NWCDN Members regularly post articles and summary judgements in workers’ compensations law in your state.
Select a state from the dropdown menu below to scroll through the state specific archives for updates and opinions on various workers’ compensation laws in your state.
Contact information for NWCDN members is also located on the state specific links in the event you have additional questions or your company is seeking a workers’ compensation lawyer in your state.
Teague Campbell’s Medicare Settlement Solutions recently obtained a favorable MSA approval from CMS in a case where the plaintiff sustained a compensable back injury in 2002. He was provided authorized medical care until his release in 2009, when his authorized treating orthopaedist indicated that he would not need any additional treatment. In 2012, an outside MSA vendor was hired to prepare a MSA proposal. The proposal recommended a MSA in excess of $288,000, based largely on medications prescribed for unrelated conditions. Teague Campbell’s Medicare Settlement Solutions analyzed the file materials and relevant issues, and worked with the parties to formulate a strategy for more accurately projecting the lifetime Medicare-covered expenses specifically related to the at-work injury. Medicare Settlement Solutions prepared a new MSA proposal and handled submission of this proposal to CMS. CMS approved the new MSA amount with total funding of less than $9,000, which resulted in significant savings and ultimately allowed the parties to proceed with full and final settlement of the claim.
Paul Fields worked as a mechanic for H and E Equipment Services, LLC for over 11 years. Mr. Fields alleged an at-work injury to his back on May 24, 2012 when removing a 43-pound battery from a car. His doctor indicated this injury aggravated Mr. Fields’ pre-existing low back problems and concluded that he would be unable to return to work as a mechanic as a result of this injury. After the hearing, Deputy Commissioner Harris found that Mr. Fields had established ongoing disability since May 24, 2012 and awarded him temporary total disability (TTD) benefits and the Full Commission agreed.
The Court of Appeals, in Fields v. H and E Equipment Services, LLC, reversed the Full Commission and found that Mr. Fields had failed to meet his burden of proving disability. Specifically, the Court found that Mr. Fields had failed to produce competent evidence that it was futile for him to seek any other employment under the Russell test, and as such, Mr. Fields had failed to establish disability under Hilliard.
Under Hilliard, an employee must prove disability by establishing three things:
(1) that he or she was incapable after the injury of earning the same wages earned before the injury in the same employment;
(2) that he or she was incapable after the injury of earning the same wages he or she earned before the injury in any other employment; and
(3) that his or her incapacity to earn was caused by the injury.
In order to establish (1) and (2) above, the employee must show one of the following (known as the Russell test):
(1) medical evidence that he or she is mentally or physically incapable of working in any capacity;
(2) evidence that he or she is capable of some work, but has not been able to find any;
(3) evidence that he or she is capable of some work, but that it would be futile to attempt to find any based on age, experience, or lack of education; or
(4) evidence that he or she has obtained employment at a lower wage than the previous employment. The employee need only produce evidence of one of these factors in order to satisfy (1) and (2) under Hillard.
Mr. Fields did not produce any evidence to support (1), (2), or (4) under Russell. This left (3) which required evidence that it would be futile for him to attempt to find work because of age, experience, or lack of education. Mr. Fields did not meet his burden because he offered no testimony from a vocational expert that his pre-existing condition made it futile for him to seek employment. He also offered no labor market evidence, nor did his doctors indicate that his medical condition would preclude him from working; just that he could not return to his pre-injury job. As such, Mr. Fields could not satisfy the first two prongs of Hilliard and could not establish disability so as to entitle him to TTD and medical benefits.
Risk Handling Hints: This case establishes that employees must have expert testimony or at least some other objective evidence of an inability to return to work in order to establish futility under the third prongs of Russell. The employee’s testimony alone will not be enough. Although not specifically outlined in the holding, employees will also want to have expert medical testimony to establish incapacity to work under the first prong of Russell. If the employee does produce an expert or other evidence of disability, defendants will want to retain an expert of their own to contradict employee’s evidence where possible.
Thomas Lowe worked as a tire technician for Branson Automotive, which involved tire mounting, dismounting, and balancing in addition to oil changes. This job required frequent lifting between 50 and 100 pounds, bending, and squatting. Mr. Lowe sought benefits for an alleged February 8, 2012 neck and low back injury when lifting a wheel and tire that weighed approximately 110 pounds. Deputy Commissioner Ledford found the claim compensable and awarded indemnity and medical benefits. The Full Commission reversed and denied the claim.
