View From the Bench

Workers’ Comp Docket

Significant workers' compensation legal decisions from around the country.
By: | February 6, 2017 • 12 min read

Marijuana Use Doesn’t Prevent Award of TTD Benefits

State ex rel. Cordell v. Pallet Co., Inc., et al., No. 2015-0163 (Ohio 12/29/16)

Ruling: The Ohio Supreme Court held that a worker was entitled to temporary total disability benefits.

What it means: In Ohio, when a worker is terminated after a workplace injury for conduct prior to and unrelated to the workplace injury, his termination does not amount to a voluntary abandonment of employment that will preclude temporary total disability compensation when: 1) the discovery of the dischargeable offense occurred because of the injury; and 2) at the time of the termination, the worker was medically incapable of returning to work as a result of the injury.

Summary: A worker for Pallet Co. was injured in the course and scope of his employment when he fell between a dock and a truck, fracturing his leg. At the hospital, the worker’s urine was collected and sent for a toxicology screening. The worker sought workers’ compensation benefits the day after the accident. Subsequently, the worker’s toxicology results showed that he tested positive for marijuana metabolites. He was terminated that day for violating Pallet’s drug-free workplace policy. The Ohio Supreme Court held that the worker was entitled to temporary total disability benefits.

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The court explained that the worker’s marijuana use was not the proximate cause of his injury. Also, when he was terminated, he had not returned to work, he had not been released by his doctor to return to work, he had not reached maximum medical improvement, and he was physically incapable of returning to work.

The court also concluded that the worker’s termination did not amount to a voluntary abandonment of his employment because he was medically incapable of returning to work when he was terminated. Also, the court explained that this case involved the violation of a work rule before the injury that was discovered as a result of the injury.

Dissenting judges opined that the worker voluntarily abandoned his employment when he used an illegal controlled substance in violation of Pallet’s drug-free workplace policy. A dissenting judge said that the worker’s misconduct severed the causal connection between the injury and the wage loss.

Unpaid Intern’s Benefits Based on Assumed Wage

Rehfeld v. Sedgwick Claims Management Services, No. A157406 (Or. Ct. App. 01/05/17)

Ruling: The Oregon Court of Appeals sent the case back to the Workers’ Compensation Board for a determination of an intern’s temporary disability benefits.

What it means: In Oregon, for workers who have no wages, benefits must be calculated on the “assumed wage” on which the employer’s premium is based.

Summary: An intern’s work for Wend Magazine involved graphic design, selling advertising, and modeling sports clothing for photo shoots. The intern was unpaid in part and paid in part on commission for advertising sales. After working one month for Wend, she was injured when she fell and broke her wrist while modeling skateboard clothing for a photo shoot. At the time of her injury, the intern had not finalized any advertising sales and had not earned a commission. Because of Wend’s noncomplying status, the Workers’ Compensation Board was unable to determine a weekly wage for the intern. The intern argued that her benefits should be based on the minimum wage. The board concluded that she was entitled to the statutory minimum benefit of $50. The Oregon Court of Appeals reversed and sent the case back to the board.

For workers like the intern who have no wages, benefits must be calculated on the assumed wage on which the employer’s premium is based. The intern did not have an assumed wage because Wend was a noncomplying employer. The court explained that a compensable injury to a worker employed by a noncomplying employer is compensable to the same extent as if the employer had complied with the law. Had Wend complied, the intern’s benefits would have been calculated using the assumed rate on which Wend’s premium was based.

The court sent the case back to the board to determine the intern’s temporary disability benefits based on the assumed wage on which Wend’s premium would have been had it provided insurance.

Employee Awarded Comp for Injury in Public Street in Front of His Home

Balloli v. New Haven Police Department, et al., No. SC 19584 (Conn. 12/27/16)

Ruling: The Connecticut Supreme Court held that a police officer’s back injury was compensable.

What it means: In Connecticut, a police officer’s injury in a public street while on his way to work is within the course of his employment.

