State News

Telecommuting is a trend that is rapidly growing in the United States, and telecommuting requests are also on the rise as a potential reasonable accommodation under the ADA.  A recent Sixth Circuit Court of Appeals case,EEOC v. Ford Motor Company, 2014 U.S. App. LEXIS 7502 (6^th Cir. 2014) illustrates how difficult it can be for an employer to oppose a request for telecommuting.

Jane Harris was hired in 2003 by Ford as a resale buyer, serving as an intermediary between steel suppliers and “stampers,” which are companies that use steel to produce parts for Ford.  Her job was to respond to emergency supply issues to ensure no gap in steel supply to parts manufacturers. The most important part of the job was group problem solving, requiring that a buyer be available to interact with members of the resale team, suppliers and others in the Ford system when problems arose.

Harris suffered from IBS, an illness that caused her fecal incontinence.  Some days she could not drive to work or stand up from her desk without potentially soiling herself.  She took intermittent leave when severe symptoms occurred.  In 2005 her supervisor allowed her to work from home on a flex-time telecommuting schedule on a trial basis.  The company did not view the trial period as a success. She continued to work occasionally from home doing remote work, including on evenings and weekends.  However, Ford did not credit Harris with the time she spent working during non-“core” hours and marked the days she stayed home because of her illness as absences.  The company stressed that core business hours were important because that was the time when employees do team problem solving. 

On occasion Harris submitted a purchase order with incorrect pricing information because she could not immediately access the supplier on a weekend to obtain updated quotations. This caused problems with co-employees and suppliers.  Under Ford’s system of marking absences, Harris was absent in the first seven months of 2009 during core hours more than she was present. 

In 2009, Harris requested that she be permitted to telecommute on an as-needed basis as a reasonable accommodation.  Harris felt that she could get most of her work done by computer or telephone.  Ford had a telecommuting policy but not for all jobs. Harris’s supervisors did not feel that her position was suitable to telecommuting and denied the request.  Instead, the company suggested that it could move her cubicle closer to the restroom or she could seek an alternative position within Ford that would be more suitable for telecommuting. 

Harris filed a charge of discrimination with the EEOC.  Eventually Ford terminated Harris for poor performance.  In 2011 the EEOC filed a complaint alleging that Ford violated the ADA by failing to accommodate Harris’s disability. The district court followed precedent that indicated an employer should not second guess the employer’s assessment of the essential functions of the job and ruled against Harris. The Sixth Circuit Court of Appeals  reversed.

The Circuit Court noted that Ford believed physical attendance at the workplace was critical to the group dynamic of the resale-buyer team.  The Court did not defer to Ford’s description of the essential job functions:

While Ford has provided substantial evidence of its business judgment and the experience of other resale buyers, the EEOC has also offered evidence that casts doubt on the importance of face-to-face interactions at Ford.  Harris’s own experience over several years as a resale buyer indicates that in-person interaction may not be as important as Ford describes: Even when Harris was physically present at Ford facilities, the vast majority of communications and interactions with both the internal and external stakeholders were done via conference call.

The Court noted that Ford did allow other resale buyers to telecommute, albeit on a more limited basis than the request Harris was making.  The Court moved away from a previous position in prior cases that telecommuting is not a reasonable accommodation, saying that telecommuting may be reasonable when someone can perform all the essential functions at home. 

Ford also argued that it made two alternative accommodations to Harris, as noted above, but Harris rejected those accommodations.  The Court said that moving her cubicle closer to the restroom would not relieve Harris of the “humiliation of soiling herself on a regular basis in front of her workers, merely because she could use Depends to contain the mess or bring a change of clothes to clean herself up after the fact.”   It said that allowing her to apply for another job was not adequate because there was no guaranty that such a position would be available.

The Court said that because the EEOC provided evidence that Harris was qualified for her position with a reasonable telecommuting accommodation, the burden shifted to Ford to show an undue burden on the company.  “Although setting up a home workstation for Harris might entail some cost, considering Ford’s financial resources and the size of its workforce, this cost is likely to be de minimis. Indeed, Ford has created a written policy in which it pledges to absorb these costs for all employees approved to telecommute.”

