State News

We always knew she was special

A long-time friend of this firm, Machelle Davidson, a senior claim representative at Accident Fund, has been named a 2023 recipient of AF Group’s Legend Award. 

In announcing the award, AF Group explained that the award recognizes AF Group  teammates who demonstrate its People First culture through their outstanding character, leadership, and commitment to excellence. Lisa Corless, president and CEO of AF Group, said that “each of our winners is an absolute shining example of who we are as a People First, values-driven organization  . . . We’re all made better by having them as part of our team.” 
                                        
We could not have said it better. Congratulations, Machelle! 
 

Copyright 2023, Stone Loughlin & Swanson, LLP

The Court didn't fall for his argument

A worker in Austin, Texas lost his bid to carve out an exception to the exclusive remedy of the Texas Workers’ Compensation Act on the ground that, at the time of his injury, he was performing duties outside of the course and scope of his employment. 

Melvin Gonzalez worked as a car detailer and porter for Dynamic Motors, a used car dealership and service garage whose advertising catchphrase is “Don’t Panic. GO DYNAMIC!” The service manager asked him to help with repairs on the roof, and while doing so Gonzalez stepped through a skylight and fell 20 feet to the concrete floor below. 

Dynamic filed a report of injury with its workers’ compensation insurance carrier and Gonzalez accepted workers’ compensation insurance benefits. He then sued Dynamic, alleging that the company was negligent in failing to provide fall protection. 

Dynamic asserted the affirmative defense that workers’ compensation insurance benefits were Gonzalez’ exclusive remedy, and the trial court agreed. On appeal, Gonzalez argued that because roof repairs are not part of Dynamic’s business, and because he was injured while performing such repairs, he was not engaged in the usual course and scope of Dynamic’s business and was, therefore, not an “employee,” as that term is defined by the Texas Worker’s Compensation Act, at the time of the injury. The Austin court of appeals disagreed and said that the Act does not contemplate a “task-by-task” approach to the issue of whether a worker is injured in the course and scope of employment. 

You can read the decision here.

Copyright 2023, Stone Loughlin & Swanson, LLP 

Supreme confusion: Is Change Afoot for SIBs? Or not?

In our August newsletter, we reported optimism that the Texas Department of Insurance, Division of Workers’ Compensation may begin requiring applicants for Supplemental Income Benefits to provide material evidence of job applications they have submitted in their search for work. Two conflicting developments this month have heightened the intrigue. 

Our Optimism in August

The source of our optimism in August was a memo to stakeholders from General Counsel Kara Mace enclosing proposed changes to the DWC Form-052, Supplemental Income Benefits Application. The proposed revision included an FAQ page with the following guidance for applicants looking for work on their own:
 

Show you were actively looking for a job by attaching job applications or other documents showing you were looking for a job.

Was our optimism justified?

The first development this month buoyed our optimism – it was the Division’s filing of a legal brief in the Supreme Court of Texas in the long-running litigation over the validity of the SIBs rule. As we have reported, on behalf of our client, Accident Fund Insurance Company of America, we challenged the rule as facially invalid because, among other things, it allows the Division to award SIBs to claimants who purport to be looking for work on their own but who do not document an active work search with job applications submitted as required by the Texas Workers’ Compensation Act. A Travis County district court agreed that the rule is invalid and enjoined the Division from applying it, but the Division appealed that ruling and then the Austin court of appeals muddied the water by affirming in part and reversing in part. Accident Fund now has filed a petition for review by the Supreme Court of Texas in an attempt to obtain clarity. On October 6, the Division, represented by the Attorney General, filed a response to the petition. When describing applications for SIBs filed by workers who purport to be looking for work on their own, the Division made this representation to the court:
 

The Division requires injured workers independently looking for work to document their searches by job applications. If the worker submits an online or hard-copy written application, a copy must be provided to the Division with the worker’s SIBs application.

See page 19 of Division’s Response to Petitions for Review in Accident Fund Insurance Company of America and Texas Cotton Ginners’ Trust v. Texas Department of Insurance, Division of Workers’ Compensation, Cause No. 23-0273, which is available for review and downloading here.

This representation by the Division seems to confirm that change is afoot because the position it is taking now certainly is not the position it has taken in the past. Indeed, one of the reasons that Accident Fund challenged the validity of the SIBs rule in the first place is that the Division historically has not required SIBs recipients to provide copies of job applications they claim to have submitted to employers – instead, it has merely asked them to check boxes and fill in blanks on the Form DWC-052 (Application for Supplemental Income Benefits) describing actions they have taken.
 

