Court Case Update, Countrywide - October 2018

Posted Date: October 24, 2018
    

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This Court Case Update provides a look at some of the cases and decisions monitored by NCCI’s Legal Division, which may impact and shape the future of workers compensation across the states. This edition provides updated information on cases previously introduced, and presents new cases and decisions. Previous editions may be accessed here: Insights

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Workers Compensation Exclusive Remedy

Exclusive remedy has seen many broad-based legal challenges over the years. While some litigants have tried to narrow or expand the scope of its application, others have sought to test its constitutionality. Florida and Oklahoma have seen several of these challenges in recent years, and it is likely such constitutional challenges will be an ongoing countrywide trend worthy of stakeholder attention. Below are some recent cases involving exclusive remedy.

Recent Decisions Upholding Exclusive Remedy:

  • California—On August 23, 2018, the California Supreme Court overturned a lower court decision that allowed an injured employee’s tort suit against a workers compensation utilization review physician and service provider in King v. CompPartners, Inc. The court ruled that workers compensation provides the exclusive remedy for a claimant’s injuries that may arise from the utilization review process. In Quinones v. Zurich American Insurance Co., a federal district court dismissed a lawsuit against a workers compensation insurer, finding that exclusive remedy precluded a lawsuit by the estate of a deceased worker whose death was allegedly caused by the insurer’s delay in approving medical treatment.
  • Nevada—On September 13, 2018, in Baiguen v. Harrah’s Las Vegas, LLC, the Supreme Court of Nevada held that workers compensation was the exclusive remedy for injuries arising from the employer’s failure to provide medical assistance to an employee suffering a stroke. And in Mirage Casino-Hotel, LLC v. Malita, as previously reported, the state’s highest court ruled that the exclusive remedy defense may be raised at any stage of the proceedings, even as late as a post-trial motion, when the opposing party had reasonable notice, opportunity to respond, and prejudice will not follow.

Pending Cases:

  • Texas—Several exclusive remedy cases are currently pending in Texas. For example, in Berkel & Company Contractors, Inc. v. Lee, the Texas Supreme Court has been asked to review an appellate court decision that may expand application of the “specific intent to injure” exception to workers compensation exclusive remedy. Another exclusive remedy case, Berry Contracting, L.P. v. Mann, has also been appealed to the state supreme court to review an appellate court decision that found the Division of Workers Compensation is not the only forum to determine whether an employee’s injury arose in the course and scope of employment. And Halferty v. Flextronics America, LLC, a case addressing exclusive remedy immunity provided to general contractors from lawsuits by employees of its subcontractors, is pending before the state’s highest court.
  • Florida—In Progressive Waste Solutions v. Britt, the Third District Court of Appeal is expected to address several questions in a personal injury lawsuit brought by an injured worker against an employer. They include whether workers compensation exclusive remedy precludes the trial court’s jurisdiction to enter a default judgment against the employer, and constitutional challenges to exclusive remedy raised by the injured worker. Oral argument is scheduled for December 4, 2018.

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Challenges to State Adoption of Third-Party Guides

Since the Pennsylvania Supreme Court’s 2017 decision striking the “most recent edition” of the American Medical Association (AMA) Guides in Protz v. Workers Compensation Appeals Board, challenges to use of the AMA Guides and other third-party guides in workers compensation have continued to pop up in courts across the states.

  • Kansas—In August 2018, the Court of Appeals of Kansas in Johnson v. US Food, declared unconstitutional the use of the 6th Edition of the AMA Guides to assign disability ratings for permanent impairment, reinstating the 4th Edition (following its June 2018 decision in Pardo v. UPS). The Johnson decision has been appealed and is currently pending with the Kansas Supreme Court.
  • Oklahoma—The state’s high court in Hill v. American Medical Response rejected a challenge to the AMA Guides and upheld use of the “current edition.” The court concluded that the requirement was not an improper delegation of legislative authority and that the “current edition” of the AMA Guides refers to the edition in place when the statute was enacted (6th Edition), not the most current edition adopted by the AMA at the time of a claimant’s injury or examination. The Hill decision resolved several other pending challenges to the use of the AMA Guides in Oklahoma, including Upton v. City of Tulsa and Henry v. IC Bus of Oklahoma, LLC.
  • Texas—Holt v. Texas Department of Insurance Division of Workers’ Compensation, a case challenging that the use of the Official Disability Guidelines (ODG) is an improper delegation of legislative authority, is still pending in the state appellate court.

With numerous states adopting the AMA Guides and ODG to aid in the administration of the workers compensation system, stakeholders continue to monitor case outcomes and state legislative action to address court rulings. An example is the recently passed Pennsylvania legislation (HB 1840), implementing use of the 6th Edition of the AMA Guides in response to the Protz decision.

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Developments in Marijuana

As highlighted in NCCI’s Regulatory and Legislative Trends Report and recently published Hot Topics in Workers Compensation Update, legalization of marijuana continues to be a hot topic in state legislatures. In the 2018 legislative session, at least 25 states considered marijuana-related legislation; however, only a few states enacted laws this year.