The Court of Appeals, in Lowe v. Branson Automotive, upheld the Full Commission’s denial of Mr. Lowe’s claim for benefits based on his lack of credibility. The Court agreed with the Commission and relied on several facts to uphold the denial of this claim:
Risk Handling Hints: The decision in Lowe serves as a reminder that lack of credibility is still grounds for denying a claim. It is important to get information from an employee and witnesses on how an injury occurred soon after it is reported. Some factors to consider when determining whether to deny a claim based on lack of credibility are:
Frances Atiapo worked as a truck driver for Goree Logistics, Inc. Goree contracted with Owen Thomas, a freight broker, to transport goods for another company. While driving a load of goods for Goree, Frances Atiapo was injured in a motor vehicle accident in Colorado. Goree did not have workers’ compensation insurance and denied Mr. Atiapo’s claim, contending he was an independent contractor and that workers’ compensation coverage was not required because Goree employed less than three employees. The Commission ultimately found Owen Thomas liable as a statutory employee and ordered it to pay Atiapo workers’ compensation benefits pursuant to N.C.G.S. § 97-19.1. In its Amended Opinion and Award, the Commission also assessed penalties against Goree and its principal, Mandieme Diouf, for failing to carry workers’ compensation insurance.
In Atiapo v. Goree Logistics, Inc., the Court of Appeals agreed with the Commission’s decision to hold Owen Thomas liable for Atiapo’s workers’ compensation claim as a statutory employer under N.C.G.S. § 97-19.1. Although Owen Thomas contended it was only a freight broker, the court decided Owen Thomas had extended its role beyond a broker to that of a contractor under § 97-19.1. The court noted Owen Thomas used its own judgment in selecting motor carriers for its clients and controlled aspects of the motor carrier’s work, including the delivery of the goods, the frequency with which motor carriers reported to Owen Thomas, and the temperature at which the freight was maintained during transport. Owen Thomas also retained any monies received from its clients above amounts paid to its chosen motor carriers. In addition, the court rejected Owen Thomas’ argument that § 97-19.1 was preempted by federal laws regulating interstate commerce, holding that the federal preemption established in 49 U.S.C. § 14501(c)(1) does not apply in these circumstances.
Although Goree did not employee three or more employees, the court also upheld the assessment of penalties against Goree and Diouf for failing to carry workers’ compensation insurance. The Commission had concluded that the number of employees Goree employed was irrelevant because § 97-19.1 imposes liability on a motor carrier under the Workers’ Compensation Act irrespective of the number of the motor carrier’s employees. Also, N.C.G.S. §§ 97-9 and 97-93 require employers subject to the Act, in this case Goree, to secure compensation for their employees and to maintain workers’ compensation insurance.
Risk Handling Hints: In holding the freight broker liable where its contracted motor carrier was uninsured, and in penalizing the motor carrier, theAtiapo case demonstrates the broad reach of N.C.G.S. § 97-19.1, along with the policy of the Act to ensure compensation for injured employees. Atiapo also leaves open the question of whether a contractor under N.C.G.S. § 97-19 who employees less than three individuals can be penalized for failing to maintain workers’ compensation coverage. Freight brokers would benefit from reviewing their contracts and obtaining valid certificates of insurance from subcontractors who agree to provide coverage. Motor carriers should also carefully assess their insurance coverage to ensure compliance with N.C.G.S. §§ 97-9, 97-19.1 and 97-93.
The Atiapo case was of special interest to our firm, as we serve many commercial transportation clients. PartnersBill Bulfer and Brad Inman have spent much of the past decade working directly with industry associations and our clients to ensure a favorable risk environment. We believe there are alternative defense strategies available and encourage commercial transportation providers and their carriers to discuss with us some of our more coordinated, holistic approaches to defending these claims.
