State News

Many workers’ compensation cases involve unwitnessed orthopedic injuries.  Consider a case where an employee alleges that he or she felt sharp back pain around 11 a.m. in aisle 4 of the store while stocking shelves.  Suppose there is no security video.  Suppose further the employer provides treatment under Section 15 without admitting liability but still questions the claim.  How do adjusters and defense counsel investigate such a claim?  The answer lies in a thorough review of all relevant treating medical records as well as any employee accident form.

That brings us to the next question:  what exactly does one look for in a medical file or an employee accident form? There are a number of basic rules that apply to all cases involving unwitnessed accidents when it comes to assessing compensability and credibility.

First, look for inconsistencies on when the accident occurred and when the employee first felt pain.  In New Jersey the first treatment is usually rendered by an occupational facility, often followed with physical therapy and often a referral to an orthopedic specialist.  The starting point is always the very first medical record closest in time to the alleged incident.  Follow the trail.  Is the date of injury consistent in each record?  Are there long gaps in time between the date of the alleged incident and the first treatment?  Does the location of the pain remain consistent or do new injured bodily areas appear 45 days post injury?  These are all important indicators in evaluating compensability and credibility.

The next step is to focus on the mechanism of injury itself.  Again, start with the first date of treatment.  Don’t focus on the ultimate diagnosis three months later.  When a case is credible, the mechanism of injury is consistent.  The most important document to read in regard to evaluating the mechanism of injury is the employee accident form.  If the employer uses employee accident forms completed by the injured worker in his or her own handwriting, this is the most helpful document.  All employers have First Report of Injury Forms, but these forms are far less helpful than employee accident forms.  Why?  Because first report forms are usually completed by someone like a supervisor who only knows what he or she has been told.  The employee accident form has no potential for a “hearsay” objection. It is filled out by the injured worker close in time to the incident, so it stands to reason that the information will be the most accurate. By contrast, the first report form may not be filled out until weeks later.

The adjuster or defense lawyer should compare the description of the mechanism of injury on all forms and on all medical records.  Does the version of the injury vary markedly over time or does it remain the same?  If it remains the same, that helps make the claim credible.  If the employee states initially that she slipped but did not fall and felt back and knee pain, but a month later states that she slipped and fell hard on her left side and back, that is a significant discrepancy.  That fact alone may not win the case for the defense, but in conjunction with other facts, it may be pivotal.  For a physician, slipping but not falling may make a huge difference in causation analysis.

Practitioners must remember that from a legal viewpoint there are claims which may not be compensable because they may not arise from work.  That is why focusing on the precise mechanism of injury is critical.  So if the first medical records says, “employee was just walking on a flat surface and felt knee pain,” that claim may be dismissed as not arising from work or as an idiopathic event.  In New Jersey an accident requires an “unexpected event.”  Walking on a flat surface is something we all do all day long at work and at home.

There are often questions in medical records put to the injured worker by the medical professional about the cause of the injury.   A claim petition may be filed shortly after the alleged accident and may refer to a specific date of injury in the parking lot or in the store.   But suppose the first medical record reads something like this:  “Employee has had pain for a week. No trauma.”  That would be inconsistent with the allegations on the claim petition and may well justify a denial.

Defense practitioners must identify the specific location where the incident took place or when the first pain was experienced. If the employee accident form reads, “Employee lifted a machine in the store and felt immediate back pain,” but the first medical record reads, “Employee awoke at home with sudden back pain this morning,” there is a difference here.  The petitioner’s counsel may be able to reconcile the two statements or the two statements could point to a larger credibility issue.  These are the kinds of details that the defense must consider.   

Prior relevant medical records are hard to obtain in many states, but they often make a critical difference.  Some states like New Jersey have no specific discovery rules for getting prior records, but most doctors and physical therapists do ask about prior relevant medical conditions.  Example: “Have you ever had treatment to your left knee before this incident?”  If the employee answers in the affirmative, those records need to be obtained.  Judges will back that kind of discovery.  If the MRI reads, “Compare to prior MRI in 2019,” then the prior MRI must be obtained in order for the physician to opine that the present knee pathology arises from work. 

Sometimes the prior injury may have taken place 15 years ago and will have little relevance on the issue of compensability, but the records could still be relevant later for potential credits at the time of the award.  In contrast, there are cases where the employer may discover that the injured worker has been treating for a non-work injury in the weeks just before the work injury. This is a big red flag.  In that case, the reason for the employee’s pain may not be work activities at all but a continuation of a prior non-work injury.

It is worth highlighting one more point.  This practitioner has found it invaluable to read the notes of the physical therapists. Too often practitioners focus heavily only on the notes and diagnoses of the orthopedic specialist.  Those notes may be very good. However, bear in mind that the specialist generally sees the employee fewer times than the physical therapist.   Another point to consider is that more and more doctors use electronic medical reports that carry forward the same initial history throughout the chart.  Physical therapists spend a good deal of time with patients.  In one of my cases the physical therapist noted, “Employee’s knee is much worse today.  He was mountain climbing over the weekend and fell hard on his knee.”   That was found to be a new accident that broke the chain of causation.

Remember this point:  judges try to evaluate all the evidence and assess credibility of the injured employee, other lay witnesses, and medical witnesses.  They too are looking for consistency from both the employee in his or her case and the employer in their case.  Details matter to judges. There is no shaped mold that fits every workers’ compensation case.  Defending cases is not like baking.  But there is a logical process to use in studying every case. Unwitnessed accident cases can be very hard to defend, but a rigorous effort to obtain all relevant medical records and employee accident forms can make the difference between getting a win or a small Section 20 versus a substantial award.

--------------------------------

John H. Geaney, Esq., is a Shareholder and Co-Chair 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. 

                                                         Simon Law Group, P.C.

                                        720 Olive Street, Suite 1720, St. Louis, MO 63101

                                                                    314-621-2828

                        MISSOURI WORKERS’ COMPENSATION CASE LAW UPDATE

                                                   January 2021 – March 2021

Claim Denied as Claimant Not in Course and Scope Because No Hazard Connected to Employment Caused Falls

Smith v. Lester E. Cox Medical Centers, Injury No. 17-011723

FACTS: The claimant sustained separate injuries from two falls at work. The first occurred near quitting time on February 21, 2017 when she was walking in the hallway and she landed on her left elbow. She was referred to Dr. Hicks who performed an open reduction with internal fixation of hardware. The hardware was removed at a later date. While on modified duty, the claimant fell again on April 25, 2017 after she was standing at a board with the listed surgeries and turned and began walking down the hallway. She landed on her left shoulder, elbow and hip.