Summary: A police officer for the New Haven Police Department moved his vehicle out of his driveway so that his son could move another vehicle out of the driveway. The officer parked his vehicle in the street directly in front of his house. About 30 minutes later, the office walked to his car to drive to work. While standing in the street, he dropped his keys, which landed under his vehicle. The officer squatted down and twisted to pick up his keys, injuring his lumbar spine. The officer filed a workers’ compensation claim. The Connecticut Supreme Court held that his injury was compensable.

The court explained that for a police officer, “in the course of employment” encompasses his departure from his place of abode to duty, his duty, and his return to his place of abode after duty. The legislature provided examples to help define the term “place of abode,” including areas related to where an individual resides such as walkways, breezeways, yards, and driveways. The court noted that this list did not include public areas adjacent to a person’s property such as sidewalks or streets. The court found that construing “place of abode” to include a public street would frustrate the remedial purpose of the law.

The court concluded that when the officer dropped his keys in the street and was injured, he was acting within the course of his employment. The fact that he had left his driveway and entered the public street on his way to duty was sufficient to establish that he was covered. It was not necessary to demonstrate that he entered his vehicle or started his engine.

A dissenting judge opined that the officer’s place of abode extended to the street where his vehicle was parked.

Time Limitation on Claim Doesn’t Allow Worker to Sue Employer

Hendrix v. Alcoa, Inc., No. CV-15-558 (Ark. 12/15/16)

Ruling: The Arkansas Supreme Court held that an estate’s wrongful death suit against a deceased worker’s employer should be dismissed.

What it means: In Arkansas, a worker can sue his employer when there is no remedy under the workers’ compensation law. The time limitation on filing a workers’ compensation claim does not equate to the absence of a remedy.

Summary: A former worker for Alcoa was diagnosed with mesothelioma, an asbestos-related cancer 17 years after he stopped working for the employer. He filed a claim against Alcoa for workers’ compensation benefits, alleging that he was exposed to asbestos during the course of his employment. The administrative law judge found that the claim was time-barred because it was not filed within three years of the last date of injurious exposure. Subsequently, the worker died. His estate sued Alcoa. In a case of first impression, the Arkansas Supreme Court dismissed the suit.

The estate asserted that because the statute of limitations extinguished the worker’s remedy under the workers’ compensation law before it accrued, the exclusive remedy provision did not apply. The court rejected the argument. The court explained that a worker can sue an employer only if the workers’ compensation law provides no remedy for the worker’s condition. The workers’ compensation law covers occupational diseases, including asbestos-related claims. The court found that the temporal limitation on recovery did not equate to the absence of a remedy under the workers’ compensation law.

The court also explained that it could not have been the legislature’s intent to absolve an employer of liability for workers’ compensation after a period of time only to subject the employer to liability in a suit after that period ended. The court noted that its result “smack[ed] of unfairness,” particularly when it was well-known that mesothelioma has a long latency period. However, any inequity must be addressed by the legislature.

Dissenting judges opined that the majority deprived the estate of the opportunity to pursue its only remedy. The dissent also said that the majority’s holding deprived workers whose injuries and disease do not manifest during the three-year statute of limitations of a remedy, essentially allowing employers to escape liability.

Unexplained Death Presumption Doesn’t Extend to Worker Who Survived

Turner v. SAIIA Construction, et al., No. 5458 (S.C. Ct. App. 12/07/16)

Ruling: The South Carolina Court of Appeals held that an operator was not entitled to benefits for the injuries he sustained from an unexplained fall.

What it means: In South Carolina, the unexplained death presumption does not apply in cases where the worker survives the injury but had no memory of the events leading up to the injury.

Summary: A heavy equipment operator for SAIIA Construction was found lying on his back next to his dump truck. The operator said that he had no memory of the accident or how it happened. A few weeks before the accident, the operator sought medical care for his lower back. Two days before the accident, he complained to his supervisor that he did not feel well. The operator filed a workers’ compensation claim alleging an injury to his back, head, and thoracic spine. The South Carolina Court of Appeals held that the operator was not entitled to benefits.

