State News

The following blog article is published with the permission of guest blogger, Brian Francis.

Dateline: NEW ORLEANS- A few blocks from the commotion of New Orleans’ Bourbon Street, just outside the French Quarter, a group of one hundred and fifty worker’s compensation professionals recently met at the Roosevelt Hotel to discuss trends and issues affecting the worker’s compensation system.

In contrast to the noise and distractions of the French Quarter, the tempo in the conference room was focused deliberation. The conversations were important because in the end they affect the delivery of health care to injured employees throughout the United States. Conversely, from a business perspective, the exchanges have an impact on the financial health of employers, insurers and self-insurers.

The American Bar Association’s (ABA) mid-winter worker’s compensation meeting is the high water mark for issues concerning claims and litigation. The event, which is sponsored by the ABA’s Labor & Employment Law Section (LEL), and the Tort & Insurance Practice Section (TIPS), is a two-day thought-provoking conference. The program brings together a multi-jurisdictional cross section of plaintiff and defense bar members, judges and magistrates, insurance regulators, workers’ compensation insurance executives, self-insurers, reinsurers and physicians and medical professionals.

The majority of seasoned insurance executives in attendance were able to recall when “workman’s” compensation (comp) was a fairly predictable and profitable line of insurance coverage. Comp possessed ideally insurable attributes such as foreseeable loss expectancy and a few core statutory issues affecting compensability. Together, these made “work comp” a stable, and at times, profitable line of insurance coverage.

Today, there is no shortage of critical issues creating volatility and obscured predictability. The once profitable line of coverage faces a myriad of complex issues such as: evidenced-based medicine, attacks on the exclusive remedy doctrine,  an aging workforce, medical fee schedules, home-based employment, professional employment organizations, natural disasters, terrorism and the aggregation of losses, undocumented workers, nanotechnology, ADA and FMLA regulations, Medicare Set-Asides, obesity and co-morbidity issues, social media, RICO violations, the Federalization of Workers’ Compensation, Opt-in and Opt-Out ERISA plans and claims of bad faith conduct; so much for predictability and profitability.

While two days of meetings are insufficient to address all of these issues, the panel-format presentations were well-composed, articulate and balanced. Panels discussed topics such as: the loss mitigation of high value claims, the management of psychological injuries, compound drug use, effective claim management, social media and claimant credibility. Presentations were composed of the views of a cross-section of defense/insurer, plaintiff/employee and union/employer perspectives.

For those followers of the FN&H Alabama Workers’ Comp Blawg, both Counsel Mike Fish and Joshua Holden contributed to the ABA meeting. Josh Holden’s presentation addressed issues pertaining to Social Media uses and their associated pitfalls, while Mike Fish was a participant in a lightning round presentation of 60 Legal Tips in 60 minutes.

The ABA does not restrict its membership to attorneys. Associate memberships are available to any and all non-attorney specialist in the area of Workers’ Compensation. Membership should be attractive to those insurance professionals charged with the profitability of a workers’ compensation program. Whether your corporate role is chief underwriter, home office or regional claims manager, or self-insured program manager, I’m confident that either of the ABA committees (LEL or TIPS) would welcome your expertise and participation. To learn more about membership or associate membership visit: www.americanbar.org and click on the “join or renew tab. For question about the ABA contact Mike Fish or Joshua Holden at 205 332 3430.

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Guest blogger, Brian Francis, is a Principal and Manager in a Michigan based third party administrator.

On March 18, 2016, the Alabama Supreme Court issued a Writ of Mandamus to the Circuit Court of Jefferson County, in the case ofEx parte Rock Wool Manufacturing Company, directing the trial court to enter an order dismissing multiple tort claims and a claim under the Employers’ Liability Act brought by Palmer Cason and his wife, Jessie Cason, against Mr. Cason’s employer, Rock Wool Manufacturing Company. Palmer Cason made a workers’ compensation claim for injuries he allegedly sustained in July of 2014 while working for Rock Wool. The claim was accepted and Mr. Cason was paid benefits in accordance with The Alabama Workers’ Compensation Act. However, in October 2014, Cason sued Rock Wool, alleging claims of negligence, wantonness, and outrage. Mr. Cason later asserted a claim under the Alabama Employer’s Liability Act, and Mrs. Cason brought a claim for loss of consortium. Rock Wool filed a Motion to Dismiss all of the Casons’ claims, asserting that they were barred by the exclusivity provisions of the Alabama Workers’ Compensation Act. The trial court denied Rock Wool’s motion, and Rock Wool filed its Petition for Writ of Mandamus.

