NC Risk Handling Hint -Estoppel; Insurance Coverage; Sanctions

Defendant insurance carrier, New York State Insurance Fund (NYSIF), contracted to provide workers’ compensation coverage for Defendant-Employer, DenRoss Contracting, with a policy rider which specifically excluded “bodily injury occurring outside the State of New York.” DenRoss was annually audited by NYSIF, after which the policy was automatically renewed and premiums paid. DenRoss provided maintenance service throughout the U.S. and contracted with Defendant Kapstone Kraft Paper to provide services, for which DenRoss hired James Arthur Smith and several others. Smith filed a workers’ compensation claim after suffering a work-related injury. DenRoss denied the claim, stating NYSIF had coverage and Kapstone was the principal contractor and statutory employer. Kapstone denied liability stating Smith was either an independent contractor or the employee of an independent contractor, DenRoss.

The Deputy Commissioner ordered DenRoss to begin making payments immediately or notify the Commission of its denial that day and further ordered DenRoss to submit the claim to NYSIF for immediate payment. The order was not appealed. After a hearing the Deputy Commissioner entered an Opinion and Award ordering NYSIF to pay Smith benefits, including past medical expenses, attendant care and a 10 percent penalty for unreasonable and untimely denial of benefits under N.C.G.S. § 97-18(j).

On Appeal by NYSIF, the Full Commission determined that allparties were bound by the Workers’ Compensation Act, that DenRoss was covered under NYSIF’s policy at the time of Smith’s injury, awarded a 10 percent penalty for untimely and unreasonable denial and ordered Defendants to pay Smith’s attorney’s fees under N.C.G.S. § 97-88.1 as a sanction.

On December 18, 2012, inSmith v. DenRoss Contracting, U.S., Inc., the Court of Appeals first dismissed NYSIF’s contention that it was not subject to the jurisdiction of the North Carolina Industrial Commission and noted that New York law specifically stated that the NYSIF was created by statute, but was “nevertheless treated by statutes as a separate insurance business… especially in litigations.”Commissioners of State Insurance Fund v. Low, 3 N.Y.2d 590, 595, 148 N.E.2d 136, 138 (1958). The Court agreed with the Commission that Smith sustained compensable injuries while working for DenRoss who paid premiums to NYSIF to maintain coverage and, as such, NYSIF was liable for Smith’s injuries.

The Court also held that the Commission did not err in concluding that Smith’s injury was covered by the insurance policy between NYSIF and DenRoss inasmuch as the Commission did not base its decision on the coverage provided in the policy which specifically excluded bodily injury occurring outside of New York State. Rather, the Court noted, the Commission had instead concluded that NYSIF was estopped from denying coverage because its representations to DenRoss were sufficient for DenRoss to believe it was covered for injuries outside New York State.

Although the Court declined to determine whether NYSIF misled DenRoss, it concluded that the Commission did not err in finding that NYSIF’s actions were sufficient to induce DenRoss into believing it had coverage because NYSIF accepted premiums knowing that DenRoss only had clerical staff in New York State, but performed work throughout the United States.

The Court, however, did find that the Commission erred in awarding a late payment penalty against NYSIF even though it responded more than thirty days after Smith’s Form 18 since it did respond within thirty days of receiving notice of the claim from the Commission, as required under N.C.G.S. § 97-18(j)(2). The Court also held that the Commission erred in concluding that NYSIF unreasonably defended the claim since NYSIF’s policy specifically excluded claims for bodily injury outside of New York State and the Full Commission’s award on estoppel grounds was affirmed.

Risk Handling Hint: Carriers need to be aware of the specific business of their insured. In North Carolina, coverage may be found despite any policy language which otherwise attempts to limit the geographic scope of coverage.

  PARTNER ANNOUNCEMENT 

NC Risk Handling Hint -Attendant Care Services; Home Modifications; Post Award Interest

Sheryl Boylan suffered a compensable back injury in 2003 and was awarded past and future attendant care services, at $8 per hour, for care provided by her daughter and her sister’s family in the past and her sister’s family in the future. This was affirmed by the Court of Appeals.Boylan v. Verizon Wireless, 201 N.C. App. 81, 685 S.E.2d 155 (2009).

