State News

 The SD Supreme Court recently issued a decision in Patricia Wheeler v. Cinna Bakers LLC d/b/a Cinnabon and Hartford Casualty Insurance Company 2015 S.D. 25.  　

On May 6, 2015, the Supreme Court issued a decision in the above-referenced matter. The following issue was addressed: When calculating average weekly wage, do you consider wages from other jobs?

In this result-oriented decision, the Court held that a claimant is allowed to include earnings from other jobs when calculating AWW. The Court interpreted the definition of "earnings" used to calculate AWW in Claimant’s favor, finding that "earnings" were the sum of all wages from all of claimant’s employments no matter the type. As you can imagine, the effect of this will likely require an employer to pay higher rates to cover an employee’s other job or lost income-earning ability. The Court acknowledged this fact, but found that it is more appropriate for the employer/insurer to bear this burden rather than the claimant.

The Court did not address two prior cases expressly holding wages could not be combined.  In doing so, the Court called his an issue of first impression instead of overruling the older cases.  This likely means the case will be applied retroactively to all open files. 

 If you questions regarding this case, please contact Charlie Larson at 605-336-2424 orcalarson@boycelaw.com

Robert L. Miller v. McLaughlin Electric and Travelers Insurance

Robert Miller/Thomas J. Von Wald

Issue: (1) Whether the Claimant’s choice to move to assisted living over his treating physician’s approval of a "stair-glide" subjected the employer to pay for the assisted living arrangement?

Robert L. Miller ("Claimant") suffered a work related injury in 1982 at age 52. He continued treatment with a chiropractor and had a regular exercise program at the YMCA. In 2006, Claimant aggravated his injury. In 2013, he went to Orthopedic Surgery Specialists and reported that his back had worsened when he used stairs. He wished to go to assisted living and asked his treating physician at Orthopedic Surgery Specialists to write him a medical recommendation. The physician did so, but the Insurer subsequently inquired about whether a "stair-glide" would be an acceptable option. The physician stated in another letter that it would be an acceptable option so long as the Claimant did not use stairs. Claimant moved into an assisted living center in Oak Grove, Minnesota just prior to that letter from the physician to the Insurer. Insurer denied benefits and assisted living care, as a stair-glide in Claimant’s home would have been a more appropriate option. Claimant was also denied his requests for physical therapy to treat knee pain.

Ultimately, summary judgment was granted in favor of Insurer regarding Claimant’s request for payment of assisted living. Additionally, Judge Catherine Duenwald ruled that if Claimant wanted a change in choice of medical practitioner in order to attend physical therapy in Minnesota, it should have first been approved by the employer under SDCL § 62-4-43. Although ultimately prevailing, Insurer was ordered to pay Claimant’s gym membership in Minnesota as it was instructed by his treating physician and medical providers to continue exercising and swimming on a regular basis.

Charles Dockter v. Ron’s Equipment Painting, Inc. and Farmer’s Mutual Insurance Group

Lonald L. Gellhaus/J.G. Shultz

Issue: (1) Whether an injury sustained by Claimant arose out of and in the course of his employment with Employer?

Charles Dockter ("Claimant") was employed in July 2013 by Ron’s Equipment Painting, Inc. ("Employer"). His job duties primarily included power washing trucks, waxing, and cleaning. Prior to this employment, Claimant was fired and re-hired numerous times by Employer. Claimant’s alleged injury occurred on July 17, 2013, while he was washing a truck, but he did not report it to anyone. Claimant went to the Emergency Room in Ortonville, Minnesota on July 20, 2013, and afterwards he called his supervisor to notify him that he hurt his neck while working on July 17, 2013.

Multiple employees of Employer testified that Claimant had not told them anything about his alleged injury. Additionally, Claimant had requested July 18, 2013, off from work so that he could see his attorney. At hearing, Claimant provided inconsistent testimony regarding the pain and the circumstances surrounding the injury. Furthermore, in an unrelated event, the Department noted that Claimant had a co-worker who was injured when he closed his finger in the door of his house. Claimant advised the co-worker that he should tell the supervisor so that he could collect workers’ compensation for that injury.

Judge Hageman determined that the only evidence produced by Claimant was his testimony, which he did not find credible. Further, Claimant had a reputation for dishonesty which was further diminished by his suggestion to his co-worker to file a false workers’ compensation claim. Judge Hageman ultimately determined that Claimant fell "far short of carrying his burden of proof."

Catherine Guadagnino Wang v. Mileage Plus, Inc.

Dennis Finch and Jeffrey Maks/Kristi Geisler Holm

Issue: (1) Whether Claimant proved by a preponderance of the evidence that her work-related incident was a major contributing cause of her past and current condition and need for treatment?

Catherine Guadagnino Wang ("Claimant") started working for Mileage Plus, Inc. ("Employer") in 1998. She worked as a customer service representative, which was a sedentary job involving sitting for long periods of time at a desk with a computer station and a phone. In March 2000, she was referred to The Spine Center where she saw Dr. Larry Teuber for neck, shoulder, and face pain as well as pain in her mid and low back. Claimant underwent a lumbar microdisectomy and returned to work on light duty with lifting restrictions. She was discharged without restrictions in March 2002.