We all know that before finalizing a settlement in a workers’ compensation claim, the parties need to determine whether Medicare has already made any payments and, if so, whether there is a conditional payment lien. The obvious risk in not addressing conditional payments before resolving a case is that Medicare may come back after the settlement seeking reimbursement for conditional payments that it made while the claim was open. If Medicare does have to seek repayment after the settlement, it can seek more than just the amount of the conditional payments. Medicare can seek twice that amount, or double damages.[1]
Medicare is not the only entity that can come after a party to obtain reimbursement for conditional payments. The Medicare Secondary Payer Act also includes a private cause of action which means that the injured employee can sue the carrier for failure to reimburse Medicare for conditional payments.
The private cause of action in the context of a workers’ compensation award was recently addressed in Estate of McDonald v. Indenmity Insurance Company of North America, 2014 U.S. Dist. LEXIS 121902. In this case, the Western District of Kentucky awarded the employee’s estate the full amount of Medicare conditional payments, plus double damages, despite the carrier having already reimbursed Medicare.
By way of background, the employee was involved in a motor vehicle accident, which he alleged was work related. The resulting workers’ compensation claim was denied. Between the accident on May 10, 2007, and his ultimate death on November 5, 2007, Medicare paid $180,185.75 in medical bills. On December 28, 2009, the Kentucky Workers’ Compensation Board found the accident and resulting death were work related and ordered the employer/carrier to pay medical expenses. The final order was issued on March 9, 2010.
On September 13, 2012, the estate of the injured employee filed a lawsuit under the Medicare Secondary Payer private cause of action. After the lawsuit was filed, the carrier received a Medicare conditional payment letter dated September 18, 2012, which was followed by the Final Demand Letter on October 25, 2012. The carrier paid the full conditional payment amount to Medicare on December 11, 2012, and received a letter from Medicare dated January 11, 2013, acknowledging payment in full and closure of the file. The carrier moved to dismiss the lawsuit, in part, because the conditional payment had been reimbursed per Medicare’s demand. The court did not agree, instead relying upon the same reasoning as the 8th Circuit as follows:
The thinking behind the statute is apparently that (1) the beneficiary can be expected to be more aware than the government of whether other entities may be responsible to pay his expenses; (2) without double damages, the beneficiary might not be motivated to take arms against a recalcitrant insurer because Medicare may have already paid the expenses and the beneficiary would have nothing to gain by pursuing the primary payer; and (3) with the private right of action and the double damages, the beneficiary can pay back the government for its outlay and still have money left over to reward him for his efforts.
Estate of McDonald, 2014 U.S. Dist. LEXIS 121902, *5. The court held that the carrier’s argument—that it had already reimbursed Medicare, so there was “no harm, no foul”— disregarded the two years between the order for payment made by the Workers’ Compensation Board and the filing of the lawsuit, during which the carrier did nothing to either notify or reimburse Medicare. The court awarded the employee’s estate the full amount of the $184,514.24 in Medicare conditional payments, plus double damages in that amount, as a reward for the estate’s efforts.
This private cause of action is also being exercised by Medicare Advantage Plans. Although the circuits are somewhat split, the majority are allowing such plans to initiate lawsuits seeking reimbursement for expenses paid under Medicare Part C.
Risk Handling Hints:
It is important to include language in your settlement agreement to address how conditional payments are being addressed. But what happens if your case goes to a hearing and responsibility for payment of medical care is retroactively established? We recommend contacting the Benefits Coordination & Recovery Center (BCRC) once a final award establishes responsibility for payment of medicals to obtain any conditional payment amount that must be reimbursed.
We also recommend beginning the process to verify any conditional payments beforereaching a final settlement or taking a case to hearing. Although Medicare is reluctant to provide a final conditional payment amount prior to settlement, we recommend reporting the claim to Medicare, which is done through the BCRC, to establish a case identification number, which will begin the conditional payment investigation process. At any point after the claim has been established, a party may then report the settlement, which will generate a final conditional payment letter. We are looking forward to Medicare’s full implementation of Section 205 of the SMART Act which will allow the parties to obtain a final conditional payment amount prior to settlement.
The law is not yet settled on how much time must pass before an employee is able to file the private cause of action (although the SMART Act established a three-year statute of limitations for pursuing a claim for conditional payment reimbursement, which begins to run from the date notification of settlement or award is provided to Medicare), the amount of damages that can be recovered, and the standard for demonstrating entitlement to double damages, but it is clear that carriers and defense counsel can take steps to mitigate any potential damages. In addition to the list above, some best practices we recommend include the following:
[1] 42 U.S.C. § 1395y(b)(2)(B)(2).
