State News : Alabama

On August, 8, 2014, the Alabama Court of Civil Appeals released its opinion inFab Arc Steel Supply, Inc. v. Timothy Dodd wherein it reversed a permanent and total disability award. Among the several issues on appeal, the Court considered whether there was enough evidence to support a finding that an L-1 herniation that was asymptomatic for more than a year following the accident was causally related to the accident. The Court also considered whether a determination of permanent disability could be made when the employee was not yet at maximum medical improvement (MMI). In addition, the Court considered whether a termination for misconduct could be considered a constructive refusal of suitable employment for purposes of denying temporary total disability (TTD) benefits.

L-1 Herniation

On appeal, the employer relied on the testimony of neurosurgeon, Dr. James White. At his deposition, Dr. White testified that he could not connect the herniation to the accident since the symptoms of lower back pain radiating into the lower extremities did not begin for over a year following the accident. In affirming the Trial Court on this issue, the Court of Appeals acknowledged that such a delay in symptoms certainly weakens the inference that a post-accident appearance of an injury is related to an accident. However, the Court relied on the fact that a herniation is the type of injury that results from trauma, that late symptoms did not rule out the accident as the cause, and that no doctor attributed the herniation to any other cause such as a degenerative condition.

MMI

Since the employer denied that the L-1 herniation was related to the accident, it refused to provide any of the recommended treatment associated with the injury. Dr. White testified that he recommended surgery and/or injections. At trial, the employee testified that he wanted to have the surgery. On appeal, the employer asserted that, if the herniation was determined to be related, then the employee could not be considered to be at MMI and, thus, any determination of permanent disability was premature. The Court of Appeals agreed and reversed the permanent and total disability award. The Court further ordered that the recommended treatment be provided and that the issue of permanent disability be readdressed once the employee was placed at MMI.

Constructive Refusal of Suitable Employment

At trial, the employer presented evidence that the employee was terminated due to insubordination and argued that his conduct amounted to a constructive refusal of suitable employment. The employer took the position that it should not be responsible for paying TTD benefits when it made a job available that fell within the physical limitations assigned by the treating physician but then the employee basically got himself fired. The Trial Court determined that the employer’s reasons for terminating the employee were without merit. The Court of Civil Appeals declined to reverse the Trial Court on that determination and, therefore, could not reverse the determination that TTD was owed.

My Two Cents:

Although the Court of Appeals refused to reverse the Trial Court on the TTD issue, it did not assert that the "constructive refusal of suitable employment" argument was improper. This leaves the door open in the future for this argument to be made whenever an employee is fired due to misconduct.

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About the Author

This article was written by Michael I. Fish, Esq. of Fish Nelson & Holden LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation matters. Fish Nelson & Holden is a member of The National Workers’ Compensation Network (NWCDN). If you have any questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author atmfish@fishnelson.com or any firm member at 205-332-1448.

Hooks v. Coastal Stone Works, Inc.

Released September 5, 2014

The Alabama Court of Civil Appeals ruled that an officer of a corporation must take action to revoke previous certification of exemption from workers’ compensation coverage pursuant to § 25-5-50(b).

On May 24, 2006, Hooks, along with two other officers of Coastal Stone Works, Inc., signed a certificate of exemption to be exempted from coverage under the Alabama Workers’ Compensation Act pursuant to § 25-5-60(b). On November 23, 2011, Hooks was injured and sought benefits under the Alabama Workers’ Compensation Act and filed suit. Coastal Stone Works, Inc. file a motion for summary judgment, which was ultimately granted the second time it was filed. It’s position was Hooks exempted himself in 2006 and never revoked the exemption. Hooks asserted that, if he did not file a certification of exemption each year, the exemption automatically revoked itself. There was no dispute that Hooks did not sign or file anything other than the certification of exemption submitted in May of 2006.

Hooks argued that § 25-5-60(b) states an officer of a corporation may elect annually to be exempt from coverage on the workers’ compensation act. Hooks interpreted this section to require him to annually elect to be exempted from coverage and if he did not the exemption was automatically revoked. Coast Stone Works, Inc. argued that this the provision goes on to state that the exemption may be revoked upon an officer filing a written certification electing to be covered. Coastal Stone Works, Inc. argued that this showed that the legislature intended the requested exemption to remain in effect until the officer revoked the exemption in writing.