Boylan’s daughter moved back into Boylan’s home in April 2009 and resumed providing attendant care. As the Commission had not provided for future changes in attendant care providers, Defendants did not pay her. Defendants also argued Boylan’s claim for attendant care had been rendered moot by Defendants’ modifications to Boylan’s home and Boylan’s own medical improvement. Both parties filed Form 33s and, after a hearing, both parties appealed to the Full Commission. The Full Commission awarded $8 per hour for all services provided by Boylan’s daughter from April 2009 to the date of its Opinion and Award and $10 per hour for ongoing attendant care provided by either Boylan’s daughter or her sister’s family or, if they were unable, professionals. The Full Commission also awarded Boylan costs for modifications to her home, but denied Boylan’s request for interest on attendant care between August 2004 and April 2009 because Boylan had not suffered any prejudice or out of pocket expenses.

On December 18, 2012, inBoylan v. Verizon Wireless, the Court of Appeals first found that the Full Commission did not err in awarding Boylan attendant care from April 2009 onward as there was competent evidence to support the Commission’s finding that such care was ‘medically beneficial’ to Boylan including testimony from a certified life care planner and registered nurse. Their testimony was that Boylan needed eight hours of care daily and was at risk of falling if she did not receive it. In finding attendant care medically beneficial, the Full Commission dismissed the idea that Boylan’s medical condition had improved to the point that such care was unnecessary.

The Court also affirmed the Full Commission’s determination that the cost of skilled nursing care was competent evidence to determine the rate for unskilled attendant care provided by family members. Judge Beasley, however, dissented in part on this issue, stating that evidence of the cost of skilled nursing care was not competent evidence which supported the hourly rate awarded by the Full Commission.

Although home modifications were not expressly recommended by Boylan’s physicians, the Court concluded that the Full Commission did not err in awarding Boylan home modifications since her occupational therapist, life care planner and occupational nurse all testified that she would benefit from further modifications, including wheelchair ramps and a handicapped accessible pantry. In addition, the Court found that the Full Commission did not err in preventing Defendants from choosing Boylan’s attendant care provider despite their right to direct medical treatment in this accepted claim because Defendants had not directed care to their chosen provider in a prompt and adequate manner and fought Boylan’s claims for attendant care at every step.

The Court also concluded that the Full Commission erred in failing to award Boylan interest on the portion of attendant care awarded from August 2004 until April 2009 because the Commission incorrectly required a show out of pocket expenses or prejudice. According to the Court, there is no discretion in the application of N.C.G.S. § 97-86.2 which requires interest be paid on the final award from the date of the initial hearing until the award is paid. The purpose of the statute is to compensate Plaintiffs for the lost time value of money, to prevent unjust enrichment to Defendants by delaying payment, and to promote settlement. There is no requirement that Plaintiffs show prejudice or out of pocket expense. 

Risk Handling Hint: Although N.C.G.S. § 97-2(19) has been revised to require a prescription by a health care provider or authorization by the employer or the Commission for attendant care services, the Boylan case still clarifies that the Commission can weigh evidence supporting an award of attendant care services. In addition, evidence of the value of skilled nursing services can be considered as evidence even though non-skilled services are actually rendered. Defendants should take care to control all medical treatment, including attendant care, in an accepted case in a prompt and timely manner, to avoid losing control of the treatment and creating further issues in the claim.

THE SMART ACT ENACTED

By Kevin L. Connors, Esquire

On January 10, 2013, theSmart Act was signed into Law by President Obama.

The Smart Act stands for “The Strengthening Medicare And Repaying Taxpayers Act”.

This legislation reforms several aspects of Medicare requirements for conditional payments.

Under Section 201 (Conditional Payment Final Demand and Use of Website), efficiencies have been approved in the conditional payment system, with the following reforms:

Under Section 202 (Thresholds for Reporting a Conditional Payment Reimbursement); by November 15^th of every year, the Secretary will have to publish a threshold, wherein reporting conditional payment reimbursements shall not apply.

This procedure will not take effect until 2014.

