Court Case Update Countrywide - April 2019
By NCCI Insights April 2, 2019

This Court Case Update provides a look at some of the cases and decisions monitored by NCCI’s Legal Division that may impact and shape the future of workers compensation across the states. This April 2019 edition provides updated information on cases previously introduced and presents new cases and decisions. To access previous editions, visit INSIGHTS.


Workers Compensation Exclusive Remedy

Challenges to the constitutionality and scope of the exclusive remedy has been a hot topic in the courts in recent years. Below are some of the latest cases involving exclusive remedy.

Recent Decisions:

  • Arkansas—The Court of Appeals of Arkansas, in January 2019, in Vasile Stan v. Vences, ruled that an employer did not waive its workers compensation exclusive remedy defense when it failed to respond to a negligence lawsuit filed by an injured employee. The decision was appealed to the Arkansas Supreme Court, but review has not yet been granted.
  • Florida—In December 2018, the Third District Court of Appeal, in Progressive Waste Solutions v. Britt, upheld a default judgment entered against an employer that failed to respond to an employee’s negligence lawsuit for work-related injuries.
  • Louisiana—In January 2019, the Louisiana Supreme Court found, in Griggs v. Bounce N’ Around Inflatables, L.L.C, that minors who are injured while illegally employed or engaged in illegal tasks during the employment are not exempt from the exclusive remedy provision of workers compensation and cannot sue in tort.
  • Minnesota—In February 2019, in Daniel v. City of Minneapolis, the Minnesota Supreme Court reversed its previous precedent, ruling that an employee—who was injured while working and received workers compensation benefits—may also bring claims against his employer under the Minnesota Human Rights Act for disability discrimination related to his workplace injury.
  • South Carolina—In Matthews v. E.I. Du Pont De Nemours & Co., the Federal District Court of South Carolina ruled, in November 2018, that exclusive remedy barred a civil lawsuit against the former employer of a deceased worker who contracted lung cancer from workplace asbestos exposure approximately 40 years earlier, even though the worker’s estate was time-barred from claiming workers compensation benefits.

Pending Cases:

  • Texas—Two exclusive remedy related cases are pending in Texas. Berkel & Company Contractors, Inc. v. Lee (concerning the intentional injury exception to exclusive remedy) remains pending with the Texas Supreme Court. In addition, a petition for review has been filed with the Texas Supreme Court in Mo-Vac Service Co. v. Escobedo, where, similar to Berkel, the court could address the scope of the intentional injury exception to exclusive remedy.
  • Wisconsin—In Graef v. Continental Indemnity Co., the Wisconsin Court of Appeals will likely determine whether exclusive remedy bars a negligence lawsuit brought by a worker against a workers compensation insurer. The worker suffered from depression caused by a workplace accident and is suing the insurer for self-inflicted injuries allegedly caused after the insurer failed to authorize a medication to treat the depression.

Challenges to State Adoption of Third-Party Guides

Challenges to the use of the American Medical Association (AMA) Guides and other third-party guides in workers compensation continue to be decided in courts across the states.

  • KansasJohnson v. US Food remains pending before the Kansas Supreme Court. In August 2018, the Court of Appeals of Kansas found the use of the 6th Edition of the AMA Guides to assign disability ratings for permanent impairment as unconstitutional, reinstating the 4th Edition.
  • Texas—In Holt v. Texas Department of Insurance Division of Workers’ Compensation, a court of appeals dismissed a challenge that use of the Official Disability Guidelines (ODG) is an improper delegation of legislative authority, reasoning that the case had to be brought under the Administrative Procedures Act to challenge the validity of an administrative rule.

Stakeholders continue to monitor case outcomes and state legislative action regarding the use of the AMA Guides and ODG to aid in the administration of the workers compensation system.

Developments in Marijuana

Legalization of marijuana is an ongoing area of broad interest at the state and federal levels. Courts have been actively reviewing marijuana-related issues in workers compensation and the workplace, with varying outcomes across the states.

Marijuana and Workers Compensation:

  • Delaware—In October 2018, in Giles & Ransome v. Kalix, the state superior court found that an employer was required to reimburse an injured worker for the entire cost of his medical marijuana treatment, including a portion of the treatment that an expert witness considered excessive. The court adopted the Board of Industrial Accident’s conclusion that since medical marijuana is not part of the fee schedule and absent legislative guidance, the worker was entitled to full reimbursement because the worker was trying to determine the appropriate dosage and frequency.
  • Massachusetts—In February 2019, the state Department of Industrial Accidents found, in Wright v. Pioneer Valley, that because the state’s medical marijuana law conflicts with the federal Controlled Substances Act, a workers compensation insurer cannot be compelled to reimburse an employee for medical marijuana workers compensation treatment.
  • New Hampshire—The New Hampshire Supreme Court ruled, in March 2019, in Appeal of Andrew Panaggio, that the state medical marijuana law does not prohibit reimbursement under workers compensation; however, the Court did not rule that a worker is actually entitled to reimbursement.
  • Oklahoma—In Rose v. Berry Plastics Corp., the state court of appeals concluded, in November 2018, that the presence of THC in an employee’s blood after a workplace accident does not automatically mean that the employee was intoxicated so as to deny workers compensation benefits.

Marijuana and the Workplace: The impact of marijuana laws in the workplace remains an issue before state legislatures and the courts.