In March 2005, a doctor with The Spine Center had a "frank talk" with Claimant, as he felt she was "blowing her symptoms out of proportion" and that she should return to work in the near future. Her primary care physician also noted that her pain symptoms were of "questionable etiology and significance." In June 2005, Dr. Wayne Anderson conducted a review of the Claimant’s records at the request of the Employer and Insurer, concluding that the slip at work was just another incident that aggravated a low back condition

Ultimately, there were records noting that the Claimant had a complex pain disorder, but causation was an issue because multiple doctors questioned the etiology of the Claimant’s back pain. Claimant’s lower back pain was present and actively being treated just prior to her slip at work. She was not able to show by a preponderance of the evidence that her slip was a major contributing cause of her treatment and need for surgery. Despite the opinion that Claimant was permanently and totally disabled, there was no indication that it was due to any work-related injury or condition.

Todd Barber v. MWP Construction, Inc., and Acuity Mutual Insurance Company

Brad J. Lee/Rebecca L. Mann

Issue: (1) Whether Employer/Insurer is required to prove a change of condition after a settlement agreement was signed which provided an obligation of Employer/Insurer to pay future medical benefits, except when the Employer/Insurer approves a Medicare Set-Aside?

The Department of Labor had previously approved a settlement agreement between Claimant and Employer, which encompassed all medical benefits relating to the Claimant’s back injury for past, present, and future. Indemnity benefits were not included in the settlement, and were essentially waived by the Claimant. The settlement agreement provided that there was an obligation on the part of the Employer to pay future medical benefits, with the exception that future benefits would not be covered if the Claimant obtained an approved Medicare Set-Aside at the Employer’s expense.

Both parties agreed that neither party was permitted to reopen the matter upon a change of condition, which Judge Catherine Duenwald found to be unambiguous. Relying on the Department’s decision inStanton v. United Parcel Service and Liberty Mutual Insurance Group, Judge Duenwald concluded that after an award is final, the Employer is required to establish a change in condition before they can deny medical benefits, fail to pay medical bills, or not authorize treatments, and until such time, the settlement agreement is considered to be an Order of the Department.

Catherine Tobin v. Care Concepts, LLC, and First Dakota Indemnity Company

Margo Tschetter Julius/Charles Larson

Issue: (1) Whether Claimant’s injury arose out of her employment with Employer?

Catherine Tobin ("Claimant") was a 68 year old woman at the time of her hearing. She worked with Care Concepts, LLC ("Employer"), where she worked as a medication aide. On May 30, 2014, Claimant fell while she was at work, stating that she "fell over my own two feet." Employer denied worker’s compensation benefits on the grounds that the injury did not arise out of her employment, as the injury did not arise out of a risk that could be associated with her employment.

In the Department’s decision, Judge Hageman first reviewed the "Positional Risk Doctrine." Under that doctrine, a person who is injured when he or she is required to be in a particular place at a particular time during his or her employment is able to collect workers’ compensation, even if the employment-related activities were not a major cause of the injury. Judge Hageman determined that Claimant’s employment placed her in the room in which she fell, and therefore the Positional Risk doctrine did apply.

Further, the Department addressed the "Unexplained Fall Doctrine." This doctrine makes an injury compensable when the employee proves that an injury occurred by accident in the course of employment from a neutral risk that is neither attributable to the claimant personally nor the employer. Judge Hageman found that the Unexplained Fall Doctrine applied, holding that it was apparent that Claimant did not know what caused her to fall, therefore that the fall was "unexplained." Accordingly, it was determined that Claimant’s injury arose out of and in the course of her employment with Employer.

Tammy Lagler v. Menard’s, Inc., and Zurich American Insurance Company

Ronald Parsons/J. G. Shultz

Issue: (1) Whether Claimant is entitled to attorney’s fees pursuant to SDCL § 58-12-3? (2) Whether Claimant is entitled to a lump sum payment of benefits? (3) Whether Claimant is entitled to costs?

Tammy Lagler ("Claimant") was injured during the course of her employment with Menards, Inc. ("Employer") in April 2007. In February 2008, Dr. Watts of Core Orthopedics performed surgery on Claimant’s ankle. Zurich American Insurance Company ("Insurer") assumed responsibility of the injury and initially paid all medical expenses including the surgery. Claimant continued treatment with Dr. Watts. In August 2008, Dr. Watts recommended surgery Claimant’s ankle as a result of her work injury.

While the surgery request was pending, the Insurer scheduled an independent medical exam for September 2008. In late August 2008, Claimant filed a Petition for Hearing alleging that Insurer has "veraciously and unreasonably refused payment." The IME was subsequently cancelled and not rescheduled for unknown reasons. The Insurer reached Claimant’s attorney in early September 2008, stating that additional information was needed from Dr. Watts before surgery could be approved, but that Insurer had not yet denied Claimant’s requested treatment. Claimant’s attorney stated that he would not withdraw the Petition for Hearing until it was confirmed that surgery was being paid for.

Surgery was denied after the Insurer found out from Dr. Watts’ nurse that Claimant’s condition can be caused by wearing heels. Insurer concluded that the injury was not due to the original work injury. Each of Dr. Watts’ assistants denied having any conversations with Insurer in which they indicated that Claimant’s injury was not related to the workplace. An adjuster from Insurer stated that the assistant that gave her this information was named "Angie Roberts" but nobody by that name had ever worked for Dr. Watts. There is a record of a five minute telephone call between Dr. Watts’ office and Insurer on that day.

In October 2008, Dr. Eric Watson conducted an examination of Claimant’s ankle and concluded that surgery would be beneficial, but did not say whether it was related to the work injury. Again in November 2008, Dr. Watts stated that she had changed her gait pattern since the injury, which he believed was the biggest contributing factor to her need for surgery. Surgery was performed in February 2009, and Claimant was able to return to work part time in April 2009. In February 2010, a Dr. Richard Farnham opined that Claimant’s work injury did not require surgery.