The operator argued that the unexplained death presumption applied. The presumption applies when one found charged with the performance of a duty and injured while performing such duty or found injuries where his duty required him to be is injured in the course of his employment. The court declined to apply the presumption in cases where the worker survived the injury but had no memory of the events leading up to the injury. Even if the court extended the presumption, SAIIA rebutted the presumption with evidence that the operator had recent nonwork-related preexisting back conditions.

The court also found that the injury was not a compensable unexplained fall. The operator failed to establish a causal connection between his unexplained fall and his employment. The court noted that it could not determine what he was doing at the time of the incident. Although he was at work when he fell, no evidence showed that his employment contributed to the cause of the fall.

Downsized Injured Worker Was Not Victim of Discrimination

Tirk v. Dubrook, Inc., No. 16-1402 (3d Cir. 12/27/16, unpublished)

Ruling: In an unpublished decision, the 3d U.S. Circuit Court of Appeals affirmed a District Court decision granting summary judgment to an employer on an employee’s claims under ADA Title I. The 3d Circuit held that the employee’s discrimination claim failed because he showed neither causation nor pretext.

What it means: Absent evidence “unduly suggestive” of discrimination, a temporal gap of one month between a protected activity and termination does not sufficiently demonstrate a causal connection.

Summary: A maintenance worker injured his left knee several times over the course of three years. Each time, he missed several weeks of work and was put on medical restrictions, which the company accommodated. After one of the injuries, he filed a workers’ compensation claim. He injured his knee again when he fell from a ladder at work. He filed an accident report but missed no work time. He was put on temporary medical restrictions, which the company honored. One month later, the worker and two other employees were terminated for “economic reasons as part of a reduction in force.” Existing employees took over his responsibilities, and the company did not replace him. The worker sued under the ADA. In an unpublished decision, the 3d Circuit held that he showed neither causation nor pretext.

The worker argued that the company discriminated against him because of a perceived disability and that its stated reasons for terminating him were pretext. The 3d Circuit concluded that the worker failed to make a prima facie showing of causation. Although only one month transpired between the filing of his accident report and his termination, “a temporal gap of one month alone [does not] sufficiently demonstrate a causal connection.” Also, there was no basis to believe that the temporal gap was “unduly suggestive” of discrimination, given the worker’s history of knee injuries, time off from work related to those injuries, and medical work restrictions. He faced no repercussions because of prior injuries or for filing a workers’ comp claim and provided no explanation for why the most recent injury — which required no time off work and minimal work restrictions — created a perception of disability resulting in termination.

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The worker also failed to show that the company’s reasons for his termination were pretextual. He did not dispute that the company faced economic problems, that other employees assumed his responsibilities, and that he was never replaced. Rather, he argued that the company’s reasons were pretextual because three months after the RIF it partially replaced one of the other two employees. The court concluded that the company’s partial replacement three months later of another employee provided no basis to disbelieve the company’s stated reasons for terminating the worker.

Trip, Fall at Holiday Party Isn’t Covered by Comp

Lennon v. N.C. Judicial Department, et al., No. COA16-476 (N.C. Ct. App. 12/06/16, unpublished)

Ruling: In an unpublished decision, the North Carolina Court of Appeals held that a clerk’s injury at a holiday party was not compensable.

What it means: In North Carolina, an injury arising out of a recreational activity will not be compensable when the employer did not require attendance at the activity.

Summary: A deputy clerk of court in the accounting division for the Harnett County Clerk of Court planned the annual office holiday party with her division. A group of attorneys sponsored the party by paying for the venue and the food. The clerk helped design the invitations and assisted with securing catering and planning the program. She also volunteered to serve as the emcee for the event, which was to be held in the evening after work. All employees were invited to attend. Regardless of whether they attended, employees were expected to contribute $13 to pay for a gift for the clerk of court and for cleaning up after the party. On the night of the party, the clerk was entering the party venue when she tripped and fell, suffering injuries. She sought workers’ compensation benefits. The North Carolina Court of Appeals held that she was not entitled to benefits.

The clerk argued that she was required to attend the party. The court disagreed, pointing out that coworkers testified that attendance was not required. The clerk volunteered to emcee the party, the only activity that necessitated her attendance.

