Court Case Update Countrywide - August 2019
InsightsLegal
By NCCI Insights August 15, 2019

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

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Workers Compensation Exclusive Remedy

Challenges to employer immunity from injured employee tort suits—as provided by workers compensation exclusive remedy—have persisted into 2019. Below are some of the latest cases involving exclusive remedy.

Recent Decisions:

  • Texas—The Court of Appeals for the Ninth District in Amerigas Propane, L.P. v. Aboyte-Muniz ruled that an employer’s name that was accidentally omitted from a workers compensation policy issued to its parent company was entitled to exclusive remedy immunity. The court found that the payment of premium by the employer and the receipt of benefits by injured employees constituted evidence that coverage was in place at the time of the injuries.
  • Oklahoma—In Wells v. Oklahoma Roofing & Sheet Metal, the Supreme Court of Oklahoma ruled that injuries that are substantially certain to occur are considered intentional torts by an employer and are not subject to the exclusive remedy protection of Oklahoma’s Workers Compensation Act. The court determined that “specific intent” and “substantial certainty” are both nomenclatures of an intentional tort. Thus, an employer’s act or failure to act is intentional if the employer acts with willful, deliberate, specific intent to injure, or when the employer is substantially certain that an injury will result.   

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

  • TexasBerkel & Company Contractors, Inc. v. Lee, a case concerning the intentional injury exception to exclusive remedy, remains pending with the Texas Supreme Court.
  • Wisconsin—In Graef v. Continental Indemnity Co., the Wisconsin Court of Appeals is expected to rule if exclusive remedy bars a negligence lawsuit 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 by the insurer’s failure to authorize medication to treat the depression. 

Challenges to State Adoption of Third-Party Guides

Stakeholders have maintained interest in case outcomes and state legislative action regarding the use of the American Medical Association (AMA) Guides and Official Disability Guidelines (ODG) to aid in the administration of the workers compensation system. In Kansas, Johnson v. US Food remains pending before the Kansas Supreme Court after the Court of Appeals of Kansas declared unconstitutional the use of the 6th Edition of the AMA Guides to assign disability ratings for permanent impairment and reinstated the 4th Edition. And in Texas, in Holt v. Texas Department of Insurance Division of Workers’ Compensation, a petition for review was filed with the Texas Supreme Court after a court of appeals dismissed a constitutional challenge that use of the ODG is an improper delegation of legislative authority.

Developments in Marijuana

Legalization of marijuana is an ongoing area of broad interest at the state and federal levels. In the 2019 state legislative sessions, legislatures stayed the course in taking up issues surrounding the legalization of marijuana. For example, Illinois enacted HB1438, legalizing marijuana for recreational purposes; Nevada enacted AB132, prohibiting employers from refusing employment to applicants who test positive for marijuana in a preemployment drug test; and New Jersey enacted A20, amending its medical marijuana statute to prohibit employers from taking adverse employment actions against employees based solely on their status as a medical marijuana patient. Also, in Rhode Island, H5151 was enacted which, similar to HB 579 enacted in Louisiana last year, states that employers are not required to pay for medical marijuana costs.

State courts are also engaged in reviewing marijuana-related issues in workers compensation, as well as the workplace.

  • Oklahoma—The case of Rose v. Berry Plastics Corp. is on appeal to the state supreme court; the court of appeals concluded 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.
  • Florida—In Jones v. Grace Health Center, a workers compensation judge (JCC) found that Florida’s medical marijuana statute prohibits reimbursement under workers compensation, and that requiring employers and insurers to pay for a worker’s medical marijuana would violate the federal Controlled Substances Act. The JCC also determined that employers and insurers should not be required to pay for a worker’s medical evaluation to obtain medical marijuana because the cost of the evaluation would be part and parcel of the cost of obtaining marijuana. The case has been appealed to Florida’s First District Court of Appeal.
  • New Jersey—In Wild v. Carriage Funeral Holdings, Inc., the New Jersey Supreme Court is expected to review the state’s medical marijuana law to determine whether a worker—who was a state-authorized medical marijuana user—can sue his former employer for violation of a state antidiscrimination law, when the employer terminated the worker for a drug test that was positive for marijuana metabolites.