On August 17, 2006, Danny K. Allred was injured in a motor vehicle accident while working for Exceptional Landscapes Inc., which was not self-insured and did not have workers’ compensation insurance at the time. Allred filed a From 18 and a Form 33. At a mediated settlement conference in February 2007, the parties could not reach an agreement as to the workers’ compensation claim and instead, attempted to reach an agreement regarding the liability claim, purportedly based upon the assumption that Allred would withdraw his workers’ compensation claim. An agreement was reached in which Exceptional Landscapes agreed to pay Allred $26,000.00, but made no mention of medical bills. Payment was made and Allred never withdrew his workers’ compensation claim and the claim went to hearing.
On March 30, 2012, the Full Commission entered an Opinion and Award finding that the Commission had jurisdiction over the matter and that the settlement agreement did not comply with the requirements of N.C. Gen. Stat. § 97-17 inasmuch as it was not ‘fair and just.’ The Commission also found two shareholders and Exceptional Landscape’s secretary jointly and severally liable for the indemnity and medical compensation due in this case. Defendants appealed.
On May 21, 2013, in Allred v. Exceptional Landscapes, Inc.,the Court of Appeals first addressed the issue of jurisdiction and found that the Commission had jurisdiction over the claim even though the settlement agreement pertained to Allred’s liability claim. The Court noted that in order to invoke jurisdiction, an employee must either file a claim for compensation or submit a settlement for approval and by filing the Form 18 and Form 33 with the Commission for the August 2006 injury, Allred had invoked the Commission’s jurisdiction and the Commission retained continuing jurisdiction of all proceedings there initiated.
The Court also concluded that the Commission did not err in concluding that the settlement agreement was not "fair and just" as required by N.C. Gen. Stat.
§ 97-17. N.C. Gen. Stat. § 97-17 mandates that medical expenses be addressed in the settlement agreement. The parties’ settlement agreement did not make any provision for payment of Allred’s medical expenses, nor did it provide adequate indemnity compensation given Allred’s physical and vocational limitations at the time of the settlement.
As for the award of attorney’s fees under N.C. Gen. Stat. §97-88, the Court held that the Commission did err because none of the Defendants were ‘insurers’ as used in the statute and as such, no ‘insurer’ appealed the decision to trigger an award of sanctions. The Court also found that the Commission erred in piercing the corporate veil as to Exceptional Landscape’s treasurer since she was not a shareholder of the corporation. As treasurer, Defendant J. Wright did not exercise control over the business or maintain complete domination of policy, finances, and business practices, nor did she exercise such control over Exceptional Landscapes, Inc., that the corporate entity had no separate existence.
Risk Handling Hint: Employers are strongly advised to ensure that they are maintaining proper and adequate workers’ compensation coverage while conducting business in North Carolina. The Industrial Commission will not tolerate business owners that neglect their responsibilities. The Allred case is also a reminder to employers and risk managers to ensure that all terms of claim resolution are addressed in a mediated settlement agreement, especially payment of medical expenses. The Industrial Commission will scrutinize settlement agreements for the consideration paid to the employee and to ensure that the issue of payment of medical expenses is adequately addressed.
When principal contract is insured but carrier defaults, subcontractor liable
Jose Clemente Hernandez Gonzalez had worked for Worrell Construction as a carpenter and then crew leader for about ten years. On March 24, 2009, he rode home from a job site as a passenger in Defendant Worrell’s vehicle. Defendant Lamm was the general contractor for the project and Defendant Worrell was the sub-contractor. On the way home, another employee drove Defendant Worrell’s vehicle off the road and into a tree. As a result of the accident, Gonzalez was rendered a quadriplegic. Defendant Worrell was insured by Cincinnati Insurance Co., and Defendant Lamm was insured by Builders Mutual.
