Christina Lumbreras

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at riskletters@lrp.com

The State of the States

Regulatory Review

A round-up of nationwide regulatory changes affecting the workers' compensation industry.
By: | April 13, 2015 • 4 min read
Texas capital

Texas

Interest Rates

The Division of Workers’ Compensation announced that any interest or discount provided for in the Texas Workers’ Compensation Act shall be at the rate of 3.77 percent. The rate is effective April 1 through June 30, 2015.

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The rate in effect for the previous period of Jan. 1, 2015, through March 31, 2015 was 3.73 percent. For more information regarding calculation of the Discount Rate and Interest Rate, contact Dylan McCoy, Texas Department of Insurance, Financial Services at (512) 676-6195, or visit the website.

Lifetime Income Benefits

The Commissioner of Workers’ Compensation adopted new 28 Texas Administrative Code Section 131.1 regarding Initiation of Lifetime Income Benefits: Notice of Denial. The new rule was published in the Feb. 27 issue of the Texas Register and is available at www.sos.state.tx.us/texreg/index.shtml. The new rule requires that an insurance carrier review an injured employee’s eligibility for lifetime income benefits in a timely fashion, including when an injured employee requests LIBs, and requires that the carrier review all of the statutory criteria. The new rule also outlines the time frames for determining LIBs eligibility in situations where an injured employee requests LIBs in writing, as well as time frames for the payment of LIBs after the insurance carrier reasonably believes the injured employee is eligible. The new rule also helps ensure that if the insurance carrier denies LIBs eligibility, communication between the insurance carrier and the injured employee will be consistent, documented, and that all parties will be informed of their right to initiate dispute resolution. The new rule also retains the statutory eligibility requirements for LIBs. The new rule is effective June 1. The division has amended Form PLN-4, Notice Regarding Eligibility for Lifetime Income Benefits, for use with this rule. The finalized PLN-4 is available online and is also effective June 1.

Medical Audits

The Division of Workers’ Compensation’s Medical Advisor approved a Medical Quality Review Annual Audit Plan, which was adopted by the Commissioner of Workers’ Compensation. The purpose of the plan is to promote the delivery of quality health care in a cost-effective manner with emphasis on injured employee safety, ensure that health care providers adhere to medically accepted standards of care, and support return-to-work efforts and avoid unnecessary disability.

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The medical quality review process is medical case review initiated from either a written complaint, which may include an internal referral, a plan-based audit, or monitoring resulting from a consent order in accordance with 28 Texas Administrative Code Section 180.68. The Medical Advisor oversees the medical quality review process conducted by the Medical Quality Review Panel.

Medical Billing

The Division of Workers’ Compensation announced that, beginning Oct. 1, the Texas workers’ compensation system will transition to the use of the International Classification of Diseases, 10th Edition, Clinical Modification and Procedure Coding System (ICD-10) from the 9th Edition (ICD-9) for medical billing, processing, and reporting in alignment with federal regulations. These federal regulations adopt standard medical data code sets that apply to the Medicare system, which is regulated by the Centers for Medicare and Medicaid Services. Although there have been delays in the implementation of the ICD-10 code sets, the DWC stated that it will follow the time frame set by CMS. The DWC stated that health care providers, insurance carriers, clearinghouses, and billing services that participate in the Texas workers’ compensation system must be prepared to comply with ICD-10. All health care services provided on or after Oct. 1 must be billed with ICD-10 diagnosis codes or ICD-10 procedure codes. This includes medical bills submitted electronically or paper forms. Health care services provided before Oct. 1 must continue to be billed with ICD-9 diagnosis and procedure codes. Practice management systems and bill review management must be able to accommodate both ICD-9 and ICD-10 codes until all medical bills for service dates before Oct. 1, 2015, have been processed.

Oregon

Medical Billing Data Submissions

The Oregon Workers’ Compensation Division posted a list of insurers and self-insured employers that are required to electronically submit detailed workers’ compensation medical bill and payment data to the Oregon Department of Consumer and Business Services under OAR 436-160-0405. For more information, contact the EDI coordinator by telephone at (503) 947-7742, by email at edinews.wcd@oregon.gov, or visit online.

Pennsylvania

Rates

The Pennsylvania Department of Labor and Industries announced that workers’ compensation insurance rates dropped 5.99 percent, effective April 1.