For the issue of whether Claimant could collect attorney’s fees pursuant to SDCL § 58-12-3, Judge Hageman concluded that Insurer had diligently investigated the claim and sought an answer from the treating doctor. The phone records indicating that someone from Insurer’s office did have a conversation with someone at Core Orthopedics and that Insurer had the right to ascertain why the surgery was needed. The Department found that Claimant could not collect attorney’s fees because she was unable to prove that Insurer’s denial of the second surgery was vexatious or without reasonable cause.

On the issue of whether Claimant could receive a lump sum payment of her benefits, Judge Hageman determined that would be appropriate because of Claimant’s "exceptional financial need that arose as a result of reduced income due to the injury," as required by SDCL § 62-7-3. Additionally, on the third issue, the Department concluded that Claimant was not entitled to costs.

Sharleen Grimlie v. Larson Manufacturing Company, Inc., and Zurich North America

David J. King and Bram Weidenaar/Justin G. Smith

Issue: (1) Whether the incident that Claimant experienced while working for Employer is and remains a major contributing cause of Claimant’s current condition and need for treatment? (2) Whether Claimant’s medical treatment was medically necessary and reasonable? (3) What is the extent of Claimant’s current condition and is Claimant entitled to Permanent Partial Disability Benefits? (4) Whether Claimant is permanently and totally disabled due to a work-related injury or condition and falls under the Odd-Lot Doctrine? (5) Whether Employer/Insurer is required to reimburse Claimant and Claimant’s medical insurer for medical bills paid, and if so, in what amount?

Sharleen Grimlie ("Claimant") was hired in 1993 as a door assembler at Larson Manufacturing Company, Inc. ("Employer"). Claimant injured her back in January 2011 while working, which she initially attributed to overwork. She reported the injury that day and filled out an injury report the next day when her back did not feel any better. The day after the injury occurred, she also went to a chiropractor who advised her not to return to work. Claimant had treated with this chiropractor in the past but had not previous history of back problems.

An MRI was taken in April 2011, which showed degenerative spondylotlisthesis, spinal stenosis, a bulging disc and protruding disc, as well as other levels of degenerative disc change. Dr. Mitchell Johnson of Orthopedic Institute recommended a back brace and physical therapy and allowed her to return to work with restrictions for a short period of time. In June 2011, however, Dr. Paul Cederberg performed an IME of Claimant. Dr. Cederberg stated that Claimant had chronic, long term, and degenerative preexisting conditions. Accordingly, he opined that her injury was not related to the employment. As a result, Employer issued a denial.

Dr. Johnson performed fusion surgery in August 2011, and Claimant returned to physical therapy until December 2011 when she began a home-based program. The surgery was paid for by Employer’s health insurance coverage, not workers’ compensation.

In March 2012, Dr. Johnson ordered Claimant completely off work. She was subsequently terminated by Employer and lost insurance coverage. In June 2013, Dr. Johnson wrote to Claimant, in a response to her attorney, saying that there may be some other work she could perform with restrictions, and that his previous recommendation was only relating to her current job duties. In July 2014, Dr. Cederberg performed a follow-up IME and came to the same conclusion as he had previously.

In reviewing the causation of the injury, Judge Duenwald determined that Dr. Cederberg’s conclusion was flawed in a number of ways, and ultimately did not find him credible. As to the extent of Claimant’s condition, Judge Duenwald found that under SDCL § 62-4-53, the employee has the burden of proof to make a prima facie showing of permanent total disability. Because Claimant had not attended a Functional Capacities Examination or been evaluated recently by a treating physician to establish the extent of her disability, Judge Duenwald looked to Dr. Cederberg’s opinion from August 2012 in which he said that she could perform sedentary work, thereby finding that she was not permanently and totally disabled. As to the issue of whether Employer was required to reimburse Claimant for medical bills, Judge Duenwald determined that because the medical claim was deemed to be compensable, any medical bills that have been incurred by Claimant and have been paid out by any other party are to be reimbursed by Employer.

Anthony J. Shulte v. Rural Manufacturing Co., Inc., and First Dakota Indemnity Company

Michael E. Unke/Michael McKnight

Issue: (1) Was Claimant’s work for Employer a major contributing cause of Claimant’s injury or condition and need for treatment?

Anthony Shulte ("Claimant") worked for Rural Manufacturing Co., Inc. ("Employer") for over 20 years as a shop foreman doing fabrication, installation work, service work, repair work, and some design work. On May 1, 2012, Claimant injured his shoulder while building a steel scale pan for some equipment they were building. He felt a pop and a sharp pain in his shoulder, which he claimed he did not realize he injured at the time.

Claimant treated regularly with a local chiropractor since 1989 for a variety of injuries and symptoms including neck, back, ankle, wrist, knew, and toe pains. In April 2012, just prior to the injury, Claimant saw the chiropractor for his cervical spine and left shoulder. Claimant did not return to the chiropractor until June 2, 2012, reporting a left shoulder pain at 8 out of 10. On June 11, 2012, Claimant returned again with the same complaints, and further testing revealed a possible rotator cuff tear.

Dr. Hurd provided an opinion that the MRI showed AC joint arthrosis, a possible superior labral tear, as well as a low grade rotator cuff tear. The degree of muscular atrophy and retraction of the muscle indicated to Dr. Hurd that the rotator cuff was injured in an acute manner. Eventually, symptoms became worse, and Dr. Hurd recommended rotator cuff surgery.