Marijuana and Workers Compensation:

As states continue to legalize medical and/or recreational marijuana, courts are expected to continue addressing marijuana-related issues in workers compensation. Notably, only three states—Idaho, Kansas, and Nebraska—have not enacted laws legalizing marijuana in some form.

While some state courts and legislatures have determined that marijuana is not reimbursable under workers compensation (see Vermont—Hall v. Safelite Group, Inc.; Maine—Bourgoin v. Twin River Paper; and Louisiana HB 579, enacted), a handful of other states have found, and continue to find, that it is reimbursable (CT, MN, NJ, NM, and NY). For example, in McNeary v. Township of Freehold, a New Jersey workers compensation judge recently ordered medical marijuana reimbursement for an injured worker who suffered from muscular spasticity, following at least one previous decision from the state’s Workers Compensation Court. And on September 27, 2018, the New Jersey legislature introduced a bill, AB 4505, that would require workers compensation coverage for medical marijuana under certain circumstances. However, many states have yet to address the reimbursement question. The supreme court in New Hampshire, for one, is expected to decide soon whether workers compensation insurers in the state are required to pay for an injured worker’s medical marijuana treatment, in Appeal of Andrew Panaggio.

Workers compensation benefits and compensability questions involving marijuana are also being reviewed. In Oklahoma, the state court of appeals is expected to review a denial of compensability when the worker tested positive for THC after suffering a workplace accident, in Rose v. Berry Plastics Corp. In Colorado, one of nine states plus the District of Columbia that have legalized recreational marijuana, there are news reports of a pending challenge (case name unknown at time of publication) to the state’s workers compensation law that allows a reduction of up to 50% of dependent death benefits when the injured or deceased worker tests positive for a controlled substance (marijuana included). And in Illinois, the governor recently signed into law the Alternatives to Opioids Act of 2018 (SB 336), which establishes a pilot program to expand medical marijuana access for opioid patients. Injured workers in the workers compensation system may qualify for medical marijuana treatment as an opioid alternative.

Marijuana and the Workplace:

State marijuana laws continue to impact the workplace. Recently, Oklahoma voters passed a ballot initiative (SQ 788) legalizing medical marijuana and protecting medical marijuana patients from adverse employment action. Ten states (AZ, CT, DE, IL, ME, MN, NV, NY, OK, and RI) now have antidiscrimination or reasonable accommodation provisions in their marijuana laws. Along with state legislatures, courts continue to review issues surrounding marijuana and the workplace.

Recent Decisions:

  • Connecticut—The federal District Court for the District of Connecticut ruled in Noffsinger v. SSC Niantic Operating Co., that an employer violated the antidiscrimination provisions of the state’s medical marijuana law when it rescinded a job offer after the applicant tested positive for marijuana and disclosed being a medical marijuana user.
  • New Jersey—In Cotto v. Ardagh Glass Packing, Inc., the federal District Court for the District of New Jersey ruled that, under New Jersey’s medical marijuana law, an employer was not required to waive a drug test for medical marijuana users who suffered a work-related accident.

Pending Cases:

As previously reported in June 2018, both Arizona and Montana have cases pending in federal court that are expected to decide whether employers violated their respective state and/or federal antidiscrimination laws by terminating employees—who were state-authorized medical marijuana users—for drug tests that were positive for marijuana. The Arizona case, Terry v. UPS, Inc., is currently pending in the federal District Court for the District of Arizona. In Montana, Carlson v. Charter Communications, is pending in the federal Court of Appeals for the Ninth Circuit.

At the federal level, marijuana remains illegal and classified as a Schedule I drug under the Controlled Substances Act. Several bills aimed at decriminalizing or allowing state regulation of marijuana without federal interference are pending before Congress (for example, S. 3174 and H.R. 2528); however, all are currently in committee and there has been little movement to date. Additionally, Washington v. Sessions, a case that seeks to declare unconstitutional the classification of marijuana as a Schedule I drug, remains pending in the federal Court of Appeals for the Second Circuit. In the meantime, courts are expected to remain actively engaged in the state-by-state patchwork of laws.

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Air Ambulance Reimbursement: State v. 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; however, several cases remain pending.

  • Kansas—A petition for review was filed with the Kansas Supreme Court in Eaglemed, LLC v. Travelers Insurance, after the appellate court ruled that the ADA preempts Kansas state law regulating air ambulance charges.
  • Colorado—Scarlett v. Air Methods has been appealed to the federal Court of Appeals for the Tenth Circuit after the federal district court upheld the ADA against a constitutional challenge and found that the ADA preempts state common law principles to determine a reasonable price for air ambulance services.
  • Texas—Air Evac EMS, Inc. v. State of Texas, Department of Insurance is currently pending in the federal Court of Appeals for the Fifth Circuit after the federal district court ruled that the ADA preempts the Texas Workers’ Compensation Act’s restrictions on air ambulance rates and billing. And as previously reported, PHI Air Medical, LLC v. Texas Mutual Insurance Co., remains pending with the Texas Supreme Court.
  • West Virginia—The federal Court of Appeals for the Fourth Circuit is scheduled to hear oral arguments on October 31, 2018 in the case of Air Evac EMS, Inc. v. Cheatham, where the federal district court previously ruled that the ADA preempts state workers compensation law. Cox v. Air Methods Corp. is also still pending with the federal District Court for the Southern District of West Virginia.