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The rate reduction follows the Insurance Department’s approval of the Pennsylvania Compensation Rating Bureau’s annual loss cost filing. The loss costs are used to determine the premiums businesses pay for workers’ compensation insurance. The department stated that premium savings for an individual employer will vary based on the employer’s risk classification, claims experience, and other factors. Not all employers will see a decrease. This is the fourth consecutive year that workers’ compensation insurance rates have been cut, the department stated.

Washington

Employer Classifications

The Department of Labor and Industries adopted rules that amend the following four specific areas: 1) rules applicable to the classification and reporting of professional sports teams (WAC 296-17-35203(1), 296-17A-6706, 296-17A-6707, 296-17A-6809, and 296-17A-7102); 2) rules applicable to the classification of employers operating spas (WAC 296-17A-6109, 296-17A-6204, and 296-17A-6501); 3) rules applicable to the classification of reforestation employment (WAC 296-17A-1007, 296-17A-5004, and 296-17A-5006); and 4) rules applicable to the classification of farming operations (WAC 296-17A-4802 through 296-17A-4813). The changes will be effective July 1.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at riskletters@lrp.com
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View From the Bench

Workers’ Comp Docket

Significant workers' comp legal decisions from around the country.
By: | April 3, 2015 • 12 min read
judge

Teacher Gets Failing Grade on Disclosing Extent of Disability

Gramza v. Buffalo Board of Education, No. 518613 (N.Y. App. Div. 02/11/15)

Ruling: The New York Supreme Court, Appellate Division reversed a ruling that an injured teacher did not violate New York law prohibiting the making of false statements in support of a workers’ compensation claim. The court sent the case back to the board for a determination of whether the teacher’s failure to disclose the extent of his abilities was material, and done both knowingly and for the purpose of obtaining benefits.

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What it means: Under New York Workers’ Compensation Law, a claimant may be disqualified from receiving workers’ compensation benefits if, for the purpose of obtaining compensation, or for the purpose of influencing any determination regarding the payment of workers’ compensation, he knowingly makes a false statement or representation as to a material fact.

Summary: The employee was a teacher who was injured when he tripped over electrical cords and fell at work. He established injury claims for his left shoulder and neck. During his July 2010 independent medical examination, the teacher stated he was able to mow his lawn with a self-propelled mower and could take two-mile walks several times a week, but that his wife raked and cleaned up their yard and his neighbor performed snow removal. He also stated he did no indoor home maintenance activities. A surveillance video showed him performing yard work around his house for over two hours, including raking, using a large walk-behind mower, overhead tree trimming, cleaning up trimmings, and carrying a garbage bag to the curb — all with no sign of neck or shoulder problems. Video surveillance also showed him using a leaf blower, lifting a wheelbarrow and lumber, painting, digging, and standing on a ladder while using a power drill, wrench, and hammer.

The New York Workers’ Compensation Board found that surveillance video introduced by the school board did not show the teacher engaging in physical activities inconsistent with the representations he made to the doctors in his case. The Appellate Division disagreed and reversed. The court noted that after viewing the video surveillance, the IME physician concluded that the teacher “clearly is capable of doing far more home-based activities than he admitted to during my independent examination.” The physician revised his findings, concluding that the teacher had only a mild partial disability and no functional disability. Under these circumstances, the court explained, the board’s finding that the video surveillance did not show the teacher engaging in physical activities inconsistent with representations he had made to the doctors was not supported by substantial evidence in the record.

The court sent the case back to the board for a determination of whether the teacher’s failure to disclose the extent of his abilities was material, and done both knowingly and for the purpose of obtaining benefits.

Waffle House Defense of Post-Injury Termination Falls Flat

Graves v. Waffle House Inc., No. 3:12-cv-0414 (M.D. Tenn. 03/06/15)

Ruling: The U.S. District Court, Middle District of Tennessee denied summary judgment to a restaurant on an employee’s claims of retaliation under the Americans with Disabilities Act and state workers’ compensation law. The court held there were questions for the jury as to whether the reasons for the employee’s termination were pretext.

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What it means: Under Tennessee law, establishing a workers’ compensation retaliation claim requires an employee to show that filing for workers’ compensation benefits was a “substantial factor” in her employer’s adverse action against her. In this case, the fact that the server did not have a previous disciplinary record created questions for the jury on this front.