In October 2012, an IME was performed by Dr. Gary Wyard, who was of the opinion that Claimant had not suffered a rotator cuff tear, as it would have shown up on an MRI. He believed Claimant was magnifying his symptoms, and continued to have that belief even after the rotator cuff surgery by Dr. Hurd, which Dr. Wyard deemed unnecessary.

Judge Duenwald ultimately found in favor of Claimant as to causation, Although Dr. Wyard’s reasoning regarding age and tearing of muscles appeared to be "textbook," Judge Duenwald concluded that not every injury is textbook and that Dr. Hurd was the doctor who actually had the opportunity to see the muscle and the tear during the surgery. Accordingly, Judge Duenwald found the treating physician’s opinion more credible than the IME, thereby awarding benefits.

 If you have any questions regarding these decisions, please contact Charlie Larson at 605-336-2424 orcalarson@boycelaw.com.   

Supreme Court of South Dakota

Jason Petrik v. J.J. Concrete, Inc. and EMC Insurance Company, 2015 S.D. 39

Michael Bornitz and Joseph Dylla/Charles Larson

Issues: (1) Whether the Circuit Court erred in holding that Petrik’s injury "arose out of" his employment but did not occur "in the course of" his employment?

Jason Petrik ("Claimant") was an employee J.J. Concrete ("Employer") when he was injured running away from a co-worker on a job-site. The Department ruled that Claimant’s injury "arose out of" his employment, but did not occur "in the course of" the employment, thereby denying benefits. The Circuit Court approved the Department’s holding, and Claimant appealed to the Supreme Court who reversed in part, affirmed in part, and remanded to the Department to establish benefits.

Claimant was a concrete laborer with Employer since 2011. His employment sometimes involved idle times when he and his co-workers were required to sit and wait for other work to be completed before they could continue with their own. During the idle times, the testimony established that Claimant and his co-workers were expected to clean up the job-site, put away tools, and other like-activities. Testimony also established that Petrik and his co-workers liked to play jokes on each other during the work day. On the date of injury it was very hot outside and Petrik tricked a co-worker into getting out of the air-conditioned truck. After about 5 minutes, Petrik got out of the truck and the co-worker he tricked started chasing him through the construction site and Petrick tried to jump across a trench. Petrik fell into the trench, ultimately breaking his ankle.

Employer and Insurer denied the claim, stating that Claimant was engaging in horseplay. Claimant argued that his horseplay was insubstantial and that the injury did arise out of and in the course of his employment. In reviewing the "arising out of" portion of the arguments, the Supreme Court found that the activity in which Claimant was engaged – playing a prank on a co-worker during an idle period – was on in which employees might reasonable engage. Accordingly, the Supreme Court affirmed then Department finding that the injury did arise out of the employment.

The Supreme Court then addressed the "in the course of the employment" standard. In doing so, the court first addressed the extent and seriousness of the deviation from the employment activities. The Court stated that "however misguided, the extent of Petrik’s momentary impulsive deviation during a lull in work was insubstantial." The Court then addressed the completeness of the deviation to determine whether the act was commingled with the performance of a duty or whether it involved a complete abandonment of job duties. The Court found that although he engaged in prohibited horseplay, "the act was accomplished while [he] was waiting for the concrete truck," therefore finding he did not abandon his job duties.

The Court went on to find that it is expected that in the nature of the employment that certain horseplay would occur, and that a moment’s deviation from work should be expected. Accordingly, the Supreme Court found that although Claimant’s actions were misguided, that his act did not come from a deliberate or conscious excursion and did not require him to abandon any job duties.

On July 6, 2015, Governor Hassan signed into law Senate Bill 133, which makes significant changes to RSA 281-A:24 (Payment for Reasonable Value of Services), the statute that governs the manner in which disputes over the reasonable value of medical services are decided in workers’ compensation claims.

Under the old version of RSA 281-A:24, an employer or carrier was required to “pay the full amount of the health care provider’s bill unless… [it] can show just cause as to why the total amount should not be paid.” This language provided employers, carriers, and their representatives little leverage in a dispute about the cost of medical procedures. “Just cause” was never defined, but suggested a heightened burden of proof the carrier had to reach to overcome the assumption that the full amount of the bill was to be paid.

Concerns over the rising cost of medical care – particularly medical care in workers’ compensation claims – have been present in New Hampshire for some time. In September of 2014, the Governor and New Hampshire Legislature created a commission to study the issue, noting that medical costs had grown to nearly 75% of total workers’ compensation dollars spent in New Hampshire (versus 60% nationwide) and that the average workers’ compensation surgical procedure in New Hampshire was 83% more expensive than similar procedures in the region and more than twice as expensive as they are nationally.[1] The report produced by the commission, released in December of 2014, noted that medical costs for procedures performed for a workers’ compensation injury were 107% to 263% higher than identical treatments for similar injuries not caused at work.[2]

With that in mind, the legislature crafted a change to RSA 281-A:24 to address the high cost of medical care in workers’ compensation claims. Effective September 4, 2015, RSA 281-A:24 is changed in relevant part below:

(a) The employer or the employer’s insurance carrier shall pay the reasonable value of medical services provided under this chapter.

(b)  The health care provider shall have the burden of establishing that its bill for services is reasonable.

