State News

This is good news, except it is a shame you have to go to court to get an agreement like this.  In this case, the Division appealed an agreed judgment entered by a trial court where the claimant and the carrier agreed to a reduced payment in amount less than the full amount of SIBs would have been. The Division claimed that the Labor Code is clear on this point, and SIBs can only be paid in the full amount or not at all. The Dallas Court of Appeals rejected all of the Division’s arguments and held that, while neither the Division nor the court could award partial SIBs, nothing prevented the parties from settling to an agreed partial amount.  Tex. Dept. of Ins, Div. of Workers’ Comp. v. Jones, 2014 WL 5768728 (Tex. App.–Dallas 2014, no pet. h.) (mem. op.).

Circumstantial evidence is enough to support a claim for retaliatory discharge. The claimant reported a work injury and was terminated after presenting a doctor’s note keeping him off work. He then brought suit against his employer alleging that he was terminated in retaliation for filing a workers’ compensation claim.   A claim for retaliatory discharge requires that filing a workers’ compensation claim isa reason, but not necessarily the only reason, that the employee was terminated. The burden is on the employee to show the causal connection, the burden then shifts to the employer to show that there was a legitimate reason for the termination, and if it does so the burden then shifts back to the employee to show that the reason was a mere pretext. The Austin Court of Appeals reversed and remanded a summary judgment in favor of the employer because the employer’s stated reason, that the employee was unable to perform his job, was not a nondiscriminatory reason as a matter of law where there was not a uniformly applied termination policy.Phillips v. SACHEM, Inc., 2014 WL  7464035 (Tex. App.–Austin 2014, no pet.).

An injured worker brought extra-contractual claims against her worker’s compensation carrier after the Division held that her injury was compensable.  She claimed damages from misrepresentations under the Insurance Code and unconscionability under the DTPA.  The San Antonio Court of Appeals held that a denial of compensability or payment does not constitute an actionable misrepresentation of the policy, even when later reversed by the DWC. Questions that deal with whether a claim falls within the scope of coverage is not an interpretation of the policy. The court also held that an alleged failure to investigate a claim does not defeat the Supreme Court’sRuttiger holding. In other words, “the sole remedy against [the carrier] for failing to timely pay benefits to [the claimant] is under the Workers’ Compensation Act.”  Vause v. Liberty Mutual Ins. Corp., 2014 WL 6687598 (Tex. App.–San Antonio 2014, no pet.).

Anybody remember Blazing Saddles? The Court will hear argument from Seabright Insurance Company that section 401.011(12) of the Labor Code, regarding course and scope of employment, is ambiguous.  A worker was driving other employees in a company truck from a hotel paid for by the company to a jobsite when the truck was struck by a semi, leading to his death.  Seabright denied the beneficiary’s claim for death benefits because the worker was traveling at the time of the accident and was thus not in the course and scope of employment. In its attempt to avoid paying death benefits to the deceased worker’s beneficiary, Seabright argues thatLeordeanu v. American  Protection  Insurance  Company  has  led  to  confusion  over  section 401.011(12) among Texas’ appellate courts. The Court will determine if the ‘but for’ test is appropriate in this situation; that is, but for his employment, the deceased worker would not have been in the situation that led to his death.  The case isSeabright Insurance Company v. Maxima Lopez, appealed from the Fourth Court of Appeals, Cause No. 01-12-00863-CV and the 229th District Court of Starr County, Cause No. DC-08-484.

As expected, Commissioner Brannan also adopted new Division Rule 131.1 regarding initiation or denial of Lifetime Income Benefits.  Under the new rule, an insurance carrier must review an injured worker’s eligibility for LIBs in a timely manner and review all statutory criteria.  Carriers will have to develop criteria to narrow down which claims may have LIBs exposure. If the insurance carrier believes the injured worker is entitled to LIBs, it shall initiate payment within 15 days even if the claimant has not requested LIBs.  But in the case where an injured worker requests LIBs in writing, the carrier has 60 days to determine eligibility.  Any denial must be on form PLN-4.

