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

View From the Bench

Workers’ Comp Docket

Significant workers' comp legal decisions from around the country.
By: | May 21, 2015 • 12 min read
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Traveling Employee’s Collision With Wild Hog Is Compensable

Choctaw Resort Development Enterprise v. Applequist, No. 2014-WC-00969-COA (Miss. Ct. App. 04/21/15)

Ruling: The Mississippi Court of Appeals held that an off-property casino director was entitled to benefits for the injuries she sustained in a car accident.

What it means: In Mississippi, a traveling employee is within the course of employment from the time she leaves home until she returns unless she deviates from her work task on a personal errand.

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Summary: An off-property director of player development for a casino worked from her home when she was not traveling, hosting events, or surveying competing bingo halls. She had no fixed employment hours but often worked long hours. She traveled to three new bingo facilities to survey them. The director had only lived in the area for a few weeks, so she asked her sister to accompany her. They left the last casino around 4 a.m. to return home. The director’s sister was driving in a rain storm when their car hit a 400-pound wild hog. The director was injured and hospitalized for several days. She sought workers’ compensation benefits. The Mississippi Court of Appeals held that she was entitled to benefits.

The court explained that travel was a large part of the director’s work. Her boss explained that her job duties included investigating competing gaming operations. The court agreed with the Workers’ Compensation Commission that the director was not on a personal errand when she was injured. She explained that she inspected the gaming operations for their size and location, amenities, and whether their parking lots were full.

The director explained that she asked her sister to drive because she was more familiar with the area. The 68-year-old director also claimed to have taken prescription medication.

The casino asserted that the director did not request reimbursement for her travel on the day of the accident. The director explained that she received travel advances.

Temp Worker’s Injury Covered Under General Liability Policy

Broom v. Wilson Paving & Excavating, Inc., et al., No. 109813 (Okla. 04/07/15)

Ruling: The Oklahoma Supreme Court held that a temporary worker’s injury from a collapsed trench was covered by a subcontractor’s general liability insurance policy.

What it means: In Oklahoma, a temporary worker’s injury can be covered by a subcontractor’s general liability insurance policy when he was an employee of, and received workers’ compensation from, the employment agency.

Summary: A temporary worker went to the offices of Labor Ready, an employment agency, to secure employment. The worker was directed by Labor Ready to work with Wilson Paving. He began work laying pipe inside a trench. The trench in which he was working collapsed, covering him in dirt to his neck. He sustained serious injuries. The worker received workers’ compensation benefits from Labor Ready. He also sued Wilson Paving for his injuries. Wilson Paving had two insurance policies — one for workers’ compensation and liability to employees and a general liability policy that covered injuries to the public. The Oklahoma Supreme Court held that the worker’s injury was covered by Wilson Paving’s general liability policy.

The general liability insurer argued that the worker was not covered under the policy as a temporary worker because there was no agreement granting coverage to a temporary worker. The court pointed out that the policy did not contain language excluding coverage injuries to temporary workers.

The court also explained that the insurer was not immune from liability under the workers’ compensation exclusive remedy provision. The worker was not considered Wilson Paving’s employee at the time of the incident. Labor Ready was identified as his employer in the workers’ compensation action. Negligence was the basis of the worker’s recovery against Wilson Paving.

The court concluded that coverage for the worker’s injuries was not precluded under the policy. The court rejected the insurer’s argument that coverage was excluded because a trench collapse was considered “earth movement” under the policy. The court found that the policy excluded coverage for naturally occurring earth movement such as earthquakes and landslides but several of the terms within the provision such as slipping and caving could be caused by naturally occurring events or man-made events. The record indicated that Wilson Paving expected coverage in a situation such as this. The insurer was aware of the nature of Wilson Paving’s business and could have excluded man-made earth movement from coverage. The court found that the policy only excluded earth movement caused by natural events.