Summary: Being terminated less than three months after she requested work restrictions stemming from on-the-job injuries that prompted her to file a workers’ compensation claim helped a Waffle House server establish triable retaliation issues on her ADA and state workers’ compensation law claims. The court explained that given the restaurant’s shaky justifications for her termination, which were based on disputed disciplinary incidents, a jury could find that the stated reasons for her termination were pretext.

The server sought workers’ compensation benefits and a change to her work assignments after she felt a “pop” in her shoulder while lifting dishes from a dishwasher to an overhead shelf. Part of her job routinely required her to lift up to 35 pounds of items to shelves. Her doctor advised Waffle House that she should not have to perform lifting and dishwasher-emptying duties. Allegations arose that the server was spreading gossip about coworkers, and Waffle House claimed it terminated her for “screaming, cursing, and telling [another employee] ‘the devil is going to get you.’”

The court explained that there were questions about assertions Waffle House made that the server had been disciplined and that an investigation had been performed. Without conclusive evidence on these issues, the ADA claims headed for jury consideration as, in the court’s view, the case presented the need for credibility determinations.

Likewise, the workers’ compensation claims went forward.

“The evidence shows in [the employee’s] nearly twenty years of employment with [Waffle House], she was never disciplined or written up … and within less than three months of her workers’ compensation claim, she was terminated,” the court explained.

Although the evidence in the server’s favor was not “profuse,” the court held that a jury could conclude that her workers’ compensation activity was a “substantial factor” in her termination.

Activities Caught on Surveillance Video Point to Violation

Hershewsky v. Community General Hospital, No. 517625 (N.Y. App. Div. 01/20/15)

Ruling: The New York Supreme Court, Appellate Division affirmed the New York Workers’ Compensation Board’s ruling that the employee violated New York law regarding making false representations in support of workers’ compensation claims.

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What it means: Where there is sufficient support for a finding that the employee made a false representation in support of her workers’ compensation claim under New York law, she is disqualified from receiving further workers’ compensation benefits.

Summary: A hospital employee was injured in 1992. At a 2011 hearing, she testified that she was unable to walk without assistance, bend over, or push or pull anything. Surveillance video of her entering and leaving the hearing showed the employee requiring assistance to get in and out of the car and walking with a cane. However, video taken 15 minutes after she left the hearing showed her walking a dog without difficulty, bending over to pick up the dog, and getting into her car without assistance. Based on this video, the court found substantial evidence supported the board’s decision that the employee made false representations regarding material facts.

Under New York law, a claimant who knowingly makes a false statement or representation as to a material fact is disqualified from receiving any compensation directly attributable to the false statement or representation.

Florida Trucker Must Arbitrate Claim in Texas

AMS Staff Leasing v. Taylor, No. 4D14-1387 (Fla. Dist. Ct. App. 03/04/15)

Ruling: Reversing the trial court, a Florida District Court of Appeal ruled that an employment agreement’s mandatory arbitration provision was valid. The appellate court ordered the trial court to grant a Texas company’s motion to compel arbitration in a case where a Florida worker alleged retaliatory discharge.

What it means: According to this court, an agreement to require the arbitration of a workers’ compensation retaliation claim doesn’t violate public policy because the arbitration of such a claim, which is distinct from a claim for workers’ compensation benefits, doesn’t defeat the workers’ compensation statute’s remedial purpose.

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Summary: After starting work as a truck driver in Florida, the employee was told by a supervisor to fill out an application for employment with AMS Staff Leasing, a Dallas company. The employee claimed that he was told to backdate the form and that if he didn’t return the form within five minutes, he would be fired. The employee completed the paperwork on the hood of a truck under a parking lot light but reportedly didn’t read the employment agreement because he didn’t have his reading glasses. The employment agreement included a provision stating that any dispute with AMS would be arbitrated in Texas. The employee was later injured on the job and claimed that he was discharged in retaliation for his workers’ compensation claim. AMS moved to compel arbitration. Finding the arbitration provision deficient, the trial court denied the motion. The appellate court reversed, determining that the agreement was valid.

Before the trial court, the employee challenged the validity of the arbitration provision. The trial court found the provision deficient for two reasons: 1) it didn’t exclude workers’ compensation proceedings from its scope; and 2) it violated public policy by requiring an hourly wage employee in Florida to arbitrate a dispute in another state.