A new PLN-4, Notice Regarding Eligibility for Lifetime Income Benefits, has been finalized. The revisions were made to ensure that the injured worker and the Division had a complete explanation as to why the insurance carrier is denying LIBs.  The revised form adds a checkbox to clearly show that eligibility for LIBs is denied followed by a space for a full and complete statement.

States have been cracking down on the lucrative practice of physician dispensing of prescription drugs, a practice largely limited to workers’ compensation doctors. Some doctors are prescribing novel doses of common drugs for which they can charge more. For example, muscle relaxant cyclobenzaprine is commonly prescribed in 5 and 10 milligram doses. However, physicians are dispensing new 7.5 milligram doses of the medication for which they can charge nearly 5 times as much, despite the lack of any medical evidence that the new dose is any more effective.  Another move we are seeing is physicians prescribing complex compounded medications, such as topical creams to treat pain, also despite evidence that these creams are not effective.

Nova Healthcare Management / Nova Medical Centers of Houston, Texas pled guilty to felony worker’s compensation fraud. An investigation by Texas Mutual revealed that Nova was billing for one-on-one physical therapy but was actually providing less expensive group therapy. Under the plea agreement, Nova has withdrawn from the Texas Star Network, repaid $6.5 million to Texas Mutual, and paid a $5,000 fine.

On February 27, 2015, the Alabama Court of Civil Appeals released its opinion inDana Louise Pollock v. Girl Scouts of Southern Alabama, Inc. wherein it considered a claimed injury arising out of a horse riding accident. At the trial court level, the judge was presented with evidence that the injured employee, the business manager of a 6 week summer camp, voluntarily participated in a horseback ride at the end of the camp. The ride was for staff members only and participation was not required or encouraged. In fact, when the employee asked her supervisor for permission to participate, she was actually discouraged because of the existence of prior back injuries. During the ride, the horse bolted unexpectedly causing injury to the employee’s back. The employee contended that the injury was work related because it happened during work hours, during an event that occurs every year at the end of the summer session, it was on her employer’s property, and she had her supervisor’s permission. The employer file a motion for summary judgment asserting that the accident did not arise out of or in the course of her employment. The trial court granted the motion and the employee appealed.

The Court of Civil Appeals agreed with the trial court noting that the horseback ride was voluntary and the employer did not derive any benefit from the activity.

My Two Cents:

Whether or not an employer derives a benefit from a particular activity is an important, and sometimes overlooked, consideration when looking at the "arising out of" portion of the two part causation test. Just because you are at work when an accident occurs does not mean that the accident is work related. Simply being at work might satisfy the "in the course of" portion of the test but not both parts. In this case, it was determined that there was not substantial evidence that either part of the two part test could be proven.

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About the Author

This blog submission was prepared by Mike Fish, an attorney with Fish, Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers' compensation. Fish Nelson & Holden is a member of the National Workers' Compensation Defense Network. If you have any questions about this submission or Alabama workers' compensation in general, please contact Fish by e-mailing him atmfish@fishnelson.com or by calling him directly at 205-332-1448.

Brandon Lee Wegner v. Hormel Foods Corporation, Court of Appeals of Iowa, No. 14-0300

Claimant, Brandon Lee Wegner, worked for Hormel Foods Corporation and sustained an on-the-job injury on March 23, 2009.  Following a hearing, a deputy commissioner issued an arbitration decision accepting Hormel’s proposed weekly compensation rate over Claimant’s proposed rate, which, in the deputy’s view, was based on “unreliable,” “scissored snippets of original documents mashed together.” The deputy also summarily denied Claimant’s request for penalty benefits based on the claimed unreasonable rate calculation. Because Claimant had not reached maximum medical improvement, the deputy deferred ruling on permanent benefits, and also elected to defer consideration of any issues relating to temporary partial disability benefits.