Rock Wool asserted that it was immune from suit in tort pursuant to the "exclusivity provisions" (§§ 25-5-52 and 25-5-53) of The Alabama Workers’ Compensation Act. Those sections provide that, where the injury occurs in and arises out of the course of the employment, workers’ compensation benefits are the employee’s sole remedy against the employer.

The Supreme Court noted that there was no dispute as to whether Mr. Cason’s injury occurred in and arose out of his employment, so the exclusivity provisions required that the tort claims be dismissed. The Court further held that the Employer’s Liability Act and The Alabama Workers’ Compensation Act are mutually exclusive, and there can be no claim under the Employers’ Liability Act where both the employee and employer are subject to The Alabama Workers’ Compensation Act. Finally, the Court agreed with Rock Wool in regard to Mrs. Cason’s consortium claim. As a result, the Supreme Court granted the Petition and issued a Writ of Mandamus directing the trial court to enter an order dismissing all of the Casons’ claims against Rock Wool.

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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.

Reasonable accommodation has its limits as is noted in the case of Belasco v. Warrensville Heights City School District, 2015U.S. App. LEXIS 21493 (6^th Cir. 2015).  Norma Belasco, a long-time teacher, began to have serious health issues in 2007, starting with renal failure with an eventual kidney transplant in 2013.  She also had heart surgery in 2010 and suffered from shortness of breath, balance problems and fatigue, sometimes requiring the use of a walker. 

Over time her class became more and more uncontrolled with students fighting frequently and the Principal having to intervene fairly regularly.  The school security guard testified in a deposition that she had to respond to Belasco’s classroom four or five times a day.  Students would be out of their seats, playing loud music, and sometimes laying on the floor.  One student would occasionally draw lesson plans for other students to work on. 

Belasco conceded in a deposition that she needed assistance but maintained that the assistance she needed was related to her disabilities. 

Q. So when you requested assistance, you were requesting assistance to deal with their behaviors, not assistance to perform your duties as a result of the limitations that you experienced?

A. Well, they were related, obviously.

Q. How were they related?

A. As I said, my balance and things like that were not perfect, so I was a little afraid that the children would hurt each other, but also could knock me down, which has happened with teachers.

The School District was also concerned that Belasco was not implementing a program called “Action 100,” which was a Reading Challenge program.  Belasco was entering false data into the database, claiming she was instructed to do so.  She was absent from work frequently, missing 26 days in one semester, and was frequently late for school.

The School District arranged a fitness-for-duty examination which Belasco failed to pass.  She challenged the results of the fitness exam and set up her own examination, which she also failed.  Both fitness exams noted that Belasco could not ensure safety of students because that required quick reactions on the part of the teacher.  Belasco had poor balance and shortness of breath with minimal tasks.  Following these examinations, the District conducted a hearing in which Belasco requested the assignment to her of a teaching aide and the use of a walker.

The District refused to hire a teaching aide but did agree to allow the use of a walker if Belasco’s doctor could certify that using the walker would enable Belasco to perform the essential functions of her job.  After further hearings, the District terminated Belasco’s employment.  Belasco sued alleging that she was discriminated against based on her disabilities.

The federal court found in favor of the District, and Belasco appealed to the Court of Appeals for the Sixth Circuit.  The Court found that Belasco failed to show that she could safely perform the essential functions of her job, even if she was disabled.  The Court added that “Belasco does not explain why her failure to pass the relevant aspects of the fitness-for-duty tests cannot independently support the examiners’ conclusions that she was unable to perform essential functions of her job – namely, supervising students, ensuring their safety, and responding in emergencies.”

With regard to her requests for reasonable accommodations, the Court said that Belasco failed to produce a medical certification explaining how the use of a walker would allow her to perform the essential functions of her job.  Further, the Court said that the ADA does not require an employer to hire another person to help someone with a disability perform the essential job functions.  In this case the union collective bargaining agreement prohibited hiring part-time educational aides without the express consent of both the prospective aide and the union.  The union refused to provide its consent. Lastly, the Court said that Belasco’s request to shift unruly students to another classroom was unreasonable because the District should not have to reassign essential job functions to another employee.

The case illustrates a number of important principles: first, that requests for accommodations must be linked to helping the employee perform the essential job functions. Moreover, certain requests for accommodation are unreasonable on their face, particularly those requests that would require other employees to do part of the disabled employee’s job. 

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

Wellness programs are becoming a new area of litigation as can be seen in Equal Employment Opportunity Commission  v. Flambeau, Inc., 2015U.S. Dist. LEXIS 173482 (W. D. Wisconsin December 31, 2015).  The case involved a manufacturer of plastic products which offered its employees various employee benefits, including participation in a health insurance plan.  Employees were not required to participate in the health insurance plan, but for those employees who wanted to be in the plan, the company established a “wellness program.”