Or is it situation normal?

But the second development this month has clouded the picture. On October 13, we received a decision from a contested case hearing that directly contradicts the Division’s representations to the state’s highest court. In that contested case hearing, in which the issue was entitlement to SIBs, we argued that the worker was not entitled to SIBs because she had not provided copies of job applications that she claimed she had submitted to employers. The Administrative Law Judge dismissed that argument and ordered payment of SIBs. In her decision, she wrote:

The insurance carrier questioned the claimant’s credibility because she did not provide any documentary evidence of the applications or emails she sent to the companies listed. The insurance carrier also contended that the claimant did not make an active effort to obtain employment. The insurance carrier’s argument was considered, but it was not persuasive.

Based on a careful review of the evidence presented, the claimant met her burden of proof to establish that she demonstrated an active effort to obtain employment. The claimant performed three work search contacts each week of the qualifying periods. Accordingly, the claimant is entitled to supplemental income benefits for the third and fourth quarters.

So we have to ask – have Division ALJs not gotten the memo that the Division’s position has changed? Or was the Division’s representation to the state’s highest court incorrect?

Copyright 2023, Stone Loughlin & Swanson, LLP 

Now you tell me!

If you are a regular reader of our newsletter, you know that there was a challenge pending in the 13th Court of Appeals to the old Seabolt standard for determining entitlement to Lifetime Income Benefits.  The challenge boils down to whether “total loss of use” of a body part as stated in the current LIBs statute really means “total” and whether loss of use under the current LIBs statute means loss of function as a member of the body, or loss of function in regard to employability. At the Zoom trial held in this case, the trial court judge determined that the old standard still applied and that the worker could not work using his hand, despite the video evidence that showed the worker using his hand while working for himself. Well, lo and behold, well after the fact and during the course of the carrier’s appeal to the 13th Court of Appeals, SLS received an anonymous letter in the mail.  We will leave you to wonder what the letter said, but it did mention in closing that SLS did a good job at the trial, which was a nice compliment having nothing to do with the merits of the case. Given that the trial was held by Zoom with limited participants, we wonder how the writer of the letter knew so much!

In the meantime, the 13th Court of Appeals issued a Memorandum opinion on October 12, 2023 dodging the legal issue it was asked to address, and holding that “the doctrine of vertical stare decises” required the Court to follow the precedent of the Texas Supreme Court as established law affirming the use of the Seabolt standard to new law cases.  However, the precedents the Court cited were not cases where any party directly challenged the Seabolt standard itself. The cases merely applied that standard.  No challenge was made in those cases on the basis that under the current LIBs statute employability is not relevant to the application of the statutory language of “total loss of use.” The LIBs statute contains no qualifier indicating that employability is determinative of entitlement.  The Court of Appeals case is not yet final.
 

You can read the decision here. 
 

Copyright 2023, Stone Loughlin & Swanson, LLP

Former Division ALJ starts mediation practice

Another long-time friend of this firm, Jacquelyn Coleman, recently retired from the Division after serving for 16 years as an ALJ and has started her own mediation practice. While she normally conducts mediations by Zoom, she can perform in-person mediations with advance notice. 

You can learn more about Ms. Coleman and her mediation services on her website at jdcmediation.com.

We wish you well in your new endeavor, Jacquelyn!

Copyright 2023, Stone Loughlin & Swanson, LLP

The retail sale of psilocybin, better known as “magic mushrooms”, has recently received extensive media coverage. Employers across Canada are increasingly wondering how to address the use or simple possession of psilocybin in the workplace. This article answers five recurring questions.

Current situation

Long used by aficionados for their supposed mind-sharpening and other properties, magic mushrooms seem to have sprung out of Canada’s back alleys in recent years.
In Ontario, at least one storefront retailer has set up shop in Ottawa. In Québec, a similar Montréal business received extensive media coverage when it became the target of repeated police searches within hours of opening in summer 2023. Online, the sale of psilocybin for recreational use or micro dosing – low-dose self-medication – is reportedly surging.

While it is illegal to sell, buy or possess psilocybin in Canada, the substance appears to be gaining in popularity. It has even been spotted on billboards in some Canadian cities. As we’ve seen with cannabis, which was normalized before becoming legal, some employees may now wrongly believe that they can legally use or possess magic mushrooms – even in the workplace.