The Court of Civil Appeals agreed with Coastal Stone Works, Inc. and stated that if the legislature had intended the exemption to revoke each year unless the officer requested the exemption again it would not have provided the method for revoking the exemption. The Court of Civil Appeals opined that § 25-5-60(b) required an officer to take action to revoke the previous certification of exemption as opposed to the revocation being automatic unless they file another certification of exemption.

MY TWO CENTS:

Any time you are dealing with an injury involving an officer of a corporation make sure to verify that they never submitted a written certification of exemption to the carrier and the Alabama Department of Labor.

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ABOUT THE AUTHOR

The article was written by Joshua G. Holden, Esq. a Member of Fish, Nelson & Holden, LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation and related liability matters. Mr. Holden is AV rated by Martindale-Hubbell, which is the highest rating an attorney can receive. Holden and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields.

If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author atjholden@fishnelson.com or 205-332-1428.

In an effort to reduce painkiller abuse and misuse, the Drug Enforcement Agency (DEA) announced last week that it is reclassifying hydrocodone as a Schedule II Controlled Substance. Under the new regulation, which will go into effect on October 5, 2014, doctors will no longer be able to call in prescriptions for drugs like Lortab and Vicodin. Additionally, patients will only be allowed one 90-day prescription per doctor visit, and will have to actually see their doctor in person before obtaining a refill. According to DEA Administrator Michele Leonhart, "Almost seven million Americans abuse controlled-substance prescription medications, including opioid painkillers, resulting in more deaths from prescription drug overdoses than auto accidents." The official DEA release can be found here.

My Two Cents

The effects of the new regulation on employers could be two-fold. Employers can most likely expect an increase in claims management costs associated with more frequent doctor visits for injured workers who are in long-term opiate therapy. However, the new regulation could also greatly reduce the financial burden placed on employers by "pill mills" that dole out drugs like candy after seeing a patient only once or twice. In either case, employers and claims managers need to be aware of the new regulation to ensure that the medical providers they select to care for injured workers comply with these guidelines.

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About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

Flanagan Lumbar Co., Inc. v. Tennison

Released August 22, 2014

The Alabama Court of Civil once again ruled that devices to be considered "other apparatus" set out in §25-5-77(a) of the Alabama Workers’ Compensation Act should be decided on a case by case basis. The Court of Civil Appeals pointed out that the Alabama Supreme Court has previously ruled in Ex parte Mitchell, 989 So. 2d 1083, 1092 (Ala. 2008) that the definition of "other apparatus" is an item that is "(a) reasonably necessary and (b) intended to improve the injured employee’s condition, to prevent the further deterioration of the employee’s condition, or to relieve the employee from the effect of his condition by restoring the employee to a basic level of appearance or functioning. The determination of what constitutes a reasonably necessary ‘other apparatus’ should be made on a case-by-case basis."

Tennison had settled his worker’s compensation claim for a back injury with Flanagan Lumbar and medical benefits were to be left open. Tennison’s authorized treating physician was Dr. John Roberts. At some point during treatment Dr. Roberts recommended pool therapy. However, Tennison indicated that this made his condition worse so he stopped going. Some time later Tennison presented to Dr. Robert’s and asked that he prescribe a walk-in bathtub for Tennison’s home. Tennison told Dr. Robert’s he had not had an actual bath in 3 years and was unsteady stepping in and out of the regular tub in his home. He also told Dr. Robert’s the water would benefit him and allow him to do his general strengthening exercises at home rather than go to water therapy. Based on this request Dr. Robert’s recommended that the walk-in tub be approved as reasonably necessary. Dr. Robert’s stated in his letter to the carrier that he felt the walk-in tub would help prevent falls getting in and out of the tub and that because of Tension’s disability and de-conditioned body the walk-in tub was reasonable. Flanagan Lumbar refused to approve the walk-in tub and Tennison sought relief from the Circuit Court of Limestone County. The trial court reviewed deposition testimony from Tennison as well as deposition testimony from Dr. Roberts and found that the walk-in tub met the definition of "other apparatus" and, therefore, should be paid for by Flanagan Lumbar. Flanagan Lumbar appealed the decision which the Alabama Court of Civil Appeals reviewed de novo, having to give no weight or deference to the trial court’s findings of fact based on the only evidence presented being via deposition and not live testimony.