On intra-agency appeal, the commissioner adopted the deputy’s decision. Claimant sought judicial review. The district court affirmed the commissioner’s decision. Claimant appealed following the denial of his motion for enlarged findings and conclusions. Claimant contends (A) the commissioner failed to set forth sufficient findings of fact and conclusions of law as required by Iowa Code section 17A.16(1), (B) the commissioner erred in determining his weekly compensation rate; (C) the commissioner erred in denying him penalty benefits arising from the compensation rate; and (D) the commissioner erred in bifurcating claims for past temporary disability benefits until he reached maximum medical improvement.

The Court of Appeals affirmed the district court’s judicial review decision affirming the commissioner’s workers’ compensation decision. The Court found both the deputy commissioner and the commissioner complied with Iowa Code section 17A.16(1) (2013) because they explicated their reasons for rejecting Claimant’s proposed rate calculations, denying penalty benefits based on the compensation rate, and deferring consideration of temporary disability benefits and penalties arising from the payment of these benefits. The Court emphasized that step-by-step reasoning in an agency decision is not essential, as long as it is possible to determine what evidence was considered and why certain evidence was credited over other evidence.

Additionally, the Court found the commissioner’s findings on the issue of Claimant’s weekly compensation rate are supported by substantial evidence. The deputy commissioner accepted Hormel’s proposed rate over Claimant’s proposed rate because Claimant’s exhibit did not appear to be a complete record. The Court also found the record contains substantial evidence to support the commissioner’s implicit findings in declining to award Claimant penalty benefits. Finally, the Court found the commissioner acted well within his discretion in deciding to defer consideration of issues relating to the past award of temporary benefits, given that the parties had stipulated Claimant has yet to reach maximum medical improvement and agreed “[e]ntitlement to permanent disability [was] not ripe for determination.”

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!

             There have been a number of developments in the Division of Workers’ Compensation in 2015 of which practitioners should be aware:

            Retirement of Director Peter J. Calderone,

            After 13 years of service as Director of the Division of Workers’ Compensation and 39 years of service to the State of New Jersey, Chief Judge and Director Peter J. Calderone announced this week that he will be retiring effective February 28, 2015.  Director Calderone raised the level of professionalism within the Division and modernized the New Jersey workers’ compensation practice, with e-filing of pleadings, court listings and communications from counsel to the courts.  He led the creation of an extensive case management system and developed a first class Division website providing a wide range of valuable information to practitioners and the public.   During his tenure, rules for discovery on urgent motions for medical and temporary disability benefits were established, and new administrative rules were adopted for medical reimbursement petitions, thousands of which are now handled in the Division. 

            The new Director of the Division of Workers’ Compensation will be the Honorable Russell Wojtenko, Jr., Supervising Judge of New Brunswick vicinage.  Judge Wojtenko resides in Mercer County and currently sits in New Brunswick.  He has earned a reputation in the bar as  hard working and fair to all parties. 

            Three New Workers’ Compensation Judges

             The Governor has nominated three experienced practitioners as workers’ compensation judges: Michael J. Dillon, Esq., Thomas J. Ludlum, Esq. and John C. Gavejian, Esq., all from Bergen County.

             2015 Rate Charts Are Available

             For clients who are interested in receiving 2015 rate charts, please email the undersigned or Carol Wright atcwright@capehart.com.  The maximum rate for temporary disability benefits and total permanent disability benefits is $855 per week, up from $843 per week in 2014.  That amounts to approximately a 1.5% increase over last year.

            The minimum rate is now $228 per week.  The current state average weekly wage on which the rates are based is $1,140.02 per week. In 2005 the maximum rate was $666 per week and the minimum rate was $168.  In 1995 the maximum rate was $469 and the minimum rate $125.  In the past 20 years the maximum and minimum rates have increased 82%.

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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.