The case shows that telecommuting is inevitably going to be viewed as a reasonable accommodation, no matter that earlier cases on the ADA did not find it to be.  Employers that have telecommuting policies will be hard pressed to deny requests for accommodation where there is evidence that the employee can perform the essential job functions at home. 

On June 13, 2014, the Alabama Court of Civil Appeals issued its opinion in Alabama Forrest Products Industry Workmen’s Compensation Self Insurer’s Fund v. Harris. In 1990, Harris sustained a severe work-related injury to his pelvis and right leg. As a result of his injuries, Harris was permanently and severely limited in his lifting, bending, stooping, squatting, climbing, and walking. Those limitations allegedly prevent him from performing ordinary activities of daily living without assistance. Since his injury, Harris’s daughter had been assisting him in getting in and out of bed, using the bathroom, bathing, dressing, administering his medications, and preparing meals. In the fall of 2011, Harris sent notice to his employer’s insurer, Alabama Forrest Products, that he wanted his future son-in-law to replace his daughter as his designated care giver. However, Alabama Forrest Products later discovered that the future son-in-law was employed full time in another town, and stopped paying him to take care of Harris. Harris then filed a declaratory judgement action, requesting that the trial Court order Alabama Forrest Products to reinstate the payments.

Alabama Forrest Products took the deposition of Harris’s authorized treating physician, who stated that Harris continued to require assistance with activities of daily living. The doctor also testified that although the attendant care provided by Harris’s daughter in the past had not improved his underlying physical condition and further attendant care would not improve his condition, it did allow and would continue to allow Harris to maintain his function and prevent deterioration of his condition. The doctor further testified that without in home attendant care provided by his family, Harris would have to be admitted into a skilled nursing facility. Based on the testimony of Harris’s family members and his doctor, the trial Court ordered Alabama Forrest Products to reinstate the payments, and Alabama Forrest Products appealed.

On appeal, Alabama Forrest Products argued that an injured employee has no right to payment for attendant care based on the holdings inOsorio v. K & D Erectors, Inc. and Ex parte City of Guntersville, which previously held that employers were only responsible to reimburse an employee for services designed to improve his condition. Harris argued that the case ofEx parte Mitchell overruled Osorio, in that it held that preventive and functional aids aimed at preventing the deterioration of an employee’s condition or improving his function are also compensable.

In its analysis, the Court of Appeals noted that Alabama Administrative Code Rule 480-5-5-.30 provides that authorized services by non-professional family members may be reimbursable when certain conditions are met. Based on this, the Court of Appeals upheld the trial Court’s decision and ordered Alabama Forrest Products to reinstate payment to Harris’s family for his in-home care.

MY TWO CENTS

Given the potential impact this decision on the cost of workers’ compensation claims, I expect that Alabama Forrest Products will petition the Supreme Court for review. If this decision stands, it could increase the costs of many workers’ compensation claims by over $21,000 per year (based on current minimum wage). One possible end-around that the Court of Appeals mentioned, but did not address (because the issue was not raised), would be to challenge the Department of Labor’s authority to promulgate and enforce the provisions of Rule 480-5-5-.30. The Alabama Workers’ Compensation Act does not explicitly provide for non-medical treatment such as the services at issue in this case, so the question is whether the Act gives the Department of Labor the authority to require benefits that were not specifically enumerated by the legislature in the Act.

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ABOUT THE AUTHOR

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

Guyoungtech USA, Inc. v. Dees

On June 6, 2014 the Supreme Court of Alabama issued a lengthy opinion covering many issues related to a Retaliatory Discharge case tried in Conecuh County Circuit Court.

Dees, the employee, was injured on March 14, 2011, 4 months after she was hired. Shortly before hiring Dees HMMA reduced its orders from Guyoungtech. In November of 2010 Guyoungtech laid off 300 employees and then another 212 in May of 2011. Dees was one of the layoffs in May of 2011. As a result Dees filed the retaliatory discharge claims alleging she was fired because of her workers’ compensation in violation of § 25-5-11.1 of the Alabama Workers’ Compensation Act. The jury order Guyoungtech to pay $1,000,000.00 in compensatory damages and $2,500,000.00 in punitive damages. The Trial Judge remitted the damages to $300,000.00 in compensatory damages and $900,000.00 in punitive damages. Dees accepted the remitted amounts and Guyoungtech appealed the decision.

