View From the Bench

Workers’ Comp Docket

Significant workers' comp legal decisions from around the country.
By: | November 28, 2016 • 12 min read

Benefit Limit for Undocumented Workers Unconstitutional

Martinez v. Lawhon, et al., No. M2015-00635-SC-R3-WC (Tenn. 11/21/16, unpublished)

Ruling: In an unpublished decision, the Tennessee Supreme Court held that a law limiting the maximum permanent partial disability benefits an injured undocumented worker can receive is unconstitutional.

What it means: In Tennessee, the law limiting the maximum permanent partial disability benefits an injured undocumented worker can receive is unconstitutional.

Summary: An undocumented worker was operating a lawn mower on a hillside in the course of his employment when he slipped on wet grass and fell, losing control of the mower. The mower ran over his left arm, causing severe injuries.

Because of the worker’s undocumented status, the employer did not return him to work after the injury. The worker sought workers’ compensation benefits and challenged the constitutionality of a law limiting his award to one and one-half times the medical impairment rating. The Tennessee Supreme Court held that the provision is unconstitutional.

According to the law, the permanent partial disability benefits that a worker who is not legally allowed to return to work because of federal immigration law can receive are limited to a cap of one and one-half times the medical impairments rating. The court pointed out that other workers who do not fall within this exception are entitled to a multiplier of up to six times.

The court found that the provision was preempted by federal immigration law. The legislative history of the provision showed that the legislature intended for an additional sum to be paid by employers as a penalty. The court explained that the provision was preempted by federal law because the legislature intended and attempted to establish what amounted to a state immigration policy.

The court also explained that by reducing the liability of employers of undocumented workers to one and one-half times the medical impairment rating, the law made it less costly to hire those workers and potentially created an incentive for employers to hire undocumented workers, especially in high-risk jobs that often result in workers’ compensation claims.

In this case, the court found that the worker sustained an 84 percent permanent partial impairment to the left arm as a result of his work injury.

Attorney Fees Warranted When Employer’s Actions Delayed Surgery

Bockus v. First Student Services, et al., No. S-15784, 7137 (Alaska 12/02/16)

Ruling: The Alaska Supreme Court held that a driver was entitled to attorney’s fees because the employer resisted furnishing medical care by unreasonably delaying his third surgery.

What it means: In Alaska, an employer’s acquiescence to a claim before a hearing does not prevent a finding that the employer resisted providing the benefit.

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Summary: A school bus driver injured his back while pulling open a chain-link gate. He felt a pop in his back and severe pain radiating into his legs. He had two spinal surgeries, and his surgeon recommended a third. At about the same time, the employer scheduled an independent medical examination. This delayed the surgery because the surgeon would not schedule the surgery while the IME was pending.

The driver filed a workers’ compensation claim for the third surgery, and the employer’s doctor ultimately agreed that a third surgery was appropriate. The Alaska Supreme Court held that the driver was entitled to attorney’s fees because the employer resisted furnishing medical care by unreasonably delaying the third surgery.

The driver asserted that the employer delayed his surgery because it “had ample information” about the compensability of the surgery before the IME. The employer argued that it was merely exercising a statutory right to an IME and it rescheduled the IME at the driver’s request.

The court pointed out that the employer authorized the third surgery when it was required to answer the driver’s claim. The court pointed out that an employer’s acquiescence to a claim before a hearing does not prevent a finding that the employer resisted providing the benefit.

The court explained that the IME was not directed at an opinion about the surgery itself. Instead, the adjustor listed nine treatment options and asked for an opinion about the reasonable necessity of all treatments.

The court found that this broad request was not reasonable because the driver and his surgeon, after trying conservative care, had decided that surgical treatment was the best option for addressing his condition.

The court pointed out that the employer had adequate information about the reasonable necessity of the surgery well before the surgery was authorized. The information the employer sought from the IME was not reasonably related to the narrow question of the compensability of and the need for the requested surgery.

