Adjuster X

Citizen Kane

By: | March 3, 2014 • 3 min read
This column is based on the experiences of a group of long-time claims adjusters. The situations they describe are real, but the names and key details are kept confidential. Michelle Kerr is the editor of this column and can be reached at [email protected]

Cynthia Kane, 58, allegedly suffered shortness of breath due to breathing in petroleum fumes over a prolonged period. Kane had already “lawyered up,” so a statement was out of the question. Her file during her 15 years with Union Manufacturing raised no suspicions. Kane was a nonsmoker, and she had never complained to the company nurse about pulmonary problems.

I arranged to tour Kane’s work location. It was separated from the machine shop, where the actual manufacturing took place, by a floor-to-ceiling wall with glass windows. The assembly area was not particularly dirty, and I verified that the HVAC system was up to specifications and maintained twice annually.

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Kane didn’t appear to be in any distress as she did her job.

Kane’s shift ended at 5 p.m., so I returned to the plant at 4:45 that afternoon and waited in the parking lot. I followed her as she made her way home in a fairly new two-door sports car. She stopped at a dry cleaner on the way. I parked and waited nearby for 10 minutes. When she didn’t come out, I decided to
go in.

This was a large operation with the cleaning machines in the back room. There were huge fans throughout the store, but even so there was an unmistakable kerosene-like smell from the solvents used in the dry cleaning process.

At the counter, I asked the clerk about dry-cleaning bedspreads while I strained to see into the back of the store. It was evident Kane was working.

I scratched my head. Why didn’t her attorneys name the shop as a co-defendant on the claims petition? It had far greater pulmonary exposure to airborne contaminants than Union Manufacturing.

The next day, I went back to the dry cleaner and asked to speak with Kane. The flustered counter person said they had no employee by that name. I went back to the dry cleaners three more times during the next two weeks, and each time, I saw Kane’s car there.

I arranged to have a disability evaluation by a pulmonologist, who confirmed that Kane had a mild pulmonary disability (5 percent PPD rating). After reading my report, the doctor concluded the condition was not due to her work at Union Manufacturing. Kane’s attorney had a disability report rating Kane at 25 percent PPD.

I couldn’t fault Kane for wanting a part-time job to help pay for living expenses (and her sports car), but she left me no choice but to deny the claim against Union.

I called her counsel and explained that we’d have to go to trial. He was incredulous, until I explained my findings.

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“Your client didn’t tell you about her ‘under the table’ deal at Salerno’s Dry Cleaning, did she?” I asked him. “I personally observed her working there on three different occasions, and noted the smell of the dry cleaning solvent was very strong.

“I am willing to bet that exposure is the proximate cause of any pulmonary disability she has, rather than from a clean and temperature-controlled environment at Union Manufacturing Co. My examining physician agrees.”

The attorney reluctantly agreed to withdraw the petition. Kane continued to work at Union, and whether she kept her night job at the dry cleaner wasn’t my concern. A good investigation paid off and the claim against Union Manufacturing hit a snag.

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View From the Bench

Workers’ Comp Docket

Significant workers' comp legal decisions from around the country.
By: | September 23, 2016 • 10 min read
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Operator Wins Benefits for Guillain-Barre Syndrome From Flu Shot

Phillips v. Wyman Gordon Pennsylvania, 31 PAWCLR 128 (Pa. W.C.A.B. 2016)

Ruling: The Pennsylvania Workers’ Compensation Appeals Board affirmed the workers’ compensation judge’s decision awarding benefits to a worker, who alleged that he contracted Guillain-Barre syndrome after receiving a flu shot at work.

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What it means: In Pennsylvania, a worker’s act of receiving a flu shot at work arises in the course and scope of his employment even though the shot is voluntary and he receives no benefit or penalty from the employer for receiving or refusing the shot.

Summary: The board affirmed the WCJ’s decision awarding benefits to a machine operator who alleged he contracted Guillain-Barre syndrome after receiving a flu shot at work.