Guyoungtech argued that Dees was part of a corporate layoff and not terminated, but was definitely not terminated as a result of her workers’ compensation claim. Dees argued that Guyoungtech used the layoff as a mask to conceal the wrongful termination. Dees pointed to the proximity in time and a safety director denying knowledge of her injury which seemed implausible. The Supreme Court noted that mere proximity of time is typically not enough to establish sufficient evidence in a retaliatory discharge claim. However, the jury could have found the safety director’s testimony that she/he did not know about the injury was not credible. That, in addition to the proximity was sufficient for the jury to find liability and the Supreme Court stated they were not in a position to substitute their judgment for the jury.

However, the errors as it related to the damages resulted in the Supreme Court reversing liability and ordering a new trial.

In regards to the lost wages component of the compensatory damages, the Supreme Court pointed out that no expert testified as to Dees’ lack of employability, or restricted access to the labor market, as a result of her termination. They stated that Dees’ testimony that she was under treatment and restrictions and hampered in looking for work does not provide evidence that the discharge itself rendered her less employable. The Supreme Court stated that the extent of her disability and its effect on her ability to work was part of the workers’ compensation trial, which was severed from the discharge trial, and not at issue in the discharge case. The Supreme Court then pointed out that Guyoungtech had given her a letter stating she was laid-off, and not fired, so there was no stigma of being terminated when she went to secure employment. Therefore, no evidence was present to show the termination caused Dees to be less marketable in the work force.

As to the mental anguish component of the compensatory damages, the Supreme Court pointed out the broad discretion given to the jury in determining mental anguish. However, the Supreme Court pointed to two other decisions where the employee presented evidence of mental health medication, mental health treatment, divorce, loss of home and/or inability to pay bills where one employee was awarded $30,000.00 for mental anguish and the other was award $75,000.00. The Supreme Court stated that Dees only presented evidence of concern for the stability of her marriage. Dees did not present evidence that she had lost her home, could not pay bills, or that she required mental-health treatment.

The Supreme Court also opined that the trial court erroneously admitted Mortality Tables into evidence. Guyountech argued that Dees life expectancy was not relevant to the discharge claim, as Dees offered no evidence she could never work again. The Supreme Court pointed out that Mortality Tables are admissible when there is evidence that the plaintiff suffers from permanent personal injury.Drummond Co. v. Self, 622 So. 2d 336, 337 (Ala. 1993). The Supreme Court stated that the trial court was in error when it instructed the jury to use the mortality tables if they were reasonably satisfied that the injuries were permanent when there was no expert medical testimony that the injuries were permanent.

The verdict form did not itemize the compensatory damages and both, lost wages and mental anguish, were infected by the error of allowing the mortality table into evidence. As such, the error constituted grounds for reversal.

The Supreme Court then pointed out that for a jury to award punitive damages there must be compensatory damages.Life Ins. Co. of Georgia v. Smith, 719 So. 2d 797, 806 (Ala. 1998). Based on the reversal of the compensatory damages the punitive damages were due to be reversed as well. However, the Supreme Court offered guidance to the trial court upon remand as to the issue of punitive damages. At the trial level Dees’ argument for punitive damages was based on Guyountech’s failure to report some smaller workers’ compensation claim despite Dees’ claim being properly reported. The Supreme Court stated that punitive damages for the purpose of punishing a defendant for harm it did to others, not the plaintiff, is not supported by case law.Philip Morris USA v. Williams, 549 U.S. 346, 354, (2007). As a result, the Supreme Court pointed out that punitive damages must be based on harm to Dees, not potential harm to other individuals not a party to the litigation.

As a result of the error involving the compensatory and punitive damages a new trial was necessary because the question of damages and liability were too intertwined for the jury to just consider the issue of damages.

MY TWO CENTS

It is always important to sever your workers’ compensation trial from the discharge trial to assure there is no confusion that the disability, or inability to work due to the disability, should not be considered when determining damages in the discharge trial. Even if the judge instructs the jury not to consider the disability you can almost be sure that it will factor in if they are allowed to hear it. This will help keep the focus of the damages in the discharge trial on the termination only.