Inability to Obtain Job Doesn’t Warrant Benefits for 100 Percent Loss

Hathorn v. ESCO Corp., No. 2015-WC-01528-COA (Miss. Ct. App. 11/15/16)

Ruling: The Mississippi Court of Appeals held that a grinder was entitled to benefits for a 50 percent industrial loss.

What it means: In Mississippi, the fact that an injured worker is unable to obtain employment is not conclusive proof that he is unemployable.

Summary: A grinder for ESCO suffered a compensable injury to his right hand while operating his grinder. He returned to work with medical restrictions, including not using a grinder and to not lift more than 50 pounds. At work, he performed various janitorial and maintenance duties and ran errands.

After he claimed that his hand swelled from driving a forklift, the grinder was terminated for insubordination when he did not provide a written work restriction stating that he could not operate a forklift. The Workers’ Compensation Commission awarded him benefits for a 50 percent industrial loss. The Mississippi Court of Appeals affirmed the commission’s decision.

The grinder claimed that because of his injury he was unable to find work and could no longer perform the substantial acts of his usual employment. However, the court found that the grinder’s post-injury employment at ESCO demonstrated that he could perform some of the substantial acts of his usual employment.

He worked for more than a year after he reached maximum medical improvement. The court also pointed out that the grinder’s post-injury employment was consistent with a number of previous jobs he had. Also, many of the grinder’s previous job duties were within his medical restrictions.

The court found that even though the grinder’s job search was not successful, this was not conclusive proof that he was unemployable. The grinder admitted that he did not seek employment in the security, maintenance, or housekeeping fields.

Assault By Student Doesn’t Fall Under Intentional Act Exception

Field, et al. v. Lafayette Parish School Board, No. 16-495 (La. Ct. App. 11/09/16)

Ruling: The Louisiana Court of Appeal held that a teacher’s suit was barred by the exclusive remedy provision of the workers’ compensation law. The teacher failed to establish that the intentional act exception applied.

What it means: In Louisiana, for the intentional act exception of the workers’ compensation law to apply, the worker must prove an employer’s intent, which is defined as consciously desiring the physical results of the conduct or knowledge that the physical results were substantially certain to follow such conduct.

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Summary: A student of a high school English teacher had a dispute with another student and attempted to leave the classroom to fight with him in the hallway. The teacher tried to keep the student inside the classroom by holding the door closed, but the student hit her repeatedly in the stomach.

The teacher was six weeks pregnant. Later, the teacher’s child was born with a congenital kidney condition. The teacher received workers’ compensation benefits but also sued the Lafayette Parish School Board, the principal of her school, and the student.

The teacher asserted that the intentional act exception of the workers’ compensation law applied. The Louisiana Court of Appeal held that the teacher’s suit was barred by the exclusive remedy provision of the workers’ compensation law.

The court concluded that the intentional act exception did not apply. For the intentional act exception to apply, the worker must prove an employer’s intent, which is defined as consciously desiring the physical results of the conduct or knowledge that the physical results were substantially certain to follow such conduct.

In this case, the court found that the teacher failed to prove the school board’s intent for the harm that occurred in her classroom. While the student had an extensive history of disciplinary issues, the school board’s knowledge of his issues and readmittance into the high school did not amount to an intentional act.

The court pointed out that no evidence showed that the student had previously attacked a teacher.

Director Who Tripped on Stairs Not Entitled to Compensation

Mojares v. RK Chevrolet, Inc., No. 1016-16-2 (Va. Ct. App. 11/22/16, unpublished)

Ruling: In an unpublished decision, the Virginia Court of Appeals held that a director’s fall on stairs did not arise out of his employment.

What it means: In Virginia, a worker who trips while walking up a staircase at work cannot recover compensation unless something about the steps presented a hazard or danger peculiar to the work site.

Summary: A finance director for a car dealership was in a hurry to deliver paperwork for a sale when he fell while walking up stairs. The director had preexisting injuries that left him permanently partially disabled. His gait was affected, he had limited use of his right hand, and he walked with a cane.