The matter was initially heard by Deputy Commissioner Adrian Phillips, who found Defendants Worrell/Cincinnati and Defendants Lamm/Builders Mutual jointly and severally liable to Gonzalez for his injury. Both Defendants filed separate Motions for Reconsideration: Cincinnati on the basis that it had cancelled its policy with Worrell and Lamm/Builders Mutual seeking to have the Deputy modify the award, both of which were denied. Defendants appealed to the Full Commission who affirmed the Deputy Commissioner’s award but held that Defendant Lamm/Builders Mutual would only be liable for disability benefits if Defendant Cincinnati defaulted in payments. Defendant Cincinnati appealed to the Court of Appeals, and Defendant Lamm/Builders Mutual filed a cross-appeal.
On June 19, 2012 in Gonzalez v. Worrell et al., the Court of Appeals concluded that the Commission did not err in finding Defendant Cincinnati jointly and severally liable to Gonzalez. The Commission relied on N.C.G.S. §§ 58-36-105(b) and 58-36-110(b) and found Cincinnati’s policy was still in effect at the time of the accident. Cincinnati was unable to produce a "green card" or other proof of service of the cancellation notice. Despite the testimony of a postal worker that the cancellation had been delivered, the Court noted that Cincinnati could only establish that the cancellation process had started but not that it was completed. There was also evidence that Worrell continued to pay premiums and that Cincinnati had failed to provide a non-renewal notice. As a result, the policy was in effect on the date of the accident and Cincinnati was jointly liable to Gonzalez for his injury.
The Court also found that the Commission did not err in finding Defendants Lamm/Builders Mutual liable because of their failure to obtain a certificate of insurance. Defendants Lamm and Builders Mutual became liable to the same extent as the subcontractor under N.C.G.S. § 97-19 by failing to obtain the certificate of insurance for the project that resulted in Gonzalez’s injury. The Court further held that Defendants Lamm/Builders Mutual liability in the event that Cincinnati defaulted on its payments was not against legislative intent or public policy.
On December 12, 2012, the Supreme Court allowed Defendant Cincinnati Insurance Co.’s petition for discretionary review. On April 12, 2013, the Supreme Court affirmed the Court of Appeals but since only six Justices participated in the decision and the panel was equally divided, the decision of the Court of Appeals was left undisturbed and without precedential value.
On April 8, 2004, Katherine Williams, a customer service representative for Bank of America, injured her back, arm and neck when a chair was pulled out from under her. Williams sought medical treatment, particularly for headaches and neck pain, and continued to work for Bank of America until she was laid off in 2008. In the Fall of 2009, her neurologist determined that she was unable to work in any capacity due to cervical disc disease and intractable post-traumatic headaches. At a subsequent hearing before the Deputy Commissioner, Williams was awarded temporary total disability benefits and ongoing medical treatment.
Defendants appealed to the Full Commission on November 15, 2011 and on December 8, 2011, the transcript of the hearing was transmitted electronically to the parties by the Industrial Commission. After receiving no further filings from Defendants, Williams filed a Motion to dismiss Defendants’ appeal on January 16, 2012 for failure to timely file a Form 44 Application for Review and a brief. On January 24, 2012, Defendants responded to Plaintiff’s Motion and also filed their Form 44 and brief. The Full Commission denied Williams’ Motion to Dismiss the appeal, but sanctioned Defendants by waiving their opportunity for oral argument. The Full Commission subsequently entered an Opinion and Award affirming the Deputy Commissioner’s decision with minor modifications. Both parties appealed.
On April 2, 2013, in Williams v. Bank of America, the Court of Appeals held that the Full Commission did not err in allowing Defendants’ appeal to go forward despite their failure to strictly comply with the time limitations set for filing a Form 44 and brief in Industrial Commission Rule 701. The Court noted that although Industrial Commission Rule 801, which allows the Commission to waive its rules in the interest of justice, does not allow the Commission to waive total noncompliance with Rule 701, in this instance, the Commission’s decision to waive strict compliance with Rule 701 was not abuse of discretion.
The Court next addressed the Full Commission’s conclusion that Williams’ headaches were causally related to her work injury and that she was disabled as a result. The Court rejected Defendants’ contention that the opinion of Williams’ treating neurologist, that her headaches were causally related to her work accident, was speculative and that he failed to rule out other potential causes of the headaches. The Court noted that the neurologist’s affidavit and deposition testimony established that he did consider other possible causes of Williams’ headaches and, ultimately, testified to a reasonable degree of medical certainty that her work related injury caused her headaches, which was sufficient to support the Commission’s determination.