Actual Notice of Injury Not Enough; Worker Must File Claim

Izikson v. Protein Science Corp., et al., No. AC 36325 (Conn. App. Ct. 04/21/15)

Ruling: The Connecticut Appellate Court held that a worker failed to provide proper notice of his claim.

What it means: In Connecticut, a worker must provide written notice that informs his employer of his intent to pursue a workers’ compensation claim.

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Summary: A worker for Protein Science Corp. injured his back and leg while lifting a box. He notified Protein Science’s controller of his injuries. The controller prepared a first report of injury form and transmitted it to its insurance provider, Chubb Indemnity Insurance Co. The controller advised the worker to contact Chubb directly to discuss his injuries and learn how to proceed with the matter. Chubb sent the worker a prescription card and filed a form contesting the worker’s assertion that he injured his back in the course of his employment. The worker did not file a notice of claim or request a hearing within one year of his injuries. Protein Science and Chubb did not provide him with medical treatment. Instead, the worker underwent surgery and sought payment for the surgery through his group health insurance carrier. More than one year after the injuries, the worker sought workers’ compensation benefits. The Connecticut Appellate Court held that the worker failed to provide proper notice of his claim.

The worker asserted that based on the totality of the circumstances, Protein Science and Chubb had notice that he was pursuing or intended to pursue workers’ compensation benefits. The worker asserted that Protein Science and Chubb had notice of the injury and his intent to file a claim based on the first report of injury, emails between him and the controller, correspondence from Chubb enclosing a prescription card, a schedule of weekly earnings prepared by the controller, and the form contesting the injury. The court explained that the worker failed to provide written notice of his claim. He pursued benefits through his group health care provider. He did not submit medical bills to Protein Science or Chubb and did not use the prescription card Chubb sent him.

The worker also argued that Chubb’s filing of the form contesting the injury should be an exception to the notice of claim requirement. The court disagreed, stating that the legislature was the proper forum to create additional exceptions.

Nurse’s Fall While Carrying Soiled Clothes Is Linked to Employment

Kilbane v. Lutheran Hospital-Cleveland Clinic, et al., No. 101897 (Ohio Ct. App. 04/16/15)

Ruling: The Ohio Court of Appeals held that a nurse’s fall in the parking lot at the end of her workday was compensable.

What it means: In Ohio, a causal connection exists between a worker’s injury and her employment when the worker was performing a duty for her employer’s benefit when she encountered a hazard and was injured.

Summary: A nurse for Lutheran Hospital was required to change back into her “street clothes” at the end of her workday and deposit her scrub uniform into a hospital laundry basket. As she prepared to leave work, she noticed that her lab coat and shoes were soiled as a result of her operating room duties. The hospital did not clean lab coats or shoes, so she obtained a plastic bag from the operating room and placed her lab coat and shoes inside.

The nurse then retrieved her purse and a container of food and “clocked out.” She crossed the street to the employee parking lot. While she was walking on a hill, wind captured the bag, and she stumbled and fell. The nurse sought workers’ compensation benefits. The Ohio Court of Appeals held that her injury was compensable.

The court rejected the hospital’s argument that the nurse’s injury did not occur in the scope of and arising out of her employment. The court explained that she was required to wear nursing garb while performing her duties. She was required to maintain her lab coat and shoes personally. She could do so only by taking those items with her when she left work for the day. The court said the nurse’s actions when she was injured were consistent with her contact for hire and logically related to the hospital’s business.

The court also found a causal connection between the nurse’s injury and her employment. Her fall resulted from the bag’s hindrance of her safe movement from her workplace to her car. The court explained that she was in the discharge of one of the duties placed upon her for the hospital’s benefit when she encountered a hazard.

Delayed Autopsy Report Tolls 6-Month Time Limit for Seeking Death Benefits

Sheena H., et al. v. West Virginia Office of the Insurance Commissioner, No. 13-0875 (W.Va. 04/10/15)

Ruling: The West Virginia Supreme Court of Appeals held that the six-month statute of limitations for filing a claim for death benefits was tolled until a miner’s heirs received an autopsy report indicating that his death was work-related.