When the director fell, he was holding files and his cane in his left hand and using the railing for the stairs with his right hand. He could not explain what caused his fall and said that he tripped himself. The Virginia Court of Appeals held that he was not entitled to benefits.

The director argued that his preexisting condition combined with the configuration of the stairs increased his risk of falling. The court concluded that the director failed to establish that his injury arose out of his employment. The record established that the director simply and inexplicably fell.

The court also explained that under the idiopathic fall doctrine, if a fall results from a preexisting condition, any resulting injury is compensable only when the conditions of the workplace aggravate the worker’s injury.

Here, the director fell while simply walking up the non-defective steps. The record showed that the director’s fall was not caused by his preexisting conditions. The court found that his injury was not causally related to his employment.

Intoxication Doesn’t Block Benefits When Flat Tire May Have Caused Accident

Diaz v. National Retail Transportation, Inc., No. A-3927-14T2 (N.J. Super. Ct. App. Div. 11/09/16, unpublished)

Ruling: In an unpublished decision, the New Jersey Superior Court, Appellate Division held that a mechanic was entitled to benefits for his injury.

What it means: In New Jersey, when a worker’s intoxication is the “natural or proximate cause” of an injury, benefits will not be provided. Courts have interpreted the intoxication defense to mean that the worker’s intoxication must be the sole cause of the accident.

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Summary: A mechanic for National Retail Transportation was injured when he attempted to move a heavy metal lift that fell over on him. He said that the lift fell when it tilted to one side. The mechanic said that after the lift fell on him, he noticed that one of the tires on the lift was flat.

National conceded that a tire was deflated. The mechanic filed a claim for workers’ compensation benefits. National denied benefits and asserted the intoxication defense, arguing that the mechanic’s intoxication was the proximate cause of the accident.

The mechanic admitted that before going to work, he drank at least two eight-ounce glasses consisting of half whiskey and half ice water. National’s toxicologist opined that, based on the blood sample drawn from the mechanic after the accident, that he was intoxicated and impaired at the time of the accident.

The New Jersey Superior Court, Appellate Division held that the mechanic was entitled to benefits.

The court concluded that substantial credible evidence established that the flat tire may have caused the lift to fall, and therefore, intoxication was not established to be the sole cause of the accident.

The court found there was sufficient evidence that the flat tire may have also contributed to the accident. Without testimony eliminating the flat tire as a cause of the accident, the court found that National did not carry its burden to prove that the mechanic’s intoxication was the sole cause of the accident.

Comp Doesn’t Cover Officer’s Crossfit Injury

Maley v. Borough of Penbrook, 31 PAWCLR 191 (Pa. W.C.A.B. 2016)

Ruling: The Pennsylvania Workers’ Compensation Appeals Board reversed the workers’ compensation judge’s finding that a police officer was in the course and scope of his employment when he was injured while performing box jumps at a CrossFit gym.

What it means: In Pennsylvania, where a police officer is not required by either the employer or the SWAT team to join a CrossFit gym or perform box jumps as a part of any physical fitness test, his injuries sustained while performing this activity do not fall within the course of his employment.

Summary: The board reversed the WCJ’s finding that a police officer was in the course and scope of his employment when he was injured while performing box jumps at a CrossFit gym.

The employer had a wellness and fitness policy, which recommended that the officers stay physically fit so they can perform their duties in a safe and healthy manner. Because the employer did not have a workout room, the officer joined a CrossFit gym.

He also was a SWAT team member for the county. His participation in the SWAT team was not required by the employer. In denying benefits, the board noted that the officer’s participation in the employer’s physical fitness program was completely voluntary.

The employer did not mandate that the officer undergo any physical fitness tests, and choosing not to participate in the testing would not result in disciplinary action.

Also, although the officer’s involvement with the SWAT team required him to undergo periodic fitness testing, his participation in that program was not a mandatory part of his employment.

In addition, the officer was not required by either the employer or the SWAT team to join a CrossFit gym or perform box jumps as a part of any physical fitness test.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

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Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

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“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

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But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]