She testified that the floors where she fell on each date were slippery from buffing or polishing though she did not know when the maintenance crew buffed the floors. She could not remember whether the floors were more or less slippery between her two falls and did not know whether anyone else had fallen in the same hallways between February 21 and April 25, 2017. She heard that there were some people who had fallen in the surgical department but she did not know their names. She testified that a coworker told her that she too had slipped because of the floor, though the coworker had not fallen. Neither the coworker nor any other witness testified regarding the condition of the floors.

Immediately after she fell on February 21, 2017, she told emergency room personnel that she had been “walking down the hallway, tripped and fell on her left elbow, denies LOC, denies neck or back pain…” and two days later when she saw Dr. Hicks, he recorded in the medical record that she tripped. She disagreed with his recitation and believed she told him she had slipped. Following her second fall the emergency room staff recorded that “patient states: she tripped over something while working (in OR) and fell…C/o left hip pain.” The claimant disagreed with this statement. Upon her admission to the hospital that same day Dr. Smith recorded that the claimant was not sure why she fell. She did not remember what she told the admitting physician. In a recorded statement taken by the employer’s third-party administrator the claimant stated she tripped and blamed it partly on her shoes which she stated she threw away. The claimant agreed with the accuracy of the recorded statement but stated she was emotional at the time and had been blaming herself.

The claimant saw a psychologist on May 9, 2017 who reported that the claimant stated she purchased a new pair of shoes in February 2017 and the soles kept catching on the floor and she noted she fell while wearing the shoes in late February.

According to the ALJ the issue was whether there was a risk source associated with the job that caused the claimant to fall on each occasion. A claim will be denied when the claimant fails to prove that there was a work hazard risk or risk of injury to which the employee would not have been exposed outside of work. In the instant case, the claimant did not prove that, more likely than not, a condition at her work place posed a risk of injury greater than what she faced off the job. She did not notice any hazards including substances on the floor, defects or any problems immediately afterward, and she gave different accounts of why she fell and believed that her shoes were at least partly to blame. Therefore, the ALJ concluded that the claimant did not meet her burden of proof of persuasion that there was a risk connected to her employment greater than one faced in her normal non-employment life. Therefore, the claim was denied. The claimant appealed.

HOLDING: The Commission affirmed the Award and decision of the ALJ.

Post Injury Misconduct Proven Therefore TTD Benefits Not Owed

Paxton v. Little Sisters of the Poor & Old Republic Insurance Company, Injury No. 14-001314

FACTS:  On January 11, 2014 while walking in the parking lot at work the claimant slipped on ice and fell and injured her left ankle. Several days later while in crutches the claimant fell again and lacerated her right elbow. She underwent authorized treatment with Dr. McCormick who diagnosed a distal fibula fracture in the left ankle on January 16, 2014. After the fracture healed the claimant continued to experience pain and the doctor recommended an evaluation. He was then seen by Dr. Tung who performed surgery on March 31, 2015. She then treated with Dr. Keener who diagnosed olecranon bursitis of the right elbow.

The claimant’s supervisors, Ms. Avery and Mr. Deering, who testified on behalf of the employer, terminated the claimant on May 5, 2014 after several policy violations including leaving a medicine cart unlocked twice and failing to supervise patients to make sure they took their medicine. The employer argued that the claimant engaged in post injury misconduct and was therefore not entitled to the TTD benefits she received. The ALJ concluded that the testimony of Ms. Avery and Mr. Deering was less than credible and that based on the exhibits and evidence, the employer did not meet its burden to prove the claimant engaged in post injury misconduct.

The claimant’s attorney obtained a report of Dr. Volarich who connected the claimant’s ankle condition back to the work injury and assessed 40% disability of the left ankle and 20% disability of the right elbow. The employer obtained a report of Dr. Krause who concluded that the claimant’s left ankle fracture and need for non-operative treatment was related back to the work injury. However, he did not believe that the superficial peroneal nerve injury was related to the work injury. In any event, the ALJ believed Dr. Volarich was more credible and connected the claimant’s peroneal nerve injury back to the work injury.

HOLDING: The Commission modified the Award finding that the claimant’s actions constituted misconduct as she violated employer’s known policy as well as state safety regulations when she left a cart with controlled medications unlocked and out of her sight which was irresponsible, unlawful and dangerous behavior, regardless of whether she intended harm or harm resulted. Therefore, she was not eligible for TTD after her May 5, 2014 discharge.

Application for Payment of Additional Reimbursement of Medical Fees Dismissed Because Not Filed Within One Year of Notice of Dispute

Chesterfield Spine Center, LLC, d/b/a St. Louis Spine and Orthopedic Surgery Center v. Best Buy Company, Inc. and XL Insurance America, Inc., Case No. WD83757 (Mo. App. 2021)

FACTS: On April 27, 2013 an employee of Best Buy was injured when a refrigerator fell on him. On December 22, 2015 Chesterfield Spine Center (“Chesterfield”) provided authorized treatment to the claimant and billed the employer $125,184.60. On May 23, 2016 Sedgwick Claims Management sent Chesterfield a check for $50,629.23 along with an Explanation of Bill Review. On August 16, 2017 Chesterfield filed an Application for Payment of Additional Reimbursement Medial Fees asserting that Chesterfield is entitled to the additional $74,555.37 for the authorized treatment. In response, the insurer filed a Request for Award on undisputed facts asking the Division to deny Chesterfield’s Application as untimely under Section 287.140.4. 

The insurer’s request asserted that 1) the date of service was December 22, 2015 and the amount billed was $125,184.60 2) a check in the amount of $50,629.93 and the Explanation was mailed by or on behalf of Sedgwick to Chesterfield 3) the Explanation was in writing and had Reason Codes to explain the basis for disputing the charged amounts 4) Chesterfield cashed or deposited the check on or before June 1, 2016 5) Chesterfield’s Application was filed on or about August 16, 2017.

Chesterfield denied that 1) the Explanation and check were mailed together 2) the Explanation constituted a notice of dispute and 3) Chesterfield received the Explanation on or before June 1, 2016.

On September 17, 2019 an ALJ denied Chesterfield’s Application finding that there were no genuine issues of material fact as to the notice of dispute or the fact that Chesterfield’s Application was time barred. The Commission adopted the ALJ’s findings and Award and concluded that Employer/Insurer is not liable to Chesterfield for additional reimbursement of medical fees. Chesterfield appealed.

HOLDING: In its first three points, Chesterfield argued that the Commission erred in dismissing its Medical Fee Dispute because genuine issues of material fact existed as to whether Explanation is a “notice of dispute” sent by an agent of the Employer/Insurer and whether it was received by Chesterfield more than one year before the Application was filed. The Court noted that the Explanation contained all the elements required by 8 C.S.R. Section 50-2.030(1)(A), and therefore the Explanation was a notice of dispute within the meaning of that rule.