What it means: In West Virginia, the six-month time limitation on filing a claim for death benefits can be tolled until the worker’s heirs receive the autopsy report finding that the worker’s death was work-related when the heirs could not have learned through reasonable diligence that the death was work-related until the autopsy report.

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Summary: A coal miner suffered a work-related injury when a wrench fell from a mine’s ceiling and hit him on the head. The injury left him unconscious for one minute and resulted in a golf ball-size knot on his head. His treating physicians prescribed him pain medication.

The miner did not seek additional medical treatment for the injury, and he returned to work two days later. Nearly two years later, the miner died in his sleep. Due to the medical examiner’s delay, an autopsy report was not completed until eight months after his death.

The report declared that the miner’s death was the result of a traumatic seizure disorder that stemmed from the work-related head injury.

Six months after the autopsy report, the miner’s mother applied for death benefits on behalf of the miner’s daughter. Dependents of a deceased worker have six months from the date of the work-related death to apply for death benefits. The employer asserted that the claim was not timely filed. The West Virginia Supreme Court of Appeals held that the six-month statute of limitations was tolled until the mother received the autopsy report.

The mother argued that there was no way of knowing that the miner’s death was work-related until the autopsy report was completed. The court noted that a claim filed before the autopsy report would have been “purely speculative.” The court also said a finding that the time limitation could never be tolled was “patently unfair.”

The court found that the legislature did not intend that a worker’s heirs be completely barred from receiving death benefits where, due to the medical examiner’s delay in completing the autopsy, there was no knowledge that the worker’s death was work-related until eight months after the death, and the heirs promptly filed the claim within six months of learning that the death was work-related. The court noted that it limited its holding to when the delay was on the part of the medical examiner, not the heirs.

The employer also argued that the mother was not a proper party to file for death benefits on behalf of the miner’s daughter. The court said that when a worker or dependent of a worker is mentally or physically incapable of filing the application, it can be filed by her attorney or by a member of her family. Here, the miner’s six-year-old daughter was mentally and physically incapable to file an application for death benefits. The miner’s mother was a member of the daughter’s family, so she could file an application on the daughter’s behalf.

Teacher Connects Respiratory Problems With Dusty, Moldy Classroom

United Heartland, Inc., et al. v. Brown, No. 14-1070 (Iowa Ct. App. 04/08/15)

Ruling: The Iowa Court of Appeals held that a teacher was entitled to workers’ compensation benefits for the respiratory problems she sustained from exposure to mold or dust in her classroom.

What it means: In Iowa, a worker’s respiratory injury arises out of her employment when evidence establishes a causal connection between her injury and the moldy and dusty conditions in the building.

Summary: A teacher for Camanche Community School District taught in a windowless room with little ventilation. She recalled seeing ceiling tiles that were stained from water intrusion and believed a “buildup of dirt and grunge was an ongoing problem” at the school. She brought a humidifier into her classroom to help with her chronic cough and noticed mold on the filter. She claimed that she developed respiratory problems from exposure to mold or dust in her classroom. The Iowa Court of Appeals held that the teacher was entitled to benefits.

The court rejected the school district’s argument that the teacher did not suffer “a pulmonary function injury” related to her work. Although two doctors did not believe the teacher had asthma or a chronic impairment of the respiratory system, a pulmonologist diagnosed the teacher with an occupational lung disease, including hyper-reactive airways and shortness of breath. Another doctor found a positive methacholine challenge test to support his diagnosis of asthma. He also reviewed several air quality reports, which discussed examples of water damage to the school.

The court found that the teacher’s injury arose out of her employment. Expert evidence established a causal relationship between her injury and the conditions in the school. Water had infiltrated the roof and ceiling tiles in the school building. A doctor opined that the water damage more likely than not was the cause of the teacher’s lung injury. Indoor air testing pointed to heavy dust accumulation and elevated levels of carbon dioxide from low ventilation in the building.

