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 (WC) across the states. This November 2021 edition contains updated information on cases previously introduced and presents new cases and decisions.
To view previously reported decisions, click the case links. For more information on cases monitored by NCCI’s Legal Team, visit previous Court Case Updates, COVID-19 Court Cases, and
Court Case Insights on
ncci.com.
COVID-19 Court Cases
Courts have been considering COVID-19-related cases that could impact the WC system. Some examples include:
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California—The California Second Appellate District will consider, in
See's Candies, Inc. et al. v. Superior Court of Los Angeles County, whether WC exclusive remedy bars a lawsuit brought by an employee alleging that the employer’s failure to provide sufficient safeguards against COVID-19 caused the death of the employee’s spouse, who was infected after the employee contracted the virus at work.—Pending
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Delaware—On August 19, 2021, the Superior Court of Delaware ruled, in
Ingino-Cacchioli v. Infinity Consulting Sols., that the surviving spouse of an employee who allegedly contracted COVID-19 at work, must file a WC claim with the Industrial Accident Board (IAB) before suing the employer in tort. The court found that the IAB is vested with jurisdiction to hear all cases arising under the Workers Compensation Act, and any dispute over work-related injuries must be first heard by the IAB. The court stayed the case pending the IAB’s determination of whether the employee’s contraction of COVID-19 arose in and out of the employment.
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Kansas—Talavera v. Bob’s Super Saver, Inc. (Kansas Workers Compensation Appeals Board)
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Mississippi—West v. The Nichols Center (Mississippi Workers’ Compensation Commission)
For more information on other COVID-19-related state and federal cases with potential implications for WC insurance, visit COVID-19 Court Cases on
ncci.com.
WC Exclusive Remedy
Stakeholders remain interested in cases addressing challenges to the constitutionality and scope of exclusive remedy. Below are some of the latest exclusive remedy-related cases.
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Pennsylvania—The Superior Court of Pennsylvania, on September 24, 2021, in
Franczyk v. The Home Depot, Inc., found that a store employee could file a negligence lawsuit against an employer for the employer’s alleged interference with the employee’s right to sue a third-party tortfeasor for an injury occurring at work. The court concluded that the employer was estopped from claiming immunity under the Workers Compensation Act when the employer was responsible for the employee’s inability to seek redress from the wrongdoer.
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South Carolina—On August 11, 2021, the Supreme Court of South Carolina ruled, in
Keene v. CNA Holdings, LLC, that a manufacturer was not entitled to WC exclusive remedy protection and not immune from a lawsuit in a wrongful death case brought by the estate of a maintenance worker who performed repair services at the manufacturer’s plant. The manufacturer had contracted with the worker’s employer for the provision of these services and alleged that it was a statutory employer immune from lawsuit pursuant to South Carolina statute 42-1-400—which provides that any owner who performs or executes any work that is a part of his trade, business, or occupation and contracts with any other person to do the tasks—shall be liable for WC benefits.
The court found that whether an employer contracts out work that is a part of the trade, business, or occupation depends on what the employer decides is part of his business, and is a question of business judgment, not law. In this case, the court concluded the manufacturer made a legitimate business decision to outsource its maintenance and repair work to the worker’s employer and had no intention of avoiding the cost of insuring against work-related injuries. Therefore, the worker was not a statutory employee, and WC was not the exclusive remedy. -
Virginia—The Supreme Court of Virginia, on August 5, 2021, held, in
Lopez v. Intercept Youth Services, Inc., that exclusive remedy barred a negligence and wrongful death lawsuit brought against an employer by the estate of an employee who was killed by a resident of an at-risk youth facility where the employee worked as counselor. The court found that the counselor’s death arose out of conditions of the employment because the assailant targeted the victim as an employee, at the place of employment and on the pretense of performing employment duties. Therefore, the court ruled, the lawsuit against the employer should be dismissed on exclusive remedy grounds.
