Workers’ Comp Docket
Attorney Attempts to Skim Extra Fees Off of Injured Worker’s Benefits
Page v. McCain Foods, Inc., No. 40568 (Idaho 01/03/14)
Ruling: The Idaho Supreme Court held that a worker’s attorney was entitled to a 30 percent attorney’s fees award.
What it means: In Idaho, the Industrial Commission has the discretion to fix the amount of reasonable attorney’s fees awarded.
Summary: An injured worker and her attorney entered into a contingent fee agreement. The agreement stated that the attorney would be entitled to 30 percent of benefits obtained if a hearing in the matter was commenced and 40 percent of benefits obtained if the matter was appealed. After appeals, the worker was awarded benefits. The parties agreed that the worker’s attorney would receive 30 percent of the value of benefits awarded to the worker. The employer issued three checks — two for the worker’s benefits and one for attorney’s fees that equaled 30 percent of the other two checks. Rather than keeping the third check for attorney’s fees, the attorney added the three checks together and deducted 30 percent from the larger total. The calculation resulted in the attorney receiving 39 percent of the worker’s award. The Idaho Supreme Court held that the attorney was entitled to a 30 percent attorney’s fees award.
The court pointed out that the parties stipulated to attorney’s fees of 30 percent. The court noted that the Industrial Commission did not find it reasonable to approve attorney’s fees that would take a portion of the fees from the worker’s awarded benefits rather than from the employer.
The court rejected the attorney’s argument that without the stipulation he would have been awarded a 40 percent award. The court explained that the attorney’s fee agreement recognized that the commission has the final word with regard to attorney’s fee awards.
The attorney also asserted that an attorney’s fees award constituted a “benefit” and he should be permitted to add the award to other benefits awarded before calculating his percentage. The court found that attorney’s fees and compensation are not the same. The attorney’s fees were granted so that the worker did not have to carry the burden of paying attorney’s fees from the benefits she received.
Employer Plays NAFTA Card in Attempt to Avoid Paying Comp
Porteadores Del Noroeste S.A. De, C.V. v. Industrial Commission of Arizona, No. 1 CA-IC 12-0038 (Ariz. Ct. App. 01/14/14)
Ruling: The Arizona Court of Appeals held that a Mexican employer was subject to Arizona’s workers’ compensation laws for a driver’s injury, so the driver was entitled to benefits.
What it means: In Arizona, an employer based in Mexico is subject to the state’s workers’ compensation laws.
Summary: A truck driver, who was a citizen of Mexico, was injured in an accident in Arizona. He received workers’ compensation benefits in Mexico and filed a claim for workers’ compensation benefits in Arizona. The employer, a company based in Mexico, did not have Arizona workers’ compensation coverage for its workers. The employer argued that requiring a foreign employer to comply with the state’s workers’ compensation laws would violate federal law. The Arizona Court of Appeals held that the driver was entitled to benefits and that the state was entitled to a credit for workers’ compensation benefits paid in Mexico.
The employer argued that the North American Free Trade Agreement and the North American Agreement on Labor Cooperation preempted a claim that was covered by Mexican law. The court explained that only the United States can challenge a state law or state action on the ground that it conflicts with NAFTA or NAALC. The prohibition against using NAFTA to invalidate state laws extends to any argument that a state law is “inconsistent” with NAFTA. Therefore, the employer’s argument was rejected.
The employer also asserted that application of Arizona’s workers’ compensation laws would “impair federal uniformity” because NAFTA and NAALC would be undermined. The court found no “specific indications of congressional intent” barring application of Arizona’s workers’ compensation laws to the employer. The court pointed out that NAFTA and NAALC do not discuss workers’ compensation. The court found no authority that the federal government adopted a uniform policy regarding workers’ compensation principles applicable to foreign companies doing business in the United States. Therefore, the court would not presume that the Foreign Commerce Clause barred application of Arizona’s workers’ compensation laws to foreign employers.
Worker Claims Poor Safety Practice Entitles Him to Extra Benefits
Veneris v. Domtar Paper Co., LLC f/k/a Wayerhaeuser Co., No. COA13-649 (N.C. Ct. App. 01/07/14)
Ruling: The North Carolina Court of Appeals held that a mechanic was not entitled to a 10 percent increase in his compensation.