The court also pointed out that other teachers experienced sinus and respiratory problems when they were in the building during the school year, which dissipated when they were away from the building.

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 Helper Recover Comp From eBusiness?

A moving service that pairs moving customers with movers' helpers claims it is not the employer of those helpers for the purposes of workers' comp.
By: | May 15, 2015 • 2 min read
You Be the Judge

A moving business operated by Sean Unterkoefler executed a contract to assist customers of eMove, an Internet marketplace where individuals renting moving trucks could search for and hire local moving companies to assist with loading or unloading rental trucks. When a job was complete, eMove would release the customer’s payment to the moving company, keeping 15 percent of the payment for its services.

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Unterkoefler used rental moving trucks and equipment supplied by customers. He set the days and times he would perform moving services and set his own rates, times, and coverage areas. Customers set the date, time, and location of the jobs. When Unterkoefler could not complete the job himself, he asked for help and paid his helpers in cash.

A moving helper was working part time for Unterkoefler when he injured his hand and arm while moving a washer/dryer unit. The helper had performed 10 to 15 jobs for Unterkoefler in five months and also worked for other moving companies. He sought workers’ compensation benefits.

The workers’ compensation commissioner denied benefits, finding the helper failed to prove he was an employee of Unterkoefler or that eMove was his statutory employer. The Workers’ Compensation Commission affirmed the commissioner’s decision. The helper appealed.

Poll Question

Was the commission correct in denying benefits to the helper?

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How the Court Ruled

The court explained that Unterkoefler did not have the right to control the helper in the performance of his work. When he was injured, the helper was completing a job for Unterkoefler on his own. Unterkoefler did not exercise control over the work he performed but merely gave him the customer’s information. The customer dictated the date, time, and location of the job. When the job was completed, Unterkoefler gave him cash for the entire cost of the job.

Regarding the furnishing of equipment, Unterkoefler did not have his own moving truck or equipment and used the truck that customers rented. Regarding the method of payment, Unterkoefler was paid by the job and split his earnings with the number of helpers he had during the job, paying them in cash. Unterkoefler could choose his helpers, and the helper could decline a job. There was no set schedule, and the helper did not work on a consistent basis.

Furthermore, the court found that Unterkoefler was not subject to the workers’ compensation law because he did not regularly employ four or more employees during the relevant time period.

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A is incorrect. The court found that eMove was not the helper’s statutory employer. The court agreed with eMove’s argument that it was not a moving company. Its business or trade was to create a marketplace for individuals to meet movers.

C is incorrect. The court concluded that Unterkoefler was not the helper’s employer.

B is correct. In Ferguson v. New Hampshire Insurance Co., et al., No. 5307 (S.C. Ct. App. 04/01/15), the South Carolina Court of Appeals held that Unterkoefler was not the worker’s employer.

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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View From the Bench

Workers’ Comp Docket

Significant workers' comp legal decisions from around the country.
By: | May 11, 2015 • 12 min read
judge

Pharmacist Advances Claims by Filing as Customer, Not Worker

McPadden v. Wal-Mart Stores East, L.P., No. 14-CV-475-SM (D.N.H. 04/02/15)

Ruling: The U.S. District Court, District of New Hampshire denied Wal-Mart’s motion to dismiss a worker’s tort claims based on the exclusivity provisions of New Hampshire’s workers’ compensation law. The court held that the worker’s claims arose out of her status as a customer, not an employee, of Wal-Mart.

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What it means: Under New Hampshire workers’ compensation law, claims based upon negligence by an employer or coworker for personal injuries arising out of or in the course of employment are generally barred by the law’s exclusivity provisions. In this case, a Wal-Mart employee’s claims were not barred because they related to alleged injuries she experienced as a Wal-Mart customer, so workers’ compensation law did not apply.