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ABOUT THE AUTHOR

The article was written by Joshua G. Holden, Esq. a Member of Fish Nelson, 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.

If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author atjholden@fishnelson.com or 205-332-1428.

New Jersey has a strong fraud statute, and it applies both to employees and employers.  Most of the cases that have been highlighted in this blog have concerned employees.  However, in a recent development, a Spring Lake, New Jersey man, was sentenced to 180 days in jail, 150 days of community service, and three years of probation, for workers’ compensation fraud.  He was also ordered to pay full restitution for his participation in third degree insurance fraud.

Charles Kelcy Pegler Sr., 56, was the President of a roofing company called Roof Diagnostics, Inc. (“RDI”), which was located in Wall Township, N.J. As president of the company, which employs nearly 400 people, Pegler indicated in his application for insurance to New Jersey Casualty Insurance Company that RDI was not a roofing company, that RDI did not employ roofers, and that its employees did not engage in the repair or maintenance of roofs.  The facts were otherwise.  Between June 11, 2003 and October 5, 2009, RDI paid $265,044 less in workers’ compensation insurance premiums than the company would have paid had Pegler accurately represented the nature of the business.

Additionally, Pegler falsely represented the nature of RDI’s business to USF Insurance Company, currently named Atain Insurance Company, claiming that all roofing services performed by RDI were carried out by subcontractors. RDI thereby avoided $134,087 in general liability insurance premiums that it legally owed to USF.

Pegler was charged on December 19, 2013 in a State Grand Jury indictment and entered a guilty plea on April 17, 2014 before the Honorable Anthony J. Mellaci of the Superior Court of New Jersey. The Acting Attorney General, John J. Hoffman, made the following comments:

This defendant had a legal and moral obligation to provide full and adequate workers’ compensation insurance coverage for his employees. By failing in this duty, Mr. Pegler defrauded not just his employees and his insurance company, but also honest, hard-working New Jerseyans who are forced to pay increased premiums to cover the costs of the fraud.

New Jersey’s Acting Insurance Fraud Prosecutor Ronald Chillemi warned. “The jail time imposed upon this defendant should act as a deterrent to anyone who fails to provide adequate and lawful workers’ compensation insurance.”  He added, “Such frauds will not be tolerated and will be investigated and prosecuted to the fullest extent of the law.”

This case serves as a clear reminder to employers that misrepresenting the nature of one’s business to lower workers’ compensation costs constitutes fraud and will be strongly penalized.

Beverly Ballard worked for the Chicago Park District.  Her mother, Sarah, who lived with her daughter, was diagnosed with end-stage congestive heart failure in 2006 and began receiving hospice support.  Beverly acted as the primary caregiver for her mother, cooking her meals, administering insulin and other medications, draining fluids from her heart, and bathing and dressing her.

            Sarah met with a Horizon Hospice social worker in 2007 and discussed Sarah’s end-of-life goals.  Sarah said that she had always wanted to take a family trip to Las Vegas.  Through the Fairy-Godmother’s Foundation, the six-day trip was scheduled.

            Beverly sought unpaid leave from the Chicago Park District to accompany her mother to Las Vegas.  The District ultimately denied the request, but Beverly said she was not informed of the denial prior to the trip. The two women then traveled to Las Vegas and participated in typical tourist activities.  Beverly continued to serve as her mother’s caretaker during the trip.  Once she drove her mother to the hospital when a fire  prevented them from reaching their hotel room.

            The Chicago Park District months later terminated Ballard for unauthorized absences accumulated during her trip to Las Vegas, prompting Ballard to sue under the FMLA for interference with her FMLA rights. 

            In the law suit, the Park District argued that the trip to Las Vegas was not related to a continuing course of medical treatment.  The Park District lost at the District Court level and appealed to the Seventh Circuit Court of Appeals. The issue on appeal was whether “care” in the context of an away-from-home trip is limited to services provided in connection with ongoing medical treatment.

            The Court noted that “the FMLA does note define ‘care,’ so perhaps there is room to disagree about whether Ballard can be said to have cared for her mother in Las Vegas.”  The Court also observed that there are various sections of the FMLA that refer to care in connection with treatment, but one section  2612(a)(1)(C) speaks in terms of “care” not “treatment.”  Additionally, the Court said, “Another problem is that the FMLA’s text does not restrict care to a particular place or geographic location. For instance, it does not say that an employee is entitled to time off ‘to care at home for’ a family member.”