What it means: In North Carolina, if an employer believed that it provided appropriate safety gear to workers, it will not be liable for a willful failure to follow safety regulations.
Summary: A utility mechanic for a paper company was often exposed to welding light while assisting welders. The company provided with him with safety glasses not rated for welding. Welders were provided with welding shields. The mechanic’s eyes were burned by the welding arc. He noted an impairment to his central vision. A neuro-opthamologist concluded that he probably suffered from welder’s arc retinopathy, a condition caused by exposure to intense welding light. The deputy commissioner found that the mechanic’s eye injury was compensable. The mechanic asserted that he was entitled to a 10 percent increase in compensation because of the company’s willful failure to follow occupational safety and health regulations. The North Carolina Court of Appeals held that he was not entitled to a compensation increase.
The court found that the company’s safety and security manager’s testimony indicated that the company believed it was providing OSHA compliant protective gear to workers and that the company was unaware of the hazard faced by mechanics.
The mechanic asserted that the company knew the hazards of welding light, knew he worked in close proximity to welding light, knew he would be affected by the welding light, and knew about the safety regulation, yet provided him with safety glasses that were not rated for welding. The court found it did not follow that the company deliberately avoided its obligation to provide the mechanic with appropriate eye protection. The company could have believed, even mistakenly, that utility mechanics exposed to welding light did not require the same level of eye protection that it afforded to welders.
Benefits Payer Claims Man Was Already Totally Disabled Before Back Injury
Scott v. Treasurer of the State of Missouri, No. WD76602 (Mo. Ct. App. 01/14/14)
Ruling: The Missouri Court of Appeals held that an owner could be entitled to benefits from the second injury fund.
What it means: In Missouri, the second injury fund is liable where a worker establishes that his preexisting partial disability combined with a disability from a subsequent injury to create a permanent and total disability.
Summary: The owner of an excavation company had impaired hearing and several preexisting physical injuries, including a hernia which was diagnosed but not treated. While driving a bulldozer over rough terrain, the owner injured his back. He underwent surgery. In the course of treating him for his back problems, his doctor diagnosed him with two hernias and he underwent surgery for the hernias. The owner eventually returned to work operating machinery and supervising his employees. Later, he injured his chest and shoulder while attempting to position a 115-pound battery in a piece of equipment. He stopped working after that injury. The owner sought workers’ compensation benefits for his back injury, hernias, and chest and shoulder injuries. He settled his claim with the company, but his claims against the second injury fund remained. The Missouri Court of Appeals held that he could be entitled to benefits from the second injury fund.
The Industrial Relations Commission denied the owner’s claim, finding that he was already permanently and totally disabled before his back injury. The court reversed the commission’s decision, finding that several of the factual findings underlying the decision were not supported by the evidence.
The medical evidence did not support a finding that the owner’s doctors told him to stop working before his back injury. Before the back injury, he resumed performing lifting, loading, and vehicle maintenance duties and operated heavy equipment. Even after his hernias, his doctor released him to return to his general activities. His doctors’ records did not show that the doctors believed he was completely and totally disabled before his back injury. The owner said he was not advised to stop working until after the back injury. The court said if a doctor advised him to stop working after the back injury, part of that consideration would have involved the restrictions resulting from the back injury.
Also, the court found that a vocational expert’s report did not show that the owner was unemployable in the open labor market before his back injury. The vocational expert’s opinion took into account the owner’s restrictions as a result of his back and shoulder injuries.
Employer Must Pay for Surgery It Didn’t Authorize
Downing v. McDonald’s Sirloin Stockade, No. SD32683 (Mo. Ct. App. 01/17/14)
Ruling: The Missouri Court of Appeals held that a waitress was entitled to an award for past medical expenses.
What it means: In Missouri, an employer must provide medical treatment as may reasonably be required after a worker’s injury to cure and relieve the effects of the injury.