The wellness program had two parts:  a health risk assessment and a biometric test.  The health risk component required a participant to complete a questionnaire regarding his or her medical history, diet, mental and social health and job satisfaction.  The biometric test was akin to a routine physical examination, including height and weight measurements, a blood pressure test and a blood draw.

The information from the health risk assessment was only reported to the company in the aggregate, so as to make sure that the company had no idea of any individual participant’s results.  This information helped the employer estimate the cost of providing health insurance as well as appropriate premiums and co-pays.  The information also was useful to the company in formulating weight loss competitions and modified vending machine options.

For the year 2011, the company gave employees a $600 credit if they participated and completed both the health risk assessment and the biometric test.  This credit was eliminated in subsequent years, and health insurance was only offered to those employees who completed the wellness program. 

This particular litigation arose from one employee, Mr. Arnold, who refused to complete the program tests.  That led the company to discontinue Arnold’s health insurance.  After losing his coverage, Arnold filed a union grievance and a complaint with the EEOC.  Eventually Arnold decided to participate in the program, and his benefits were reinstated.  However, the EEOC filed a law suit anyway, challenging the program.

The EEOC charged the company with violating the ADA alleging that the company could not show that it had a job related need for the medical examination.  The company countered that the ADA has a “safe harbor” provision for insurance benefit plans.  Section 12201(c)(2) provides that the ADA “shall not be construed to prohibit or restrict” an employer from establishing or administering ‘the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks.”

The federal court Judge who heard the challenge agreed with the employer.  He held that the safe harbor noted in the ADA does apply to wellness programs as a term of defendant’s benefit plan.  The Judge also found that the wellness program was “based on underwriting risks, or administering such risks.”  42U.S.C. 12202(c)(2). The Court said that underwriting risks, classifying risks or administering risks refer to the process of developing an insurance plan. 

The wellness program requirement was clearly intended to assist defendant with underwriting, classifying or administering risks associated with the insurance plan.  The undisputed evidence establishes that defendant’s consultant used the data gathered through the wellness program to classify defendant’s projected insurance costs for the benefit year.  They then provided recommendations regarding what defendant should charge the plan participants for maintenance medications and preventative care.  They also made recommendations regarding plan premiums, which included a recommendation that defendant charge cigarette smokers higher premiums. Finally, after identifying the risks through the wellness program, defendant decided to purchase stop-loss insurance as a hedge against the possibility of unexpectedly large claims.  These types of decisions are a fundamental part of developing and administering an insurance plan and therefore fall squarely within the scope of the safe harbor.

The Court also rejected the EEOC’s argument that the purpose of the ADA was to prohibit employers from asking for medical and disability-related information. The Court said the real purpose of the ADA is to eliminate discrimination against individuals with disabilities.  

“Regardless of their disability status, all employees that wanted insurance had to complete the wellness program before enrolling in defendant’s plan.  Furthermore, there is no evidence that defendant used the information gathered from the tests and assessments to make disability-related distinctions with respect to employees’ benefits.”

Employers can expect more challenges to wellness programs in the future, as the EEOC seems to be decidedly opposed to such programs. 

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

The case of Cabrera v. Cousins Supermarket, A-5287-13T1 (App. Div. February 23, 2016) covers a point not previously addressed underN.J.S.A. 34:15-40, the provision dealing with the employer’s subrogation rights to third party recoveries.

Jose Cabrera injured his right hand while operating a meat perforating machine and recovered workers’ compensation benefits under an order approving settlement in 2010.  He received both temporary and permanent disability benefits. 

Cabrera also brought a civil complaint against the manufacturer of the machine and his employer, but the arbitrator found no liability.  However, pursuant to a “high/low” agreement, Cabrera did recover counsel fees of $25,000. Those fees went to his attorney and to cover costs, but nothing went to Cabrera.

In May 2012, Cabrera issued a subpoena on Amerihealth Casualty, his health insurance carrier, to find out the amount of medical bills paid on his behalf in relation to the work injury.  Cabrera asked if Amerihealth Casualty was asserting lien rights.  Amerihealth did not respond to the subpoena.  Three months later (just prior to the arbitration) Cabrera contacted Cousins’s counsel with a request that counsel call Amerihealth to obtain the lien number.  Cousins was not informed of the impending arbitration.  The next day, Cabrera advised Cousins that he would not be honoring any lien because the lien amount had not been provided to Cabrera.  Cousins responded that it was not waiving any lien.  One day after the arbitration, the lien figures were provided to Cabrera.

