State News : Arkansas

The Arkansas Court of Appeals recently dealt a blow to what’s known as the “Shipper Transport defense” when it found that a claimant was not barred from receiving workers compensation benefits for a torn bicep tendon even though he lied about having preexisting neck, back and shoulder issues on his post-offer/pre-placement health questionnaire which may have led to him being placed in a position which the employer likely would not have placed him in if they had been given an accurate medical history. Int'l Paper Co. v. Steward, 2024 Ark. App. 465, 700 S.W.3d 204. In 1979, the Arkansas Supreme Court established the Shippers Transport defense when it held that a workers compensation claimant would be barred from receiving workers compensation benefits if Respondents proved (1) that the employee knowingly and willfully made a false representation as to his/her physical condition, (2) that the employer relied upon the employee’s false representation, with such reliance playing a substantial factor in the hiring of the employee, and (3) that there was a causal connection between the false representation and the claimant’s injury.  Shippers Transp. of Ga. v. Stepp, 265 Ark. 365, 369, 578 S.W.2d 232, 234 (1979). In affirming the Full Commission’s and Administrative Law Judge’s narrow interpretation of Shippers Transport, the Arkansas Court of Appeals found that the Respondent Employer failed to satisfy the second prong of the test in establishing that they relied on the claimant’s false misrepresentations in hiring the claimant because the claimant had already been hired when he filled out the health questionnaire and lied about his preexisting conditions. Int'l Paper Co., 2024 Ark. App. 465 at 11.

Although the rationale behind the rulings of the Commission, Administrative Law Judge and Court of Appeals was fairly straightforward, it leaves employers beholden to the representations of newly hired workers regarding their physical limitations and preexisting injuries. At first glance, an Arkansas employer may want to avoid the dilemma that International Paper Company found itself in by having a job applicant fill out a health questionnaire before any employment offer is made so that the employer can figure out whether they have any open jobs that are suitable for the applicant’s physical condition while still being able to fall back on the Shippers Transport defense in case the applicant lies about their medical conditions. However, the Americans with Disabilities Act prohibits employers from asking a job applicant if they are disabled, asking about the severity or nature of any impairment, or having the applicant fill out a medical questionnaire before the employer makes a job offer. This leaves Arkansas employers in a legal Catch-22 because on one hand they are barred under federal law from asking applicants about their physical condition prior to making a job offer, and on the other hand, they are required to prove that they relied on the claimant's pre-offer misrepresentations about their physical condition in deciding to hire the claimant to successfully assert the Shippers Transport defense.

As suggested by Arkansas Workers Compensation Commissioner Michael Mayton in his dissenting opinion, “[t]he rule of law in the Shippers Transport case should be expanded beyond the actual moment of hiring to encompass the entire hiring process, including job placement.” Ronald Steward, Emp., Claimant v. International Paper Co., Emp., Respondent & Sedgwick Claims Mgmt. Servs. Inc., Carrier/TPA, Respondent, No. H109777 (Ark. Work. Comp. Com., May 2, 2023), at *13. Employers like International Paper Company should be able to rely on the representations of new employees completing post-offer medical questionnaires and undergoing medical examinations in determining which job most safely suits those employees’ medical conditions and physical restrictions without worrying that they’ll be stuck footing the bill for an aggravation of a preexisting injury that could have been avoided if the employee was honest about their medical history in the first place. 

Unfortunately, we do not know how the current Arkansas Supreme Court would have applied the Shippers Transport defense to the facts of this case because the case was not appealed after the Court of Appeals issued its opinion affirming the award of benefits to the claimant. Therefore, Arkansas employers should ensure that they ask one of the few questions allowed under the Americans with Disabilities Act during the interview process, which is whether the applicant can perform the specific duties of a job with or without reasonable accommodation. Arkansas courts have not yet considered whether an employer would satisfy the second prong of the Shippers Transport test if they proved that they relied on the claimant’s dishonest answer to the foregoing question in hiring the claimant. However, employers would undoubtedly have a better chance of successfully asserting the Shippers Transport defense in the above scenario than if they continued to only have new employees fill out post-offer health questionnaires or undergo medical examinations where the employee will be able to lie about their preexisting health condition and physical restrictions without the risk of being barred from receiving workers compensation benefits. When inquiring about the applicant’s ability to perform job duties though, it’s imperative that employers avoid asking if the applicant is disabled or probing further by asking about the nature or severity of that applicant’s disability because such questions would leave the employer at risk of being sued for violating the applicant’s civil rights by discriminating against them in the hiring process on the basis of their disability.