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Wisconsin—The Supreme Court of Wisconsin, on May 20, 2021, in
Graef v. Continental Indemnity Co., found that WC exclusive remedy barred a lawsuit filed by an employee against a WC insurer for a denial of benefits to treat the employee’s depression. The employee alleged that he sustained self-inflicted injuries caused by the insurer’s denial of medication to treat his depression stemming from a workplace accident. The court reasoned that WC covers subsequent injuries that stem from a first work-related injury. The court concluded that the employee’s injuries were a direct result of the prior workplace accident and, therefore, must be brought as a WC claim. With this decision, the court affirmed an
appellate ruling, which found that the Workers Compensation Act provides the employee’s exclusive remedy.
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Idaho—Kelly v. TRC Fabrication, LLC (Supreme Court of Idaho)
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 in WC have continued to surface in courts across the states. For example, in
Kansas, the Court of Appeals will consider, in
Morris v. Schilling Construction Co., whether the Workers Compensation Appeals Board erred in calculating a claimant’s impairment rating solely based on the
AMA Guides, 6th Edition, when the state’s highest court in
Johnson ruled that the 6th Edition is a starting point for the analysis and the ultimate decision should be based on competent medical evidence.
Developments in Marijuana
Legalization of marijuana has been active at state and federal levels. So far in 2021,
Virginia, New Mexico, Connecticut, and
New York have legalized recreational marijuana.
Alabama legalized medical marijuana through the enactment of SB64, which in part provides that it does not affect, alter, or impact an employer’s right to deny or establish legal defenses to the payment of WC benefits based on a positive drug test. The
Mississippi Supreme Court, in In Re Initiative Measure No. 65, invalidated the state’s medical marijuana initiative approved by the voters in the 2020 election. And in
South Dakota, a trial judge ruled that the recreational marijuana ballot measure passed in 2020 was unconstitutional. The case,
Thom v. Barnett, is pending before the state’s supreme court.
State courts remain engaged in reviewing marijuana-related issues in WC.
In addition, courts continue to review employment-related marijuana questions:
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Pennsylvania—On August 10, 2021, the Superior Court of Pennsylvania, in
Palmiter v. Commonwealth Health Systems, Inc., ruled that an employee terminated due to her medical marijuana use could sue her former employer under the state’s Medical Marijuana Act. The court reasoned that, although the legislature did not expressly create a private right of action for employees who suffer discrimination for their medical marijuana use, it proclaimed a public policy prohibiting such discrimination when it enacted section 10231.2103(b)(1) of the Act—which provides that no employer may discharge or otherwise discriminate against an employee on the employee’s status as a certified medical marijuana user.
Air Ambulance Reimbursement: State vs. Federal Law
On June 26, 2020, the Texas Supreme Court ruled, in
Texas Mutual Insurance Co. v. PHI Air Medical, LLC, that the federal Airline Deregulation Act (ADA) does not preempt the state’s “fair and reasonable” WC reimbursement standard. More recently, on August 4, 2021, the Federal Court of Appeals for the Fifth Circuit ruled, in
Air Evac Ems, Inc. v. Sullivan, that the ADA expressly preempts the Texas Workers Compensation Act (TWCA) regulating of price restrictions as applied to the reimbursement of air ambulance providers. In its decision, the federal court said it disagreed with the earlier Texas Supreme Court decision in
Texas Mutual Insurance Co. v. PHI Air Medical, LLC. Meanwhile, the case of Eaglemed, LLC v. Travelers Insurance remains pending before the Kansas Supreme Court.
In a health insurance-related case out of Florida, on October 12, 2021, the federal District Court of the Northern District, in
Air Methods Corp. v. Altmaier, dismissed a lawsuit filed by an air ambulance carrier against the Florida Insurance Commissioner alleging that the ADA preempted Florida statutes §627.42397 and §641.514, enacted in 2020, that prohibit balance billing and require health insurance policies and health maintenance contracts to provide reasonable reimbursement to an air ambulance service.
Other Federal and State Developments (by Geographic Zone)
Federal
Northeast
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Maryland, Statutory Offset of Benefits—Spevak v. Montgomery County (Court of Special Appeals)
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New Hampshire, Compensability of Death by Suicide—Appeal of Pelmac Industries, Inc. (Supreme Court of New Hampshire)
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New York, Forfeiture of WC Benefits—On May 27, 2021, the New York Appellate Division, Third Department, ruled, in
Kornreich v. Elmont Glass Co., that a WC claimant forfeited his benefits when he failed to disclose his work for an illegal gambling operation. The court found that the claimant violated New York Workers Compensation Law §114-a, which disqualifies claimants who knowingly make false statements or misrepresentations from receiving benefits that are attributable to those statements or misrepresentations. The court reasoned that the claimant violated the statute when he knowingly made false representations in work activity reports submitted to the WC carrier, stating that he had not performed any work for himself or others on a paid or unpaid basis, but later admitted in a criminal matter that he knowingly advanced unlawful gambling activities by engaging in bookmaking.
