment.

Based on the holding in Overnite Transport, the Alabama Court of Civil Appeals ruled that Rule 480-5-5-.15(15) related to ED did not override §25-5-77(a). Therefore, since the evidence showed, and the Employer did not argue otherwise, that the ED was related to the work injury and the medication was reasonably necessary, the Court held that the Employer’s Petition was due to be denied.

Of note, The Alabama Court of Civil Appeals stated in a footnote to this opinion that the Alabama Workers’ Compensation Act provides for coverage of psychological or psychiatric conditions related to a physical injury. Therefore, it seems that the Court would find, if the issued presented itself, that §25-5-1(9) would provide coverage for psychological or psychiatric ED despite Rule 480-5-5-.15(15) stating otherwise.

My Two Cents:

Whenever there is a prescription for ED medication, it is advisable to focus on whether it is related and if the medication is reasonably necessary. You might consider having a urologist determine if the employee actually suffers from ED and provide an opinion as to the cause. You can also have the doctor weigh in on the reason for time release medication versus a tablet that could be taken as need with it being limited to 5 per 30 days. If the doctor opines that there is no medical reason for the time release medication, then it may be possible to argue that it is not reasonably necessary. Once you take §25-5-77(a) out of the equation, the Rule 480-5-5-.15(15) would apply which limits the employee to 5 tablets per 30 days for ED.

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ABOUT THE AUTHOR

The article was written by Joshua G. Holden, Esq. a Member of Fish, Nelson & Holden, LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation and related liability matters. Mr. Holden is AV rated by Martindale-Hubbell, which is the highest rating an attorney can receive. Holden 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.

New Jersey has a statute of limitations for occupational disease claims.  In Rajpaul v. McDonald’s Corporation, A-4681-13T4 (App. Div. August 28, 2015), the proper application of the statute became the issue on appeal.

 In this case, the petitioner worked as a maintenance person from August 1995 until November 2005 at McDonald’s.  He began to have pain in his shoulders, wrists, and elbows in 1999.  He sought medical treatment at Somerset Family Practice and was referred to Somerset Orthpedic Associates where he was diagnosed with bilateral bicipital tendonitis in 2001.

For the next four years petitioner continued to work at McDonald’s.  In June 2005, he returned to Somerset Family Practice for treatment of his left shoulder.  In November he left McDonald’s to work elsewhere.  In June 2006, petitioner was diagnosed with a left shoulder rotator cuff tear and underwent surgery to repair the tear.

On December 14, 2006 petitioner filed a claim petition against McDonald’s alleging that occupational duties over 10 years caused his rotator cuff tear.  McDonald’s moved to dismiss and argued that petitioner had failed to file within two years from when he knew the nature of his condition and thought that it was due to work.  The Judge of Compensation granted the motion, and petitioner appealed.

On appeal, petitioner argued that the two-year statute of limitations should not have run in his case because he did not know he had a rotator cuff tear until 2006.  While he did know he had shoulder problems as far back as 2001, he was never told he had a rotator cuff tear.  Respondent argued that his condition was simply a progressive one due to tendonitis.

The Appellate Division sided with petitioner.  “We agree with the compensation judge that petitioner knew of his prior diagnosis of tendonitis as early as 2001.  Even so, we disagree with the compensation judge’s determination that petitioner had sufficient knowledge of a torn rotator cuff, based on previous treatment for tendonitis, to trigger the statute of limitations under N.J.S.A. 34:15-34.”

The Court in this case felt that the statute cannot run on a rotator cuff tear condition via a prior diagnosis of tendonitis because these are two completely different medical conditions.  The case is helpful for practitioners in deciding when there is a valid statute of limitations defense.  At a minimum, the medical condition at issue must have been diagnosed sometime in the past, and it must be the same medical condition that is presently at issue for the employer to win a statute of limitations defense.

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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.  

Our new Commissioner made some personnel changes at DWC. Barbara Salyers is the new Chief
Deputy. Her stated job duties are management and oversight of DWC operations and liaison with
TDI-Hobby administration and operations. Amy Lee and the Research and Evaluation Group now
report directly to Ms. Salyers. Patricia Gilbert, former Executive Deputy Commissioner for
Operations retired and Joe McElrath is now the Deputy Commissioner for Business Process, a
position similar to that previously held by Ms. Gilbert. Kathy McMaster will serve in a new position
called Deputy Commission of Claims and Customer Services (previously Field Operations). Kristen
Harmon is the new Director of External Relations. It remains to be seen what the impact of all of
these changes will be, but we will continue to keep an eye on things over at the Division.

We think it bears repeating that effective October 1, 2015, the Division is making the transition from
ICD-9 to ICD-10. The Division has a video to help participants with this transition at:
www.tdi.texas.gov/wc/hcprovider/icd10.html. As we mentioned in July, the Division has not
provided guidance on how carriers should process bills submitted with ICD-9 codes for dates of
service after 10-1-15 and has not provided any guidance to stakeholders regarding many issues that
are expected to arise. Hopefully we can update you in September. It could be quite a mess.