            In attempting to resolve confusion over the legislative intent in defining “care,” the Court examined the Department of Labor’s regulations, which read as follows:

What does it mean that an employee is ‘needed to care for’ a family member?

The medical certification provision that an employee ‘is needed to care for’ a family member encompasses both physical and psychological care. It includes situations where, for example, because of a serious health condition, the family member is unable to care for his or her own basic medical hygienic, or nutritional needs or safety, or is unable to transport himself or herself to the doctor, etc.  The term also includes providing psychological comfort and reassurance which would be beneficial to a child, spouse or parent with a serious health condition who is receiving inpatient or home care.

In the end, the Court was persuaded by the statement in the regulations that care includes psychological assistance and that there is no specific geographic limitation. “Sarah’s basic medical, hygienic, and nutritional needs did not change while she wasin Las Vegas, and Beverly continued to assist her with those needs during the trip.”  The Court rejected the argument of the Park District that care must be connected to medical treatment because the regulations never use the word “treatment” in their definition of care.

The Seventh Circuit acknowledged that its decision was counter to decisions in the Ninth and First Circuit Courts of Appeal.  The Court was impressed by an inherent inconsistency within the FMLA:  “If Beverly had sought leave to care for her mother in Chicago, her request would have fallen within the scope of the FMLA. So too if Sarah had lived in Las Vegas instead of with her daughter, and Beverly had requested leave to care for her mother there.”

            The case may be found at Ballard v. Chicago Park District, 741F.3d 838 (7^th Cir. 2014).  Employers need to reflect on the judicial philosophy in their own circuit and should always try to obtain medical certifications from the physician treating the family member to see what care the physician thinks is necessary. 

In Ex parte Schnitzer Steel Industries, Inc., released on September 27, 2013 (summarized on our blog September 28, 2013), the Alabama Supreme Court granted the employer’s petition for writ of mandamus and held that the post-accident report was prepared in anticipation of litigation and, therefore, was considered work product and not discoverable.

On May 30, 2014, the Alabama Supreme Court decided not to get involved in a work product issue inEx parte USA Water Ski, Inc. and denied the petition for writ of mandamus filed by USA Water Ski, Inc. The issue came before the Supreme Court previously when USA Water Ski, Inc filed a petition for writ of mandamus in June of 2013. In June the Supreme Court found that the post accident report at issue was work product and directed the trial court vacate its order that USA Water Ski, Inc. produce the report. Upon remand additional evidence came to light suggesting the post accident report was not prepared in anticipation of litigation. The trial court once again ordered that USA Water Ski, Inc. produce the post accident report. USA Water Ski, Inc. once again file a petition for writ of mandamus and this time the Supreme Court denied the petition without an opinion. However, Chief Justice Moore wrote a concurring opinion. According to Chief Justice Moore a writ of mandamus is not proper in the context of discovery issues and the Supreme Court should not get involved. Chief Justice Moore opined that the trial court is in a better position to deal with discovery issues and petitions for writ of mandamus require the need for extraordinary remedy which is normally not present in discovery issues.

My Two Cents:

It seems that once the trial court orders a party to produce a post accident report the Supreme Court is most likely going to defer to the trial court’s opinion and not get involved. For this reason it is important for employers to establish the reason behind the creation of the post accident report. As the Supreme Court ruled in Ex parte Schnitzer Steel Industries, Incthe report does not have to be solely prepared in anticipation of litigation but there must be evidence that the employer could have reasonably assumed litigation was expected, and for that reason, as well as standard procedure or other reasons, prepared the post accident report. If the employer can establish this at the trial level the post-accident report should not be discoverable. However, if the trial court orders that it be produced the Supreme Court has indicated that they are not likely going to get involved in discovery issues.

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ABOUT THE AUTHOR

The article was written by Joshua G. Holden, Esq. a Member of Fish Nelson, 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.

If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author atjholden@fishnelson.com or 205-332-1428.