A carrier need no longer pay the “full amount” of the bill, and now need only pay the “reasonable value” for the services provided. More importantly, the carrier no longer has the burden of showing “just cause” as to why the total amount should not be paid; health care providers have the burden of showing a charge is reasonable when a carrier objects to the amount of a medical bill. This burden shifting levels the playing field by forcing providers to present evidence that charges are reasonable, rather than placing that onus on the carrier to show why a bill is unreasonable. This change will hopefully counteract the continued rise of medical costs in workers’ compensation claims as referenced above, and in turn lower the costs of workers’ compensation insurance across the state.

The full text of the bill can be found here.

Bernard & Merrill represents employers, insurance carriers, and third-party administrators in workers’ compensation cases, civil litigation, and insurance defense. The firm has offices in Manchester, NH, represents clients across the state of New Hampshire, and can be reached at 603.622.8454 or josh@bernard-merrill.com. 

As previously reported in Risk Alert: Special Edition (New IC Rules) published in October 2014, Industrial Commission costs associated with settlement agreements and mediations were increased, but the fees for Forms 21, 26, and 26A and hearing costs have now been eliminated.  Effective back on November 1, 2014, the processing fee for compromise settlement agreements, or clinchers, increased from $375 to $400.  Additionally, a fee of $200 is now charged for the filing of the “Report of Mediator” form, regardless if the mediation is mandatory or voluntary.   As before, the employer or carrier pays the processing fee for the clincher and the “Report of Mediator” in their entirety, but is entitled to a credit for the employee’s 50% share of the fees against any settlement proceeds or final award, unless the parties agree otherwise.

Most recently, effective July 1, 2015, the $120 fee for Deputy Commissioner hearings and the $220 fee for Full Commission hearings was eliminated.  The $300 processing fees for Forms 21, 26, and 26A were also eliminated effective July 1, 2015.

In Brown v. City of Columbia, Injury No. 11-049932, the claimant filed three separate claims, all of which alleged injury due to heat exhaustion. The claimant drove a trash truck, which did not have air conditioning, and he was also often required to wear a haz-mat suit for several hours. The heat indices on his alleged dates of injury were over 100 degrees. As a result of his heat exhaustion, he developed headaches and dizziness. He sought medical treatment on two of the three alleged dates of injury, but no medical evidence was introduced regarding the third alleged date of injury. At a hearing, the ALJ found that the claimant provided evidence of heat exhaustion on two of the three dates of injury and awarded 10% disability of the body for each of those two instances. On appeal, the Commission summarily affirmed.

Heat Exhaustion Not Compensable Due to Lack of Medical Evidence

In Fowler v. State of Missouri/Department of Corrections, Injury No. 09-065204, the claimant worked in a control/surveillance tower. On the alleged date of injury, June 27, 2009, she claimed the tower was extremely hot and a thermometer near her desk read 100 degrees. She began to feel lightheaded and testified she contacted her primary care physician on or shortly after June 27, 2009, and reported her symptoms. However, her primary care physician’s records showed the claimant called on June 29, 2009 for unrelated reasons and there was no mention of heat exhaustion. The claimant testified to a similar work incident of heat exhaustion on August 4, 2009 and her work log, which she filled out, did indicate the heat was making her sick. Her primary care physician’s records showed she did call and report sickness from heat on August 4, 2009 but she was not seen. The claimant saw Dr. Elliott on August 11, 2009 and was diagnosed with heat exhaustion based on her self-reported history. At a hearing, the ALJ denied compensation finding that the claimant may have sustained an injury on June 27, 2009 or August 4, 2009 but there was no contemporaneous objective evidence of heat exhaustion in the medical records. The Commission affirmed.

Employers are aware that if the claimant has not pursued his or her third party civil action within a year of the injury, the employer can provide a 10-day notice and then sue in the name of the injured worker. But what happens if the injured worker will not cooperate with the law suit? Can the employer settle the third party case without the consent of the injured worker?

The most helpful decision yet on this subject isElhelou v. CVS Pharmacy, Inc., v. Lipinski Outdoor Services v. All State Power Wash, A-4731-13T1, (App. Div. July 9, 2015). Mr. Elhelou, the manager of a CVS store inJamesburg, N.J., was injured in February 2010 when he slipped and fell while shoveling snow from a loading dock in the rear of the CVS.  He retainedRaymond Shebell, Esq. and recovered medical and indemnity benefits in workers’ compensation.  Elhelou did not pursue any third party law suit arising from this accident.                     

On February 16, 2011, the third party administrator, Gallagher Bassett Services, wrote to Elhelou stating that his injuries may been caused by the negligence of a third party.  GB provided the proper 10-day notice stating that if Elhelou did not settle with the third party who may have been responsible for his injuries, then GB would protect its rights and file suit. 

On March 1, 2011, Shebell wrote to attorney Laub, representing CVS and GB, advising Laub that GB was not to contact his client directly.  GB then wrote to the insurance carrier for Lipinski Outdoor Services, which was responsible for the snow removal at the CVS, putting Lipinski on notice of its workers’ compensation lien.  The lien at that time was $90,630.87. 

Laub wrote again to Shebell on December 9, 2011 asking whether Shebell intended to file suit against Lipinski.  When Laub received no response, he filed a complaint against Lipinski on January 23, 2012 in the name of Elhelou, CVS and GB.  Lipinski filed an answer and a third party complaint against All State PowerWash asserting that All State was responsible for clearing ice and snow on the premises. 