Defendants also contended that Williams failed to meet her burden of proving an ongoing disability, particularly when she was able to continue working after her accident for more than four years, an assertion the Court rejected. It noted that Williams’ testimony regarding the debilitating effect of her post-traumatic headaches was sufficient, in itself, to establish her disability. However, Williams also offered the testimony of her neurologist that her post-traumatic headaches prevented her from being a "reliable employee" due to the fact that she could not maintain "consistent performance." In addition, her vocational expert testified that it would be futile for Williams to seek employment because he did not believe she could maintain it. As a result, the Court upheld the Full Commission’s determination that Plaintiff’s headaches were related to her on-the-job injury and that she continued to be disabled as a result.
Risk Handling Hint:Williams is another reminder that the Full Commission may rely on an injured worker’s own testimony regarding their incapacity for work and that such testimony, by itself, can be sufficient to meet the injured worker’s burden of proof.
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Mary Frances Powe sustained a compensable injury to her low back and left hip in 2001 for which she received weekly indemnity benefits and vocational rehabilitation provided by Defendants. In 2005, those benefits were suspended due to non-compliance with vocational rehabilitation, a decision which was affirmed by the Full Commission and Court of Appeals (Powe I). Defendants continued to provide vocational rehabilitation through February 22, 2008, when the vocational case manager terminated those services. Although Powe attended vocational meetings, she consistently failed to follow through on the case manager’s suggestions and recommendations.
At a hearing in 2009, the Deputy Commissioner determined that Powe continued to be non-compliant with vocational rehabilitation, but held that since Defendants had stopped offering vocational rehabilitation, Powe was entitled to reinstatement of her indemnity benefits. On appeal, the Full Commission concluded that Powe had not "fully complied" with vocational rehabilitation, but affirmed the Deputy Commissioner’s Order to reinstate Powe’s indemnity benefits as of the date vocational services ceased. Both parties appealed and the Court of Appeals remanded the case to the Full Commission for further findings regarding whether Powe was substantially compliant, and not significantly interfering with, the vocational case manager’s efforts to assist her in returning to suitable employment (Powe II). (See Risk Alert Vol. 13, No. 9, Oct. 2011) The Court also directed the Full Commission to address in more detail why vocational rehabilitation was not being provided.
On remand, the Full Commission found that Powe misrepresented her true physical capacity to the vocational case manager; her attendance at vocational meetings, alone, was insufficient to constitute substantial compliance with vocational rehabilitation; Powe failed to make a genuine effort to locate employment and comply with vocational rehabilitation; she interfered with her case manager’s efforts to assist her and willfully refused vocational rehabilitation through February 22, 2008; the cessation of vocational rehabilitation was not entirely the result of Powe’s failure to comply; Powe would have benefitted from continued vocational rehabilitation which Defendants should have provided; and Powe’s failure to comply with vocational rehabilitation ceased when those services stopped in February 2008. As a result, the Full Commission reinstated Powe’s indemnity benefits as of that date. Both parties appealed.
On April 2, 2013 in Powe v. Centerpoint Human Services (Powe III), the Court of Appeals affirmed in part the Full Commission’s decision and again remanded for further findings of fact on the issue of Powe’s disability. The Court noted that while the Commission is not required to make findings as to each fact presented by the evidence, it must make specific findings as to crucial facts on which the injured worker’s right to compensation depends. Because Powe’s disability affected her right to compensation, the Court held that the Commission was required to make specific findings as to both the existence and extent of her disability.
The Court also held the Full Commission did not err in reinstating Powe’s benefits as of February 22, 2008. It is well established in North Carolina that an appellate court is bound by the Full Commission’s findings of fact so long as there is any credible evidence to support them, even when the record contains evidence to the contrary and even though the Court disagrees with the Commission’s findings. Therefore, although the evidence Powe presented was minimal, at best, it was competent to support the Commission’s finding that vocational rehabilitation was ended prematurely and due, at least in part, to factors other than Powe’s noncompliance.
Risk Handling Hint:
Powe III cautions risk managers to carefully consider ending vocational rehabilitation efforts when the injured worker retains some wage earning capacity and the cessation of services is, even in part, for reasons other than the injured worker’s noncompliance.