Summary: A Wal-Mart pharmacist’s tort claims against the retailer were not barred by the exclusivity provisions of New Hampshire’s workers’ compensation law. That is because the claims were related to information that the pharmacist provided as a customer of the store, not an employee. Thus, the court denied Wal-Mart’s motion to dismiss, explaining that the pharmacist could pursue her tort claims because the injuries alleged in the case did not arise out of her employment by Wal-Mart.

The case arose when the pharmacist was terminated for allegedly misplacing a key to the pharmacy. She sued, alleging workplace discrimination, retaliation, invasion of privacy, and negligence against Wal-Mart. The crux of the pharmacist’s tort claims had to do with allegations that a technician accessed the pharmacist’s private health information and disclosed the information to other employees.

The court explained that for Wal-Mart to establish that the pharmacist’s claims were barred by the exclusivity provisions, it would have to show: 1) that the injury arose out of her employment by demonstrating that it resulted from a risk created by the employment; and 2) that the injury arose in the course of her employment by demonstrating that it occurred within the boundaries of time and space created by the terms of the employment and that it occurred in the performance of an activity related to employment.

In this case, the technician’s alleged disclosure of the pharmacist’s confidential medical information did not result from a risk created by the pharmacist’s employment. The court also held that her injuries did not arise in the course of her employment but instead out of her status as a customer. Thus, her claims were not barred by New Hampshire’s workers’ compensation law.

Inability to Pinpoint Exact Cause of Injury Doesn’t Block Claim

Pulaski County Special School District v. Laster, No. CV-14-955 (Ark. Ct. App. 04/01/15)

Ruling: The Arkansas Court of Appeals held that a specialist was entitled to temporary total disability benefits for his back injury.

What it means: In Arkansas, a claimant’s inability to pinpoint exactly how he was injured is a credibility issue that the Workers’ Compensation Commission can weigh.

Summary: A lighting specialist in the maintenance department of Pulaski County Special School District was digging ditches and putting pipe in the ground at a school. He experienced serious back pain that worsened and was diagnosed with a herniated disk. The specialist sought workers’ compensation benefits. The Arkansas Court of Appeals held that he was entitled to temporary total disability benefits.

The school district asserted that the specialist did not identify how he was injured at work. The district also argued that he did not display any physical problems at work or immediately report a work-related injury. The court rejected the district’s arguments, pointing out that the specialist told his supervisor that he hurt his back riding equipment and pulling pipes. Also, the supervisor corroborated the specialist’s testimony that the work was “strenuous.”

The court also noted that there was no evidence of a nonwork-related injury that contradicted the specialist’s claim. The court said that the specialist’s inability to pinpoint exactly how he was injured was a credibility issue the Workers’ Compensation Commission could weigh and resolve in the specialist’s favor. The court said that reasonable minds could conclude that his back injury was caused by his strenuous activity at work.

Termination Doesn’t Prevent Award of TTD

State ex rel. Vaught v. Industrial Commission of Ohio, No. 14AP-377 (Ohio Ct. App. 03/31/15)

Ruling: The Ohio Court of Appeals held that a driver was entitled to temporary total disability benefits.

What it means: In Ohio, where a worker takes action that prevents him from returning to work even if he is physically able to return, he is not entitled to TTD benefits since it is his own action rather than the work-related injury that prevents him from returning to work.

Summary: A dump truck driver sustained an injury when the truck he was driving rolled over. He received hospital treatment and was released the same day. He notified his employer that he would return to work the following week. However, the driver did not return to work and did not notify the employer that he would not be going into work that day.

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The driver received additional treatment and medication for his neck and back pain. His physician indicated a return-to-work date. The driver still did not contact the employer and did not return to work. The employer terminated the driver, citing his failure to call or show up for work. The driver sought temporary total disability benefits. The workers’ compensation magistrate denied benefits, finding that the driver violated the employer’s work policy by failing to report to work and abandoned the workforce. On appeal, the Ohio Court of Appeals held that the driver was entitled to TTD benefits.