At the federal level, pending proposals seek to decriminalize marijuana (S1552), allow state regulation without federal interference (HR2093), and protect financial institutions and insurance companies that provide services for legitimate cannabis businesses (HR1595). In a recent development, the federal Court of Appeals for the Second Circuit, in Washington et al. v. Barr, declined to consider a constitutional challenge to the inclusion of marijuana as a controlled substance, ruling that plaintiffs should exhaust their administrative remedies before suing in court.  

Air Ambulance Reimbursement: State vs. Federal Law

Courts continue to review cases addressing whether state workers compensation laws establishing air ambulance reimbursement rates are preempted by the federal Airline Deregulation Act of 1978 (ADA). Recently, in PHI Air Medical, LLC v. Tennessee Department of Labor and Workforce Development, the federal District Court of Middle District of Tennessee found that the ADA preempts Tennessee’s workers compensation fee schedule.

The following cases remain pending in state and federal courts: Eaglemed, LLC v. Travelers Insurance (Kansas Supreme Court), 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. Texas Mutual Insurance Co. (Texas Supreme Court).

To date, state and federal courts have largely found that the federal ADA preempts state workers compensation laws and fee schedules.

Other Federal and State Developments

Federal

State Compensability Presumptions for Federal Workers

The federal District Court for the Eastern District of Washington, in United States of America v. State of Washington, upheld the constitutionality of a Washington workers compensation statute that creates a presumption of compensability for certain types of diseases developed by federal contractors working at the Hanford federal nuclear cleanup site.

The federal government argued that the state statute violated the Supremacy Clause of the US Constitution and directly regulated the federal government by imposing additional costs on the cleanup operation, since the federal government had previously agreed to bear workers compensation costs in a memorandum of understanding with the state of Washington. The court rejected the federal government challenge and concluded that a federal statute (40 U.S.C. § 3172) gives authority to the states to regulate workers compensation on federal land to the same extent that the states can regulate on nonfederal land. This decision has been appealed to the federal Court of Appeals for the Ninth Circuit.

Black Lung Benefits

Freestone Coal Co. v. Director, Office of Workers Compensation Programs, a case reported in previous editions of the Court Case Update, remains pending in the federal Court of Appeals for the Fourth Circuit. This case is expected to determine whether a mine operator is liable to an employee for black lung benefits, even though the mine operator was not the last employer for at least one year under the “last employer rule”, which imposes liability for black lung benefits upon the mine operator that most recently employed a miner who is totally disabled due to pneumoconiosis, for at least a year.

State Cases (By Geographic Zone):

Northeast

  • Maryland—In a case of first impression, the Maryland Court of Special Appeals, in Schwan Food Co. v. Frederick, adopted “Larson’s Worker’s Compensation Law” three-part test to determine whether an employee’s home qualifies as a place of employment. The court ruled that injuries sustained by an employee while traveling from his “home worksite” to another work-related location may arise in and out of the course of employment and could be covered by workers compensation. However, the court remanded the case to the trial court for a factual determination of whether the employee’s home qualifies as a worksite, and whether the injuries suffered by the employee, while leaving the house to see clients, arose in the course of employment.

Southeast

  • Kentucky—In Teco/Perry County Coal v. Feltner (previously reported as Napier v. Enterprise Mining Company), the Supreme Court of Kentucky reversed a Court of Appeals decision declaring unconstitutional a Kentucky workers compensation statute that excluded permanent partial disability benefits for an occupational hearing loss involving both ears, with a resulting total body impairment rating of less than 8% under the AMA Guides. The court found that there was a rational basis for treating hearing loss claimants differently from other types of claimants and upheld the statute as constitutional.
  • Florida—The Florida First District Court of Appeal, in Abreu v. Riverland Elementary School, held that section 440.13(9)(c) of the Florida statutes that provides a presumption of correctness to the opinion of an expert medical advisor—unless there is clear and convincing evidence to the contrary— does not violate the state constitution. The case has been appealed to the Florida Supreme Court.

Midwest

  • Iowa—The Iowa Supreme Court ruled, in De Dios v. Indemnity Insurance Co., that under Iowa law, a common law cause of action for bad-faith failure to pay workers compensation benefits is not available against a third-party claims administrator of a workers compensation insurance carrier. The court found that bad-faith actions can only arise from the special contractual relation between insurers and an insured and/or from the specific statutory and administrative duties imposed on insurers, and third-party claim administrators do not fit within these parameters.