The appellate court disagreed with the trial court’s analysis. The appellate court explained that for an agreement to require arbitration of a workers’ compensation retaliation claim doesn’t violate public policy because the arbitration of such a claim doesn’t defeat the remedial purpose of the workers’ compensation statute. A claim for workers’ compensation benefits is distinct from the claim here of retaliatory discharge, the court observed.

The second reason for invalidating the arbitration provision also couldn’t “withstand careful scrutiny,” the appellate court wrote. The employment transaction at issue — an individual in Florida contracting with a Texas company — involved interstate commerce. Accordingly, the Federal Arbitration Act, not Florida’s arbitration code, governed the agreement. Under the FAA, the fact that an agreement provides for arbitration in another state is not a ground for invalidating it.

The appellate court also determined that the agreement wasn’t unconscionable or signed under duress. “The only evidence of a ‘threat’ in this case was the threat that the driver’s services were not needed if he did not sign the employment contract. This is insufficient to constitute duress,” the court explained.

Concluding that the agreement was valid, the appellate court ordered the trial court to grant AMS’s motion to compel arbitration.

Timing of Resignation Means Case Will Go to Jury

Tadlock v. Marshall County HMA LLC, No. 14-6085 (10th Cir. 02/25/15)

Ruling: The 10th U.S. Circuit Court of Appeals affirmed in part and reversed and remanded in part a District Court decision that granted summary judgment to a hospital on a worker’s Americans with Disabilities Act and state workers’ compensation claims. While the 10th Circuit agreed that the worker did not establish workers’ compensation retaliation, it held that a reasonable jury could find that the worker was subjected to disability discrimination.

What it means: Under the ADA, an employer’s decision to accelerate an employee’s resignation may be evidence of disability discrimination when it comes shortly after the employee informs the employer of health issues and a possible need for accommodations. To show retaliation under Oklahoma workers’ compensation law, employees must prove that their workers’ compensation claims resulted in “consequent termination.” The worker’s evidence in this case did not adequately address this element.

Summary: Evidence suggesting that a dietary manager’s resignation from a hospital was accelerated shortly after she spoke with her superiors about her injuries from a fall at work and requested time off for those injuries helped the manager advance her disability discrimination claims. However, insufficient evidence of a “consequent termination” defeated the manager’s workers’ compensation retaliation claims. Thus, the 10th U.S. Circuit Court of Appeals affirmed in part and reversed and remanded in part a District Court decision that granted summary judgment to the hospital.

The manager twice fell at work, and both incidents required emergency room visits. She was diagnosed with degenerative disk disease and placed on medication. Prior to the falls, the manager had also been diagnosed with type II diabetes. At around the same time, new management made changes to the dietary department, prompting the manager to ask for increased staffing. She also asked for spongy mats due to concerns she had about standing on the job. She submitted notice of her resignation and sought FMLA leave, but the hospital made the decision to make her resignation effective sooner than she intended.

The 10th Circuit explained that timing can establish an initial ADA claim when a protected activity is particularly close in time to an adverse employment action. The hospital put forth legitimate, nondiscriminatory reasons for accelerating her resignation related to the manager’s performance and alleged comments she made about hospital decisions. However, because the adverse action came on the heels of her discussions about her injuries and seeking time off, a jury could find that the hospital’s reasons were pretext.

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The workers’ compensation claims did not raise similar questions. Under the state law at issue, workers have to show a “consequent termination” based on the worker’s filing for benefits.

The 10th Circuit said that the timing between the hospital’s knowledge of the manager’s workers’ compensation action and the accelerated resignation was not sufficient to establish that she was subjected to retaliation. The manager pointed to an email the hospital’s human resources director sent that accused her of “trying for whatever sticks.” However, this was not evidence of “consequent termination” for filing a workers’ compensation claim. Instead, it was evidence that the hospital believed the manager was making bad-faith claims.

Carriers’ Inaccurate Form 400s Don’t Create Contractual Liability

Ace American Insurance Co. v. Workers’ Compensation Agency/Director, No. 317508 (Mich. Ct. App. 02/17/15, unpublished)

Ruling: In an unpublished opinion, the Michigan Court of Appeals affirmed the trial court’s order granting a motion for summary disposition filed by two workers’ compensation carriers who failed to properly identify the employer they insured on several Form 400 notifications submitted to the Michigan Workers’ Compensation Agency. The court ruled the carriers were not liable to the employer’s employees simply because of the filing of inaccurate Form 400s.

