Court Case Update Countrywide

Court Case Update Countrywide - April 2020

Legal

By NCCI Insights April 13, 2020

NCCI’s Court Case Update provides a look at some of the cases and decisions monitored by NCCI’s Legal Team that may impact workers compensation across the states. This April 2020 edition contains updated information on cases previously introduced and presents new cases and decisions. For more information on cases monitored by NCCI’s Legal Team, visit previous Court Case Updates and Court Case Insights under the Legal section of INSIGHTS on ncci.com.

Workers Compensation Exclusive Remedy

Challenges to the constitutionality and scope of exclusive remedy—providing employer immunity from injured employee tort suits—continued as a hot topic into 2020 among workers compensation stakeholders. Below are some of the latest cases involving exclusive remedy.

Wisconsin—In February 2020, in Graef v. Continental Indemnity Co., the Court of Appeals of Wisconsin ruled that exclusive remedy bars an employee’s tort action against a workers compensation insurer for the insurer’s alleged negligent denial of benefits. The worker suffered from depression caused by a workplace accident and sued the insurer for self-inflicted injuries caused by the insurer’s failure to authorize medication to treat his depression. The case has been appealed to the state’s highest court.

Kentucky—In Ontario LTD. d/b/a JDW International v. Mackey, the Kentucky Court of Appeals, in October 2019, held that a Canadian employee, injured in Kentucky while working for her Canadian employer, is permitted to bring a civil suit in Kentucky for her injuries against the Canadian employer. The court relied on Kentucky statute 342.670(3) as providing workers compensation exclusive remedy protections for an employer from another state or Canada if, in part, the employee is “entitled to” workers compensation benefits under the employer’s domicile law. The court found that, as Canadian law permits employees to reject workers compensation benefits in favor of proceeding with a civil action, and the ability of an employee to reject workers compensation is also an integral part of Kentucky law, the employee’s rejection of Canadian workers compensation benefits means that she was not “entitled to” them.

Florida—In January 2020, in McNair v. Dorsey, the Florida First District Court of Appeal ruled that an employer was not estopped from raising an exclusive remedy defense against an employee’s tort suit, when the employer previously denied benefits on the basis that there was no injury or compensable accident at all. The court found that the employer was entitled to litigate whether a compensable accident occurred in a workers compensation forum. The court further noted that the employer cannot, however, claim that the employee doesn’t belong in a compensation forum because the accident was not work-related, and then turn around and claim that the employee must be in a compensation forum because the accident was work-related.

Idaho—In February 2020, the Idaho Supreme Court, in the case of Gomez v. Crookham Co., ruled that a separate civil lawsuit filed by the estate of an employee who was fatally injured on the job, can proceed against the employer who paid workers compensation death benefits. The court found that, pursuant to Idaho Code 72-209(3), an employer may be subject to a separate civil lawsuit if the employee can prove the employer was aware of, but consciously ignored, a danger that would result in an injury, so as to constitute a “willful or unprovoked physical aggression” against the employee under an exception to exclusive remedy.

Texas—In March 2020, the Texas Supreme Court, in Orozco v. County of El Paso, ruled that the widow of a deputy sheriff, who died in a vehicular accident while driving home in his patrol car from an extra duty assignment, was entitled to workers compensation benefits. Reasoning that the county, as the sheriff’s employer, provided the sheriff’s patrol car and controlled its use, the court found that the sheriff’s travel was in the course and scope of employment because it fell under two of the exceptions to the coming and going rule, which are (1) the employer pays for the transportation or (2) exercises control over it.

The cases of Berkel & Company Contractors, Inc. v. Lee and Mo-Vac Service Co. v. Escobedo, concerning the intentional injury exception to exclusive remedy, remain pending with the Texas Supreme Court.

Challenges to State Adoption of Third-Party Guides

Stakeholders have maintained interest in challenges to the use of the American Medical Association (AMA) Guides and other third-party guides in workers compensation across the states. In Pennsylvania the Commonwealth Court found, in October 2019, in Pennsylvania AFL-CIO v. Commonwealth, that the state legislature did not violate the Pennsylvania constitution’s prohibition against delegation of legislative authority when, in response to the Protz decision, it enacted Section 306(a.3) of the Workers Compensation Act requiring the use of the 6th Edition of the AMA Guides to evaluate impairment ratings. 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 Montana, in Hensley v. Montana State Fund, the supreme court is expected to review a constitutional challenge to Montana statute 39-71-703(2), which denies compensation to permanently impaired injured workers with no wage loss and a Class 1 impairment rating, whereas workers with a Class 2 impairment rating and no wage loss are compensated in full for their permanent impairment rating—as determined by the AMA Guides, 6th Edition.