On appeal the Alabama Court of Civil Appeals stated that the walk-in tub in this case did meet the definition of "other apparatus" because Dr. Robert’s testified that the walk-in tub was not solely to allow Tennison a access to the bath, unlike like the scooter lift in Ex parte Mitchell. In this case Dr. Robert’s testified that the walk-in tub was a method to prevent falling and water therapy could assist with back pain. Therefore, a walk-in tub could meet the definition of "other apparatus" and did in this case. However, the Court of Civil Appeals then turned to whether substantial evidence was presented to support that the tub was reasonably necessary to 1)improve Tennison’s condition, 2) to prevent the further deterioration of his condition, or 3) relieve him from the effect of his condition by restoring him to basic level of function and appearance.

The Court of Civil Appeals stated that the walk-in tub would not improve his condition based on Dr. Robert’s testimony that he did not believe anything would improve Tennison’s condition. Dr. Robert’s stated that the tub would be helpful to provide potential and temporary pain relief but the Court of Civil Appeals stated that this does not constitute improving someone’s condition. The Court of Civil Appeals also pointed out that reducing the fall risk would not meet the standard in order to establish improving one’s condition.

They then turned to whether it would prevent Tennison’s condition from deteriorating. Dr. Robert’s testified that if Tennison did not get the tub his condition would probably not deteriorate. While Dr. Robert’s testified that it would help prevent Tennison from falling, there was no evidence to support that presented at trial. In fact, the Court of Civil Appeals pointed out that Flanagan Lumbar had present an alternative transfer bench that costs much less than the $18,500.00 walk-in tub.

The Court of Civil Appeals went on to find that the potential temporary symptom relief would not rise to the level of restoring Tennison to the basic level of function and appearance. While Dr. Robert’s testified that it might be helpful from a hygienic standpoint, there was no testimony that Tennison’s showers were inadequate for this.

As a result, the Alabama Court of Civil Appeals ruled that a walk-in tub can meet the definition of "other apparatus" but in this case the evidence did not establish that the walk-in tub was reasonably necessary.

Judge Terry Moore wrote in concurrence to point out that he questioned whether the case should be reviewed de novo and whether the tub actually met the definition of "other apparatus." Judge Moore pointed out further evidence to support his concurring opinion which included Tennison testifying that pool therapy had made his back worse so he stopped going, as well as Dr. Robert’s testifying that the walk-in tub would not be big enough to perform the strengthening exercises, which Tennison claims was the reason for getting the walk-in tub. Judge Moore also pointed out the Dr. Robert’s recommendation for the walk-in tub was based solely on the employee’s request for the tub as opposed to medical reasons that would meet the requirements set out inEx parte Mitchell. Therefore, Judge Moore did not feel the walk-in tub in this case would meet the definition of "other apparatus" as the majority opinion stated. However, he did agree that if it did meet the definition sufficient evidence was not presented to establish it was reasonably necessary.

MY TWO CENTS:

When dealing with a recommendation for a medical device/aid requested pursuant to the "other apparatus" provision of §25-5-77(a) make sure the authorized treating physician gives a detailed explanation of his reason behind ordering the device and not just that he or she believes it is reasonably necessary.

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ABOUT THE AUTHOR

The article was written by Joshua G. Holden, Esq. a Member of Fish, Nelson & Holden, LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation and related liability matters. Mr. Holden is AV rated by Martindale-Hubbell, which is the highest rating an attorney can receive. Holden and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields.

If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author atjholden@fishnelson.com or 205-332-1428.

On August 22, 2014, the Alabama Supreme Court released an opinion wherein it considered whether an adult child can be considered a partial dependent for purposes of receiving death benefits. InDonna Banks v. Premier Service Company, Inc., it was stipulated by the parties that the 22 year old child received regular financial support from her father prior to his death. The Trial Court noted in its final order that the adult child was not working but pursuing a double major at college. Since there was no evidence that the adult child was physically or mentally handicapped, the Court held that she did not qualify as a partial dependent. The Court of Appeals agreed noting that the same would hold true even if the adult child was totally dependent upon a deceased worker for support.