The court explained that if the employer had a written “no call/no show” policy it might have concluded that the driver voluntarily abandoned his employment by not going to work or contacting the employer. However, there was no evidence that the employer’s policy was in writing. The record contained no evidence of a written employee handbook, work rule, or prior warnings, reprimands, or other violations to suggest that the driver was or should have been aware that not contacting the employer after his injury could result in his termination. Therefore, the court concluded that he did not voluntarily abandon his employment.

The court also noted that there was medical evidence of disability at the time of the driver’s termination. The evidence did not show that the disability was caused by a non-allowed preexisting condition.

Employment Relationship Halts Postdoctoral Fellow’s Suit

Schwenger v. NYU School of Medicine, et al., No. 517372 (N.Y. App. Div. 03/05/15)

Ruling: The New York Supreme Court, Appellate Division held that an employer-employee relationship existed between NYU School of Medicine and a postdoctoral fellow who was exposed to piggyback herpes virus while working in the school’s laboratory.

What it means: In New York, where a postdoctoral fellow receives his salary from a federal grant but he is overseen at the university’s laboratory by a professor who sets the fellow’s hours, directs the fellow’s research, has the authority to discipline and fire the fellow, and the fellow uses equipment provided in part by the university, substantial evidence supports a determination that the fellow is an employee of the university.

Summary: A postdoctoral fellow at NYU’s School of Medicine was working in the school’s laboratory when he was exposed to piggyback herpes virus. His salary was funded by a federal grant that was administered through the National Institutes of Health. The fellow sued, and NYU asserted that the workers’ compensation exclusive remedy provision applied. The New York Supreme Court, Appellate Division held that an employer-employee relationship existed between NYU and the fellow. Therefore, his exclusive remedy was in workers’ compensation.

The court rejected the fellow’s contention that the Workers’ Compensation Board was preempted by federal law from exercising jurisdiction over him. Although a program announcement circulated by NIH indicated that grant recipients were not employees of NIH or the awardee institution, those statements were addressing tax liability of the grant recipients and did not justify the preemption of state workers’ compensation law.

The court went on to rule that substantial evidence supported the board’s finding of an employer-employee relationship. The fellow was overseen at the laboratory by an NYU professor who set the fellow’s hours, directed the fellow’s research, and had the authority to discipline and fire the fellow. NYU was listed as the payor on the fellow’s paychecks and provided him with vacation, sick leave, and health insurance. Also, he used equipment provided in part by NYU. Based on this evidence, the court concluded that substantial evidence supported the determination that the fellow was an employee of NYU.

Implied Contract for Hire Triggers Liability for Contractor

Ashley v. Mercer, No. 2014-SC-000273-WC (Ky. 04/02/15, unpublished)

Ruling: In an unpublished decision, the Kentucky Supreme Court held that a contractor was liable for a worker’s benefits.

What it means: In Kentucky, evidence of an implied contract for hire can establish an employment relationship between an employer and a worker.

Summary: A homeowner hired a contractor to oversee the construction of a house. A worker was hired to help build the house. At the jobsite, the contractor instructed the worker what tasks to perform and arranged his hourly wage. The homeowner stated that he did not supervise the worker, provide tools to him, and did not believe he had the authority to hire or fire him. The homeowner directly paid the worker for his work at the contractor’s request. The worker suffered a severe fall, causing multiple injuries. The worker sought workers’ compensation benefits. The contractor asserted that the worker was not its employee but the employee of the homeowner. The Kentucky Supreme Court held that the contractor was liable for the worker’s benefits.

The court found that an implied contract for hire existed between the contractor and the worker. The contractor told the worker how to perform his job, what jobs he needed to complete, and provided the majority of the tools the worker used. The contractor also negotiated with the homeowner for the worker’s hourly wage.