Employer questions about a mushrooming phenomenon

For Canadian employers, it can be difficult to get a good handle on the impact of rising magic mushroom use, let alone detect it. To help, we have compiled five questions to get you on the right track.

1. What are the effects of psilocybin use? 

Magic mushrooms have a chemical composition similar to serotonin, one of our feel-good hormones. They also have hallucinogenic properties.

Health Canada lists a number of effects related to psilocybin use. In the short term, it can cause euphoria and uncontrollable laughter. But it can also cause hallucinations, fear and paranoia. Someone who has taken magic mushrooms may appear confused or disoriented or experience panic attacks.¹

The effects generally appear within 15 to 45 minutes of ingestion and last for four to six hours.

Magic mushrooms are usually ingested in solid form (as a tablet or dried and ground up) or infused to make a tea. When in powder form, they can also be snorted. They should never be injected. Doing so can result in a serious medical emergency, since it can cause septic shock and multi-system organ failure.

2. What signs of psilocybin use can be detected in the workplace?

Along with the mood-altering and cognitive effects described above, the physical effects can include light-headedness, spasms or convulsions, sweating, numbness, pupil dilation, loss of coordination and even loss of urinary control. However, these signs are not necessarily specific to psilocybin use.

These effects mean that magic mushroom use is not readily compatible with many jobs, particularly high-risk trades that involve operating precision tools, working at heights or driving motorized vehicles.

No two doses are the same. There are different species of magic mushroom, and effects can even vary between two mushrooms of the same species. Consequently, users cannot easily anticipate the effects based on the dose ingested. Given its long-lasting effects, psilocybin could interfere with an employee’s performance even when taken outside work hours.

In addition, severe intoxication can result from accidentally consuming magic mushroom look-alikes.

No studies have evaluated the long-term effects of extended magic mushroom use. Currently, there is little evidence that consuming hallucinogenic mushrooms can cause physical dependence, but continued use could result in psychological dependence. Many users appear to develop a tolerance to the drug and ramp up consumption to achieve the desired effect.

In contrast, micro dosing involves taking small quantities (about 100 mg, or one tenth of a normal dose) every few days. According to micro dosing proponents, this is not enough to produce the common psychoactive effects, but it does help reduce symptoms of anxiety and depression.

3. How can employers recognize psilocybin products?

These products are typically sold as dried mushrooms. However, since they are consumed in different ways, possession may be hard to detect in the workplace. For example, they can be infused in honey, oil or tea or used as an ingredient in risotto.

4. Does psilocybin have therapeutic effects?

While psilocybin has long been consumed recreationally, its therapeutic use is currently being studied to properly evaluate its potential as a partial treatment for addiction, depression and post-traumatic stress. Clinical trials of such psychedelic-assisted psychotherapies have only been authorized in Canada for a few years and are carried out under strict supervision.

It is therefore not impossible for an employee to be consuming psilocybin as part of a research study into its medical uses.

5. How should employers react to psilocybin’s growing popularity?

To proactively manage the rise of magic mushrooms on the Canadian market, we strongly recommend that employers review their policies on drugs, alcohol and other substances to ensure that workplace possession, use and sale are clearly prohibited. This should apply so long as the substance remains illegal.

Currently, the cultivation, production, possession, purchase and sale of magic mushrooms are illegal. Employers must therefore ensure that employees do not bring such products into the workplace, even if they have no intention of consuming them there.

Employer policies should require any employee or self-employed worker with a medical prescription for psilocybin or cannabis to advise their human resources department as soon as possible. The employer should in turn seek the advice of a health professional to determine whether this substance use is compatible with the employee’s duties. As necessary, the employer could then work with the prescribing professional to prevent the dosage regimen from interfering with work. The employer should also make sure that it poses no risk to the health and safety of the employee or the people around them.

Contact us

If you have any questions regarding this article or how to manage psychoactive substances in the workplace, please do not hesitate to reach out to the author or any member of our Labor and Employment Group.

The Claimant/Appellant, Barry Mullins, was diagnosed with ocular melanoma in 2010 and passed away in 2021. Claimant was awarded a disability pension as a result. Claimant’s widow, Melissa Mullins, filed a Petition with the Industrial Accident Board on April 22, 2022, seeking workers’ compensation survivor benefits, based upon the City of Wilmington Pension Code. An Industrial Accident Board Hearing took place on December 8, 2022, where Employer argued benefits paid through the City of Wilmington Pension Code did not constitute or establish liability for Workers’ Compensation benefits relating to an occupational disease. The Board ultimately found the Claimant had failed to prove entitlement to workers’ compensation benefits in relation to his death from ocular melanoma.  