The treating doctor testified that the operator’s condition was caused by the flu shot he got at work because there were no other potential causes identified and that GBS is one of the risk factors of a flu shot. This testimony constituted sufficient support for a finding that the operator’s GBS was caused by his flu shot.

Furthermore, the board found no error in the WCJ’s finding that the operator was in the course and scope of his employment when he was vaccinated at work. By opting to receive the flu shot that the employer made available, the operator was acting in furtherance of the employer’s business and affairs.

Despite the employer’s assertion that the operator’s decision to receive the flu shot was voluntary and that no employee received either a benefit or penalty for either receiving the shot or refusing it, it was clearly in the employer’s best interest to have its employees vaccinated.

By offering flu shots to its employees, the employer was attempting to ensure that there would be a sufficient number of healthy employees able to work and maintain production during flu season. Accordingly, the operator was within the course and scope of his employment when he was vaccinated at work.

Bystander Emotional Injury Claim Barred by Exclusive Remedy Provision

Velecela v. All Habitat Services, LLC, No. SC 19589 (Conn. 08/09/16)

Ruling: The Connecticut Supreme Court held that a suit brought by the wife of a deceased worker for bystander emotional distress was barred by the exclusive remedy provision of the workers’ compensation law.

What it means: In Connecticut, a suit against an employer for bystander emotional distress is barred by the exclusive remedy provision.

Summary: A worker for All Habitat Services was repairing an all-terrain vehicle that was elevated on a lift. During the repair, the vehicle slipped off the lift, crushing and killing him. The worker’s wife arrived to bring him lunch, and she discovered his body under the vehicle.

The wife received workers’ compensation survivor benefits. The wife also sued All Habitat, claiming bystander emotional distress. The Connecticut Supreme Court held that the wife’s suit was barred by the exclusive remedy provision of the workers’ compensation law.

The court explained that the language of the exclusive remedy provision is broad, abolishing “all rights and claims” that fall under the workers’ compensation law, including any rights and claims of workers’ dependents.

The court also noted that emotional distress, by itself, is not a bodily injury, so it can be compensable only if it flows from the bodily injury of another person. Bystander emotional distress results from and arises out of the underlying personal injury or death. When that personal injury or death is compensable under workers’ compensation, an action for bystander emotional distress is barred by the exclusive remedy provision.

Here, it was undisputed that the worker’s injuries and death arose out of and in the course of his employment and were compensable under workers’ compensation, and the wife’s alleged emotional injuries derived from and were caused by those injuries and death. Therefore, the wife’s claim was barred.

A concurring judge pointed out that a claim for a bystander emotional injury would be compensable if the underlying injury fell within an exception to the exclusivity provision.

Worker’s ‘Income Producing’ Activities Support Finding of Overpayment

State ex rel. Perez v. Industrial Commission of Ohio, No. 2015-0532 (Ohio 07/26/16)

Ruling: The Ohio Supreme Court held that a worker received an overpayment of temporary total disability benefits and that he fraudulently misrepresented that he was not working.

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What it means: In Ohio, a finding that a worker committed fraud is proper when he misrepresented to the Industrial Commission that he was not working and was not forthcoming with his physicians about his activities.

Summary: A construction worker sustained a work-related injury and was awarded temporary total disability compensation. The worker had also owned and operated an auto repair business. The Bureau of Workers’ Compensation received information that the worker was operating his business while receiving TTD benefits.

During an investigation, the worker was observed performing auto work and meeting customers. Witnesses stated that the worker handled scheduling, diagnosed car problems, received payments, and picked up parts from an auto parts store. The Ohio Supreme Court held that the worker received an overpayment of TTD benefits and that he fraudulently misrepresented that he was not working.

The court rejected the worker’s argument that his business activities were unpaid and minimal and did not directly produce income for the business. The court concluded he was engaged in “more than minimal activities that were income-producing” for the business. Also, the court noted that during the relevant time period, he purchased more than $43,000 in auto parts, an amount that indicated that they were not merely for personal use.