On January 24, 2013, Lipinski’s lawyers wrote to Laub requesting that Elhelou appear for an IME.  Laub wrote to Shebell also advising that he needed to take the deposition of Elhelou.  Laub asked for permission to contact Elhelou and then followed with another request.  Finally, Laub wrote directly to Elhelou advising that his deposition would be taken on February 15, 2013.  Elhelou appeared for the deposition but not for the IME because he had upcoming surgery.  The lien was by then $105,129.45.

Laub next wrote to Elhelou to advise that his presence would be needed at an arbitration.  Elhelou appeared at the arbitration and his testimony was taken.  The arbitration resulted in a non-binding award in the amount of $105,129.45. CVS negotiated a settlement of $93,500 to resolve its lien against Lipinski andAll State. The lien eventually climbed to $198,000.  Laub then wrote to Elhelou requesting that he sign and return a release of his claim against Lipinski andAll State.  Robert Morley of the Shebell Law Firm then wrote to Laub advising that Elhelou was seeking the firm’s advice regarding whether he should sign the release.  Morley explained that it advised Elhelou not to sign the release until the Shebell firm could review the entire litigation file. 

Several months went by without progress, so in March 2014, Laub filed a motion to compel Elhelou to sign the release or alternatively the court should enter an order declaring that Elhelou’s release was not required.  Elhelou filed a cross-motion seeking the following:  1) permission for the Shebell firm to appear in the action; 2) denying the relief requested by CVS and GB; 3) disqualifying Laub’s law firm; 4) substituting Shebell as counsel, and 5) compelling the turnover of the entire litigation file. 

The Superior Court ruled in favor of CVS and GB and held that the suit by CVS was more a “subrogation action” than a personal injury action.  The Court said that there was no attorney-client relationship between Laub and Elhelou and no obligation on Laub’s part to do anything other than to protect the Section 40 lien rights on behalf of CVS.  The Court further held that there was no obligation on the part of CVS to seek a settlement in excess of the lien, which was then $198,000.  Elhelou appealed.

The Appellate Division made a number of very important rulings in this case:

           A) “Thus, to the extent that N.J.S.A. 34:15-40(f) grants an employer or compensation carrier a right of statutory subrogation, it cuts off the employee’s right to participate in settlement or file a lawsuit, and limits the employee’s right of recovery to the excess of the compensation lien.”

            B) The employer or carrier has a right “to settle with the third party or its insurance carrier, or to bring an action to recover personal injury damages from a third party when the employee fails to do so.”

            C) The employer or carrier’s action “shall constitute a bar to any further claim or action by the injured employee . . . against the third person.” 

            D) “If the amount recovered ‘is in excess of the employer’s obligation to the employee . . . and the expenses of suit, such excess shall be paid to the employee.’”

            E) “Even though the statute requires no notice of the settlement to the employee, its consummation acts as ‘a bar to any further claim or action by the injured employee.’ “

            F) “Similarly, the statute does not require that the employee be given notice of a suit brought by the employer or its carrier. The only notice required by the statute is the ten-day notice of the employer or carrier’s right to bring such suit, which must be given prior to the filing of the complaint.  There are no notice requirements after that point.”

            G) “[I]f the employee has brought and abandoned his or her own action, the statute allows the employer or carrier to reopen the action and prosecute it ‘in the name of the injured employee,’ rather than on behalf of the employee directly.”

            H) The statute does not “mention any right of the employee to participate in reaching a settlement, whether in lieu of litigation or to conclude litigation.”

            I) Just as an employee can settle his or her third party action without involvement by the workers’ compensation carrier, the workers’ compensation carrier is authorized to settle or bring suit against the third party after providing a 10-day notice following one year from the date of accident. 

The Appellate Division said, “In summary, we hold that CVS and Gallagher had no obligation to inform Elhelou in advance of the settlement.  Instead, they had the right to settle the subrogation action without Elhelou’s consent.”  It said that since the Shebell loaw firm took no steps to file suit in Elhelou’s name during the one-year period and during the 10-day notice period, neither Shebell nor Elhelou could bring any action after the 10-day period.

This case poses the most complete analysis of the rights of an employer to protect its statutory lien when the employee files no civil suit. The case is particularly helpful because it dealt with an attempt by the injured employee to engineer a last minute derailment of the settlement effected by CVS.   The Court made clear that no consent was needed by CVS from the injured employee. 

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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. 

The long awaited proposed re-write of the VT WC Rules has been unveiled and will be ready for public comment soon.

Shaffer v First Choice Communications, Opinion No. 15-14WC (Oct. 21, 2014)(HO Phillips).

Claimant’s request for Synvisc injections found reasonable and necessary medical care relying on doctor’s opinion who is supplying the injections since 2012 over those of IME doctor. “While [IME Doctor’s] concerns as to the efficacy of Synvisc injections when used ‘off label’ are worth noting, I do not consider them determinative in this case.” PTD claim denied relying upon IVE which found that “if Claimant avails himself of additional vocational rehabilitation services such as tutoring, access to assistive technology and focused job development, it is reasonable to expect that he will be able to resume regular gainful work.”

Simmons v Landmark College, Inc., Opinion No. 07F-13WC (Oct. 23, 2014)(HO Woodruff)

On remand from successful Superior Court Appeal, Claimant awarded attorney fees and costs at DOL rate ($145/hour for attorneys and $75/hour for paralegals) and only for those costs associated with DOL hearing, not those incurred at Superior Court..No statutory basis for an award of interest on attorney fees and thus none awarded.                       