Practice Pointer:

The Court noted that the Alabama Workers’ Compensation Act provides that a child is considered a dependent until the age of 18. This is different that the recognized age of majority in Alabama which is 19. When determining the dependency status of a teen, it is important that you apply the correct cut off age.

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About the Author

This article was written by Michael I. Fish, Esq. of Fish Nelson & Holden LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers' compensation matters. Fish Nelson is a member of The National Workers' Compensation Network (NWCDN). If you have any questions about this article or Alabama workers' compensation issues in general, please feel free to contact the author at

mfish@fishnelson.com or any firm member at 205-332-1448.

On August 22, 2014, the Alabama Court of Civil Appeals released its opinion inTotal Fire Protection, Inc. v Jonathan Jean, affirming the Trial Court’s order denying Total Fire Protection’s Motion to Terminate Medical Benefits based on the Last Injurious Exposure Rule. Jean injured both of his wrists in April 2005 while working for Total Fire Protection (TFP). Jean’s authorized treating physician performed surgery on both of his wrists, including the placement of hardware in the right wrist. Five months later, the Trial Court approved a settlement of indemnity and vocational benefits, with future medical benefits remaining open. After the settlement, Jean went to work for another employer. In June of 2006, TFP filed a Motion to Terminate Medical Benefits, asserting that Jean had developed carpal tunnel syndrome as a result of his job with his subsequent employer, and that TFP was no longer responsible for Jean’s medical treatment under the Last Injurious Exposure Rule. The Trial Court granted TFP’s motion.

In April of 2008, Jean filed a Motion for Relief from the June 2006 Order terminating his medical benefits, seeking to hold TFP responsible for further treatment. The Trial Court granted Jean’s motion, and entered an order reinstating Jean’s medical benefits, and TFP appealed.

On November 13, 2008, the Court of Appeals dismissed TFP’s appeal because it determined that it had been taken from a non-final judgment, since the Trial Court had not adjudicated TFP’s liability for all of the employee’s medical issues, most specifically his alleged carpal tunnel syndrome, and that the Trial Court had not issued findings of fact and conclusions of law in its June 16, 2008 judgment as required under the Alabama Workers’ Compensation Act. After the appeal was dismissed, TFP moved the Trial Court to include findings of fact and conclusions of law in its judgment, which the Trial Court never ruled on. On May 30, 2012, TFP filed another motion to terminate Jean’s medical benefits, asserting identical grounds set out in the 2006 Motion. The parties then deposed the authorized treating physician and submitted his deposition transcript to the Trial Court. On August 9, 2013, the Trial Court entered a judgment finding that there was no conclusive evidence that Jean ever developed carpal tunnel syndrome and that the pain in his right wrist was directly related to the original injury with TFP. The Trial Court Ordered TFP to pay for Jean’s surgery to remove the hardware in his wrist and other treatment related to the original injury. TFP then appealed again, asserting that the Trial Court exceeded its discretion in granting Jean’s Motion for Relief from the June 2006 Order, and the Trial Court had no basis for setting aside that Order.

In its recent opinion, the Court of Appeals affirmed the Trial Court’s decision, stating that the September 2005 settlement became a binding judgment with the same affect as any other final judgment, and that the settlement preserved Jean’s right to future treatment for any injuries sustained in the April 2005 accident. The Court of Appeals further pointed out that those rights could only be extinguished through the procedures set out in the Alabama Workers’ Compensation Act. §25-5-56 of the Act allows a party to have a settlement vacated within six months after settlement only for fraud, undue influence, or coercion. A settlement may also be set aside on other grounds, as provided in the Alabama Rules of Civil Procedure. However, the Court of Appeals pointed out that TFP did not assert any of the procedural grounds outlined in the Rules of Civil Procedure nor did they assert fraud, undue influence or coercion. The Court noted that this case is the first attempt by an employer to use the Last Injurious Exposure Rule to terminate its agreed liability for future medical expenses via post judgment practice, and that TFP had not been able to cite any case in which such a procedure had been followed or approved. While the 2006 settlement explicitly left the issue of future medical benefits open so that the Court retained jurisdiction over any controversy that might arise as to further treatment, the Alabama Workers’ Compensation Act requires that an employer disputing its liability for an injury must file a Complaint so that the issue can be resolved by trial in which both parties have a chance to present evidence. Citing the holding inEx parte Publix Supermarkets, Inc., the Court noted that just as a trial court may not award an employee medical benefits based on an allegation and a motion, a trial court cannot terminate an employee’s right to medical benefits based on allegations in a motion. The Court of Appeals therefore held that the June 2006 Order terminating Jean’s medical benefits violated Jean’s due process, and was therefore, void.