The court also found that the evidence supported a finding of fraud. The worker misrepresented to the Industrial Commission on multiple occasions that he was not working. Also, he was not forthcoming to physicians about his activities with his business.

Psychological Condition Was Reasonably Contemplated at Time of Settlement

Ryan v. Potlach Corp., No. A15-1404 (Minn. 07/13/16)

Ruling: The Minnesota Supreme Court held that a worker had to bring a motion to set aside her settlement agreement with her employer before she could proceed with a claim for a psychological condition.

What it means: In Minnesota, a workers’ compensation settlement agreement can close out the work-related injury that is the subject of the agreement and also conditions and complications that arise from the injury and are within the reasonable contemplation of the parties at the time of the settlement agreement.

Summary: A worker injured her back while working for Potlach Corp. She and Potlach entered into a settlement agreement that provided for a full, final, and complete settlement of her workers’ compensation claims, excluding future reasonable and necessary medical treatment, in return for a lump-sum payment.

Later, the worker filed a claim for a consequential psychological injury. The Minnesota Supreme Court held that she had to bring a motion to set aside the settlement agreement before she could proceed with her claim for a psychological condition.

The court found that a workers’ compensation settlement agreement can close out the injury that is the subject of the agreement and also conditions and complications arising out of the injury. It is not necessary that the condition or complication be specifically referenced in the settlement agreement. The agreement must resolve any conditions or complications that arise out of the injury that were reasonable within the contemplation of the parties at the time of the agreement.

Here, the court rejected the worker’s argument that her depression was a new condition not within the contemplation of the parties at the time of the agreement. The court explained that her depression was a psychological condition that arose out of and was a consequence of her workers’ compensation injury, and therefore, it fell within the scope of the agreement. The court also pointed out that depression can arise from the pain and loss of function associated with a chronic back condition.

Dispute Over Timing of Termination Revives Mine Worker’s Retaliation Claim

Foster v. Mountain Coal Co., LLC, et al., No. 15-1025 (10th Cir. 07/26/16)

Ruling: The 10th U.S. Circuit Court of Appeals reversed and remanded a District Court decision granting summary judgment to an employer on a worker’s Americans with Disabilities Act claim. The 10th Circuit held that triable issues existed regarding the worker’s retaliation claim.

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What it means: A worker who alleged he was terminated within hours of requesting an accommodation sufficiently showed causation for an ADA retaliation claim.

Summary: A worker for Mountain Coal Co. injured his neck at work and went to the emergency room. The ER doctor completed a return-to-work slip, but the company refused to accept it because it was not on the company’s form. The worker had his primary doctor complete the form, and he said he dropped it off at human resources. HR said they never received it, and the company accused him of lying. He later dropped off another form signed by his primary doctor.

At a meeting one week later, the worker was suspended. He claimed that he was suspended because he had his primary doctor complete the form even though he had not treated the worker’s neck injury. He told his supervisors that he was going to schedule surgery for his neck.

A week later, he received a letter terminating him effective a few days earlier, allegedly for lying about having dropped off the first note. The letter was written the same day he told another supervisor over the phone that he was going to have surgery. The parties disputed whether the decision to terminate him was made before or after the phone call.

The worker sued, claiming that his statements, once at the meeting and once over the phone, that he was going to have surgery were requests for accommodation and that he was terminated in retaliation for making them. The 10th Circuit held that there were triable issues regarding his claim.

The company argued that the worker’s alleged requests for accommodation were not specific enough to constitute protected activity. The court disagreed, concluding that a reasonable jury could interpret his statements that he was going to need surgery as adequate requests for accommodation.

The company contended that even assuming the requests were adequate the worker could not show causation. The court explained that where the protected activity “is closely followed by an adverse employment action” a worker can rely solely on temporal proximity to show causation.

Here, the court concluded that “because the purported protected activity occurred mere days or even hours before the adverse employment action” the worker sufficiently showed causation.

Furthermore, the parties disputed the reasons for the suspension and termination. The court concluded that if a jury credited the worker’s account — that he was suspended for one reason and terminated for another — then it could find that these inconsistent reasons were sufficient to show pretext.