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The court found these facts indicated that the contractor was the worker’s employer. No evidence showed that the homeowner intended to hire the worker or directed his work. Although the homeowner paid the worker, this was done at the contractor’s request.

The court rejected the contractor’s argument that the worker was an independent contractor of the homeowner. The homeowner did not hire the worker or have any control over him at the jobsite. The evidence showed that the homeowner hired the contractor, and the contractor hired the worker to assist.

The court also noted that the administrative law judge was within his discretion to decline to order vocational rehabilitation benefits for the worker because he found the worker was permanently and totally occupationally disabled.

Prior Injuries Don’t Allow Employer to Apportion Liability

Roberts Dairy v. Billick, No. 13-1009 (Iowa 04/03/15)

Ruling: The Iowa Supreme Court held that an employer was not entitled to apportion its liability for permanent partial disability benefits.

What it means: In Iowa, under the fresh start rule, an employer is liable for a work-related permanent partial loss of a new earning capacity refreshed by market forces and existing at the time of a successive injury and not for a preexisting disability arising from employment with a different employer.

Summary: A truck driver suffered four work-related injuries while working for Roberts Dairy. He also had suffered work-related injuries while working for previous employers. Roberts Dairy asserted that its liability for industrial disability benefits should be apportioned because the driver previously suffered disability from injuries sustained while working for other employers. The Iowa Supreme Court held that Roberts Dairy was not entitled to apportion its liability for benefits.

An amendment to Iowa’s workers’ compensation law states that an employer is not liable for compensating a worker’s preexisting disability that arose out of and in the course of employment with a different employer. However, the legislature did not prescribe how an offset of disability benefits should be determined.

The court found that workers have a refreshed earning capacity upon commencement of new employment, noting that earning capacity is not static. The court explained that a worker’s recovery for a successive loss of earning capacity sustained in the employment with a new employer is not a double recovery for a prior loss. Instead, it is a full recovery for the loss of the refreshed earning capacity.

The court pointed out that Roberts Dairy’s approach would not credit increases in earning capacity resulting from a worker’s restoration of physical capacity, education, training, or work experience achieved before beginning new employment with a different employer and a successive injury. The court also explained that Roberts Dairy’s interpretation assumes that earning capacity is static.

Payments by Health Insurer Reduce Employer’s Offset

Milbrandt v. Bibbs Inc., No. 27116 (S.D. 04/01/15)

Ruling: The South Dakota Supreme Court held that amounts paid by a driver’s health insurance reduced the offset the employer would receive against future medical expenses from a third-party settlement.

What it means: In South Dakota, a health insurer’s payment for a worker’s medical treatment will reduce an offset an employer would receive against future medical expenses from a third-party settlement.

Summary: A truck driver for Bibbs was injured in an automobile accident during the course of his employment. The driver settled a claim against the other driver involved in the accident. The truck driver used some of the settlement proceeds to repay workers’ compensation benefits already paid by Bibbs. Bibbs would receive an offset against future medical expenses from the remaining amount of the settlement. After the settlement, the driver’s health insurance paid for medical treatment related to the work injury. The driver sought workers’ compensation benefits. Bibbs asserted that the amounts paid by insurance would not reduce the offset against future medical expenses. In a case of first impression, the South Dakota Supreme Court held that the amounts reduced the offset.

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The court explained that the workers’ compensation law did not impose a restriction on how a worker can pay for expenses incurred. The law simply ensures that an employer is not paying an amount for which a third party is legally liable. Here, because the driver’s expenses were amounts he would have been entitled to receive, the expenses reduced the offset regardless of how they were paid. The court pointed out that the law did not make a provision or exception for expenses covered by insurance.

Regarding the driver’s claim for benefits, the court explained that he had no compensable claim against Bibbs until the expenses in the remaining amount of his settlement were paid.

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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