Turning to TFP’s substantive argument that the Trial Court misapplied the Last Injurious Exposure Rule, the Court held that when an employee experiences expected ongoing symptoms from an original compensable injury as a result of routine physical activities in his subsequent employment, in the absence of evidence of some additional harmful change to the underlying anatomical condition of the employee, those expected ongoing symptoms will be treated as a recurrence of the symptoms from the original injury, and not an aggravation of the original injury. Under those circumstances, the Court found that while the repetitive gripping and grasping in Jean’s new employment increased his pain and swelling in his wrist on a temporary basis, the fact that it did not cause any permanent worsening of his baseline physical condition required a finding that he had experienced a recurrence of the 2006 injury, and not an aggravation or new injury with his subsequent employer.

My Two Cents

This decision provides guidance for employers when there is a dispute as to whether medical treatment continues to be owed. According to this holding, the employer needs to file a Complaint and ask for a trial on the merits rather than filing a motion. In any case where the Last Injurious Exposure Rule applies, the employer would also need to add the subsequent employer as a defendant in the lawsuit.

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About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

On August 22, 2014, the Alabama Court of Civil Appeals released its opinion inGoodyear Tire & Rubber Co. v. Stephen Bush. Bush alleged on February 11, 2011, he was walking down some stairs when he stumbled and fell onto his right knee. He then climbed back up the stairs and notified his supervisor of the accident, which both Bush and his supervisor reportedly laughed off. Bush did not report that he had injured his knee at that time, but he apparently told his supervisor that his knee was swollen and painful a few weeks later. Goodyear denied Bush’s workers’ compensation claim based on Bush’s alleged failure to provide timely and adequate notice of the injury, and Bush filed suit.

The parties proceeded to trial in May 2013. Following trial but before the trial court entered judgment, the parties reached a settlement agreement, which they presented to the trial court for approval in July. The trial court determined that the settlement was not in Bush’s best interest because it would have closed his medical benefits, and rejected the settlement. A few days later, the trial court entered judgment in favor of Bush. The trial court ultimately found that Bush’s testimony that he reported pain and swelling within 90 days of the accident more credible than his supervisor’s testimony that Bush never reported the injury. The court also found that Bush’s right knee injury had limited him to working light duty jobs which required no stooping, squatting, kneeling, climbing or lifting over twenty pounds, and that those restrictions prevented him from returning to work as an automobile mechanic, which was his primary occupation for over forty years. The trial court rejected Goodyear’s argument that Bush’s compensation should have been limited to that set out in the schedule for the leg, and concluded that Bush was permanently and totally disabled. Goodyear appealed, asserting that the trial court exceeded its discretion in refusing to approve the settlement. Goodyear also asserted that the trial court erred (1) in finding that Bush provided adequate notice of his injury, (2) in finding that Bush’s compensation was not limited to the schedule for the leg, and (3) in finding that Bush was permanently and totally disabled.

In regard to the Trial Court’s rejection of the settlement, the Court of Appeals stated that when a settlement is approved by an Alabama Department of Labor Ombudsman, it may only be set aside upon a showing of fraud, coercion or undue influence within 60 days of the settlement. However, when a settlement is presented to the circuit court for approval, it is the duty of the trial judge to ensure that the settlement is in the employee’s best interest. The Court of Appeals held that since the parties chose to submit the settlement to the court for approval, the trial judge had discretion to determine whether the settlement was in Bush’s best interest, and that the judge did not abuse his discretion by rejecting the settlement.