Under Section 203 (Discretionary Fines for Non-Compliance of Mandatory Insurance Reporting):

Fines for non-compliance with Mandatory Insurer Reporting will now be discretionary, rather than mandatory.

The guidelines surrounding discretionary application have yet to be created.

Within sixty (60) days of the passage of the Smart Act, being signed into law as of January 10, 2013, CMS will seek proposed comments on which action/practices should or should not be sactionable, with publication of the proposed comments in the Federal Register.

This section established an enactment date of March 10, 2013.

Under Section 204 (Social Security Numbers); Social Security numbers will no longer be required on health identification claim forms. CMS has been given eighteen (18) months after the enactment date of theSmart Actto publish rules surrounding this declaration.

Under Section 205 (Statute of Limitations for Conditional Payment Recovery):

The statute of limitations for conditional payment recoveries is three (3) years after the receipt of notice of a settlement, judgment, award, or other payment made.

Effective as of January 1, 2014, certain liability claims will be exempt from reporting and reimbursement, if the claim falls below the annual threshold as calculated by the Secretary of Health and Human Services.

Civil penalties for non-compliance with mandatory insurance reporting requirements will be discretionary, and can be up to $1,000.00 for each day of non-compliance, with respect to each Claimant.

The Smart Act can be accessed online through several links, to include CMS.gov.

Copies of the Smart Act are also available through our office.

This is long overdue reform, intended to simplify what has become a Sisphysian ordeal, more complicated than necessary, and fraught with both frustration and uncertainty.

ConnorsLaw LLP

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

Defending workers’ compensation claims throughout Pennsylvania for employers, self-insureds, insurance carriers, and third party administrators, our 100+ years of cumulative experience defending our clients against compensation-related liabilities, empowers our workers’ compensation practice group attorneys to be more than mere claim denials, entrusting 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’s Workers’ Compensation Act.

With every member of our workers’ compensation practice group being AV-rated, our partnership with the NWCDN magnifies the lens through which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, businesses, corporations, and insurance carriers, seeking our trial and compensation acumen, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania workers’ compensation practice and procedure.

PENNSYLVANIA RATE INCREASE FOR WORKERS’ COMPENSATION BENEFITS

By Kevin L. Connors, Esquire

Effective as of January 1, 2013, the Pennsylvania Bureau of Workers’ Compensation increased the maximum compensation payable rate, for temporary total disability benefits, to a weekly rate of $917.00.

This translates into yearly compensation benefits equaling $47,684.00.

This temporary total disability benefit rate is applicable to any pre-injury average weekly wage that equals or exceeds $1,375.90, representing sixty-six (66) and two-thirds (2/3) of the pre-injury average weekly wage.

Between a pre-injury average weekly wage of $1,375.50 and $687.76, the average weekly wage is multiplied by sixty-six (66) two-thirds (2/3), for the temporary total disability benefit rate.

For pre-injury average weekly wages between $687.75 and $509.44, the Bureau has assigned a temporary total disability benefit rate of $458.50 per week, yielding $23,842.00 in yearly compensation benefits.

For those earning $509.43 per week or less, the temporary total disability benefit rate will be determined at a ninety percent (90%) rate.

The 2013 maximum compensation payable rate represents a rate increase of approximately 3.265 percent over the 2012 rate.

For the last five (5) years, the maximum rates have been:

Access to Pennsylvania’s Bureau of Workers’ Compensation, now known as the Office of Adjudication, is available through the following link:

http://www.portal.state.pa.us.

ConnorsLaw LLP

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

Defending workers’ compensation claims throughout Pennsylvania for employers, self-insureds, insurance carriers, and third party administrators, our 100+ years of cumulative experience defending our clients against compensation-related liabilities, empowers our workers’ compensation practice group attorneys to be more than mere claim denials, entrusting 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’s Workers’ Compensation Act.

With every member of our workers’ compensation practice group being AV-rated, our partnership with the NWCDN magnifies the lens through which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, businesses, corporations, and insurance carriers, seeking our trial and compensation acumen, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania workers’ compensation practice and procedure.