Worker’s Volunteer Work Falls Outside Scope of Employment

Gray v. Bank of America, 24 ILWCLB 102 (Ill. W.C. Comm. 2016)

Ruling: The Illinois Workers’ Compensation Commission held that a worker’s accidental injury while performing volunteer work at a community event did not occur in the course of her employment even though she cochaired the employer’s community volunteer team.

What it means: In Illinois, where a worker is not paid extra for her work as cochair on her employer’s community volunteer team, her performance reviews are not tied to her volunteer participation, and her volunteer work is not ordered or assigned by the employer, the worker’s injury while participating in a volunteer event does not occur in the course of her employment.

Summary: A project manager for Bank of America was also the cochair of the bank’s community volunteer team. As such, she was responsible for establishing relationships between the bank and the community, including nonprofits as well as different lines of businesses within the bank.

She was reimbursed as part of her salary for the services she performed as cochair of the community volunteer team, but her salary stayed the same regardless of whether she volunteered. The manager was at an event organized by the Girl Scouts of America that bank volunteers were encouraged to attend. While at the event, the manager fell and broke her leg.

The arbitrator found the evidence was insufficient to show that the manager’s injury occurred from an activity that was compulsory or occurred in the course of her employment. The arbitrator noted that the manager was not ordered or assigned to participate in any volunteer program or activity by the bank. Rather, her participation at the event was purely under her own volition and not mandated by the bank.

The arbitrator agreed that the bank encouraged its employees to volunteer in the community, and the bank derived a benefit from employee attendance at community events. However, the manager was not paid extra for her participation, and her performance reviews were not tied to her volunteer participation.

Also, the Girl Scouts event was not sponsored by the bank. The fact that the bank’s corporate presence in the community may have resulted in some benefit incidental to its actual business of banking was too tenuous and intangible to be persuasive in this case. Also, bank employees could choose not to participate in the volunteer networks without negative effect at work. The commission affirmed and adopted the decision of the arbitrator.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]
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Sponsored: Liberty Mutual Insurance

Using Data to Get Through Hail and Back

Commercial property owners must take action to mitigate the risk of hail-related damage.
By: | September 14, 2016 • 6 min read

4,600 hailstorms have rained down on the U.S. as of the end of July according to the National Oceanic and Atmospheric Administration. And these storms have left damage behind, cracking unprotected skylights, damaging exterior siding, dimpling rooftops and destroying HVAC systems.

While storm frequency is almost on par with last year’s 5,400, the rest of the picture isn’t quite the same. For example, the hail zone seems to be shifting south. San Antonio, Texas, a “moderate” hazard hail zone area, typically sees four or five hail storms a year, on average.  Year to date, more than 30 storms have been reported. Overall, Texas has suffered nearly 20 percent of all hail storms this year.

Liberty Mutual’s Ralph Tiede discusses the risk hail poses to large commercial property owners.

The resulting damage is different too, with air conditioning (AC) units accounting for more than a third of the insurance industry’s losses, a greater proportion than in previous years.  “In some cases, we’ve seen properties that sustained no roof damage but had heavily damaged AC systems. This may be a result of smaller hail stone size coupled with high winds,” noted Ralph Tiede, Vice President of Commercial Insurance and Manager of Property Risk Engineering at Liberty Mutual.

Despite the shifting trends, however, these losses are largely preventable if commercial property owners understand their exposures and take steps to mitigate them. By partnering with the right insurer, a company can gain access to the industry-leading resources and expertise to make it happen.

Understanding the Risk through Data

A property owner might know that his property is located in an area prone to hail, but could underestimate the extent of damage a storm could cause. Exposed skylights, solar panels, satellite dishes and other roof-mounted equipment can translate to serious losses.

Three trends that have emerged this hail season.

This is where Liberty Mutual’s property loss control engineers offer critical guidance for customers with large property exposures.

“Our property loss control engineers go out and inspect locations to develop loss estimates,” said Tiede. “They’re looking at the age and condition of the roof, the material it’s made of, and whether equipment is exposed or if there are adequate safeguards in place.”