In regard to Goodyear’s notice defense, the Court of appeals stated that while the Act requires notice of an accident, case law indicates that the pertinent inquiry is whether the employer has received actual notice of the injury, such to enable the employer to provide immediate medical diagnosis and treatment in an effort to minimize the seriousness of the injury and facilitate the earliest possible investigation of the facts surrounding the injury. The appellate court noted that Goodyear did not argue that Bush’s alleged notice was insufficient to put Goodyear on inquiry notice. The Court of Appeals stated that since the trial judge had the opportunity to hear and observe the witnesses first hand, the fact that it found Bush’s testimony credible was sufficient to support a finding that Bush gave proper notice of his injury.

However, the Court of Appeals reversed the trial court’s finding that Bush was permanently and totally disabled, because the trial court failed to make a finding that the effects of Bush’s knee injury extended to and affected the use and efficiency of other parts of his body. Citing Advantage Sales of Alabama, Inc. v Clemons, the Court of Appeals reiterated that if the employee does not prove that the injury to the scheduled member prevents him from using the uninjured parts of his body, the injury shall be classified as a permanent partial disability as a matter of law, and no evidence of vocational disability is to be considered.

My Two Cents

The Court of Appeals’ reliance on Advantage Sales of Alabama, Inc. v Clemons is good news for employers, as it resolves what is somewhat of a chicken-egg argument. Employees’ attorneys have long argued that permanent total disability was effectively an exception allowing compensation outside of the schedule. However, as this ruling points out, an inquiry into the effects of the scheduled-member injury on the other parts of the body is necessary before a determination of whether evidence of vocational disability can even be considered. Assuming totally or virtually totally disabling pain or psych are not issues, even if an employee has a severe knee injury, his compensation is limited to 200 weeks unless the effects of his knee injury somehow extend beyond his leg and permanently affect the efficiency of other body parts.

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About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

On July 18, 2014, the Alabama Court of Civil Appeals released its opinion in Arthur Barney v. Elizabeth Bell, as personal representative of the estate of Maurice Bell, deceased, and William Clay Teague. In the underlying action, Barney sued two Montgomery attorneys for legal malpractice arising out of a personal injury and workers’ compensation claim they handled for Barney. Barney was injured in a work-related car accident in July of 2010. He retained the two attorneys to represent him in his claim against his employer for workers’ compensation benefits, and in a negligence claim against the driver of the other vehicle who caused the accident. Pursuant to Code Section 25-5-11, an employer or its insurer is entitled to reimbursement of workers’ compensation benefits it has paid if the claimant also recovers damages from a third-party. However, the Act provides that the employer’s right to reimbursement is subject to a portion of the employee’s attorney’s fees incurred obtaining a settlement or judgment against the liable third party. The employer’s pro-rata share of attorney’s fees is an amount proportional to the reduction in the employer’s liability, and is generally equal to the contingency fee agreement that the attorney has with the claimant.

Barney settled his workers’ comp claim for $42,500, of which the attorneys received a 15 percent fee in the amount of $6,375. However, as a material term of that settlement, the employer’s insurer reserved its rights to full reimbursement of over $65,000 in workers’ compensation benefits that it had paid Barney from any recovery Barney might later obtain as a result of the negligence action against the third party. The third party’s insurer later settled with Barney in the amount of $45,000. Since Barney had signed a 50 percent contingency fee agreement with his attorneys for handling the personal injury case, his attorneys forwarded half of the $45,000 settlement to the insurer. The attorneys then retained the other $22,500 as their fee, pursuant to their agreement with Barney. Barney then filed suit against the attorneys, alleging legal malpractice. Barney alleged that his attorneys had charged him excessive attorney’s fees in violation of Alabama law, and that they also retained some of his money for their own benefit. Specifically, Barney alleged that the insurer agreed to reduce its subrogation interest to $22,500, and that the attorneys were only entitled to $11,250 pursuant to their 50% contingency agreement. Additionally, Barney alleged that his attorneys were not entitled to retain the $6,375 attorney fee they had collected on the workers’ compensation settlement, because they had been fully compensated in the third-party case.