For its remaining points, Chesterfield argued that the Commission erred in dismissing the dispute because Section 287.140 and 8 C.S.R. Section 50-2.030 violated Chesterfield’s constitutional rights in various ways including the retroactive application of laws, interference with the right to contract and vagueness. The Court was not persuaded. The Commission’s decision was affirmed.

Claimant Not Entitled to Past Medical Expenses Because No Demand Made or Notice Given to Employer

Justin Kent v. NHC Healthcare and Treasurer of the State of Missouri as Custodian of the Second Injury Fund, Case No. ED108667 (Mo. App. 2021)

FACTS: The claimant sustained an injury to his back on December 4, 2008. The employer sent the claimant out for treatment and he treated conservatively until he was placed at MMI on March 2, 2009. In March of 2009 the claimant was terminated. He then began treating on his own.

The ALJ found that the employer was liable for $140,030.65 in past medical expenses and that they would be responsible for future medical expenses. The ALJ also ruled that the claimant was entitled to TTD benefits beginning May 12, 2010. The ALJ granted the claimant PTD based on both medical records introduced at the hearing and the ALJ’s observations of the claimant’s pain cues during his testimony. The ALJ held that the Fund was not liable because the claimant’s disability stemmed solely from the 2009 workplace injury.

The employer appealed. The Commission rejected the ALJ’s finding that the claimant was PTD and instead found that the claimant sustained 35% PPD referable to the lower back. The Commission affirmed the ALJs conclusion that the Fund was not liable for PTD. The Commission rejected the theory of constrictive notice adopted by the ALJ. Accordingly, the Commission reversed the ALJ’s award of most medical expenses as well as the award of additional TTD benefits. The Commission ordered the employer to pay PPD benefits in the amount of $44,123.80. The claimant appealed.

HOLDING: The claimant argued that the facts found by the Commission required a finding of PTD. The Court pointed out that the Commission found that while there is evidence that the claimant may be PTD, the evidence did not persuade them that it is the disability resulting from the work injury that caused the PTD. The claimant also argued that there was not sufficient evidence in the record to support an Award of anything less that PTD. The Court did not agree.

The claimant also argued that the Commission erred in not awarding past medical expenses.  The Court noted that Section 287.140.1 states that when the employee picks his own doctor, the employer must pay only when the employer has notice that the employee needs treatment or a demand is made on the employer to furnish medical treatment.  In this case, no demand was made by the claimant and there was no specific evidence in the record that would put the employer on notice that the claimant needed further medical care.

In his fourth point, the claimant argued the Commission erred in denying additional TTD benefits because the evidence showed the claimant was totally disabled during the time period at issue. The Court noted that an employee’s self-assessment may be sufficient evidence to establish TTD but it is not necessarily conclusive, and the Commission expressed concern as to the claimant’s credibility. The Court deferred to the credibility determination of the Commission and held that the denial of additional TTD benefits was supported by sufficient evidence.

Claimant Not Entitled to PTD From Fund Because No Documented Pre-existing Disability Qualified Per Statute

Phelps v. Treasurer of Missouri as Custodian of Second Injury Fund, Injury No. 16-025639

FACTS: On April 14, 2016 the claimant sustained an injury to his left shoulder. He was seen by Dr. Mall who performed an arthroscopic rotator cuff repair and released him at MMI on December 13, 2016. He settled his claim with the employer/insurer for 30% of the left shoulder. The claimant’s prior injuries include asthma, several chemical exposures, two motor vehicle accidents causing injury to the spine, three injuries to the right knee, two injuries to the lumbar spine, and injury to the right index finger and three strokes.

Dr. Volarich, the claimant’s expert, opined that the claimant was PTD due to a combination of the April 14, 2016 work injury and his pre-existing medical conditions. Ms. Shay provided a vocational evaluation and concluded that the claimant was unemployable in any work that is typically performed in the national labor market.

The ALJ concluded that the claimant was not entitled to PTD benefits from the Fund because the claimant has no medically documented disability that falls under categories 1,3, or 4 of Section 287.020.3.  Specifically, the Commission concluded that the claimant did not meet his burden of proof that his chemical exposures and right knee injuries were compensable since the evidence was insufficient to support a finding that they were a substantial factor in causing his medical condition.  Also, certain injuries were non-work related while others equaled less than the 50 weeks of compensation required by the Section.  The ALJ concluded that the claimant had no qualifying disabilities for Fund liability and therefore his claim against the Fund was denied.  The claimant appealed.

HOLDING: The Commission affirmed the ALJ’s decision noting that the claimant failed to demonstrate that a single qualifying disability combined with disability from his primary injury to result in PTD.

Fund Not Responsible for PTD Because Claimant PTD Prior to Last Injury

Barnes v. Karren Brock Construction, Inc. & and Bitco General Insurance Corporation & Treasurer of Missouri as Custodian of Second Injury Fund, Injury No. 16-104170

FACTS: In 2015 the claimant, developed recurrent bilateral carpal tunnel syndrome. He did undergo releases with Dr. Brown and was released from care. He settled his Claim against the employer for 10% disability to each wrist.

With respect to the claimant’s preexisting injuries, he sustained a work-related non-surgical compression disc fracture in his low back in 1997 and received a settlement of 30% disability referable to the low back. In 2002 he developed carpal tunnel syndrome and underwent releases and settled that Claim based on 20% of the left wrist and 18% of the right wrist, a 15% load and two weeks of disfigurement. The claimant also had multiple medical conditions involving his neck, shoulders and hands and sleep apnea, polyarthritis, hypertension, bilateral shoulder bursitis, cervical disc disease with cervicalgia and chronic post knee replacement pain.

Dr. Meyers, the claimant’s expert, opined that the claimant was PTD due to a combination of his preexisting work injuries and his other non-work-related injuries. Mr. Kaver also opined he was PTD as a result of his work injury and his preexisting condition. Mr. Dolan testified on behalf of the Second Injury Fund and opined that the claimant was unemployable prior to the primary injury and he was employed only because of accommodations and an excessive use of opioids.

The claimant went to a Hearing against the Fund who first argued that the claimant’s pre-existing work-related carpal tunnel syndrome did not qualify under Section 287.220.3 because the disability did not equal a minimum of 50 weeks of PPD compensation as required by the statute. The ALJ noted that the claimant settled his Workers’ Compensation claim for 66.5 weeks of PPD benefits and therefore the argument was unsound.

The Fund then argued that the claimant’s total disability was a result of not just his work-related injuries, but also multiple non-work-related medical conditions. The ALJ concluded that these non-work-related medical conditions did not constitute permanent partial disabilities as defined by the statute because no physician certified that they were such.