Summary: A waitress had back pain. Later, she had a constant, sharp pain in her hip and leg and thought the pain was related to her work. The employer referred her to a surgeon, who ordered an MRI. A claims representative for the employer’s workers’ compensation insurer authorized payment for the MRI. The MRI revealed a herniated disk. The waitress requested permission to undergo surgery. The claims representative told the waitress the surgery was not authorized because the insurer needed more information. The waitress underwent surgery and filed a claim for compensation. The Missouri Court of Appeals held that she was entitled to an award for past medical expenses.
The court rejected the employer’s argument that it should not pay past medical benefits because the treatment was not authorized and the surgery was not needed on an emergency basis. The court explained that the surgery was performed by the employer-authorized treating doctor. The claims representative said that the surgery was not authorized because she needed additional time to make the decision whether to deny the claim.
The court found that the medical evidence showed the surgery was reasonable and necessary in light of the worker’s job-related condition. The employer never asserted that additional investigation would have changed that determination.
The court pointed out that the waitress notified the employer of her condition, and the claims representative and employer were notified of her need for surgery before the surgery.
Pot’s Legalization Will Test Liability Standards
Marijuana’s legalization will require a risk management response for a range of liability-related issues, from workers’ compensation defense to commercial general liability policy exclusions.
That is becoming clear in Colorado, one of two states that are now experimentation centers for how the nation — and the insurance industry along with it — will adapt to legalized pot.
With the Risk and Insurance Management Society soon headed to Denver for its annual conference, there is a lot of joking across the property/casualty industry about the legal access to marijuana in Colorado.
But by the time conference attendees arrive there they will find their industry is already in the midst of serious consideration over the range of marijuana-related insurance considerations.
Certain Colorado hotels, for instance, want to move into the bourgeoning marijuana tourism business and like other companies they need CGL policies. But some underwriters are looking to exclude “marijuana related activities” from their general liability coverage, said Vance O. Knapp, an attorney at Sherman & Howard L.L.C. in Denver.
Knapp, who represents hotels among other clients, is known for his expertise on marijuana and employer liability, and will be among speakers on the topic at the RIMS conference.
The property/casualty industry already has some expertise in underwriting marijuana business. I recall in 2010 writing about London insurers providing various policies for medical marijuana growers and retailers in California and other states.
But with pot recently legal in Colorado, Washington, and probably more states in the future, laws on related liability issues are just emerging.
One of the most closely watched cases on the topic so far involves Brandon Coats, a Colorado quadriplegic and licensed medical marijuana user fired in 2010 by Dish Network L.L.C. after he tested positive for use of the drug in violation of the employer’s policy.
In an April 2013 ruling, the Colorado Court of Appeals upheld Coats’ firing.
That case is now before Colorado’s Supreme Court.
Colorado’s high court will likely uphold that finding, Knapp says. But if the Supreme Court overturns the lower court ruling it would undermine employers’ zero-tolerance drug policies.
Those policies impact everything from worker safety and workers’ comp claims defense to employers’ third party liability.
Another threat comes from Colorado plaintiff attorneys’ desire for the state’s lawmakers to adopt a law so that employees can only be terminated or disciplined if their employer can show the employee is actually impaired or under the influence.
Impairment is a substantially different standard than testing positive for the drug’s use.
Knapp says there is potential for that issue to appear before Colorado’s legislature in the future because marijuana proponents are “very vocal” and it would be a “cash cow” for plaintiff attorneys bringing unlawful-termination lawsuits.
That too would impact a range of business liability exposures and is just one example of legal issues still to be settled, although some courts have already weighed the difference between being impaired by marijuana and merely testing positive for its presence in the body.
On February 27, for instance, the Supreme Court of Arkansas overturned lower court findings that two men who tested positive for marijuana use after a workplace accident could not pursue workers’ comp claims.
Flames engulfed the men using an acetylene torch to cut the top off a barrel that exploded. Testimony in the case focused on their pot use away from work and whether they appeared intoxicated on the job.
The Supreme Court eventually found that while the two tested positive for marijuana use they showed the accident was not occasioned by that use.
I suspect more states will either legalize marijuana for recreational consumption or adopt medical use laws that essentially make pot semi-legal. As that happens expect to see more courts tackle the extent of employer liability.