One of the defendant attorney’s testified that he had received a letter from an attorney informing him that he could not retain the $6,375 fee based on the holding inBynum v. City of Huntsville. However, the defendant attorney stated that he was not aware of the holding in that case, and that he did not believe he had to refund the fee to Barney unless a Court ordered him to do so. The insurer’s claims adjuster admitted in deposition that she agreed to accept half of the third party recovery in satisfaction of its statutory reimbursement of subrogation rights. However, the totality of her testimony suggested that she understood that the defendant attorneys were entitled to the other half of the $45,000 settlement, as the employer’s pro-rata share of Barney’s attorney fees.

At trial, the defendant attorneys offered the claims adjuster’s testimony, and moved for summary judgment on the grounds that the insurer did not compromise its claim, and that they were therefore entitled to the fees they had collected. The trial Court granted their motion, effectively dismissing Barney’s malpractice claims, and Barney appealed. The Court of Appeals found that the insurer did not compromise its reimbursement claim. The Court of Appeals agreed with the trial Court’s finding that the insurer’s agreement to accept $22,500 was actually an agreement to accept the full $45,000, and then pay the 50% pro-rata share to Barney’s attorneys. Therefore, the attorneys were permitted to keep the other $22,500 as their fee. However, the Court of Appeals stated that the case of Bynum v. City of Huntsville required that the Court should credit the proceeds of the third-party settlement against any workers’ compensation benefits awarded before assessing attorney’s fees, in order to prevent a claimant from paying exorbitant attorney’s fees to an attorney who prosecutes both the worker’s compensation claim and a third party claim. Since the amount of the third-party tort case settlement exceeded the amount of the workers’ compensation settlement, the attorneys were not entitled to retain the attorney’s fees they had collected on the workers’ compensation case after they received their fee on the tort claim. Therefore, the Court of Appeals reversed that portion of the trial Court’s Order, directing the trial Court to enter a judgment for compensatory damages in the amount of $6,375.00 on Barney’s malpractice claim, and to determine what, if any, punitive damages Barney is entitled to.

My Two Cents

This case raises several interesting issues. While the defendant attorneys were apparently wrong in retaining the $6,375 fee from the workers’ compensation claim based on the holding inBynum v. City of Huntsville, the Court’s conclusion that it amounts to malpractice is a bit of a stretch. Alabama law requires that an attorney shall be required to use such reasonable care and skill and diligence as other similarly situated legal service providers in the same general line of practice in the same general area ordinarily exercise in a like case. Attorneys are required to use a reasonable level of skill to research and discover the rules. While every attorney is expected to knowcommonly known rules of law, they are not required to know every rule of law orevery case on a particular issue.

Another interesting issue is whether this holding has any implications in cases where a claimant retains one attorney to handle his workers’ compensation case, and another to handle a related tort case. It would hardly seem fair to deprive one attorney of a fee for handling a worker’s compensation case, just because another attorney received a hefty fee on a related tort case.

However, this ruling may be good news for employers in some cases. If the employer knows that the claimant’s attorney cannot take a fee on the workers’ compensation claim due to a situation similar to the one inBarney, the employer should theoretically be able to obtain a better settlement. For instance, if the claimant settles a case for $100,000, he typically only gets $85,000 after 15% attorney fees are deducted. However, if the attorney cannot take a fee, that same case could probably be settled for $85,000, because the attorney fee would not be deducted, leaving the claimant with the same amount of money.

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ABOUT THE AUTHOR

This article was written by Charley M. Drummond, Esq. of Fish Nelson, LLC. Fish Nelson is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.

In Ex Parte Diamond Scaffold Services Group, Inc., the employee filed suit for workers’ comp benefits in Washington County, Alabama. Diamond objected asserting that Washington County was not a proper venue since the accident occurred in Mobile County and it did not conduct business in Washington County. In support of its request that the case be transferred to Mobile County, Diamond submitted evidence that the company was doing work as a subcontractor for ThyssenKrupp, and, although ThyssenKrupp did business in both Washington and Mobile County, the accident occurred in Mobile County.