Developments in Marijuana

Legalization of marijuana is an active area at the state and federal levels. So far in the 2020 state legislative sessions, several states have proposed legislation on issues surrounding this topic. For example, Florida (SB962) and Washington (HB2740) introduced, but failed to pass, bills offering certain protections to employees who are medical marijuana users, while Utah (SB121) passed an amendment to its medical marijuana law providing, in part, that private employers are not required to accommodate the use of medical marijuana and are not barred from having a policy restricting its use. In New Jersey, the legislature is considering a bill (A1708) that requires workers compensation insurance to cover the costs associated with medical marijuana under certain circumstances. At the federal level, pending legislation seeks 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 the meantime, state courts remain engaged in reviewing marijuana-related issues in workers compensation, as well as the workplace.

Oklahoma—The state’s highest court declined to review the case of Rose v. Berry Plastics Corp., after 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.

Arkansas—In January 2020, in Blair v. American Stitchco Inc., the Court of Appeals of Arkansas affirmed a decision by the Workers Compensation Commission finding that a claimant was not entitled to workers compensation benefits because she failed to rebut the statutory presumption that her injury was substantially occasioned by the use of marijuana, which is considered an illegal drug in the state.

Similarly, in February 2020, in Allen v. Employbridge Holding Co., the appellate court found that a worker who suffered workplace injuries was not entitled to workers compensation benefits because he could not prove, by a preponderance of the evidence, that the accident that caused the injuries was unrelated to his marijuana use.

Florida—Jones v. Grace Health Center continues to be pending before Florida’s First District Court of Appeal after a workers compensation judge 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.

New Jersey—In Wild v. Carriage Funeral Holdings, Inc., the New Jersey Supreme Court, in March 2020, ruled that a worker—who was a state-authorized medical marijuana user—could proceed with a claim against his former employer under the state’s antidiscrimination law. The worker brought an action for failure to accommodate the use of medical marijuana outside working hours as treatment for an underlying disability when the employer terminated the worker for a drug test that was positive for marijuana. Analyzing the prior version of the state medical marijuana law—which did not require employers to accommodate the medical use of marijuana by employees—the supreme court found no conflict between the medical marijuana and antidiscrimination laws. The court reasoned that, even if the medical marijuana law did not require workplace accommodations for the use of medical marijuana, the antidiscrimination law could impose such obligations. In 2019, after the events of this case, New Jersey amended its medical marijuana statute to prohibit employers from taking adverse employment actions against employees based solely on their status as medical marijuana patients.

And, in January 2020, in Hager v. M&K Construction, the Appellate Division of the Superior Court of New Jersey ruled that medical marijuana is a “reasonable and necessary” workers compensation treatment. The court further concluded that the federal Controlled Substances Act (CSA) does not preempt the state’s medical marijuana law because reimbursement under the state medical marijuana law does not require an employer to possess, manufacture, or distribute marijuana, activities that are prohibited by the CSA. The case has been appealed to the state supreme court.

Massachusetts—In Wright v. Central Mutual Insurance Co. (reported in previous editions of the Court Case Update as Wright v. Pioneer Valley), the Supreme Judicial Court is expected to review a decision from the state Department of Industrial Accidents that found because the state’s medical marijuana law conflicts with the federal Controlled Substances Act, a workers compensation insurer cannot be compelled to reimburse the cost of medical marijuana as a workers compensation treatment.

Pennsylvania—In November 2019, in Palmiter v. Commonwealth Health Systems, the Court of Common Pleas of Lackawanna County found, as a matter of first impression, that section 2103(b)(1) of the state Medical Marijuana Act, which states that employers may not discharge, discriminate, or retaliate against an employee solely on the basis of the employee’s status as a medical marijuana user, allows an employee to sue his employer for being discharged for lawfully using medical marijuana outside employment hours.

Air Ambulance Reimbursement: State vs. Federal Law

To date, state and federal courts have largely found that the federal ADA preempts state workers compensation laws and fee schedules, but the following cases remain pending: 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).

Meanwhile, state legislatures are considering proposals addressing the rising costs of air ambulance transportation outside the workers compensation area. For instance, the Florida legislature passed HB747, which requires health insurers to provide “reasonable reimbursement” to air ambulance companies for certain covered services. At the federal level, as part of the FAA Reauthorization Act, Congress created the Air Ambulance and Patient Billing Advisory Committee, which is tasked, in part, with reviewing options to protect consumers from air ambulance balance billing.

Other Federal and State Developments

Federal

State Compensability Presumption for Federal Workers
The case of United States of America v. State of Washington, which 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, has been appealed to the federal Court of Appeals for the Ninth Circuit.