The Fund also argued that the claimant was PTD before the 2016 occurrence and the ALJ agreed and denied the claim. The claimant appealed.

HOLDING: The Commission affirmed the award and decision of the ALJ denying compensation.

Claimant PTD From Last Injury Alone Therefore Not Entitled to Fund Benefits

Southerland v. Treasurer of Missouri as Custodian of Second Injury Fund, Injury No. 11-073978

FACTS: On September 6, 2011 the claimant was preparing to remove the shifter of a tractor and when he pulled the final bolt, the full weight of the shifter came down and threw his left arm and shoulder backward, causing injury to his shoulder. He underwent surgery and physical therapy but was not able to return to the level of function needed to do his job and so he was eventually let go. He settled with the employer for 15% PPD of the left shoulder. He has not worked since September 6, 2011 and was approved for social security disability effective September 2011.

The claimant has multiple pre-existing injuries and conditions, including a low back injury from 1979, a right elbow injury from 2002, a left shoulder injury from 2003, a right-hand carpal tunnel release in 2008 and bilateral neuropathy in the feet, diagnosed in 2010. Dr. Volarich determined that the claimant was PTD due to a combination of his last injury and his pre-existing conditions and rated 25% PPD of the left shoulder from the last injury and 45% PPD of the left shoulder, 20% PPD of the left foot, 20% PPD of the right foot, 20% PPD of the body as a whole relatable to the lumbar spine, 15% PPD of the right elbow and 30% PPD of the right wrist from his preexisting conditions. Ms. Skahan found that the claimant had a total loss of access to the competitive labor market due to his pre-existing left shoulder injury, his last left shoulder injury and his age.

The ALJ found that the claimant was PTD from the last injury alone and therefore, the Fund was not liable for permanent total benefits. The ALJ found that credible evidence showed that the claimant was able to work a physically demanding job for about 5.5 years before the last injury. The ALJ also noted that claimant’s preexisting injuries and disabilities were minor and did not result in significant disability. The ALJ rejected as excessive and not credible, Dr. Volarich’s disability ratings for the claimant’s pre-existing conditions. The ALJ also noted that Dr. Volarich’s ratings for the left shoulder were inconsistent and not supported by the medical records. Lastly, the ALJ noted that claimant’s testimony supported the conclusion that the last injury alone rendered him physically unable to work. The Claim against the Fund was therefore denied. The claimant appealed.

HOLDING: The Commission affirmed the Award and decision of the ALJ.

Claimant Failed to Meet Burden Entitling Him to Fund Benefits

Marberry v. Treasurer of Missouri as Custodian of Second Injury Fund, Injury No. 15-083958

FACTS: On September 24, 2015 the claimant sustained an injury when he fell backwards after reaching for a box and was diagnosed with a strain and pelvis contusion. He underwent physical therapy and was placed at MMI on June 28, 2018. He then proceeded to Hearing against the Fund. With respect to his preexisting conditions the claimant testified that he suffered three pre-existing disabilities, two to his neck and one to his right shoulder. In 1999, he sustained an injury to his neck for which he settled for 20% PPD of the body. In 2002, he was then involved in a car accident and sustained an injury to his neck that resulted in a fusion at C4-5 for which he was not given any permanent restrictions. On December 19, 2014 he was carrying a 50-pound bag up a ladder and he jerked his right shoulder. He underwent physical therapy but his pain persisted and so he underwent an MRI in 2016 and was diagnosed with a labral tear, tendinosis and bursitis of the rotator cuff. He underwent surgery and physical therapy and was then placed at MMI in May of 2017.

Dr. Volarich opined that the claimant was PTD as a result of the work-related injuries of December 19, 2014 and September 24, 2015, in combination with each other as well as in combination with his pre-existing medical conditions. Mr. Lalk opined that the claimant was unable to compete at the unskilled sedentary level because of his inability to control his symptoms through the work day.

The ALJ concluded that the evidence did not support a finding that the claimant was entitled to Fund benefits. A claimant must establish 3 steps to be entitled to Fund benefits. Step 1 requires the claimant to establish he had a pre-existing disability that equals 50 weeks of PPD. The ALJ noted that the right shoulder injury did not reach MMI until nearly two years after the primary injury, and thus it does not qualify for step one. The 1999 neck injury meanwhile settled for 20% PPD and the evidence submitted by the claimant from Dr. Volarich provided only one rating for the neck, which considered both the 1999 and 2002 injuries at 20% PPD. The ALJ noted that this was insufficient to satisfy the requirements of Step 1. Step 2 required claimant’s disability to fall into 1 of the 4 categories. The ALJ concluded that the claimant’s 1999 neck injury fell within category 2 as an acute work injury and that therefore, the neck injury satisfied step 2. Step 3 required claimant to prove his single qualifying pre-existing disability combined with his primary injury to render him PTD. The ALJ concluded that the evidence submitted by the claimant failed to show this since the claimant’s experts based their PTD opinions on consideration of the right shoulder, which did not yet reach the state of permanency. Based on the strict construction of language used in the statute, the right shoulder was disqualified from consideration for Fund benefits. The claimant therefore failed to meet his burden of proof that he was entitled to PTD benefits from the Fund. The claimant appealed.

HOLDING: The Commission affirmed the Award and decision of the ALJ.

Missouri Claim Denied as Claimant’s Kansas Settlement Entitled to Full Faith and Credit

Austin v. AM Mechanical Services & AMCO Insurance Company & Treasurer of Missouri as Custodian of Second Injury Fund, Injury No. 11-112011

FACTS: The claimant sustained an injury while at work on March 10, 2011 when a 107-pound box fell and struck him on his face and head causing pain in his neck and wrist and a pop in his shoulder blade area. The claimant underwent a neck fusion, a TFCC repair on his left wrist and a carpal tunnel release and several other procedures. The claimant sustained several injuries prior to March 2011 including to his left shoulder, back and right knee. He settled his workers’ compensation case in Kansas which provided that he was closing out all injuries and claims arising out of his March 10, 2011 accident in all jurisdictions. He then filed a Claim in Missouri seeking workers’ compensation benefits for the March 10, 2011 injury.

The claimant argued that he was not bound by the Kansas settlement agreement because it was invalid as he was under duress and did not understand what jurisdiction meant. The ALJ noted that the claimant was in essence asking the Division to rule that a Kansas settlement agreement or contract approved by a Kansas ALJ was invalid at its inception, though he cited no authority and the Court found no such authority. The employer argued that the Kansas Settlement Agreement was entitled to full faith and credit of the US Constitution. The ALJ noted that if the claimant’s case had hinged on whether Missouri had to give full faith and credit to a Kansas decision based on a Kansas substantive law which differed from Missouri’s substantive law, he would not have been bound by the Kansas decision. However, the claimant’s case did not involve any differences in the substantive laws of the two states, but he merely wanted the Kansas settlement declared invalid. The ALJ concluded that full faith and credit must therefore be given to the language in the Kansas settlement agreement and therefore the claimant’s Claim in Missouri was denied. The claimant appealed.