What it means: Form 400, which is filed by the insurance carrier when the employer chooses to use a third-party insurer under the Michigan workers’ compensation law, does not create contractual liability. The form is simply a notice, and its function is to indicate, inform, or announce the existence of an underlying insurance obligation, not to create that obligation.

Summary: Two workers’ compensation carriers failed to properly identify the employer they insured on several Form 400 notifications submitted to the Michigan Workers’ Compensation Agency. The carriers sought a declaration against the agency and other state entities that they were not liable to the employer’s employees. First, the court held that because the carriers’ claims for declaratory relief were premised on a threat of future harm, the one-year statute of limitations found in Michigan law did not bar the carriers’ claims.

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Next, the court rejected the agency’s argument that it possessed exclusive jurisdiction over this matter because the claims arose under the workers’ compensation law. The case involved the scope of two carriers’ contracts and liability. The Court of Claims has exclusive jurisdiction over all contract-based claims for declaratory relief against a state agency and all declaratory-judgment actions against the state that involve contracts. Here, the carriers sought declaratory relief against the state, asserting they were not liable under their original contracts or any statutory contracts. Under these circumstances, jurisdiction vests with the Court of Claims.

Lastly, the court ruled that the Form 400 did not create contractual liability on behalf of the carriers. The form was simply a notice, and its function was to indicate, inform, or announce the existence of an underlying insurance obligation, not to create that obligation. Therefore, the carriers were not liable to the employer’s employees simply because of the filing of inaccurate Form 400s.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at riskletters@lrp.com
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You Be the Judge

Can Injured Temp Sue Second Employer for Negligence?

An employer seeks immunity from tort liability after a temporary employee blames his injury on the company's negligence.
By: | March 27, 2015 • 2 min read
You Be the Judge

An employee of Staffmark, a temporary employment agency, was assigned to work in the warehouse of Americold Logistics. There was no written employment contract between the worker and Americold. While driving a forklift, the employee suffered a severe spinal injury. Staffmark accepted the employee’s workers’ compensation claim and paid appropriate benefits.

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The employee also sued Americold for negligence. Americold sought to dismiss the lawsuit, contending that as the employee’s special employer, it was immune from tort liability. The trial court suspended action on the negligence claim until the Workers’ Compensation Commission determined whether there was an employer-employee relationship between the worker and Americold.

Before the administrative law judge, Americold’s general manager testified that when Staffmark sent workers to Americold, “they were our associates” to be directed, disciplined, or discharged by Americold, and that Staffmark’s role at that point was “just to hand them a paycheck.” The worker testified that he didn’t believe he was Americold’s employee and that Americold disavowed the existence of an implied employment contract until it was sued for negligence.

The ALJ determined that there was an implied employment contract between the employee and Americold, that the work performed at the time of the injury was that of Americold, and that Americold paid the employee’s wages and controlled every aspect of his work. The ALJ concluded that Americold was a special employer and that the worker was a temporary employee of Americold’s. Thus, under the dual-employment doctrine, Americold was immune from tort liability. The commission affirmed and adopted the ALJ’s decision.

The employee appealed, arguing that Americold wasn’t his employer because there was no implied employment contract.

Poll Question

Did the appellate court find fault with the determination of an implied contract?

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How the court ruled:

A is incorrect. The court explicitly stated that the fact that the implied contract was initiated through a temporary employment agency didn’t negate the fact of the employee’s dual employment.

C is incorrect. Americold’s initial denial that an implied employment contract existed didn’t impact the determination that such a contract was present.

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B is correct. In Randolph v. Staffmark, et al., No. CV-14-815 (Ark. Ct. App. 02/25/15), the Arkansas Court of Appeals held that substantial evidence supported the commission’s determination that an implied employment contract existed between the employee and Americold. The court explained that an implied contract is shown through the parties’ general course of dealings indicating an intent to make a contract. Here, the court observed, both parties operated on the belief that the employee would gain full-time employee benefits after logging a sufficient number of hours of work. Additionally, the employee provided work to Americold and Americold treated the employee as any other worker and paid for his services. These facts supported a finding that an implied contract existed and that a dual-employment scenario was in place.

Editor’s note: This feature is not intended as instructional material or to replace legal advice.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at riskletters@lrp.com
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