- Pennsylvania, Compensation for Traveling Employees—Peters v. WCAB (Pennsylvania Supreme Court)—Pending
Southeast
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Arkansas, Statute of Limitations for Benefits—The Arkansas Court of Appeals, on October 6, 2021, in
Wynne v. Liberty Trailer, ruled that the statute of limitations did not bar a claim for additional medical benefits that was filed more than one year after the last payment of medical benefits, but less than one year after the last payment of indemnity benefits. In its decision, the court reviewed Arkansas statute 11-9-702 (b)(1), which bars a claim for additional compensation that is not filed within one year from the date of the last payment of compensation or two years from the date of the injury, whichever is greater. The court noted that the claimant in this case petitioned for additional medical benefits within one year of the last payment of indemnity benefits, but more than one year after the last medical payment. The court held that the claim for additional medical benefits was timely because nothing in statute 11-9-702 (b)(1) indicates that additional medical or indemnity benefits must be filed within one year of the last payment of the specific type of benefit being requested. With this ruling, the court overturned a prior appellate decision,
Kirk v. Central States Manufacturing Inc., to the extent that it was inconsistent with its holding.
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Kentucky, Constitutional Challenge to WC Statute—On August 26, 2021, The Supreme Court of Kentucky, in
Dowell v. Matthews Contracting, upheld the constitutionality of Kentucky statute 342.730(4)—which terminates WC income benefits when the recipient reaches the age of 70 or four years after the date of injury, whichever occurs later. The court ruled that the statute did not violate the contracts clause of the federal or Kentucky constitutions because the WC system is controlled by the state, is governed by legislative enactments, and is not a contract between employers and employees.
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Kentucky, Deadline to Submit Medical Bills—On September 30, 2021, the Supreme Court of Kentucky found, in
Wonderfoil v. Russell, that the 60-day deadline for the submission of medical expenses contained in Kentucky Regulation 803 KAR 25:096 applies after an award for benefits has been entered. In this case, an employee submitted medical expenses to the employer while the WC claim was pending, but more than a year after having received the medical treatment. The court concluded that the expenses were timely submitted because the language in 803 KAR 25:096—that expenses incurred by an employee for access to compensable medical treatment shall be submitted to the employer within 60 days—only applies post-award. The court reasoned that the regulatory framework for WC claims anticipates that medical expenses will be provided to the employer pre-award and throughout the litigation of the claim.
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Mississippi, Bad Faith Lawsuit—The Court of Appeals of Mississippi, on October 19, 2021, found, in
Thornhill v. Walker-Hill Environmental, that a WC claimant could sue the employer/carrier (E/C) in tort for bad faith because the claimant exhausted his administrative remedies by entering into a final settlement that was approved by the Workers Compensation Commission. In this case, the claimant and E/C settled a contested WC claim before the Commission made a finding on compensability. The claimant then sued the E/C for bad faith denial of the compensation claim and the E/C argued that the claimant failed to exhaust his administrative remedies because the Commission never made a finding on compensability, so the claim should be dismissed. The court disagreed and allowed the bad faith lawsuit to proceed, holding that the claimant exhausted his administrative remedies by fully and finally settling the WC claim with the approval of the Commission and no other issues pending to resolve.