At the federal level, stakeholders are still monitoring federal legislation. Congress recently passed, and the President signed, the FAA Reauthorization Act of 2018 (H.R. 302) that, in part, creates an advisory committee charged with making recommendations to improve transparency in air ambulance fees and billing. S. 471, legislation that proposes to preserve state authority to regulate air ambulance billing, remains pending in the Senate Committee on Commerce, Science, and Transportation.

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Other Federal and State Developments

Federal Case—Black Lung Benefits Award

The federal Court of Appeals for the Fourth Circuit will consider an appeal from an award of benefits under the Black Lung Benefits Act in Freestone Coal Co. v. Director, Office of Workers Compensation Programs. This case is expected to review a federal administrative court decision that found a coal mine operator responsible for a former employee’s black lung benefits, even though for purposes of liability under the “last employer rule,” the operator was not the last employer for at least one year. The case is also expected to address whether the Black Lung Disability Trust Fund is liable for the employee’s claims when the Department of Labor did not assign such liability to other companies for which the employee last worked for at least one year, several of which the employee owned.

Kentucky—Update on Pending Cases and Recent Decision on PPD 2x Award

The case of Doctors Hospital of Augusta, LLC v. Commonwealth of Kentucky, where an out-of-state hospital raised a constitutional challenge to Kentucky’s medical fee schedule, is still pending in federal court. Also, the state supreme court will review the appellate court’s decision in Napier v. Enterprise Mining Co., which struck down a statute that eliminated income benefits when a hearing impairment resulted in less than 8% total impairment per the AMA Guides. And on September 27, 2018, in Active Care Chiropractic, Inc v. Rudd, the Supreme Court of Kentucky, in a case of first impression, held that a statute that allows for permanent partial disability (PPD) benefit payments of two times the amount otherwise payable during a “period of cessation” from employment, applies to a worker who voluntarily retires for reasons not solely related to a workplace injury and entitles that worker to the “two-multiplier” of weekly benefits.

Missouri—Enhanced Mesothelioma Benefits

On August 2, 2018, the Court of Appeals heard oral arguments in Hegger v. Amerisure Insurance Co., which is expected to decide whether the workers compensation insurer in 1984 is liable for enhanced mesothelioma benefits pursuant to the revised statute which became effective in 2014, even though the employer ceased to exist prior to 2014, and the deceased worker’s last exposure to asbestos was in 1984. Earlier in the year, and as previously reported, the supreme court decided in Accident Fund Insurance Co. v. Casey, that an employer’s current workers compensation insurer was liable for enhanced mesothelioma benefits to the estate of a deceased worker, even though the current insurer did not provide coverage to the employer in 1990 when the deceased worker was last exposed to asbestos.

Montana—Constitutional Challenges

On October 23, 2018, in Robinson v. State Compensation Mutual Insurance Fund, the Montana Supreme Court upheld the constitutionality of the independent medical examinations statute, finding that it did not violate the rights to be free from unreasonable searches, privacy, and substantive due process. The court also determined that the claimant did not have a valid constitutional tort claim against the State Fund.

Washington—Workers Compensation Coverage for Volunteers and a Challenge to Legislative Authority

The Washington Board of Industrial Appeals ruled, in In re Diane K Johnson, that a campground host injured while performing her duties for the Washington State Parks and Recreation Commission was a covered worker, not a volunteer, for purposes of industrial insurance coverage, because she received wages for her labor in the form of a free campsite, water, electricity, sewer, and trash collection services. And in Murray v. Department of Labor and Industries, the Washington Supreme Court will review whether the statute granting authority to the state’s Health Technology and Clinical Committee to determine a covered benefit under the Industrial Insurance Act, among other laws, is an unconstitutional delegation of legislative authority.

Texas—Waiver of Subrogation Against a Third Party

On September 17, 2018, the Texas Supreme Court heard oral arguments in Exxon Mobil Corp. v. The Insurance Company of the State of Pennsylvania. The case is reviewing whether a workers compensation waiver of subrogation policy endorsement incorporates terms from a contract between the insured and a third party, and whether the third-party contract limits the application of the insurer’s waiver of subrogation endorsement. In an earlier June 8, 2018 decision, in Wausau Underwriters Insurance Co. v. Wedel, the Texas Supreme Court determined that an insurer’s waiver of the right to recover directly from a liable third party is also a waiver of the right to indirectly recover from the proceeds the third party paid to an injured employee. The court denied the insurer’s motion for rehearing on October 19, 2018.

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