The employee responded with evidence that ThyssenKrupp did business in Washington County, but the employee did not present any evidence indicating that Diamond also did business in Washington County. In any event, the trial court denied Diamond’s change of venue request. Diamond then filed a Petition for a Writ of Mandamus asking that the trial court’s order be set aside and for the case to be transferred to Mobile County.

The Appeals Court noted that when a defendant is a corporation, like Diamond, venue is proper in the county where the accident occurred, where the defendant’s principal office is located, or where the plaintiff resides if the defendant conducts business in that county. The Appeals Court noted that the plaintiff presented no evidence to the trial court that Diamond was conducting business in Washington County, and it was undisputed that the accident occurred in Mobile County. Although the plaintiff pointed out that ThyssenKrupp conducted business in Washington County, the Appeals Court noted that Diamond was the only defendant in the lawsuit, and therefore, the locations where ThyssenKrupp did business was irrelevant. The Court stated that Diamond was an agent of ThyssenKrupp, and held that it was shown no authority which would allow an action against an agent in any county where its principal does business. The Court noted that such a rule could yield shocking results. Specifically, the Court explained that ThyssennKrupp was an international corporation doing business at locations throughout the world, and it would make no sense to hold that an agent such as Diamond, which does business only in one county, might be subject to being sued anywhere its principal does business.

The Appeals Court ruled that there was nothing in the record which would allow the case to proceed against Diamond in Washington County, and ordered the trial court to transfer the case to Mobile County. In effect, employers who are subcontractors for larger companies are not automatically subject to suit in every county where the larger companies’ do business.

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About the Author

This blog post was written by Trey Cotney, Esq., of Fish Nelson & Holden LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation matters. Fish Nelson & Holden is a member of The National Workers’ Compensation Network (NWCDN). If you have any questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author attcotney@fishnelson.com or any firm member at 205-332-3430.

On July 25, 2014, the Alabama Court of Civil Appeals considered an interesting scenario where the trial judge granted an employee’s motion to strike the employer’s defenses to compensability that were asserted in its Answer and then entered an Order requiring the employer to pay for disputed medical treatment. The court also denied the employer’s motion for an independent medical examination. As a result, the employer petition the Court of Appeals for a writ of mandamus as to all three rulings.

The genesis for the above referenced flurry of motions, was a general denial filed by the employer in its Answer. This means that the employer disputed each and every allegation in the Complaint and admitted nothing. The employee took issue with the inconsistent nature of denying all allegations in the Complaint while, at the same time, paying indemnity and medical benefits, and asserting a statutory right to an IME. Basically, it was the position of the employee that the employer could not, on one hand, deny the claim while, on the other hand, treat it as accepted.

In Alabama, if the compensability of a claim is denied, then medical treatment cannot be compelled until the issue of compensability has been determined by either a trial on the merits or by way of a successful motion for summary judgment. Rather than proceed with either of these two options, the employee sought to simply have the denial itself removed from the Answer thus clearing the way for the judge to order that medical treatment be provided. While the employee gets creativity points for this approach, the Court of Appeals pointed out that the Alabama Workers’ Compensation Act and the Alabama Rules of Evidence prohibit an employee from using the payment of indemnity and/or medical benefits against an employer as an admission of compensability. Further, the employee was unable to provide any legal support for the proposition that filing a motion for an IME amounted to an admission of compensability. Since there was no apparent inconsistency between the employer’s Answer and its subsequent actions, the Court of Appeals granted the petition as to the struck defenses and the order to compel medical treatment. However, it denied the petition as to the employer’s IME request.

My Two Cents:

Even when a claim is denied and indemnity benefits are not provided, employers often times continue to provide medical care until a final ruling is made by a judge. When this option is exercised, it allows employers to retain control of the medical treatment, just in case they eventually lose. It also allows the employee to continue to receive medical treatment during the litigation process. If the Court of Appeals had ruled differently in this case, it would have likely had a chilling effect on the payment of early medical benefits. This was a good ruling for employers and employees alike.

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About the Author

This article was written by Michael I. Fish, Esq. of Fish Nelson & Holden LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation matters. Fish Nelson is a member of The National Workers’ Compensation Network (NWCDN). If you have any questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author atmfish@fishnelson.com or any firm member at 205-332-1448.