NCCI’s Countrywide Court Case Update highlights workers compensation (WC) appellate decisions monitored by NCCI’s Legal Team in the second half of 2023 and so far in 2024. The cases included in this edition address important industry topics such as exclusive remedy, marijuana, employee or independent contractor status, first responder presumptions, and other state-specific developments.
For more information on cases reported by NCCI’s Legal Team, visit previous Court Case Updates, and Court Case Insights on ncci.com.
Exclusive remedy—providing employers with immunity from employee tort suits for work-related injuries covered by WC—continues to be a closely watched topic among WC stakeholders.
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California, Liability for Rendering Care to Injured Employee
Jimenez v. Mrs. Gooch’s Natural Food Markets, Inc. (August 28, 2023)
The California Court of Appeal, Second District, affirmed the dismissal of a wrongful death lawsuit against an employer brought by the wife and children of an employee who died after being fatally injured when crossing an intersection near the employer’s premises during a break. The plaintiffs argued that exclusive remedy did not bar the lawsuit because the employer was acting as a first-aid provider—not as the employer—when it assisted the employee after he was injured. The plaintiffs also asserted that the lawsuit could proceed under a fraudulent concealment theory because the employer failed to disclose that the employee’s injuries were work related. The court rejected both theories, reasoning that the employer was providing medical aid incidental to the employment relationship, not as a medical professional, and that the fraudulent concealment exception did not apply.
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California, Injuries Sustained While Traveling From Work
Jones v. The Regents of the University of California (October 31, 2023)
The California Court of Appeal, Fourth District, ruled that exclusive remedy barred a tort lawsuit against an employer brought by an employee for injuries suffered after falling from her bike while riding home but still within the employer’s university campus. The court cited the “premises line” rule, which provides that the employment relationship commences when the employee enters the employment premises and ends when the employee leaves the premises. The court found that the accident occurred while the employee was still on the university campus owned by the employer, therefore, the employee’s lawsuit was barred by exclusive remedy as the injuries occurred while in the course and scope of employment.
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Nebraska, Intentional Tort Exception
Lopez v. Catholic Charities of the Archdiocese of Omaha (December 15, 2023)
The Supreme Court of Nebraska held that exclusive remedy barred a lawsuit filed by an employee for mental injuries allegedly caused when the employer carried out an active shooter drill at the office where the employee worked without the employee knowing it was a drill. In this decision, the court stated that the Nebraska Workers’ Compensation Act does not contain any language that would exempt intentionally caused injuries from the application of the exclusive remedy rule.
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Marijuana legalization and its implications for WC and the workplace continues to be a watched legal trend. Though marijuana remains illegal at the federal level, at least 14 states have allowed its use for medicinal purposes only and 25 states have legalized both medical and recreational use. This year, several states have been considering marijuana legalization measures, including Hawaii (HB 2600/SB 3335), Kansas (SB 555), Kentucky (HB 420, SB 382), New Hampshire (HB 544, HB 1633), South Carolina (S 423), and Wisconsin (AB 1040). ... view more
State legislatures have also considered how to treat medical marijuana in connection with WC treatment. For example, Massachusetts H 1949 would allow for WC reimbursement in cases where the employee is a qualifying patient. New Jersey S 1943 generally would require coverage for medical marijuana for employees who are qualifying patients. New York A 4713/S 2568 would deem medical marijuana a prescription drug for WC purposes. On the other hand, Missouri introduced a bill (HB 2135) stating, in part, that an employer is not required to reimburse for medical marijuana.
Additionally, courts continue to consider cases involving the impact of these state marijuana laws on WC. On November 14, 2023, the Commonwealth Court of Pennsylvania, in Schmidt v. Schmidt, Kirifides and Rassias, PC, held that an employer violated the Workers’ Compensation Act by not reimbursing a claimant for expenses incurred while buying CBD oil that was prescribed to treat a compensable injury. The court held that CBD oil is both a medicine and a supply for purposes of Pennsylvania statute 306(f.1)(1)(i), which requires an employer to pay for reasonable medical services, including medicines and supplies, when needed. The court also found that the Workers’ Compensation Appeal Board erred by concluding that it would violate federal law to direct an insurer to reimburse a claimant for over-the-counter medicines or supplies and disregarded the Act’s humanitarian objectives regarding the claimant’s right to treatment and the goal of enabling injured workers to return or continue to work.
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The classification of workers as employees or independent contractors remains a hot topic. More recently, the United States Department of Labor published its final rule on how to determine who is an employee or independent contractor under the Fair Labor Standards Act—a federal law that establishes standards for minimum wage and overtime pay. The new rule, which became effective on March 11, 2024, applies a multifactor “economic reality test,” which relies on the totality of the circumstances where no one factor is determinative. ... view more
At the state level, legislatures have focused on the status of gig workers, such as drivers for transportation network companies (TNC). For example, Massachusetts introduced several bills (H 4256, H 4257, H 4258, H 4259, H 4260) providing that, under certain conditions, app-based drivers are not employees of TNC companies.