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Louisiana, Duty of Good Faith and Fair Dealing in WC—Cox, Cox, Filo, Camel & Wilson, LLC v. Louisiana Workers Compensation Corp. (Louisiana Supreme Court)—Pending
Midwest
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Kansas, Constitutional Challenge to Death Benefits Cap—In Neal v. Max Papay, LLC, the Court of Appeals of Kansas will consider the constitutionality of Kansas statute K.S.A. 44-510b(h)—which provides a cap on death benefits—against a challenge that it violates a claimant’s right to equal protection and due process under the Kansas and the US constitutions. The court was also asked to review whether the Workers Compensation Act denies a worker the right to have a jury determine the amount of compensation due in violation of the right to a jury trial, which is provided for by Section 5 of the Kansas Constitution.—Pending
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Kansas, Prevailing Factor Test and Secondary Injury Rule—On August 13, 2021, the Court of Appeals of Kansas, in
Perez v. National Beef Packing Co., analyzed the interplay between the prevailing factor test, codified in Kansas statute K.S.A. 44-508(f)(2)(B)(ii), and the secondary injury rule. The court ruled that the secondary injury rule–which allows benefits for the natural consequences arising out of an injury that are the direct and natural result of a primary injury—and the prevailing factor test—providing that an injury arises out of employment only if the accident is the prevailing factor causing the injury—work together and that a secondary injury must be both the natural and probable consequence of the primary injury, caused primarily by the work accident. The court upheld the Workers Compensation Appeal Board’s denial of benefits, based on the Board’s findings that the evidence established that a prior event, and not a workplace accident, was the prevailing factor in a claimant’s need for treatment. The court also upheld the constitutionality of Kansas statute K.S.A. 44-508(f)(2)(B)(ii) against a challenge that it deprived the claimant of a remedy, reasoning that the claimant had an opportunity to recover the benefits requested but failed to carry the burden of proof.
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Oklahoma, Constitutionality of Entitlement to Wrongful Death Benefits—Solis v. Travelers Casualty Ins. Co. (Casualty Insurance Ins. Co. (Oklahoma Court of Civil Appeals)—Pending
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North Dakota, Compensation for Injuries Due to Heart Injury or Disease—On June 3, 2021, the Supreme Court of North Dakota, in State by and through Workforce Safety and Insurance v. Felan, ruled that any compensable claim for a heart injury or disease must satisfy the requirements of North Dakota statute 65-01-02(11)(a)(3). The statute provides that a heart injury or disease is a compensable injury only when caused by the employment with reasonable medical certainty, and only when it is determined with reasonable medical certainty that unusual stress is at least 50% of the cause of the injury or disease. The court found that, to prove a compensable heart injury or disease, it is insufficient to look only at the event claimed to have caused the condition. Instead, the statute requires that the claimant prove that at least 50% of the cause of the injury or disease was unusual stress through their employment.
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South Dakota, Authority to Adjudicate Claims for Extraterritorial Injuries—The Supreme Court of South Dakota, on August 25, 2021, in
Anderson v. Tri State Construction, LLC, found that the South Dakota Department of Labor and Regulation had authority to adjudicate a WC claim filed by an employee who was injured while working permanently in Wyoming for a corporation formed and headquartered in South Dakota. The court reasoned that, to determine if South Dakota WC covered the injury, it must ascertain the location of the employment relationship by looking for factors that tend to show a “substantial connection” with the state on a case-by-case basis. The court found that South Dakota was the state where the employment contract was entered into, and where the employer managed and operated its business and conducted the employee’s training and post-accident interview. The court added that the fact that Wyoming shared a connection to the employment based on the location of the employee’s duties and accident did not diminish South Dakota’s connections to the employment relationship.
West
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Colorado, Statutory Cap on Benefits—Browne v. Industrial Claim Appeals Office (Colorado Court of Appeals, Division I)
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Oregon, Requirements for Existence and Denial of Combined Conditions—The Court of Appeals of Oregon, on September 1, 2021, in
Matter of Sexton, held that, in a new or combined condition claim analysis, an employer is not procedurally required to accept a preexisting condition to treat that condition as “combined” and subsequently deny it. The court reasoned that, pursuant to Oregon statute 656.005, a combined condition is the combination of an otherwise compensable injury with a preexisting condition that causes or prolongs the disability or need for treatment. The court also found that a combined condition is compensable only if a compensable injury is the major contributing cause of the disability or need for medical treatment. Nevertheless, the court reasoned, requiring prior acceptance of a preexisting condition that the employer determined not to be compensable would be illogical, even in the case of a new or omitted condition, because the employer would be required to accept a claim for which no benefits are due. Thus, the court concluded, an employer is not procedurally required to issue an acceptance of a preexisting condition for a combined condition to exist.
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.