NC Risk Handling Hint -Necessity of Objection Before Deputy Commissioner; Admissibility of Surveillance Video

Clifton Bowman was a repair technician for Cox Toyota Scion. He alleged that he tripped over an air hose at work causing injury to his neck and low back. After the fall, Bowman reported the accident to his supervisor and showed several employees his alleged back injury before leaving work early. Cox Toyota Scion had installed an extensive security system in the building, including surveillance equipment that recorded footage in the area where Bowman allegedly fell. An executive with Cox Toyota Scion reviewed the surveillance footage after learning of Bowman’s alleged fall. This footage was also recorded onto several DVDs. Because they could find no evidence of a fall on the surveillance footage, Defendants denied Bowman’s claim.

At hearing, Plaintiff’s evidence consisted of his own testimony, medical evidence and testimony of two witnesses who testified that Bowman’s back was red and swollen after the fall. The Deputy Commissioner denied Bowman’s claim, concluding that he was not credible because the video surveillance did not corroborate his testimony. On appeal, the Full Commission reversed the Deputy Commissioner and found that he erred in admitting the surveillance since Defendants did not lay a proper foundation or authenticate the surveillance video.

On December 4, 2012, inBowman v. Cox Toyota Scion, the Court of Appeals first considered whether the Full Commission erred in concluding that Defendants’ surveillance video should not have been admitted into evidence when the reversal was based on an objection that Bowman did not raise before the Deputy Commissioner. Rejecting Defendants’ argument that the North Carolina Rule of Appellate Procedure which precludes a party who fails to obtain a ruling on an issue before the trial court from raising the issue on appeal applied, the Court noted that the Full Commission is not an appellate court and that this argument had already been rejected inJoyner v. Rocky Mount Mills, 92 N.C. App. 478, 374 S.E.2d 610 (1988). The appealing party’s Form 44 determines the issues properly before the Full Commission, and the fact that a particular issue was not objected to or raised before a Deputy Commissioner does not, in and of itself, prevent the Full Commission from deciding the issue.

The Court also addressed whether the Full Commission erred in concluding that Defendants had not laid a proper foundation or authenticated the surveillance video when Defendants had offered evidence that the surveillance cameras were working properly and that the video footage was unedited. The Court held that the Commission erred in excluding the video, noting that the Rules of Procedure and Evidence used by the Commission are required to be simpler than the Rules used in State Court. Video recordings are generally admissible when a proper foundation is laid and when the recording is authenticated, which is usually accomplished when there is evidence that the camera and taping system were properly maintained and operating when the video was made, the videotape accurately presents the events depicted, and there is an unbroken chain of custody.

In this case, the Court found that a supervisor from Cox Toyota Scion testified that a state-of-the-art security system was installed, that Cox Toyota Scion experienced no problems with its video surveillance, and that the cameras were in operation on the date of the alleged injury. The supervisor also testified that he followed the instructions for retrieving footage from the cameras. Based on this testimony, the Court concluded that Defendants laid a sufficient foundation for the video and that the Full Commission erred in excluding this evidence. The Court remanded the case back to the Full Commission for the entry of an Opinion and Award that considered the video surveillance. Notably, the Court also rejected Bowman’s argument that three seconds of the video surveillance was missing, which Defendants acknowledged might have coincided with the time at which Bowman claimed to have fallen, since that issue goes to the weight of evidence, not to its admissibility.

Risk Handling Hint:Bowman underscores the fact that the issues before the Deputy Commissioner are not necessarily the same as those ultimately considered by the Full Commission. An appeal to the Full Commission can also include newly received evidence in some circumstances. Risk managers are reminded to consider the Full Commission’s scope of review to address every aspect of a worker’s compensation claim.Bowman also establishes guidelines for the admission of surveillance evidence. Risk managers should ensure that the chain of custody for surveillance footage is carefully maintained, that all surveillance equipment functions properly, that the footage is unedited, and that a representative of the employer can testify as to the fairness and accuracy of the events depicted in the recording.