On May 16, 2014, the Alabama Court of Appeals released its opinion in Jesse Stutts, Inc. v. William Hughey overruling a trial court’s finding that the employee’s new injury was a direct and natural result of his prior compensable injury. In Alabama, if an employee’s injury is found to be the direct and natural result of a previous compensable workers’ compensation injury, then the previous employer may be responsible for benefits resulting from the new injury, even if it the injury did not occur while working for the employer. However, when it cannot be shown that the first injury was the direct cause of the second injury, then the employee cannot recover additional compensation benefits for the new injury from the original employer.

Hughey, the employee in the case at hand, injured his back while working for Jesse Stutts, Inc., in 2002, and Stutts remained responsible for medical treatment for that injury. In 2011, while working for Cracker Barrel, Hughey claimed that he fell and re-injured his back due to his leg giving out. He also claimed that his leg weakness was related to his 2002 accident and that he had fallen numerous times as a result of the weakness. From the very beginning, Hughey wanted Stutts to pay for the treatment he would need for this new injury. For reasons unknown, he never sought benefits from Cracker Barrel.

At trial, the medical evidence made no clear connection between Hughey’s legs giving out and his 2002 injury. Although it was suggested that the 2002 injury could result in weakness, there was no medical evidence directly connecting Hughey’s new injury to his 2002 accident. However, despite the evidence, the trial court found that Hughey’s 2011 fall was the direct and natural result of his 2002 injury.

On Appeal, Stutts argued that Hughey had not presented substantial evidence to support the trial court’s decision, and the Court of Appeals agreed. It was noted that there was evidence suggesting that Hughey’s legs were weak and that they would give out on him at times, causing him to fall. However, the Court also noted there was no medical evidence supporting Hughey’s contention that the weakness was the cause of his new injury. In addition, the Court pointed out that Hughey had sustained other falls and incidents which were just as likely to have caused Hughey’s condition.

The Court of Appeals found that the trial court’s determination that Hughey’s fall was the result of his 2002 injury was speculation and not supported by the evidence, and therefore, overruled the trial court’s decision.

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About the Author

This post was written by Trey Cotney, Esq. of Fish Nelson LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation matters. Fish Nelson is a member of the National Workers’ Compensation Network (NWCDN). If you have any questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at tcotney@fishnelson.com or any firm member at 205-332-3430.

The Alabama Legislature recently passed HB-107, which would amend § 25-5-56 of The Alabama Workers’ Compensation Act. HB-107 was introduced by District 55 Representative Rod Scott (D) on January 14, 2014. The legislature passed the bill in March, and it has been sent to Governor Bentley for his signature. Under current law, if an employee dies as the result of an accident occurring in and arising out of his employment, the employer must pay burial expenses up to a maximum of $3,000.00. If Governor Bentley signs HB-107, the maximum burial expense would be increased to $6,500.00.

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ABOUT THE AUTHOR

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

On May 19, 2014, The New Mexico Court of Appeals ruled that Redwood Fire & Casualty must reimburse an injured mechanic for the cost of marijuana he was prescribed for pain due to his on-the-job injury. Gregory Vialpando injured his lower back in 2000 while working for Ben’s Automotive Services. Vialpando’s physician stated that Vialpando’ resulting pain was among the most intense, frequent and long-lasting out of thousands of patients the doctor had treated. In 2013, the workers’ compensation board approved Vialpando to use marijuana as treatment, but Redwood objected to reimbursing him for the cost of the drug due to its illegal status under federal law. While New Mexico passed theLynn and Erin Compassionate Use Act in 2007, legalizing the use of cannabis for treatment of debilitating medical conditions,The Controlled Substances Act of 1970 still classifies marijuana as a Schedule I drug under federal law with "no acceptable medical use", and makes its sale, possession, and distribution illegal. The Court of Appeals stated in its decision that neither Redwood nor Ben’s cited to any specific federal law that they would violate by reimbursing Vialpando for his herbal purchases.