HOLDING: The Commission agreed with the ALJ and found that the employer/insurer did not procure the Kansas Settlement by fraud or duress and that the full faith and credit clause barred the claimant from pursuing a Missouri Claim.

Written by: Bruce Hamilton

Wanda Blanche Taylor and Adrian A. Phillips appointed to the Full Commission by Gov. Cooper

Wanda Taylor has been appointed by Gov. Cooper to the Full Commission. If confirmed by the General Assembly, Attorney Taylor will replace Commissioner Charlton Allen, who has stayed on following the expiration of his term on June 30, 2020. Attorney Taylor is a Fellow of the College of Workers’ Compensation Lawyers. She received her JD degree from UNC-Chapel Hill and her undergraduate degree from Duke University. She is currently the Director of Litigation/Counsel at Key Risk Insurance. Previously, attorney Taylor served as a Deputy Commissioner and Chief Deputy Commissioner at the Industrial Commission for 20 years. Ms. Taylor’s appointment is subject to approval/confirmation by the North Carolina Gen. Assembly.

Adrian Phillips has been appointed by Gov. Cooper to the Full Commission to fill the slot currently held by Commissioner Loutit, whose term is set to expire April 30, 2021. Attorney Phillips has served as a Deputy Commissioner at the Industrial Commission since 2002. Before joining the IC, attorney Phillips worked as an assistant attorney general in the tort claim section of the North Carolina Department of Justice. Prior to that, Ms. Phillips prosecuted Medicaid fraud cases for the North Carolina Department of Justice and served as an assistant district attorney and Caswell and Person Counties. Attorney Phillips received her JD from North Carolina Central University school of Law and her undergraduate degree at Bennett College. Ms. Phillips’ appointment is also subject to confirmation by the North Carolina Gen. Assembly.

Celeste Harris Appointed to Serve as Deputy Commissioner

Celeste Harris has been appointed as a Deputy Commissioner. Attorney Harris has been in private practice for 30 years representing injured workers and workers compensation matters and individuals in personal injury and Social Security disability matters. She is a North Carolina state board certified Specialist in Worker’s Compensation Law and a North Carolina certified mediator. She earned her law degree from St. Louis University of school of Law, attending Wake Forest University school of Law during her third year. Ms. Harris will be assigned to the Winston-Salem regional office of the IC.

Notice to All Carriers, Third-Party Administrators, and Self-Insured Employers: New Requirement to Provide Commission with Email Address for Claim-Related Documents

Effective March 1, 2021, all carriers, third-party administrators, and self-insured employers are required to provide the Commission with an email address for receipt of claim-related documents. The designated email address shall be provided to the Commission at contactinfo@ic.nc.gov  . The email address provided will be used in cases where the Commission does not have an individual email address for the claims representative assigned to the claim. Providing an email address is mandatory and will ensure timely receipt of claim-related documents. See Rule 11 NCAC 23A .0109 (d).

Bruce Hamilton is a Partner in Teague Campbell’s Raleigh office. He is the legal advisor for the NCASI and, for the past 30 years, his practice has focused exclusively on workers’ compensation defense.

Ten years ago, we posted a blog article entitled Driving Distracted Should be a Safety Rule Violation.  Since that time, this deadly roadway epidemic has only gotten worse.  In 2019, distracted driverskilled 3,142 people.  This represented a 10% increase from 2018.  Although teenagers represent the largest percentage of offenders, it is done by all types and ages.  The main offendersconsider themselves good drivers and rationalize that they are only looking away for a few seconds. 

April is Distracted Driver Awareness Month.  Think about that when you are on the road.  No text message is worth an accident resulting in injury or death.  Even if you are not distracted, it is important to constantly be aware of all the drivers around you that are.    

Be safe out there!

----------------------------------

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 at mfish@fishnelson.com or by calling him directly at 205-332-1448.

West Virginia's New Intermediate Appellate Court Fundamentally Changes

Workers' Compensation Litigation Practice

By Charity Lawrence and Dill Battle

              The 2021 West Virginia Legislative Session produced a major change for West Virginia workers’ compensation litigation in the West Virginia Appellate Reorganization Act of 2021.  Specifically, Senate Bill 275 was enacted and creates an Intermediate Court of Appeals for West Virginia.  It also eliminates the Workers’ Compensation Office of Judges (“OOJ”) and establishes the West Virginia Workers’ Compensation Board of Review (“BOR”) as the initial reviewing body for objections to decisions made by insurers regarding workers’ compensation claims.

              After June 30, 2022, the OOJ will be eliminated and, effective July 1, 2022, all powers and duties of the OOJ will be transferred to the BOR.  (W. Va. Code § 23-1-1h). After this date, all objections to decisions of the Insurance Commissioner, private carrier, or self-insured employer, must be filed with the BOR instead of the OOJ.  The BOR will have exclusive jurisdiction to review objections to a decision of the Insurance Commissioner, private carrier, or self-insured employer.  (W. Va. Code § 23-5-8b).  Instead of the 3 member-panel currently comprising the BOR, the BOR will consist of 5 members appointed by the Governor.  (W. Va. Code § 23-5-11a).

              The OOJ will officially terminate on or before October 1, 2022.  (W. Va. Code § 23-5-8a).  On or before September 30, 2022, the OOJ must issue a final decision or otherwise dispose of each matter pending before the OOJ.  (W. Va. Code § 23-5-8b(b)).  If a final decision on any pending matter before the OOJ has not been entered at the time of the OOJ’s termination, that matter will be transferred to the BOR.  (W. Va. Code § 23-5-8a).  For transferred matters, the BOR will adopt any existing records of proceedings from the OOJ, conduct further proceedings, and collect evidence necessary to issue a final decision.  (W. Va. Code § 23-5-8b(b)).  The BOR must review and decide all remaining appeals filed with the BOR regarding OOJ decisions issued prior to June 30, 2022.  (W. Va. Code § 23-5-8b(e)).