Black Lung Benefits
In Freestone Coal Co. v. Director, Office of Workers Compensation Programs, the federal Court of Appeals for the Fourth Circuit was expected to determine whether a mine operator was liable to an employee for black lung benefits, even though for purposes of liability under the “last employer rule” the mine operator was not the last employer for at least one year. The court, on a joint motion to vacate by the parties, vacated the decision of the Benefits Review Board and ordered the payment of black lung benefits by the Disability Trust Fund, and not the mine operator and its insurer.

State Cases (By Geographic Zone)

Northeast

Rhode Island, Firefighter Cancer Presumptions—In December 2019, in Lang v. Municipal Employees’ Retirement System, the Supreme Court of Rhode Island found, as a threshold matter, that there is no express language in Rhode Island statute 45-19.1-1 creating a conclusive presumption that any diagnosis of cancer among firefighters is an occupational cancer. The court further found that, based on legislative intent, occupational cancer must be proven before a firefighter is entitled to receive occupational cancer disability benefits.

Pennsylvania, Compensation for Traveling Employees and Suspension of Benefits During Incarceration—The Pennsylvania Supreme Court is expected to decide, in the case of Peters v. WCAB, whether an injury is compensable when a traveling employee is injured while returning home from a work-sponsored event.

And in Sadler v. WCAB, the state supreme court is expected to determine whether section 306(a.1) of the Workers Compensation Act, which allows employers to suspend payment of benefits for the time employees are incarcerated after conviction, permits an employer to suspend payments to an employee during the time the employee was jailed on pretrial detention. The court may also consider whether the statute violates the federal and state constitutions.

New York, Awards for Scheduled and Nonscheduled Injuries—In February 2020, in Arias v. City of New, York the New York Supreme Court, Appellate Division, ruled that pursuant to New York Workers' Compensation Law § 15(3), a claimant who returned to work at pre-injury wages after suffering a work-related accident, was entitled to a loss of use award for his permanent injuries as well as to nonscheduled permanent disability benefits for other impairments arising out of the same work-related accident. This ruling is in line with the court’s other recent decisions rejecting a Workers Compensation Board guideline that denies simultaneous classifications for scheduled and nonscheduled injuries. The court further noted that the Board’s guideline failed to follow the precedent set by the case Arias v. City of New, York the New York Supreme Court, Appellate Division, ruled that pursuant to New York Workers' Compensation Law § 15(3), a claimant who returned to work at pre-injury wages after suffering a work-related accident, was entitled to a loss of use award for his permanent injuries as well as to nonscheduled permanent disability benefits for other impairments arising out of the same work-related accident. This ruling is in line with the court’s other recent decisions rejecting a Workers Compensation Board guideline that denies simultaneous classifications for scheduled and nonscheduled injuries. The court further noted that the Board’s guideline failed to follow the precedent set by the case Taher v. Yiota Taxi, Inc. and does not reflect a “fair and considered judgment” on the circumstances presented in the case.

Southeast

Kentucky, Retroactivity of Income Benefits Limitation—In Holcim v. Swinford, the Supreme Court of Kentucky, in August 2019, ruled that the 2018 amendments to workers compensation statute 342.730(4)—limiting income benefits to age 70 or four years after the employee’s injury or last exposure, whichever occurs later—apply retroactively. The court found that the duration of income benefits for workers compensation claims that are not fully and finally adjudicated, are in the appellate process, or for which time to file an appeal has not lapsed as of the effective date of the 2018 amendments, must be based on the durations set forth in the amended statute. And in a recent development, the Court of Appeals of Kentucky, upheld 342.730 against a challenge that its retroactive application violates the state and federal constitutions in Adams. v. Excel Mining, LLC.

Louisiana, Drug Test Admissibility for Benefit Denials—In October 2019, the Supreme Court of Louisiana, in Parson v. Truck Parts & Equipment, Inc., held that an unconfirmed drug test may not be used as evidence of fraud to deny workers compensation benefits under Louisiana statute 23:1208. The court explained that it is undisputed that unconfirmed drug test results cannot be used to deny benefits under an intoxication defense pursuant 23:1081, and that it would be illogical to allow the same unconfirmed drug test results to be used as proof of fraud to deny benefits under 23:1208.

Florida, Attorney Fees—The Florida First District Court of Appeal, in February 2020, in Zenith Insurance Co. v. Cruz, ruled that an employer/carrier (E/C) was liable to a claimant for attorney fees under Florida statute 440.34—which provides that an E/C can avoid attorney fees if the claim is accepted or benefits are provided within 30 days of receipt of the claimant’s petition—when the statutory 30-day period expired on a Saturday, but the E/C accepted the claim and issued payment for benefits the following Monday. The court reasoned that the statutory grace period of 440.34 is not extended by Rule 60Q-6.109 of the Rules of Procedure for Workers Compensation Adjudications, which extends deadlines to perform required acts to the next working day, when such deadline falls on a weekend or a holiday.