The court concluded that the injury did not arise out of and in the course of the clerk’s employment. The court explained that the party was not sponsored by the employer, attendance was not required, no degree of encouragement existed, the employer did not finance the occasion, the employees did not regard the event as a benefit or entitlement, and the event did not provide the employer with a benefit except for improving employee morale.

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]

More from Risk & Insurance

More from Risk & Insurance

Risk Manager Focus

Better Together

Risk managers reveal what they value in their brokers.
By: | June 1, 2017 • 11 min read

Michael K. Sheehan, (left) Managing Director, Marsh and Grant Barkey, Director of Risk Management, Motivate International Inc.

Ask a broker what they can do for you and they will tell you. But let’s ask the risk manager.

What do risk managers really need in a broker? And what do the best brokers do to help risk managers succeed in their jobs?

Chet Porembski, system vice president and deputy general counsel, OhioHealth Corp.

Risk managers say it’s a broker who helps them look knowledgeable and prepared to their bosses. It’s someone who sweeps in like a superhero with an ingenious solution to a difficult problem.

Risk managers want to see brokers bring forth better products year after year. They want a broker who shows up at renewal time with new ideas, not just a rubber stamp.

Great brokers embed with the risk management team and learn everything they can about the company and its leaders. They help risk managers prepare and keep tabs throughout the year on changes at the organization with an eye towards planning the future.

“There’s the broker that sees themselves as just a hired ‘vendor,’ or I should say, somebody that basically just does the job at hand,” said Chet Porembski, system vice president and deputy general counsel at OhioHealth Corp.

“And then there’s the broker that views themselves very much as a business partner.  They truly bring added value to the relationship.”

These brokers look at the tough issues the risk manager is facing and bring in the resources to try to help their client in ways even the client might not have thought about yet. They also do advanced planning that makes the risk manager’s job easier when a problem arises.

“That’s the kind of broker I want.” Porembski said.

And that’s the kind of broker many risk managers need more than ever.

“The only way that the relationship is going to be successful is if you build a tremendous amount of trust.” — Frances Clark, director of risk management and insurance, Sentara Healthcare

That’s because risk managers are under increasing pressure these days. They carry more weight as corporations shrink their departments to cut costs.

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Climate change, cyber threats and geopolitical shifts are turning what were once unthinkable losses into risks that are almost commonplace. And this is all happening in an under-insured risk environment, according a study by PwC entitled Broking 2020: Leading from the Front in a New Era of Risk.

Thankfully there are good brokers out there, risk managers say, who can bring more value to a client today than ever before and help ease that fear.

Brokers — the traditional intermediary in the risk transfer chain — do in fact have a tangible and growing role in developing viable and innovative solutions for the risk manager, according to PwC’s study.

They are the “global risk facilitation leaders.”

“[Whatever] organizations are doing in the short term — be this dealing with market instability or just going about day to-day business — they need to be looking at how to keep pace with the sweeping social, technological, economic, environmental and political (STEEP) developments that are transforming the world,” PwC said in the report.

Advisors That Are Getting It Done

Cyber risks are just one growing challenge that all organizations grapple with.

Frances Clark, director of risk management and insurance at Sentara Healthcare, remembers when her broker first suggested that she hold a leadership tabletop cyber drill.

Clark said her broker kept saying, “I know this is going to be a painful experience, but you are going to come out so much better in the long run.”

Frances Clark, director of risk management and insurance, Sentara Healthcare

Her broker was right, and went so far as to help arrange a system-wide drill that included representatives from the legal, finance, security, communications, marketing and medical teams.

They reviewed the many ways a cyber attack can happen and then practiced a response.

“We benefitted greatly from that exercise,” Clark said.

When Doctors on Demand developed a telemedicine app to offer mental health services through mobile devices, the company ran up against insurance limitations across state lines. All states require that the physician giving the advice be licensed in the same state where the patient is located.