              The chair of the BOR shall assign, on a rotating basis, a member of the BOR to preside over the review process and issue a decision in each objection (formerly referred to as a “protest”) properly filed with the BOR.  (W. Va. Code § 23-5-9a).  That board member may delegate his or her duties to a hearing examiner employed by the BOR, but any order or decision of the BOR (except time frame orders, continuance orders, etc.) must be issued and signed by the BOR member assigned to the objection.  (W. Va. Code § 23-5-9a).  Hearing examiners must be persons admitted to the practice of law in West Virginia with at least 4 years of experience as an attorney.  (W. Va. Code § 23-5-8a).  The chair of the BOR will supervise hearing examiners.  (W. Va. Code § 23-5-8a).  If a hearing examiner is assigned to review an objection, the hearing examiner will submit the designated record at the end of the review process to the member of the BOR who was assigned the objection, along with the hearing examiner’s recommendation of a decision affirming, reversing, or modifying the action protested.  (W. Va. Code §23-5-9a).  The board member will render a decision with findings of fact and conclusions of law.  (W. Va. Code § 23-5-9a). 

              An appeal from a BOR decision may be filed with the West Virginia Intermediate Court of Appels within 30 days of receipt of notice of the BOR decision or within 60 days of the date of the decision, regardless of notice.  (W. Va. Code § 23-5-10a).  Any employer, employee, claimant, dependent, or the Insurance Commissioner, private insurer, or self-insured employer aggrieved by a BOR decision has a right to appeal to the Intermediate Court by filing a written notice of appeal stating the grounds for review and whether oral argument is requested.  (W. Va. Code § 23-5-12a).  A filing fee of $200 may be charged to the petitioner.  (W. Va. Code § 51-11-7).  Upon appeal to the Intermediate Court, the Workers’ Compensation BOR will then send a transcript of BOR proceedings to the Intermediate Court, including a brief recital of the proceedings in the matter and each order or decision entered.  (W. Va. Code § 23-5-12a).

              The WV Intermediate Court of Appeals will have exclusive jurisdiction of:

·       decisions or orders issued by the OOJ after June 30, 2022 and prior to the OOJ’s termination, and

·       final orders or decisions issued by the BOR after June 30, 2022.

(W. Va. Code § 23-1-1h).  The Intermediate Court may affirm, reverse, modify, or supplement the decision of the BOR.  (W. Va. Code § 23-5-12a).  It may also remand the case for further proceedings.  (W. Va. Code § 23-5-12a).  A decision of the BOR will be reversed, vacated or modified if the substantial rights of the petitioner have been prejudiced because the BOR’s findings are:

·       in violation of statutory provisions;

·       in excess of the statutory authority or jurisdiction of the BOR;

·       made upon unlawful procedures;

·       affected by other error of law;

·       clearly wrong in view of the reliable, probative, and substantial evidence on the whole record; or

·       arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

(W. Va. Code § 23-5-12a).  An appeal of the Intermediate Court’s final decision may be sought by petition to the Supreme Court of Appeals of West Virginia.  (W. Va. Code § 29A-6-1).  The Supreme Court has discretion to grant or deny the petition for appeal of an Intermediate Court decision.  (W. Va. Code § 51-11-10).

              The Intermediate Court will be comprised of a three-judge panel.  (W. Va. Code § 51-11-3). Initially, the judges will be appointed by the Governor, with the advice and consent of the Senate.  Then, after the initial appointment by the Governor, the judges will be elected.  (W. Va. Code § 3-1-16, § 3-5-6e, and § 51-11-6).  The judges of the Intermediate Court must be members in good standing of the West Virginia State Bar and admitted to practice law in West Virginia for at least 10 years prior to their appointment or election, and also be residents of West Virginia for 5 years prior to appointment or election.  (W. Va. Code § 51-11-3). 

              This new legislation impacts workers’ compensation in several ways.  Eliminating the OOJ potentially eliminates experienced administrative law judges with significant knowledge (15-25 years) in workers’ compensation jurisprudence, and the practice in West Virginia.  New practice and procedure rules before the new BOR provides uncertainty of what parts of the OOJ's rules of practice and procedure will be adopted. The BOR’s ability to hire hearing examiners with only 4 years of legal experience and without workers’ compensation litigation experience may be detrimental to decisions affecting claimants, employers and insurers. However, the hearing examiners’ recommendations are not final decisions and must be reviewed by the BOR members, and the BOR members must issue the final decisions.  The hearing examiners will also be supervised by the BOR chair.  Hopefully, this will prevent the issuance of uneducated decisions.  Additionally, the new implementation of a $200 filing fee for appeals to the Intermediate Court will likely discourage claimants from appealing decisions of the Board of Review, which will decrease the overall number of workers’ compensation appeals.  SB 275 passed April 1, 2021, and is effective 90 days from passage (June 30, 2021).  The bill was sent to Governor Jim Justice on April 5, 2021, and is expected to be signed.

By:

Charity Lawrence

304-720-4056

clawrence@spilmanlaw.com

Dill Battle

304-340-3823

dbattle@spilmanlaw.com

Spilman Thomas & Battle, PLLC

300 Kanawha Blvd, E.

Charleston, WV 25301

Spilman Thomas & Battle, PLLC is the West Virginia member of the National Workers' Compensation Defense Network. The NWCDN is a nationwide network of defense firms specializing in protecting employers and carriers in workers' compensation claims and regulatory matters. For more information, visit www.nwcdn.com.

When an employee is injured on the employer’s premises, including a parking lot owned and controlled by the employer, it is fundamental that such a claim is work related.  If this injury is caused by the actions of another employee, it is also fundamental that the two employees cannot sue each other or their employer in negligence.  Given these well-established rules, the published Appellate Division decision in Lapsley v. Township of Sparta, A-0958-19T3, (App. Div. January 29, 2021) is a real head scratcher.

Diane Lapsley worked as a librarian for the Township of Sparta.  The library sits within a municipal complex including three common-use parking lots, a baseball field, and the offices of the Sparta Township Board of Education. Petitioner could park in any of the lots.  On February 3, 2014 the library closed early on account of weather conditions, and petitioner’s husband came to pick Ms. Lapsley up.  Petitioner stepped off the library curb and walked about 18 feet into the lot when a township Public Works employee drove a snowplow into Mr. and Mrs. Lapsley.  Petitioner suffered serious injuries and required multiple surgeries. 

Ms. Lapsley brought a civil suit alleging negligence against the Township of Sparta and its Department of Public Works.  The Township moved to dismiss the suit because the exclusive remedy for an injured worker arising out of work is in the Division of Workers’ Compensation.  The case eventually moved to the Division of Workers’ Compensation for a determination of compensability. The Judge of Compensation found that the injury was compensable. The reasons were sound:  the Township owned, maintained and controlled the parking lot where the accident occurred.  

Petitioner appealed and argued that her injury was not compensable because it did not arise from her employment and because she was not engaged in any task for her employer’s benefit when the injury occurred.  The Appellate Division reviewed the relevant law in N.J.S.A. 34:15-36, which states that “employment … shall be deemed to commence when an employee arrives at the employer’s place of employment to report for work and shall terminate when the employee leaves the employer’s place of employment, excluding areas not under the control of the employer ….”  This is the provision that the Judge of Compensation properly relied on.