Rodrigue v Enterprises Precision Inc., Opinion No. 16-14WC (Nov. 4, 2014)(HO Woodruff)

Voc Rehab denied at this point in time as Claimant is back to work, may become available in the future if current employment is no longer suitable. “As the circumstances of this case demonstrate, at times the concept of suitability involves more than merely comparing pre-and post-injury wages earned, or hours worked, during discrete snapshots in time. The goal of vocational rehabilitation is to return the injure worker to work that resembles, as nearly as possible, the conditions of his or her pre-injury employment. Where the pre-injury job involved consistent hours at a consistent weekly wage, a simple mathematical comparison will determine whether a post-injury job is suitable or not. However, where, as here, the pre-injury job involved widely fluctuating hours resulting in widely fluctuating weekly wages, a broader perspective is required.” Claimant is entitled to TTD of TPD benefits for those weeks in which he earned less that his AWW even though his co-workers were also working less given the seasonal nature of the job.

Moreton v State of Vermont Department of Children and Families, Opinion No. 17-14WC (Dec. 24, 2014)(HO Phillips).

Claimant slips and falls upon entering a Starbucks to meet co-workers to travel to a training session. Injury found compensable on cross-motions for summary judgment. The fact that injury occurred a half hour prior to her scheduled start of work time does not sever connection to work.

Also, meeting at a Starbucks was not a personal or substantial deviation as for the day of the injury, Claimant was a “traveling employee”.

In New Jersey it remains extremely difficult to bring an intentional harm claim against one’s employer.  Mere knowledge and appreciation of a risk is not intent.  That was the holding inKeller v. Township of Berkeley, A-5767-12T3 (June 22, 2015). 

Mr. Keller worked as a laborer for the Township sanitation department and suffered serious injuries when he fell from a moving garbage truck after the passenger-side door suddenly opened.  He argued that there had been many complaints about the truck’s door over several years and that the Township was aware that the door latch mechanism was not functioning well. Keller further argued that the Township violated safety standards by failing to repair the problem.

The Township, for its part, denied that it was aware of any problem with the truck and noted that an inspection by the State Police post-accident did not reveal any problem with the locking mechanism.  No OSHA violations were ever issued.

The trial judge granted summary judgment dismissing the law suit and plaintiffKeller appealed.  The trial judge did concede that there was evidence that the door latch mechanism had not been working well for a long time, and the Township was aware of this but did not fix the problem.  Nonetheless, the trial judge concluded that knowing there is a risk is not the same as intentional harm. 

The Appellate Division affirmed the dismissal of the case.  It stated, “Having reviewed the record in light of these precedents, we agree with the trial court that the unfortunate accident that Keller suffered does not satisfy the substantial-certainty standard required to vault the Act’s exclusivity bar.” Even if the conduct of the Township was grossly negligent, that is not enough to prove an intentional harm claim.  There were no OSHA violations at all, and there was no evidence of a prior similar incident where an employee was actually injured.  The court noted that there was no effort by the Township to remove the latch or perform some action that created additional danger to employees.  While the truck’s door was difficult to open and close, that in itself does not prove intentional harm.

The Appellate Division also affirmed the trial judge’s dismissal of a claim for fraudulent concealment of evidence and spoliation of evidence.  The Court said “At best, plaintiffs established sloppy record keeping by the Township.  There was simply no showing ‘[t]hat defendant intentionally withheld, altered or destroyed the evidence with purpose to disrupt the litigation’ as required byRosenblit v. Zimmerman, 166 N.J. 391, 406-07 (2001).’”

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John H. Geaney, Esq., is 

PENNSYLVANIA’S VALIDATION OF AN IMPAIRMENT

RATING EVALUATION (IRE)

By

Kevin L. Connors, Esquire

            “Facts are meaningless.  You could use facts to prove anything that’s even remotely true.”  Homer Simpson.

            A recent Decision by the Pennsylvania Commonwealth Court in Duffey v. WCAB (6/26/15), recently resulted in the Court, in an Opinion authored by Judge Cohn Jubelirer, validating an Employer Impairment Rating Evaluation that was the Claimant sought to invalidate by alleging that the IRE had not considered all of the Claimant’s work-related injuries, as the Claimant argued, thankfully unsuccessfully, that the IRE, which had considered the Claimant’s accepted work-related injuries in the course of determining the Claimant’s impairment rating under the AMA’s Guides, resulting in a conversion of the Claimant’s temporary total disability benefits (lifetime absent death, or change in medical condition effectuating full recovery or ability to return to available work), to temporary partial disability benefits (capped at 500 weeks), had not taken into account the medical opinion of treating physicians who testified that the Claimant was suffering from post-traumatic stress disorder as a result of the work injury.

            With the above sentence seemingly setting a syntactical record for inconsequentially-related phrases, it would be simple enough to leap to the end point, being that the Commonwealth Court affirmed the underlying Decision of the Appeal Board (charged with the first level of appeals of comp claims in Pennsylvania), reversing the underlying Decision of the Workers’ Compensation Judge, who had invalidated the Employer’s IRE, which preceded the employer filing a Notice of Change, converting the Claimant’s temporary total disability benefits to temporary partial disability benefits, in reliance upon the testimony of the Claimant’s treating physicians, that the Notice of Compensation Payable, describing the Claimant’s originally-accepted work-related injury, should be amended to include the newly-adjudicated injury of post-traumatic stress disorder.

            No doubt, another run for your money piecing together the above paragraph.