The concern was for patient encounters where the patient actually crossed state boundaries during the encounter, due to the utilization of a mobile phone. The patient may have started with a properly licensed physician in the original state, but then crossed into a neighboring state where the physician was not licensed.

Larry Hansard, a regional managing director at Arthur J. Gallagher & Co., and a 2017 Power Broker®, worked to secure medical professional liability coverage without the traditional licensure exclusions placed on medical professionals by insurance carriers.

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The initiative he helped develop actually changes how health care can be delivered to patients. It allows the emerging telemedicine sector to now offer services around the world.

Two-thirds of the risk managers in the PwC Broker 2020 survey labeled their brokers as “trusted advisors.” But the same survey found that some participants see their broker as more of a straightforward service provider rather than as a source for solutions.

The survey results indicate there is plenty of room for brokers to bring more value to clients.

OhioHealth’s brokers meet each year with OhioHealth’s risk management team to review insurance coverages.  And when the health system holds quarterly risk management retreats, the brokers attend. They bring with them education and insights on a broad range of topics, from property insurance markets to cyber solutions.

Porembski’s brokers also collaborate with the risk managers when there’s an upcoming presentation on risk issues to senior management. Sometimes the brokers help prepare the presentation, he said.

“We end up looking exceptionally good to our senior leaders and our board,” he said.

Involving the broker in interactions with leaders outside the traditional risk management team has benefits beyond selling products, he said. It extends the relationship circle.

Clark tries not to think of her brokers as outside vendors just providing a service. She wants them to be as committed and knowledgeable about the organization as she is.

“The only way that the relationship is going to be successful is if you build a tremendous amount of trust,” Clark said.

“You have to be completely open and honest about everything, no matter how bad it is, or how bad it may look to the market or underwriters.”

“Once you establish that trusting relationship, I think everything else falls into place,” she adds.

Sentara underwent significant growth recently, acquiring five hospitals in about six years. The expansion required a vast amount of integration on insurance programs and a merger of risk management departments and claims.

Clark said her brokers rolled up their sleeves and expertly navigated her through the consolidation.

“I can’t reiterate enough how most risk managers don’t know how to deal with an M&A unless you’ve gone through it.”

She said she wouldn’t have been able to manage the risk of the mergers without her broker’s counsel.

Grading the Broker

Mike Lubben, director of global risk management at Henry Crown & Co. in Chicago, sets standard expectations of his insurance brokers: know the exposures, understand how a risk manager has to sell ideas internally and understand the urgency of requests.

He lets his brokers know his expectations with regular report cards, complete with letter grades. And he isn’t shy about giving out Fs.

  • How did the broker service the EPLI coverage?
  • Did the broker provide expertise and coverage analysis?
  • Was there anything creative?
  • Did the broker recommend new endorsements based on the previous exposure?
  • Did the broker recommend any risk mitigation programs?
  • How well did he communicate and help with presentations?

“A good broker will think this is fantastic,” Lubben said.

This method starts the conversation. It helps Lubben establish long relationships with some stellar brokers.  But if the broker misses the mark, Lubben can have a talk with them about ways to do better in the future. Some brokers he has sent away.

Recently a broker failed on what Lubben calls “blocking and tackling,” the basics like returning phone calls within one day and responding promptly to emails.

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Lubben gave him an “F” on those subjects and told him why. The broker still didn’t improve his game and was eventually replaced.

For many people, insurance can seem very routine from renewal to renewal. But a really good broker will break from routine and come back with some kind of enhancement or improvement.

If the renewal is flat with no change in premium, then Clark says she’ll ask, “What are you going to do for me this year?”

The best brokers are always striving for better, she said.

“Without the brokering community, you would be hard pressed to do your job. I really appreciate what the brokers do, they bring a level of expertise that we can’t possibly have on all lines of coverage.” — Mike Lubben, director of global risk management at Henry Crown & Co.

Motivate International Inc., which operates more than half of the bike share fleets in North America, went through a recent renewal.

Their broker, Marsh, explored more than 10 options with different strategies and programs. In the end, after all of that, they decided the expiring coverage was the best fit.

“Those exercises are very valuable for risk managers,” said Grant Barkey, Motivate’s director of risk management.