In the courts, in Louisiana, the Court of Appeal, Fifth Circuit, on October 31, 2023, in Rosales v. American Liberty Insurance Co., ruled that an independent contractor who cleaned commercial offices for an employer was entitled to WC benefits. The court analyzed Louisiana statute 23:1021(7)—stating that an independent contractor is expressly covered by WC if the independent contractor spends a substantial part of worktime performing manual labor. The court reasoned that the term manual labor describes work where the physical element predominates over the mental element. The court concluded that the evidence showed the physical aspect of the claimant’s work predominated over the mental aspect, and thus, she was covered by WC despite being an independent contractor.
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In the last decade, many states have enacted laws creating WC presumptions for first responders—providing a presumption that certain injuries or diseases arise out of the course and scope of employment. The cases below illustrate some of the issues that courts consider as to the application of first responder presumption laws. ... view more
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Arizona, Applicable Statutory Version
Krol v. The Industrial Commission of Arizona (July 11, 2023)
The Arizona Court of Appeals applied the 2021 version of a first responder cancer presumption statute even though the firefighter’s listed date of injury preceded the effective date of that presumption. The 2021 presumption version—codified in Arizona statute 23-901.09—eliminated one of the elements required to meet the presumption and heightened the standard for employers to rebut it. The court held that which version of the statute applied did not depend on the listed date of injury. Rather, Arizona statute 23-901.09(C)(2) specifically states that for former firefighters, the presumption applies to those who are 65 or younger and diagnosed with the disease no more than 15 years after the last date of employment. In this case, at the time of the hearing, the firefighter was 51 and diagnosed less than 15 years before ending the employment. Thus, the court concluded, the 2021 statute would apply to the firefighter’s claim. The court also added that the application of the 2021 statute did not violate the state’s prohibition on the retroactive application of laws because the statute became effective before the start of the firefighter’s WC hearing. This case is currently pending before the Arizona Supreme Court.
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Florida, Heart Disease Presumption
North Collier Fire Control and Rescue District v. Harlem (August 9, 2023)
The District Court of Appeal of Florida, First District, held that a firefighter’s claim of thoracic aortic aneurism was not “heart disease” within the meaning of the statutory presumption of work causation available to firefighters. The court analyzed Florida statute 112.18—providing that a firefighter’s condition or impairment is presumed to be accidental and suffered in the line of duty if caused by tuberculosis, heart disease, or hypertension. In this case, a firefighter sought WC benefits after suffering from a thoracic aortic aneurism. The court, relying on several medical treatises, interpreted the term “heart disease” to mean a disease affecting and weakening the heart muscle through a degradation of the vessels or the valves and which was prevalent as a major cause of death. Applying this definition, the court concluded that a thoracic aortic aneurism was not “heart disease” and reversed a Judge of Compensation Claim’s decision finding the injury compensable based on the presumption.
- Texas, Applicability of Cancer Presumption
City of Stephenville v. Belew (March 7, 2024)
The Court of Appeals of Texas, Eastland, considered whether Texas statute 607.055 applied to a firefighter’s pancreatic cancer. When the firefighter’s claim arose, the statute provided that the firefighter’s cancer presumption applied to types of cancer that may have been caused by exposure to heat, smoke, radiation, or a known or suspected carcinogen as determined by the International Agency for Research on Cancer (IARC). The court reasoned that pursuant to the statute, the firefighter should establish, by exclusively relying on IARC materials, a general causal link between the cancer and the firefighting or exposure to heat, smoke, radiation, or a known and suspected carcinogen. Consulting materials from the IARC, the court noted that pancreatic cancer is not a type of cancer that is connected or that may be caused by firefighting, its work-related activities, or exposures. Therefore, the court concluded, the presumption was not applicable to pancreatic cancer.
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Across the states, courts continue to address other issues related to WC.
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Northeastern Zone
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New Jersey, Authorized Vehicle Rule
Keim v. Above All Termite & Pest Control (November 21, 2023)
The Supreme Court of New Jersey held that a claimant—who sustained injuries in an accident while traveling in an employer’s vehicle between his home and the employer’s store to pick up work supplies—was within the course of employment and entitled to WC benefits. The court analyzed the “authorized vehicle rule” in New Jersey statute 34:15-36—which provides that in the case of an employee who uses a vehicle authorized by the employer, the employment begins and ends with the authorized operation of that vehicle and on business authorized by the employer. The court concluded the employee was in the course of employment at the time of the accident because the employer provided the vehicle for the employee to operate and expressly authorized the employee to drive the vehicle to its premises to gather supplies before beginning his workday.