Nonetheless, the Appellate Division reversed the decision of the Judge of Compensation and found that Ms. Lapsley was not within the scope of her employment when she was injured.   Even though the Court acknowledged that the Township owned the parking lot next to the library where petitioner was injured, the Court based its decision on certain considerations seemingly never cited before by any other court.  The Court said, “It was stipulated that petitioner was off-the-clock at the time of the accident and exited the library premises.”  But the Supreme Court decision in Ramos v. M & F Fashions specifically noted that New Jersey has no clock in or clock out rule.  Employees often linger at work long past the end of their day and arrive at work long before they may clock in, but nonetheless they are covered for purposes of workers’ compensation once they reach the work premises unless they deviate from employment.

The Court next relied on another principle not found within the New Jersey Workers’ Compensation Act. “Library employees were not given any instructions about where in the subject lot to park or indeed whether to park in that particular lot, on the street, or anywhere else in town where parking may be available.  Nor were library staff instructed on the manner of ingress or egress.”  To this practitioner’s knowledge, there are no published cases that have ever restricted the premises rule to a need to instruct employees about parking in public lots.  This petitioner was on the adjacent parking lot to the building where she worked when she was injured. The Court seems to be saying that since the Township did not require petitioner to park in that particular lot, and she could have parked elsewhere, her injury was not compensable.  This seems illogical.

The last point which the Court made was that the lot was shared with other municipal employees and members of the public alike. The Court postulated, “Thus, the stipulated facts established that petitioner’s employer exercised no control of its employee’s use of the subject lot, that control being a critical element of the premises rule’s application.”  This comment misses the emphasis in the statute on the words, “excluding areas not under control of the employer.”  It is not the employee’s use of the lot that matters but the employer’s control of the lot that the employee is injured on.

This is a reported decision and therefore it must be studied by practitioners and evaluated.  What this decision meant is that a badly injured worker was able to get around the exclusive remedy provision in order to sue her employer and make a much greater financial recovery.  From the employer standpoint, and public employers in particular, this case would expose employers to extremely costly civil litigation.  The exclusive remedy should have been applied here, and the Judge of Compensation was clearly correct.

From the employee standpoint, the case raises a number of alarming questions.  Does it mean that New Jersey employees lose workers’ compensation coverage when they “clock out?”  The Supreme Court has already stated that clocking in or out is not a precondition for employment coverage.  Does it mean that injured workers lose coverage when they are injured on a public lot simply because the public lot is shared by fellow employees and the public?  All municipal parking lots are shared by employees and the public.  Why would that matter?  Does it mean that a public employer is not liable for injuries in its own parking lot if it has not instructed employees on the manner of ingress or egress?   

In short, for both employers and injured workers, the Lapsley case is singularly problematic. Its rationale does not square with any prior decisions.

--------------------------------

John H. Geaney, Esq., is a Shareholder and Co-Chair 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. 

KENTUCKY UPDATE – NEW LEGISLATION

Kentucky Legislation (House Bill 48) Reimbursement for Pharmaceutical Services, effective 6/28/21

 Creates a new section of Subtitle 12 of KRS Chapter 304 to establish certain insurance practices relating to the reimbursement of pharmacists;

 Amends KRS 304.14-135 to establish a clean claim form for the reimbursement of certain pharmacist services or procedures;

 Amends KRS 304.17A-844 and 304.17B-011 to conform;

 Amends KRS 18A.225 to require the state employee health plan to comply with pharmacist reimbursement requirements; and

 Amends KRS 342.020 (Workers’ Compensation Statute) to require workers' compensation employers, insurers, and payment obligors to comply with pharmacist reimbursement requirements.

     o Section (14) was added to KRS 342.020. Medical treatment.

          (14)(a) As used in this subsection, "practice of pharmacy" has the same meaning as in KRS 315.010.     

             (b) In addition to all other compensation that may be reimbursed to a pharmacist under this chapter, the employer, insurer, or payment obligor shall be liable for the reimbursement of a pharmacist for a service or procedure at a rate not less than that provided to other nonphysician practitioners if the service or procedure:

                         1. Is within the scope of the practice of pharmacy;

                         2. Would otherwise be compensable under this chapter if the service or procedure were provided by a:

                                a. Physician;

                                 b. Advanced practice registered nurse; or

                                 c. Physician assistant; and

                         3. Is performed by the pharmacist in strict compliance with laws and administrative regulations related to the pharmacist's license.

    o KRS 315 is titled Pharmacists and Pharmacies. KRS 315.010 defines “practice of pharmacy” as follows:

              "Practice of pharmacy" means interpretation, evaluation, and implementation of medical orders and prescription drug orders; responsibility for dispensing prescription drug orders, including radioactive substances; participation in drug and drug-related device selection; administration of medications or biologics in the course of dispensing or maintaining a prescription drug order; the administration of adult immunizations pursuant to prescriberapproved protocols; the administration of immunizations to individuals nine (9) to seventeen (17) years of age pursuant to prescriber-approved protocols with the consent of a parent or guardian; the administration of immunizations to a child as defined in KRS 214.032, pursuant to protocols as authorized by KRS 315.500; drug evaluation, utilization, or regimen review; maintenance of patient pharmacy records; and provision of patient counseling and those professional acts, professional decisions, or professional services necessary to maintain and manage all areas of a patient's pharmacy-related care, including pharmacy-related primary care as defined in this section;

o Therefore, HB 48 amends KRS 342.020 to require employer/insurers to reimburse pharmacists for services provided if they fall within the scope of the “practice of pharmacy” definition above and would otherwise be compensable if provided by a physician, advanced practice registered nurse, or physician assistant. Also the service must be performed in strict compliance with the laws and administrative regulations related to the pharmacist’s license.

Should you have any questions or wish to discuss any of these matters personally, please contact us at your convenience.

H. Douglas Jones, Esq. djones@jsbattorneys.com

Margo J. Menefee, Esq. mmenefee@jsbattorneys.com 

What if two lawyers leave their separate offices to meet at a coffee shop to discuss a case?  Is the commute to the coffee shop compensable for either or both of them?  The answer was no in the context of the facts in Pilone v. County of Middlesex, A-1676-19, (App. Div. March 15, 2021).

Lynn Pilone, an assistant prosecutor for Middlesex County, arrived at her Bayard Street office in New Brunswick between 8:30 and 9:00 a.m. on March 21, 2017.  Later in the day she knew she would be meeting with a victim-witness.  Before that meeting she wanted to discuss the case with a colleague, Helen Zanatakos, a fellow assistant prosecutor with years of experience, who worked nearby in a different office. The two decided to meet at 11:00 a.m. at a donut/coffee shop one block away from Pilone’s office.