NC Risk Handling Hint -‘Arising Out Of’ and ‘In the Course Of’; Material Aggravation; Attorney’s Fees

Cynthia Mintz worked as a customercare representative for Verizon Wireless. She worked on the second floor of the building that Verizon occupied. Verizon did not own the building. Other businesses also occupied the building, however, all of the businesses provided services to Verizon’s employees and the general public did not have access to the building without permission. During Mintz’s required unpaid lunch breaks, she walked the hallways of the first floor where the cafeteria was located for exercise. During one of these walks, Mintz slipped on a piece of ice and fell on her knee as she was returning to her cubicle.

Mintz had a history of prior knee issues, including surgery. After the fall, she was diagnosed with a knee contusion. She continued treating for her knee condition with steroid injections and prescription medications.

Mintz’s treating physician testified that her fall at work materially aggravated the arthritis in Mintz’s knee. The Deputy Commissioner concluded that Mintz suffered a compensable injury and awarded benefits. The Full Commission affirmed and awarded attorney’s fees pursuant to N.C.G.S. § 97-88.

On November 20, 2012, inMintz v. Verizon Wireless, the Court of Appeals first considered whether the Full Commission erred in concluding that Mintz suffered a compensable injury by accident when she fell while walking for exercise at work during a required, unpaid lunch break. The Court concluded that there was no error and explained that “arising out of” means the accident occurred because of a condition or risk created by the job. According to the Court, the evidence that members of the public were generally not allowed in the building, supported the Commission’s finding that Mintz’s injury was incidental to her employment.

The Court also analyzed “in the course of,” noting that it relates to the time, place and circumstances under which the accident occurred. The “course of employment” begins a reasonable time before work and continues until a reasonable time after work ends. This time includes time during the day for rest and refreshment. Although Defendants argued that this element was not met because Mintz was on an unpaid lunch break, she was required to take the hour long break. With regard to the issue of “place,” although Defendants argued that Verizon did not own, control or maintain the building, the Court concluded that the evidence that all of the other businesses in the building provided services strictly to Verizon employees supported the conclusion that the accident occurred in an area subject to Verizon’s control.  With regard to the “circumstances” element, the Court noted that it is met when an employee is engaging in an authorized activity which furthers the employer’s business. Rest and exercise furthered Mintz’s business by making her a more pleasant customer care representative, similar to cases which recognize the “personal comfort doctrine.”

In addition, the Court also considered the Commission’s findings that Mintz’s fall materially aggravated the preexisting arthritis in her knee. The Court rejected Defendants’ argument that the treating physician’s opinions were merely assumptions and reiterated that the Full Commission is the sole judge of credibility of witnesses and the weight of testimony. Mintz’s physician testified that his opinion that the fall materially aggravated her pre-existing condition was irrespective of prior flare-ups of Mintz’s knee condition.

Finally, the Court upheld the Commission’s award of attorney’s fees pursuant to N.C.G.S. § 97-88, rejecting Defendants’ argument that the imposition of attorney’s fees was premature because attorney’s fees would not be allowed if theCourt of Appeals reversed the Full Commission.

Risk Handling Hint: Although a unique fact scenario, Mintz establishes that the “personal comfort doctrine” will be extended even in circumstances where an employer does not own or maintain the business premises. Risk managers should be aware of the possibility of liability in such circumstances even though an employee is technically “off the clock.”Mintz is receiving national attention in the worker’s compensation arena and may generate additional claims under similar fact scenarios.

The SD Department recently issued a ruling that the employee bars responsibility for making sure medical bills were sent to the correct entity. 

South Dakota has a three year statute of limitations from the last payment of benefits on an accepted claim (subject to an exception for a change in condition).  The claimant was treating with a chiropractor who was billing the claimant's health carrier instead of workers' compensation.  Claimant sought payment of those bills and the Department held the bills were barred since it had been more than three years since the insurer paid any benefits on the claim. 

The Department reasoned that only claimant could have corrected this situation as claimant would have received EOBs and presumably had co-payments or paid on a deductible.  Therefore, the employer and insurer were entitled to partial summary judgment on all claims barred by the three year limitation period. This decision is subject to appeal.

If you have questions, please contact Charlie Larson atcalarson@bgpw.com or 605-336-2424.  Thanks.

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