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Pennsylvania, Rejection of the Method Used in Calculating Pharmaceutical Reimbursements
Federated Insurance Company v. Summit Pharmacy (January 2, 2024)
The Commonwealth Court of Pennsylvania ruled that Red Book values—which contain drug manufacturers’ suggested average wholesale price (AWP)—cannot be used in resolving disputes over pharmaceutical reimbursements as they do not reflect the AWP of drugs. The court noted that Pennsylvania statute 306(f.1)(3)(vi)(A), limits reimbursement to 110% of the AWP of the product. The term AWP was defined by a prior decision, Indemnity Insurance Company of North America v. Bureau of Workers’ Compensation Fee Review Hearing Office, as an industry average price derived by averaging the wholesale prices of all manufacturers or wholesalers. The court reasoned that Red Book values were inconsistent with the statute as they do not reflect the actual AWP. Turning to state regulation 127.131(b)—which requires the Bureau of Workers Compensation to identify a nationally recognized schedule for determining drugs’ AWP and give notice of the same via annual bulletin—the court stayed the case and directed the Bureau to promptly identify via bulletin a different, nationally recognized schedule to be used when determining AWP.
Southeastern Zone
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Florida, Compensability for Third-Party Acts
Normandy Insurance Company v. Bouayad (August 16, 2023)
The District Court of Appeal of Florida, First District, ruled that a claimant who was shot while at work by an unknown assailant was not entitled to WC benefits because he failed to prove that his injuries were causally connected to the employment. The court reasoned that for an injury to arise out of the employment there must be a causal connection between the injury and the employment, or the injury must have its origin in some risk incident to or connected with the employment. The district court then asked the Florida Supreme Court to decide whether the acts of a third-party tortfeasor can satisfy the causation element for compensability under state WC laws. The Florida Supreme Court has yet to indicate whether it will address the issue.
Midwestern Zone
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Kansas, Competent Medical Evidence and the American Medical Association (AMA) Guides
Weaver v. Unified Government of Wyandotte County (November 17, 2023)
The Court of Appeals of Kansas ruled, as a matter of first impression, that Kansas statute 44-510d(b)(23) permits the consideration of competent medical evidence together with the 6th Edition of the AMA Guides when assessing functional impairment for a scheduled injury. The statute provides that for injuries occurring on or after January 1, 2015, loss of use of a scheduled member shall be based on permanent impairment of function to the scheduled member as determined by using the 6th Edition of the AMA Guides. The court reasoned that the term functional impairment is the logical equivalent of “impairment of function,” which is defined in Kansas statute 44-508(u) as the extent, expressed as a percentage, of the loss of a portion of the total physiological capabilities of the human body, as established by competent medical evidence. Thus, the court ruled, based on that statutory definition, the evaluation of impairment rating must be established by competent medical evidence and based on the relevant edition of the AMA Guides, regardless of whether a claimant has suffered a scheduled or a nonscheduled injury.
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Missouri, Jurisdiction Over Medical Fee Disputes
Orthopedic Ambulatory Surgery Center of Chesterfield, LLC v. Sharpe Holdings, Inc. (July 25, 2023)
The Court of Appeals of Missouri, Eastern District, held that medical providers seeking additional payment for services rendered to injured workers are not allowed to pursue common law claims in civil court against employers and WC insurers. The court analyzed various WC statutes, including 287.140.3—providing that the Division of Workers’ Compensation or the Labor and Industrial Relations Commission shall have jurisdiction over all WC medical fee disputes. The court concluded that the statutory language and scheme evidenced a clear legislative intent that all medical fee disputes are within the exclusive authority of the Division and the Commission.
Western Zone
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Hawaii, WC Insurer’s Right to Pursue Claims Against Third-Party Tortfeasor
Park v. City and County of Honolulu (February 5, 2024)
The Supreme Court of Hawaii held that a WC insurer, as a subrogee, has an independent right to continue to pursue claims against a third-party tortfeasor, though those claims were not initially asserted by the employee and after the employee’s claims against the tortfeasor were dismissed. In this case, an employee who suffered compensable work injuries sued the third party that caused the injuries. The WC insurer that paid benefits intervened in the lawsuit raising additional claims. The lower court dismissed the claims brought by the employee but allowed the WC insurer to proceed with two of the claims it raised. The third party objected, alleging that dismissal of the employee’s claims should result in the dismissal of the WC insurer’s claims. The court disagreed and held that an employer or insurer, standing in an employee’s shoes, may continue litigating its independent claim as long as the employee could have raised that claim.
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INSIGHTS.
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