At the appointed 11:00 a.m. time Pilone left her office and walked to 25 Kirkpatrick Street to meet Zanatakos in front her office, and then the two of them started walking to the donut/coffee shop one block away. On the way, Pilone fell on the sidewalk in front of a parking lot near Kirkpatrick Street and was taken by ambulance to a hospital.

Pilone filed a workers’ compensation claim which the County of Middlesex denied on the ground that the injury did not arise from petitioner’s employment.  Trial ensued with Pilone testifying that she was not on a lunch break when she fell.  She simply wanted to discuss the case with Zanatakos face-to-face.  It was a common practice for her to discuss cases outside the office as the inside offices were often too busy. Her intent was to buy coffee in the shop and then discuss the file, which she thought she carried with her at the time of her fall.

For her part Zanatakos testified that she also planned to discuss the case with Pilone because she was aware the victim-witness was dissatisfied with how her case had proceeded.  She intended to provide guidance to Pilone.  Sometimes the two of them would discuss personal matters, but this time the discussion was definitely about this particular file.

The Judge of Compensation granted the County’s motion to dismiss the case because petitioner’s fall occurred off work premises. The fall occurred on public property.  On appeal petitioner argued that her fall was subject to the “special mission” exception.  The Court relied on the Supreme Court decision in Hersh v. County of Morris, 217 N.J. 236 (2014).  That case focused on the “situs of the accident” and “the degree of employer’s control.”  The Court pointed out that the County had no control of the public walkway, nor of the coffee shop. 

The Appellate Division noted that petitioner had not been directed to work offsite by her employer. “Although N.J.S.A. 34:15-36 extends compensability to duties assigned or directed by the employer, petitioner did not demonstrate that meeting at the donut shop was assigned or directed by the Prosecutor’s Office.”  The Court distinguished another well-known case involving a drive to a coffee shop, namely Cooper v. Barnickel Enters, 411 N.J. Super. 343 (App. Div. 2010).  In that case the Court noted that petitioner was directed to work away from the primary place of employment while being injured en route to purchase coffee.  The Court said that here petitioner could have decided to meet in the office or outside the office, but there was no employer direction to meet at the donut/coffee shop.

The decision makes sense in not extending the special mission exception to a situation where employees decide for themselves (without employer direction) to meet off work premises.

--------------------------------

John H. Geaney, Esq., is a Shareholder and Co-Chair 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. 

Lack of Clarity Surrounding Classification of Workers in the “Gig Economy” Drove the West Virginia Legislature to Redefine What Constitutes an Independent Contractor

On March 22, 2021, Senate Bill 272 was passed and Governor Jim Justice signed into law the West Virginia Employment Law Worker Classification Act. The bill will prevent worker misclassification and defines the differences between employees and independent contractors. As expressed in the bill: “Clarity in a worker’s classification allows businesses to comply with applicable laws, provides workers with certainty as to their benefits and obligations, and minimizes unnecessary mistakes, litigation, risk and legal exposure laws concerning workers’ compensation.”

Concerned with the lack of clarity in the legal standards used to differentiate employees from independent contractors, especially in the context of the “so-called ‘gig’, ‘entrepreneurial’, [and] ‘sharing’ economy,” the West Virginia Legislature drafted W. Va. Code §21-5I-1 et seq. to provide an objective method of making that distinction.  Additionally, the Legislature wanted to bring cohesion to the definition of independent contractor, as it can be defined differently depending on the law at issue.  In bringing cohesion to the law, the Legislature partially succeeded.  W. Va. Code §21-5I-4 will only apply “for the purpose of classifying workers” under the workers’ compensation laws in Chapter 23, unemployment compensation in Chapter 21A, the Human Rights Act in §5-11-1 et seq., and wage payment and collection in §21-5-1 et seq., it will not apply in any other area of law.

In order to qualify as an independent contractor, a worker must sign a written contract with the principal that makes it clear that the principal’s intent it to employ them as an independent contractor.  The contract must also contain five different acknowledgments for the worker to sign which help make it clear that the intent at the beginning of the relationship was to form a principal-independent contractor relationship.  For example, the worker must acknowledge that he or she is providing services as an independent contractor and that he or she will be responsible for all federal and state taxes.  The terms of the contract must “substantially comply” with all of the statutory requirements, although the statute does not define what constitutes substantial compliance.  Until there is case law on the issue, it will be impossible to determine if a contract containing 80% of the contractual requirements will be considered to be in substantial compliance. 

In addition to the contract requirements, the worker must also meet certain criteria.  The independent contractor must either file, or be contractually obligated to file, an income tax return for the fees earned from the work in question or the independent contractor must provide their services through some type of business entity, even a sole proprietorship as long as it is registered with a “doing business as.”  Further, the independent contractor must “actually and directly control[] the manner and means by which the work is to be accomplished,” which does not require that the contractor control “the final result of the work.”  This control does not extend to control necessary to ensure compliance with federal or state laws and regulations.  It also does not extend to contractually required measures regarding general safety concerns.

Finally, in addition to the requirements above, persons may either satisfy at least three of the enumerated requirements in W. Va. Code §21-5I-4(a)(4) to be classified as an independent contractor or be considered a direct seller under the Internal Revenue Code §3508(b)(2).  The requirements of W. Va. Code §21-5I-4(a)(4), are similar to the test used in other areas of the law to determine whether a worker is an independent contractor.  For example, an independent contractor is someone who controls the amount of time they spend providing services, controls where services are being performed, and is free to hire or solicit help.  Any combination of three requirements will be enough to satisfy the requirements of W. Va. Code §21-5I-4(a)(4) and no requirement holds more weight than the others do.

In conclusion, in order to be classified as an independent contractor the contract between the contractor and the principal must satisfy the writing requirements of W. Va. Code §21-5I-4(a)(1).  From there the contractor must either be required to file income taxes for the fees earned or do business through some business entity and must control how the work is to be performed.  Finally, the contractor must either meet three of the requirements of subsection W. Va. Code §21-5I-4(a)(4) or be considered a direct seller under IRC §3508(b)(2).  If the contractor does not meet these requirements, the classification test set forth in Internal Revenue Service Revenue Ruling 87-41 will determine whether the person is an independent contractor.    

By: 

Dill Battle

304-340-3823

dbattle@spilmanlaw.com

Kellen M. Shearin

304.340.3892

kshearin@spilmanlaw.com

Spilman Thomas & Battle, PLLC

300 Kanawha Blvd, E.

Charleston, WV 25301