Recent Decisions:

  • Arizona—In February 2019, in Whitmire v. Wal-Mart Stores Inc., the federal District Court for the District of Arizona ruled that an employee—who was a state-authorized medical marijuana user—could sue her employer for violation of the state medical marijuana law antidiscrimination provision, when the employer terminated the employee for a drug test that was positive for marijuana.
  • Delaware—In December 2018, the Superior Court, in Chance v. Kraft Heinz Foods Co., made a ruling similar to the above-mentioned Whitmire Arizona case, regarding Delaware’s medical marijuana law antidiscrimination provision.
  • Michigan—In February 2019, the Michigan Court of Appeals ruled, in Eplee v. City of Lansing, that an employer did not violate the state medical marijuana law by rescinding an employment offer to a job applicant who was a medical marijuana user, after learning that the applicant tested positive for marijuana.
  • Montana—The federal Appellate Court for the Ninth Circuit found, in November 2018, in Carlson v. Charter Communications, that federal contractors are not precluded from banning marijuana use among employees and the Montana Marijuana Act does not authorize wrongful termination suits for marijuana use.

Air Ambulance Reimbursement: State vs. Federal Law

Federal and state courts across the country have continued to address whether state workers compensation laws establishing air ambulance reimbursement rates are preempted by the federal Airline Deregulation Act of 1978 (ADA). To date, state and federal courts have largely found that the federal ADA preempts state workers compensation laws and fee schedules, including the recent Air Evac EMS, Inc. v. Cheatham decision from the federal Court of Appeals for the Fourth Circuit in West Virginia. However, several cases remain pending.

The following air ambulance cases continue to be pending in state and federal courts: Eaglemed, LLC v. Travelers Insurance (Kansas Supreme Court), Scarlett v. Air Methods (federal Court of Appeals for the Tenth Circuit), Air Evac EMS, Inc. v. State of Texas, Department of Insurance (federal Court of Appeals for the Fifth Circuit), and PHI Air Medical, LLC v. Tennessee Department of Labor and Workforce Development (federal District Court of Middle District of Tennessee). The case of PHI Air Medical, LLC v. Texas Mutual Insurance Co. (Texas Supreme Court) was stayed pending resolution of the bankruptcy petition filed in federal court by PHI Air Medical.

Other State and Federal Developments

Washington—Challenge to Legislative Authority
In Murray v. Department of Labor and Industries, the Washington Supreme Court rejected a constitutional challenge that the statute which grants authority to the state’s Health Technology and Clinical Committee (HTCC) to determine coverage for certain workers compensation related medical procedures is an improper delegation of authority. The court found that HTCC determinations are given considerable weight, but the Department of Labor and Industry remains ultimately responsible for workers compensation medical treatment decisions.

Texas—Waiver of Subrogation Against a Third Party
The Texas Supreme Court ruled, in Exxon Mobil Corp. v. The Insurance Company of the State of Pennsylvania, that a carrier’s workers compensation waiver of subrogation policy endorsement does not include liability limitation terms from a contract between an insured and a third party that is benefited by the waiver, since the endorsement did not incorporate by reference the specific contractual limitations. A motion for rehearing was not filed within the timeframe allowed.

Florida—Timeliness for Claim Investigations
The Florida First District Court of Appeal ruled, in Rente v. Orange County BOOC, that employers are not required to begin the investigative process when there is certainty that the condition is not compensable. The statute at issue allows an employer to pay benefits for 120 days while investigating a claim without waiving the right to deny compensability. The court held that the duty to investigate is triggered once the employer becomes aware of sufficient information that calls compensability into question.

Arizona—Constitutional Challenge
The Court of Appeals will hear the case of France v. The Industrial Commission of Arizona, where a first responder is challenging the constitutionality of a statute as applied to claimants with highly stressful occupations. The first responder was denied workers compensation benefits to treat a mental injury since he failed to show that the work-related stress was “extraordinary and unusual” related to the type of work performed in his occupation.

Missouri—Second Injury Fund Claims
The Missouri Supreme Court, in Cosby v. Treasurer of Missouri, is expected to review the constitutionality of a statute that prohibits any claims for permanent partial disability (PPD) benefits against the Second Injury Fund for injuries occurring after January 1, 2014.

Iowa—Bad Faith Liability for Claims Administrators
The Iowa Supreme Court will decide, in De Dios v. Indemnity Insurance Co., the circumstances under which a third-party claims administrator can be held liable for the tort of bad faith for failure to pay workers compensation benefits. The case is pending as a certified question from a federal district court. Oral argument occurred on February 13, 2019.

Federal Case—Constitutional Challenge to a State’s Workers Compensation Law
In United States of America v. State of Washington, the federal District Court of the Eastern District of Washington is expected to decide whether the supremacy clause of the US Constitution is violated by a newly enacted state law that creates a presumption of compensability for workers who suffered from certain diseases after being employed at a federal nuclear facility.

Ongoing Cases—The following cases, reported in previous editions of the Court Case Update, are still pending:

  • FederalFreestone Coal Co. v. Director, Office of Workers Compensation Programs (determining whether a mine operator is liable to an employee for black lung benefits, even though, under the “last employer rule,” the mine operator was not the last employer for at least one year)
  • KentuckyNapier v. Enterprise Mining Co. (considering a constitutional challenge to a workers compensation statute that denies permanent partial income benefits for hearing impairments that result in a total impairment of less than 8%)
  • MissouriHegger v. Amerisure Insurance Co. (determining whether a statute providing enhanced benefits for claimants affected with mesothelioma can be applied to the workers compensation insurer of an employer that ceased to exist before the statute’s effective date)

For more information on these and other cases, visit INSIGHTS.

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