“As an innovative company committed to delivering best-in-class services, we believe thorough exploration leads to informed decision-making.”

A good broker understands that a company’s day-to-day operations and a highly effective risk management program have implications for what type of policy should be procured, he said.

Brokers need to partner with risk managers to figure out what those options are, and what the markets are saying and then succinctly relay the information to management.
They also need to have the tact and curiosity to inquire about future plans and figure out what resources might be needed to better serve their client.

When PwC surveyed risk managers, most put their insurance carriers and industry groups ahead of their brokers as the primary source of cyber and supply chain risk solutions; yet these areas are still cited as risk managers’ top concerns.

“Becoming the go-to partners for developing and coordinating innovative and effective solutions in these priority risk areas is at the heart of the commercial opportunity for brokers.” PwC said in its report.

“Yet, our survey suggests that these are important areas where brokers are falling short of the market’s demands and therefore need to adapt.

For example, less than a third of respondents are very satisfied with brokers’ analytical and modelling services across a range of areas.”

When participants were asked how their brokers could be more efficient, respondents put risk analysis at the top of PwC’s survey list. Significantly, more than a third also cited ‘big data’ analysis.

Finding the Right Fit

Paul Kim, Co-CBO of U.S. Retail at Aon Risk Solutions, helps match brokers to risk managers. He keeps in mind that insurance companies tend to sell product, while the clients are looking to manage risks. The right broker assists in mapping risks to existing products and also customizing broad solutions, he said.

“The risk manager’s job has become more complex in the current environment, but there are so many tools available for those individuals to make better informed decisions that truly help protect the overall risk profile of their companies,” Kim said.

Paul Kim, Co-CBO of U.S. Retail, Aon Risk Solutions

That’s why finding the right broker should be first and foremost, he said. Look for an individual with strong industry knowledge, product expertise and market relationships. A strong broker is able to effectively communicate what the risk manager’s goals are to the marketplace to be able to execute and achieve those goals.

“Not every broker can do that,” Kim said.

“Not every broker is the right broker.”

PwC said those brokers who quickly master the art and science of identifying ambiguous threats and then mobilize a broad private/public stakeholder pool to economically manage those risks over time will pull ahead of their competition.

“We’re really generalist,” Lubben said.

“Without the brokering community, you would be hard pressed to do your job. I really appreciate what the brokers do, they bring a level of expertise that we can’t possibly have on all lines of coverage.”

When selecting a broker, the risk manager should also take into account the entire organization behind the broker. Ask about the additional support systems that are available to the broker’s clients.

The company should have a deep bench so when the primary broker is out of the office there’s someone else to rely on who is almost as knowledgeable. The broker organization should also be able to assist you with your budgeting and forecasting from a financial risk perspective.

In PwC’s survey of risk managers, nearly three-quarters want analytics from their broker to help inform their decisionmaking, with concerns over new and emerging risks being a strong driver for this demand.

Clark also thinks it is vitally important for a broker to offer a claims advocate, somebody on the outside, when you are dealing with a carrier on a complicated claim.

“Otherwise you are vulnerable to what the carrier says,” Clark said.

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To lead in this new era of risk, it’s also important that brokers forge close relationships with a broader set of stakeholders that includes governments, academia, specialist risk consultancies and even their industry peers, PwC said in the report.

It’s also going to be important to develop shared databases and research capabilities.

In turn, brokers need to assure this diverse stakeholder group that they are the right party to lead.

Clark, at Sentara Healthcare, said she knows what her risk exposures are today, but she’d like her brokers to anticipate her needs before she does.

“It’s kind of crazy, but amazingly some of them do it,” Clark said.

The broker will also use past experience and industry knowledge to anticipate where policy terms and conditions can be tweaked and improved upon.

“They will, say, advise us that we need to change this policy language, and then a year later you have a claim on that and you thank your lucky stars that they changed it,” Clark said.

“It is amazing to me every time it happens.”  &

Juliann Walsh is a staff writer at Risk & Insurance. She can be reached at [email protected]