Liberty Mutual can combine this detail with the hail data it has collected for more than 14 years and use this extensive library to help customers understand their exposures. The company’s proprietary hail tool looks at customer-specific factors, such as roof type, age, condition and geocodes, to better identify potential losses from hail. The tool provides a more detailed view of hail exposure on a micro level, as opposed to more traditional macro views based on zip codes.

“This way, we’re not just looking at a location’s exposure, we’re looking at an account’s cumulative hail exposure and providing a better understanding of where the risk is concentrated,” Tiede said.

Having a good understanding of a company’s specific exposure helps the broker, buyer, and insurer develop an effective insurance program. “Two customers may be in the same area, but if one’s building has a hail resistant roof, protected skylights, and hail guards for HVAC equipment and the other’s has unprotected sky lights and no hail guards or screens on rooftop equipment, they are going to have different levels of exposure. In both scenarios, we can design an insurance program that fits the customer’s situation and helps control the total cost of property risk,” said Brent Chambers, Underwriting Consultant for National Insurance Property at Liberty Mutual.

A Liberty Mutual property loss control engineer consults with the customer on ways to reduce or mitigate the exposure from hail so that the customer can make an informed decision as to where to deploy capital. “It’s not just about protecting a building’s roof and rooftop equipment.  Roof damage can lead to extensive water damage inside a building and in some cases disrupt service, both of which can be costly for a business. By focusing on locations with the most exposure, a risk manager is better able to mitigate future losses,” said Tiede.

Actions commercial property owners can take to mitigate the risk of hail-related damage.

Liberty Mutual property loss control engineers also provide recommendations specific to each location. “We know that hail guards work, so we encourage clients to use those to protect HVAC equipment,” said Ronnie Smith, Senior Account Engineer for National Insurance Property at Liberty Mutual. “Condenser coils in air conditioning systems are fragile and easily damaged, and units don’t necessarily come with built-in protection. It’s important for property owners to take this step proactively to prevent a loss.”

The average cost to fix a condenser coil is $500, but replacing a coil can run at least $500 per ton of cooling, a measurement of air conditioning capacity that refers to the amount of heat needed to melt a ton of ice over a 24-hour period. As one ton of cooling typically covers about 250 square feet of interior space, replacement costs can quickly add up.

Replacing an entire AC unit can run more than $1,000 per ton of cooling. In a 250,000 square foot property, the replacement could easily reach $1 million. Given the increase in hail-related AC damage this year, these are numbers worth knowing.

Other risk mitigation recommendations include regular roof maintenance, such as inspections and repairs to small damages like blisters and installing protective screens over skylights.

“If a roof needs replacing, we also suggest using materials that have been tested and approved by an independent certification laboratory and are durable enough to fit the location’s exposures,” Tiede said. “The last thing a commercial property owner wants is to replace a roof again six months after it’s installed. Experience has shown that ballasted-type roofs are the most resistant to hail damage.”

Using Data to Develop Solutions

When a property owner has an understanding of the size of its exposure and potential losses, it is better able to work with its agent or broker and insurer to develop an insurance program to manage and mitigate potential risks.

“The data and advice we provide help clients focus on the largest risks and better mitigate that exposure,” Smith said. “The more data you have, the more you can understand your risk on a granular level and manage it.”

This data-driven approach to preparedness makes Liberty particularly well-suited to serve large commercial properties with multiple locations in high risk areas.

Prices for roof and air conditioning repairs and replacements have risen over last year, Tiede said, and are likely to grow more expensive as older equipment becomes obsolete. Property owners will be forced to buy newer, pricier replacements than perhaps they had originally planned for.

And if this year’s storm trends are any indication, hail is sometimes an unpredictable foe.

Amidst these shifting trends, the value of an insurer’s expertise in identifying, mitigating and managing hail exposure will be immeasurable to large commercial property owners.

For more information about Liberty Mutual’s commercial property coverage, visit https://business.libertymutualgroup.com/business-insurance.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.

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Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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