Arkansas, Independent Contractor—The Arkansas Court of Appeals, in March 2020, in Davis v. Ed Hickman, P.A., ruled that an injured worker could not receive workers compensation benefits because he was an independent contractor, and not an employee, despite the fact that the employer’s workers compensation insurer required the employer to pay workers compensation premiums based on the injured worker’s earnings. The court reasoned that whether the employer had a workers compensation policy that covered the employee was only one element to consider in the independent contractor analysis and concluded that other factors weighed more in the determination that the worker was an independent contractor.

Midwest

Missouri, Enhanced Mesothelioma Benefits—In February 2020, in Hegger v. Valley Farm Dairy Co., the Supreme Court of Missouri ruled that a workers compensation insurer was not liable to provide enhanced mesothelioma benefits pursuant to a 2014 statute, where the insured employer ceased to exist 16 years prior to the statute’s effective date. The court reasoned that Missouri statute 287.200.4(3)(a)—which allows for recovery of enhanced mesothelioma benefits against employers that elect to accept mesothelioma liability by insuring their liability—requires an affirmative act by an employer with respect to obtaining coverage for the enhanced benefits.

West

Alaska, Attorney Fees—In Rusch v. Southeast Alaska Regional Health Consortium, the Alaska Supreme Court, in December 2019, held that, for purposes of determining claimant attorney fee awards (which are awarded to successful claimants per Alaska statute 23.30.145), when the parties dispute whether a claimant was successful on certain issues in a settlement, the employer carries the burden of demonstrating that a claim or issue lacked merit and must explain why it nonetheless decided to settle the case and grant the requested relief.

New Mexico, Injuries Occurring on Tribal Lands—In January 2020, in Mendoza v. Isleta Resort and Casino, the New Mexico Supreme Court ruled that an employee, injured while working for the Pueblo of Isleta Indian tribe casino, could not file a workers compensation claim before the state Workers Compensation Administration (WCA). The court found that, since the Pueblo enjoyed sovereign immunity, jurisdiction over a workers compensation claim originating on tribal land could not shift to the state WCA. In its reasoning, the court rejected the employee’s argument that the Pueblo waived sovereign immunity when it entered into an Indian Gaming Compact with the state of New Mexico.

Arizona, Compensability of Mental Injuries—The Court of Appeals of Arizona, in February 2020, in France v. The Industrial Commission of Arizona, clarified the standard for determining whether a mental injury is eligible for workers compensation under Arizona statute 23-1043.01(B), which denies workers compensation for mental injuries “unless some unexpected, unusual or extraordinary stress related to the employment … was a substantial contributing cause of the mental injury, illness or condition.” The court ruled that “unexpected, unusual or extraordinary stress related to the employment” must be read as a whole to mean that the injury-inducing stress imposed on a claimant because of the employment was sufficiently significant and noteworthy to differentiate it from noncompensable, general stress caused by the claimant’s work regimen. The court reasoned that, to determine if the event that caused the mental injury was work-related, the analysis should focus on whether the stress a claimant was exposed to because of the employment was “unexpected, unusual or extraordinary” and not on whether the event itself met the standard.

Oregon, Occupational Disease Compensability Standards—In Simi v. LTI, Inc.-Lynden, Inc., the Oregon Court of Appeals ruled, in October 2019, that the cumulative effects of a claimant’s separate work-related injuries sustained over a several year period qualifies as an occupational disease under statute ORS 656.802(1)(a)(C). The court found that the statutory definition of an occupational disease, which includes “a series of traumatic events or occurrences,” is broad enough to encompass a series of injuries.

Colorado, Independent Contractor Analysis—In January 2020, in Pella Windows & Doors, Inc. v. Industrial Claims Appeals Office, the Colorado Court of Appeals ruled that the independent contractor analysis, adopted by the Colorado Supreme Court in an unemployment case, also applies to workers compensation actions. The court found that, in order to determine whether a worker is an employee or an independent contractor for purposes of workers compensation, courts should not only consider the factors set forth in the workers compensation statutes, but must also take into account any other information relevant to the nature of the work and the relationship between the employer and the individual.

Nevada, Compensation for Traveling Employees—In Buma v. Providence Corp. Development, the Nevada Supreme Court, in December 2019, addressed for the first time how the statutory requirement that an “injury arose out of and in the course of employment,” applies to employees whose employment entails travel away from the workplace. The court concluded that the inquiry should focus on whether the employee was “(a) tending reasonably to the needs of personal comfort or encountering hazards necessarily incidental to the travel or work; or, alternatively, (b) was pursuing strictly personal amusement matters.

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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