    In Clark v. Insurance Company State of Pennsylvania, a case where a group of injured workers sued their employer’s workers compensation insurer in tort for an alleged negligent workplace inspection—the state supreme court dismissed the workers constitutional challenge to a statute providing workers compensation insurers with immunity from civil liability related to workplace insurance inspections.

  • Missouri—The Missouri Court of Appeals for the Eastern District, in Hegger v. Valley Farm Dairy Co., ruled that a workers compensation insurer could be held liable to provide enhanced mesothelioma benefits pursuant to a 2014 statute where the insured employer ceased to exist prior to the statute’s effective date. The court found that the workers compensation policy in place at the time of the injured employee’s last exposure to asbestos in 1984 covered the employer’s entire liability under the Workers' Compensation Act. Thus, the court concluded that the now-defunct employer had “insured its liability” and elected to provide the enhanced benefits. The court also determined that, although the statute did not exist when the insurer wrote the policy, state law provides that compensable benefit amounts are determined by the statutory benefit levels in effect on the date of the injury, not at the time that the policy is written. The case has been appealed to the state supreme court.

    In Cosby v. Treasurer of Missouri, the Missouri Supreme Court ruled that section 287.220.2 of the Missouri Workers Compensation Law applies to all permanent partial disability (PPD) claims against the Second Injury Fund (Fund) when both the initial and subsequent injuries occurred before January 1, 2014; but section 287.220.3 applies to all PPD claims against the Fund in which at least one injury occurred after January 1, 2014. Accordingly, the court concluded that section 287.200.3 precluded a PPD claim against the Fund brought by a worker who suffered a work-related knee injury in 2014 but had other preexisting work-related injuries predating January 1, 2014.

  • Kansas—The Kansas Supreme Court, in Estate of Graber v. Dillon Companies, ruled that a worker’s injuries from a fall down a workplace stairway—where the cause of the fall was unknown—did not arise from an “idiopathic cause” to preclude compensability under workers compensation. In an issue of first impression, the court clarified that noncompensable injuries from “idiopathic causes” are medical conditions or medical events of unknown origin that are peculiar to an injured individual, as opposed to a broader interpretation that would exclude injuries from all unknown causes. In this case, the court found that, absent evidence to the contrary, the worker’s injury could not be excluded as idiopathic solely based on the fact that the cause of the fall was unknown.

West

  • Idaho—In Austin v. Bio Tech Nutrients, the Idaho Supreme Court ruled that a worker’s petition for additional medical benefits and temporary total disability benefits was timely even though it was filed more than a year after the employer/insurer sent final payment of permanent partial impairment  benefits. The court found that the statute of limitations to file for additional benefits was suspended when the employer/insurer failed to send a notice of claim status informing the worker that benefit payments were terminating. The court reasoned that, although the employer/insurer notified the worker at the time of the initial benefit payment that his benefits would begin on a certain date and end after the full amount of the award was satisfied, the employer/insurer failed to comply with the workers compensation statute that requires written notice of change of status be provided within 15 days after termination of benefit payments, and failure to send such notice suspends the one-year statute of limitation.  

    In Ayala v. Robert J. Meyers Farms, Inc., the Idaho Supreme Court ruled that the Industrial Commission violated the claimant’s due process right to a meaningful hearing when it decided the case without having received the recommendations and findings of the referee who was previously assigned to the case.

  • Texas—In Texas Mutual Insurance Co. v. Chicas, the Texas Supreme Court held that judicial appeals from decisions by the Division of Workers Compensation appeals panel, which are filed with the trial court past the 45-day statutory deadline, do not automatically divest trial courts of jurisdiction. With this decision, the Supreme Court clarified how existing precedent applies in workers compensation appeals, and overruled conflicting appellate decisions which held that the failure to meet the 45-day deadline divests trial courts of jurisdiction.

  • Arizona—In France v. The Industrial Commission of Arizona, a case reported in previous editions of the Court Case Update, the Arizona Court of Appeals will hear a first responder’s constitutional challenge to a statute that limits benefits for mental injuries, as applied to claimants with highly stressful occupations.

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

​This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.


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