MY TWO CENTS

It is unclear exactly what positions Ben’s Automotive and Redwood took at trial. However, it would appear that there are valid arguments to support denying reimbursement. By paying for Vialpando’s marijuana, Redwood would arguably be enabling Vialpando to purchase drugs that are illegal under federal law and, therefore, could arguably be considered to be conspiring to violate federal law. Section 846 of theControlled Substances Act of 1970 provides that any person who conspires to commit any other drug offense shall be subject to the same penalties as those prescribed for the offense itself. If reimbursing a person for buying drugs amounts to conspiracy to violate The Controlled Substances Act, Redwood’s concerns would certainly be understandable. Additionally, from Redwood’s perspective, insurance policies are contracts, so contract defenses would apply. Illegality is a defense to a breach of contract claim, so Redwood may have a valid defense in that regard, depending on what state’s law governs the insurance contract.

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ABOUT THE AUTHOR

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

The State of New Mexico has a Compassionate Care Act which provides for medical marijuana when a patient is certified for the program by his or her health care provider.  In the case ofGregory Vialpando v. Ben’s Automotive Services and Redwood Fire & Casualty, the New Mexico Court of Appeals affirmed a decision of a Judge of Compensation requiring the worker’s employer to reimburse him for the cost of medical marijuana.

            Mr. Vialpando was seriously injured on June 9, 2000.  He underwent multiple back procedures leading to a 99% permanent partial disability.  One doctor described his pain as “high intensity multiple-site” chronic pain.  Vialpando had been taking multiple narcotic-based pain relievers and multiple anti-depressant medications.

            On April 8, 2013, Vialpando filed an application for approval of medical treatment for medical marijuana. nbsp; He had been certified for the program by two physicians.  The Judge of Compensation found that the worker was “entitled to ongoing and reasonable medical care,” including medical marijuana, and ordered the employer to pay for the care.

            The employer appealed and made several interesting arguments.  First, the employer argued that the New Mexico Workers’ Compensation Act did not authorize reimbursement for the costs of medical marijuana.  The court noted that an employer is required to provide an injured worker with “reasonable necessary health care services from a health care provider.”  However, the court conceded that the list of health care providers does not include a dispenser of medical marijuana under the State’s Compassionate Care Act.  Nor has the Director of the Division of Workers’ Compensation approved a dispenser of medical marijuana as a health care provider. 

On the other hand, the Act does define “services” as “health care services, . . . procedures, drugs, products or items provided to a worker by an health care provider, pharmacy, supplier, caregiver, or freestanding ambulatory surgical center which are reasonable and necessary for the evaluation and treatment of a worker with an injury or occupational disease. . . “ Based on this definition, the court found that medical marijuana is a product from a supplier that may be reasonable and necessary for an employee’s treatment. 

By defining ‘services’ as including a product from a supplier that is reasonable and necessary for a worker’s treatment, the regulations do not contemplate that every aspect of a worker’s reasonable and necessary treatment be directly received from a health care provider.  Such a requirement would be unworkable. A worker’s treatment may well require services that are not available from a health care provider. The most obvious of such services may be medical supplies or equipment.

As for the distinction that a doctor does not “prescribe” medical marijuana, but rather the employee gets certified to the New Mexico program, the court said it is unnecessary that each and every service must be provided by a health care provider.

            The employer also argued that medical marijuana should be viewed as a prescription drug, and since a doctor may not order medical marijuana, it should not be reimbursable under workers’ compensation.  The court rejected this argument as well. “A doctor may not order medical marijuana but may certify a patient to enroll in the medical cannabis program.” The court said that the definition of “services” is broader than the definition of a “prescription drug.”  Services include non-prescription drugs and products not necessarily prescribed by licensed pharmacists.  The court did concede that medical marijuana is a controlled substance and a drug but it reasoned that it makes no difference whether a pharmacist can prescribe it because the program authorized by the Department of Health is itself licensed. 

            Lastly, the employer contended that the court order requires the employer to violate federal law because marijuana is classified as a Schedule I Controlled Substance and is generally illegal to use or possess.  The court first observed that the employer was not specifically challenging the New Mexico Compassionate Care Act.  Rather, the employer was arguing that it was committing a crime in complying with the court order. 
“However, Employer does not cite to any federal statute it would be forced to violate, and we will not search for such a statute.”

            This case is one of the first to deal with the employer’s obligation to pay for medical marijuana through workers’ compensation, and it will not be the last.  The analysis in the New Mexico case raises complex state and federal issues. Readers are invited to give your thoughts on this decision and its implications to employers in connection with the New Jersey Compassionate Use Medical Marijuana Act.