The Claimant then appealed this Decision to the Superior Court. It was the Claimant’s position that the City “acknowledged” the claimant’s injury by paying a disability pension to the Claimant’s widow, claiming the presumption of a work-related condition was unrebutted as a result. It was the Employer’s position that the cause of the Claimant’s condition was not related to his employment with the City. The Employer further argued that payment to the Claimant’s widow through the Pension Code is independent from any payment under the Workers’ Compensation Act.

The Superior Court agreed with the Board Decision. Establishing causation of a work-related occupational disease requires evidence “the employer’s working conditions produced the ailment as a natural incident of the employee’s occupation in such a manner as to attach to that occupation a hazard distinct from and greater than the hazard attending employment in general.” The Superior Court ruled payments under the Pension Code do not in turn make the City liable for causation under the Workers’ Compensation Act, as a finding of causation requires claimants to meet the burden established in the Act. The Court noted this was consistent with comments made in a prior Board Decision (Armstead v. City of Wilmington, IAB No. 1485578, May 6, 2021), in which the Board noted the standard under the Pension Code does not translate to the causation standard in the Workers’ Compensation Act.

Should you have any questions regarding this decision, please contact Nick Bittner or any other attorney in our Workers’ Compensation Department.

BARRY MULLINS v. CITY OF WILMINGTON, N23A-01-004 CLS (August 18, 2023).

There are many sections of the Workers’ Compensation Act that may subject employers/carriers to fines, as follows:

·      19 Del. C. §2313 – Where an employer or insurance carrier fails within 10 days after knowledge of the occurrence of an accident resulting in personal injury to file a First Report of Injury, the employer may be fined between $100.00-$250.00. Reports made under this section are not admissible in evidence against the employer.

·      19 Del. C. §2320(8) – “Costs legally incurred may be taxed against either party or apportioned between the parties at the sound discretion of the Board, as the justice of the case may require.”

·      19 Del. C. §2322E(d) – Within 14 days of the issuance of an Agreement for any period of total disability, the employer shall provide to the health care provider/physician most responsible for the treatment of the employee’s work-related injury and to the employer’s insurance carrier, if applicable, a report of modified duty jobs which may be available to the employee. The insurance carrier for an insured employer shall send to such employer the aforementioned report for completion, and shall be independently responsible for providing a completed report of modified duty jobs to the health care provider/physician. 19 Del. C. 2322F(g) provides for fines of between $1,000.00-$5,000.00.

·      19 Del. C. §2322F(h) - An employer or insurance carrier shall be required to pay a health care invoice within 30 days of receipt of the invoice as long as the claim contains substantially all the required data elements necessary to adjudicate the invoice, unless the invoice is contested in good faith. If the contested invoice pertains to an acknowledged compensable claim and the denial is based upon compliance with the health care payment system and/or health care practice guidelines, it shall be referred to utilization review. Any such referral to utilization review shall be made within 15 days of denial. Unpaid invoices shall incur interest at a rate of 1% per month payable to the provider. 19 Del. C. §2322F(g) allows for fines of between $1,000.00-$5,000.00.

·      19 Del. C. §2346 – The Board may impose a fine not to exceed $500.00 for each use of the term “independent medical examination” or “IME”.

·      19 Del. C. §2362 – Requires payment of final Board Awards and settlement agreements within 14 days, and permits fines of between $500.00-$2,500.00 for non-compliance.

·      Huffman – If a Board Award or Agreement between the parties is not paid within 30 days of a final Award or Agreement, claimant can assert a Huffman demand under the Wage Payment Collections Act. If not paid within 30 days of the demand, Huffman sanctions/penalties include a liquidated damage payment of 10% per day of the outstanding balance up to 100% liquidated damages, costs of any filing (Superior Court Complaint) and a claimant’s attorney’s fee (rate of whatever is reasonable -- could be +/- $300.00 per hour). This is in addition to any other penalties otherwise available under the Workers’ Compensation Act.

·      19 Del. C. §2365 retaliation – fines of between $500.00-$3,000.00.

·      19 Del. C. §2374 – minimum of $250.00 per day or $10.00 per employee, whichever is greater, for the time period no workers’ compensation insurance policy is in effect.

·      19 Del. C. §2386 – whenever an insurance company or self-insurer violates this chapter, neglects or refuses to comply with this chapter, or willfully makes any false or fraudulent statement of its business or condition or a false or fraudulent return, it shall be fined between $100.00-$1,000.00 per offense.