            In any event, this is an important Decision since it fixes the effective timeline for validating an IRE used by an Employer to mitigate the potential lifetime exposure for temporary total disability benefits into the more limited exposure of 500 weeks for temporary partial disability benefits, still representing a significant chunk of time in both the life of the Claimant and the workers’ compensation claim, as it represents 9.6 years during which an injured Claimant might still be entitled to receive indemnity workers’ compensation benefits for wage loss.

            Like Homer, ready for a few facts?

            It begins with the March 6, 2009 injury of the Claimant, who injured his hands, when picking up hot wires while working for Trola-Dyne, Inc.  This occurred while the Claimant was repairing a machine for his employer.

            In the course of accepting the Claimant’s injuries as being work-related, the employer issued a Notice of Compensation Payable (NCP), under which the Claimant’s injuries were described as “bilateral hands, electrical burn, stripping some electric wires”.

            The same description always tugs at the inherent conflict between exclusion versus inclusion, as descriptions that focus on body parts as opposed to medical diagnoses are almost always vulnerable to future enlargement and expansion, with the practical tip being to avoid use of describing injuries in terms of body parts, as opposed to describing the work injuries in terms of reasonable medical diagnoses.

            With the issuance of the NCP, the Claimant began receiving his temporary total disability benefits for wage loss, with the employer requesting an IRE under Section 306(a.2)(1) of the Act after the Claimant had received 104 weeks of wage loss benefits.

            Requesting an IRE, the employer described the Claimant’s work injuries as “bilateral hands-nerve and joint pain”, which, technically, was already expanding the description of injury under review by the IRE, with the IRE resulting in a determination that the Claimant had a 6% impairment rating, in terms of the work injuries, resulting in his compensation benefits being converted from the lifetime temporary total disability benefits to the partial disability benefits subject to the 500 week cap under Section 306(b).

            Challenging the conversion of his compensation benefits, the Claimant filed a Review Petition, alleging that the IRE was invalid, as it had not included a complete description of injury, since the Claimant alleged that the IRE should have also considered the Claimant’s post-traumatic stress disorder, although that injury had never formally been accepted as compensable and work-related by the employer, nor had there been any litigation adjudicating a determination that the Claimant’s PTSD was related to his 2009 work injury.

            Conflicting medical testimony was then presented by the parties, in support of and in opposition to the Claimant’s Review Petition, with the Claimant’s physicians testifying that the PTSD was related, and the employer’s medical expert testified that the PTSD was not related, as well as that the Claimant was fully recovered from that diagnosis.

            Finding in favor of the Claimant, the WCJ granted the Claimant’s Review Petition, amending the description of injury to include the PTSD diagnosis, as well as invalidating the IRE, on grounds that the IRE had not considered the Claimant’s PTSD.

            Appealing the WCJ’s Decision, the employer was successful in convincing the Appeal Board to reverse the WCJ’s Decision, with the Board finding the IRE to be valid as the Claimant had never formally sought to amend the NCP to include the diagnosis of PTSD and depressed mood, and the WCJ had accepted the testimony of the IRE physician that the Claimant was at MMI as of the IRE, requiring the IRE to be valid when performed.

            Petitioning for review before the Commonwealth Court, the Claimant again argued, as he had before the WCJ, that the IRE failed to consider all of his work-related injuries, as the PTSD had not been considered, with the employer countering that acceptance of the Claimant’s argument would essentially eviscerate the IRE provisions of the Act, as Claimants could always challenge IRE determinations on grounds that the IRE failed to consider injuries never formally accepted or adjudicated as being work-related, although they might be injuries of an overlay nature, as was the case in Duffey.

            In the course of affirming the Appeal Board’s determination that the IRE had been valid, based upon the Claimant never challenging the accepted description of injury prior to the IRE and the Claimant being at MMI in terms of work injuries as of the IRE being performed, the Court determined that both the statutory language and IRE legal precedents required the validity of an IRE to be dependent upon two factors, one being the Claimant’s medical state, whether at MMI or not, when the IRE is performed, as well as, secondarily, the IRE focusing in on the injuries that were determined to be work-related, whether described on an NCP, or determined in a Decision issued by a WCJ.

            Relying upon Westmoreland Regional Hospital v. WCAB, 29 A.3d 120 (Pa. Cmwlth. 2011), the Court held that “the IRE produces a snapshot of the Claimant’s condition at the time of the IRE, not a survey of the Claimant’s work-related injuries over a period of time”.

            For that reason, the Duffey Court held that the validity of the IRE is determined by “the Claimant’s physical condition at the time of the IRE”.

            The Court also ruled that it interpreted Section 306(a.2) of the WCA to not infer that the General Assembly intended to nullify performed and otherwise valid IREs, being challenged with claims of new or additional injuries not considered by the IRE physicians.

            This ruling does not necessarily foreclose Claimant’s from challenging the conversion of their compensation benefit status from total disability to partial disability, if Claimants obtain impairment ratings of at least 50% under the AMA Guides.

            Holding that an IRE that considers a Claimant’s work injury as defined and existing at the time the IRE is performed, to be valid notwithstanding an after-the-fact expansion of the scope of a Claimant’s work-related injury, the Court held that to find otherwise would be inconsistent with the WCA, and the Court’s own prior precedents.

            As Shakespeare might have said in Richard III, “My Kingdom, My Kingdom for an IRE!”

ConnorsO’Dell LLP

Trust us, we just get it!  It is trust well spent!

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout  Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.