The Division education conferences will be held in Austin and Dallas this again this fall. The Austin
conference will be September 18 at the Renaissance Austin Hotel and the Dallas conference will be
October 9 at the Renaissance Dallas-Richardson Hotel. The Division offers continuing education
credit for adjusters. For more see: www.tdi.texas.gov/wc/events/edconference.html.

The short answer? It depends....The California Labor Commission ruled that an Uber driver who
filed a claim against the company was an employee. That ruling was limited to the facts of the
specific case in question, but could have ramifications for Uber drivers nationwide. On the opposite
coast, a New Jersey workers’ compensation judge ruled that a limousine driver in a business not
unlike Uber was an independent contractor. As the nature of the workforce continues to change in
the “gig” economy, many question whether worker protections fashioned for traditional full-time
workers provide adequate protection for the less traditional employment relationships. In Texas,
the real question is whether the company has the right to control the work performed by the
individual in question. There are currently no pending Uber-related cases in Texas. Stay
tuned..........

Charlesetta Jennings worked as a Support Services Assistant (SSA) at Womble Carlyle, a 500 lawyer firm based in North Carolina. Her job required performing a wide variety of tasks, including managing supplies, delivering or picking up packages, copying and scanning documents, setting up conference rooms, filing for receptionists, operating copy and scanning machines, and binding documents. 

Jennings took FMLA leave in 2008 when she was diagnosed with breast cancer and intermittent leave during periods of chemotherapy.  In November 2009, she noticed tenderness and swelling in her left arm, a condition diagnosed as lymphedema related to the breast cancer treatment.  Jennings continued to work but devised ways to avoid doing heavy lifting such as lifting packages or boxes of paper. 

In June 2010, Jennings suffered a work injury occasioned by heavy lifting.  She was working alone at the Liberty Plaza location of the office and had to tape up and move about 14 boxes weighing 32 to 38 pounds in addition to moving some paper boxes weighing 50 pounds.  Her doctor then restricted her to lifting no more than 10 pounds. 

The law firm met with Jennings and broke down the duties which Jennings could no longer perform.  There were two or three times more duties that she could not perform than the ones she could perform within the 10 pound restriction.  She could still copy and scan documents and deliver light weight envelopes as well as fill in for receptionists on breaks.   The law firm continued to accommodate her for six months on light duty because it had a large scanning project going on.  After the scanning project ended, the law firm could only keep Jennings busy 20% of the time. 

On February 1, 2011 Jennings provided an updated doctor’s note allowing her to lift permanently no more than 20 pounds.  However, there were still many tasks which Jennings could not perform with a 20 pound restriction.  The law firm therefore placed her on a medical leave of absence effective February 9, 2011 and when the leave ran out, the firm terminated her employment in August 2011.

Jennings sued under the ADA and contended that Womble Carlyle failed to make reasonable accommodation.  The EEOC brought the suit on behalf of Jennings.  The District Court dismissed the law suit, holding that even with reasonable accommodation, Jennings could not lift more than 20 pounds.  The Court of Appeals for the Fourth Circuit affirmed.

The Court of Appeals rejected the EEOC’s argument that Womble Carlyle could not consider job tasks that Jennings had not performed for quite some time. It said, “That an employee may typically be assigned to only certain tasks of a multifaceted job ‘does not necessarily mean that those tasks to which she was not assigned are not essential.’” (citations omitted). The Court pointed out that many of the tasks of an SSA required lifting substantially more than 20 pounds.  When Jennings had tried to life more than 20 pounds, she had in fact injured herself in 2010. 

To be sure, Jennings was able to devise ways to do some tasks, but she remained unable to do many more.  She could not work alone at Liberty Plaza or Winston Tower or on Saturdays, assist with office moves, deliver or pick up packages from offsite or among any of the three Womble Carlyle buildings, set up conference rooms, or any of a number of tasks.  Thus, even though Jennings’ work-around methods enabled her to perform a small subset of the job’s responsibilities, the ability to lift over 20 pounds was inextricably tied to the vast majority of them.

The Court concluded that Jennings was not a qualified individual under the ADA because she could not perform the essential job functions, even with accommodations.  The Court also said it would be unreasonable to require the law firm to reallocate essential functions and noted that the ADA does not require such reallocation. See 29 C.F.R. pt. 1630 app. 1630.2.(o).

This case is helpful for practitioners because it focuses on a fairly common situation where an employer temporarily accommodates an employee for a period of time until permanent restrictions are issued.  The mere fact that the employer temporarily made accommodations does not require the employer to permanently make those accommodations if the employee cannot perform the essential functions of the job with or without reasonable accommodation.  Nor must the employer ignore other essential functions of the job that the employee has not performed in quite some time. The case may be found atEEOC v. Womble Carlyle Sandridge & Rice, LLP, 31AD Cases 1349 (4^th Cir. 2015).

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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. 

On 8/26/15, the Division closed the informal comment period on possible amendments death and
burial benefits rules. The proposed amendments allow eligible spouses of first responders to remain
eligible for death benefits after remarriage and to increase the maximum amount of reimbursement
for burial benefits payable in all workers’ compensation death cases from $6,000 to $10,000. The
changes would apply to injuries occurring on or after 9/1/15. Formal comments will be requested
once the rules are proposed and published in the Texas Register.