Cousins filed a motion to enforce the lien underN.J.S.A. 34:15-40, arguing that there can be no waiver of lien rights where the plaintiff is already aware of the existence of a lien.  Cabrera countered that he did not get any money at all from the third party case, so there could not be a Section 40 lien.  The Appellate Division disagreed: “When a plaintiff recovers from a third party, a lien attaches regardless of whether the cumulative awards are sufficient to fully compensate for all injuries.” (citing toFrazier v. N.J. Mfrs. Ins. Co., 142N.J. 590 (1995).

The Court specifically rejected the notion that a plaintiff can avoid a workers’ compensation lien by making a demand for specific lien information and putting a deadline on supplying the lien figures.  “As to the waiver of the right to assert a lien, we do not find the argument has sufficient merit to warrant discussion in a written opinion.”   The Court added that there are sometimes risks to bringing a third party action.  “The decision to pursue a third-party action with its attendant costs is a known risk, one that is part and parcel to litigation.”

This case is interesting for two reasons:  the plaintiff got no money at all from the third party case, but the award of counsel fees was considered a double recovery.  Secondly, plaintiff’s ploy in setting a deadline to provide lien information was rejected by both the Judge of Compensation and the Appellate Division.  While it is true that the respondent was not aware of the pending arbitration hearing when the subpoena was served, the key to the decision is that Cabrera was aware of the potential lien and that was enough to establish the lien rights of the employer. 

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

Governor Greg Abbott has reappointed Ryan Brannan as Commissioner of Workers’ Compensation
for a term to expire February 1, 2017. Mr. Brannan was originally appointed by Governor Rick Perry
in 2014.

This month a Houston court of appeals rejected the Division’s definition of the term “imbecility”
for purposes of determining entitlement to Lifetime Income Benefits.
The case involved Francisco Chamul, a brick mason who fell from a scaffold onto a concrete slab
ten feet below, suffering multiple skull fractures and consequential brain injury. According to a
designated doctor he now functions at the level of an 11 or 12 year-old and will require a caretaker
for the rest of his life. He applied for LIBs.
Under Labor Code §408.161, LIBs are payable for an injury to the brain resulting in incurable
“insanity or imbecility.” However, the statute does not define the term “imbecile.”
A Division hearing officer found that Chamul was not entitled to LIBs. The hearing officer cited
prior decisions of the Appeals Panel which rely on a definition of the term “imbecile” in the 1991
edition of Webster’s Ninth New Collegiate Dictionary. That dictionary defines “imbecile” as a
“mentally deficient person, especially a feebleminded person having a mental age of three to seven
years and requiring supervision in the performance of routine daily tasks or caring for himself.” The
hearing officer determined that Chamul had not been shown to exhibit the mental age range in
question (a mental age of three to seven years).
The court of appeals reversed and remanded to the Division for further proceedings. It noted that
the Legislature added imbecility as a criterion for LIBs in 1917 and that dictionaries written at that
time included more generalized definitions of the term “imbecile” and did not limit the term to the
mental age range of three to seven years. According to the court, the 1991 dictionary on which the
Division relied is “not an appropriate source to discern the meaning of a term incorporated into a
statute more than 70 years earlier.”
Chamul v. Amerisure Mutual Ins. Co.

The Division has amended Rule 129.3, regarding Amount of Temporary Income Benefits, to
increase the hourly wage that determines whether a worker is paid TIBs at the rate of 70% or 75%
of the Average Weekly Wage for the first 26 weeks of benefits. The rule implements the amendment
to Labor Code section 408.103 which became effective September 1, 2015 and which raised the
threshold from $8.50/hour to $10.00/hour for claims with a date of injury of September 1, 2015 or
later.

This month a California judge sentenced Dr. Hsiu-Ying “Lisa” Tseng to 30 years to life in prison
for the murders of three of her patients who fatally overdosed. Tseng is among a small but growing
number of doctors charged with murder for prescribing painkillers that killed patients. She is
reported to be the first doctor in the United States to be convicted of murder by over-prescribing
drugs.

Oklahoma’s system of allowing businesses to opt out of the state workers’ compensation program
(the “Oklahoma Opt-Out”) is unconstitutional, the Oklahoma Workers’ Compensation Commission
said on February 26.
Under the Oklahoma statute, an employer may opt out of the workers’ compensation system but
retain exclusive remedy protections if they provide workers with an alternate benefits plan. Some
have said the system allows Oklahoma employers to “have their cake and eat it too.”
According to the Commission, the opt-out provision established a dual system in which injured
workers are