Should you have any questions, please contact any attorney in our Workers’ Compensation Department. 

The Lead Case in the Air Ambulance Litigation Comes in for a Landing

Travis County District Court Judge Madeleine Connor signed a judgment in favor of the insurance carriers in the PHI Air Medical Case on August 8, 2023.  PHI Air Medical had until September 7, 2023 to appeal Judge Connor’s decision to the court of appeals but did not do so, making her decision final.  Judge Connor found that PHI Air Medical did not timely file its petition for judicial review challenging SOAH’s decision awarding payment of 149% of the Medicare rate and agreed with the carriers that 149% of the Medicare rate exceeds the Workers’ Compensation Act’s fair and reasonable reimbursement standards for the 33 fee disputes at issue in the case.  
  
The PHI case began at the State Office of Administrative Hearings (SOAH) in 2015 when Administrative Law Judge Craig Bennett consolidated the 33 fee disputes involving eight carriers consisting of Texas Mutual Insurance Company, Hartford Underwriters Insurance Company, TASB Risk Management Fund, Transportation Insurance Company, Truck Insurance Exchange, Twin City Fire Insurance Company, Valley Forge Insurance Company, and Zenith Insurance Company.

The PHI case went all the way to the Texas Supreme Court which ruled in favor of the carriers.  PHI petitioned the U.S. Supreme Court for review but it declined to hear the case.  The case then went back to the court of appeals for a second decision before heading back down to the trial court where the carriers filed a motion for summary judgment.  Because PHI did not appeal Judge Connor’s order granting summary judgment for the carriers, the PHI case will now be remanded to SOAH for further proceedings consistent with Judge Connor’s final judgment.    

The rest of the air ambulance disputes at SOAH and DWC have been abated while the PHI case proceeded.  However, Air Evac, another air ambulance provider, recently filed a motion to lift the abatement of its cases at SOAH so that it could brief how a 2018 injunction that it obtained applies to its cases at SOAH.  The injunction states that DWC is “enjoined from enforcing Texas Labor Code § 413.011 and 28 Texas Administrative Code against Plaintiff Air Evac EMS, Inc.”  The parties filed a proposed briefing schedule on September 15, 2023 which the ALJ has not yet ruled upon.

As of August 2023, there are 2,414 air ambulance disputes pending at DWC.  This figure does not include the air ambulance fee disputes pending at SOAH.  The average amount sought by the air ambulance provider in each case at DWC is estimated to be at least $50,000, which is the difference between what the air ambulance provider was paid by the carrier and its unregulated billed charges.  This makes the total amount sought by the air ambulance providers in the disputes at DWC over one hundred and twenty million dollars plus interest.    

There are five air ambulance providers that comprise the vast majority of the air ambulance disputes. These providers are Air Evac EMS, Inc., EagleMed, LLC, Med-Trans Corp., Rocky Mountain Holdings, and PHI Air Medical, LLC.  These five providers are owned by two private equity firms and a publicly traded company.  Air Evac EMS, Inc., EagleMed, LLC, and Med-Trans Corp. are subsidiaries of Air Medical Group Holdings (AMGH) which is owned by private equity firm KKR.  Rocky Mountain Holdings (a subsidiary of Air Methods) is owned by private equity firm American Securities, LLC. And PHI Air Medical, LLC is a subsidiary of publicly-traded Petroleum Helicopter International, Inc. (PHIL). 

The air ambulance providers continue to argue that the federal Airline Deregulation Act (ADA) preempts Texas workers’ compensation laws that regulate reimbursement to air ambulance carriers and therefore, DWC must order the carriers to pay their grossly inflated billed charges.  However, the Texas Supreme Court already squarely rejected this argument in the PHI case: 
 

“First, if ADA preemption applies, neither state nor federal law provides for full reimbursement of air carrier bills—or for any reimbursement at all.  Second, the effect of federal preemption cannot be that States must provide full reimbursement, as that outcome would violate the Tenth Amendment. For these reasons, the result of ADA preemption here would not be full reimbursement—it would be no reimbursement.”

If the air ambulance providers were able to force DWC to order payment of its billed charges, it would result in a massive wealth transfer to private equity investors and reward the takeover of the air ambulance industry by private equity. See The Air-Ambulance Vultures A search for why my flight cost $86,184 led to a hidden culprit: private equity.

Copyright 2023, Stone Loughlin & Swanson, LLP