View From the Bench

Workers’ Comp Docket

Significant workers' compensation legal decisions from around the country.
By: | March 2, 2017 • 9 min read

Exposure to Pigeon Droppings Results in Compensable Claim

Lankford v. Newton County, et al., No. SD34269 (Mo. Ct. App. 01/17/17)

Ruling: The Missouri Court of Appeals held that an investigator suffered a compensable occupational disease.

What it means: In Missouri, a worker does not have to establish an “unequal exposure” for an occupational disease claim. The worker must show that the disease he suffered is not an “ordinary disease of life to which the general public is exposed outside of the employment.”

Summary: An investigator for the prosecutor’s office smoked in the employer’s basement. He began going to the roof of the building to smoke at the suggestion of an assistant prosecutor. He said that he preferred the roof because it was quiet, and he could think about the case he was working on. While on the roof, coworkers sought him out to talk about work-related matters.

The roof was a popular place for pigeons, and pigeon droppings accumulated there. The investigator was diagnosed with chronic obstructive pulmonary disease. He was also diagnosed with diseases relating to the exposure to pigeon droppings.

He underwent surgery and had a stroke, which left him unable to work. The investigator filed a workers’ compensation claim, asserting that his exposure to pigeon droppings caused an injury to his lungs and respiratory system. Subsequently, the investigator died due to complications of pneumonia and COPD. The Missouri Court of Appeals held that the investigator’s occupational disease was compensable.

The employer argued that the investigator’s duties did not require his presence on the employer’s roof, and the employer did not receive a benefit from the investigator retreating from his job to the roof to be alone and smoke 10 times per day.

The court found that the investigator’s exposure to pigeons and pigeon droppings arose out of and in the course of his employment. Experts agreed that the investigator underwent lung surgery to treat the infection caused by the bird droppings. The court found that the evidence establishes that the investigator’s work activities caused the exposure to the infection.

Award of Benefits Does Not Confer Immunity to Coworker

Entila, et al. v. Cook, et al., No. 92581-0 (Wash. 01/12/17)

Ruling: The Washington Supreme Court held that a coworker was not immune from a third-party suit because he was not acting in the course and scope of his employment when the accident occurred.

What it means: In Washington, the fact that a worker received workers’ compensation benefits plays no role in determining a coworker’s immunity in a third-party suit.

Summary: A worker for Boeing finished work for the day and was walking across the employer’s access road when he was struck by a coworker who was driving his vehicle out of the employee parking lot. The worker received workers’ compensation benefits for his injuries and sued the coworker.

The coworker argued that he was immune from suit because he was acting in the course of his employment and Boeing’s employer immunity shielded him from liability. The Washington Supreme Court held that the coworker was not immune from suit.

The court explained that if an injured worker qualified for benefits, the employer cannot be sued. However, the worker’s receipt of benefits does not control third-party immunity. The court explained that a third-party coworker is not eligible for immunity unless he is in the “same employ” as the injured worker. “Same employ” can be shown when the coworker is acting in the course of employment.

The court sent the case back to the trial court.

Passing Mention of Soreness Does Not Constitute Notice of Work Injury

Ross v. American Ordnance, et al., No. 16-0787 (Iowa Ct. App. 01/11/17, unpublished)

Ruling: In an unpublished decision, the Iowa Court of Appeals held that a worker’s claim was barred because she failed to provide sufficient notice of her injury to her employer.

What it means: In Iowa, a worker must give her employer notice of an injury within 90 days unless the employer has actual knowledge of the injury.

Summary: A worker for American Ordnance claimed that she told her supervisor that she hurt her shoulder when a box fell over. The supervisor said that the worker said her shoulder hurt a little bit. The supervisor asked if she wanted to call an ambulance or see a doctor, but she declined.

The worker continued to have problems with her shoulder. She was eventually diagnosed with a torn rotator cuff that required surgery. More than 90 days after the alleged injury, the worker filed a workers’ compensation claim. The Iowa Court of Appeals held that her claim was barred because she failed to provide American sufficient notice of her claim.

The court found that the worker had to do more than tell the supervisor that her shoulder was sore. She did not tell him there was a reasonable possibility that her condition was related to her work. The court found that American did not have actual knowledge of a reasonable possibility that her injury was related to her work.

The worker argued that the discovery rule applied to her claim. Under the discovery rule, the 90-day notice period would not begin to run until the worker recognized the nature, seriousness, and probable compensable nature of the condition.

The court rejected the argument, finding that the worker recognized the nature, seriousness, and probable compensable character of her injury on the date it occurred, so she informed her supervisor at the time of her injury.

A dissenting judge found that the worker provided sufficient notice to the employer when she said that a box fell and that she hurt her shoulder. The judge pointed out that the supervisor responded by offering to call for an ambulance.

Worker Wins Benefits for Blackout Accident Caused by Non-Work Factors

Nuclear Diagnostic Products, 116 NYWCLR 211 (N.Y. W.C.B., Panel 2016)

Ruling: The New York Workers’ Compensation Board held that a driver, who crashed his work vehicle after losing consciousness while driving, sustained a compensable accident under the WCL.

What it means: In New York, where a worker loses consciousness while driving the employer’s vehicle in the course of his employment, he is entitled to a presumption that his accident arose out of his employment.

Summary: The board held that a driver who crashed his work vehicle after losing consciousness while driving sustained a compensable accident. The driver reported to hospital staff that he started coughing, lost control of the car, and then remembered someone waking him up after the accident.

He also reported that he had been coughing due to an asthmatic reaction to a new air freshener in his house. The board explained that because the driver’s accident occurred in the course of his employment he was entitled to a presumption that the accident arose out of his employment.

Although a review of the medical records indicated that the driver lost consciousness due to a coughing attack caused by his asthma condition, the driving of the employer’s vehicle was an added risk of employment. This added risk caused the injuries to his neck and back. Therefore, the driver’s claim was compensable.

Worker Denied Benefits for PTSD After Death of Infant Client

Griffin v. Luzerne County Children and Youth, 31 PAWCLR 233 (Pa. W.C.A.B. 2016)

Ruling: The Pennsylvania Workers’ Compensation Appeals Board affirmed the workers’ compensation judge’s decision denying benefits to a caseworker who alleged she sustained post-traumatic stress disorder and depression after the traumatic death of a young baby she was supervising.

What it means: In Pennsylvania, the traumatic death of a baby that a caseworker is supervising is not sufficiently extraordinary or unusual within the context of the caseworker’s specific employment to rise to the level of an abnormal working condition.

Summary: The board affirmed the WCJ’s decision denying benefits to a caseworker who alleged that she sustained post-traumatic stress disorder and depression after the traumatic death of a young baby she was supervising.

Evidence indicated the caseworker had been at the baby’s home and held the baby. After she left, the parents began drinking, and ultimately, the mom closed the baby in the recliner and left him there all night.

On appeal, the caseworker argued the WCJ erred in finding that she failed to establish abnormal working conditions. Rejecting this argument, the board explained that the events in this case, while indisputably tragic, were not found to be sufficiently extraordinary or unusual, within the context of the caseworker’s specific employment, to rise to the level of an abnormal working condition. The caseworker had to deal with abused and neglected children, and her agency was charged with reviewing these types of scenarios.

Relying on a prior case holding that the more fact intensive the inquiry, the more deference a reviewing court should give to the WCJ’s findings, the board found no sound basis for disturbing the WCJ’s decision.

Evidence Establishes That Mosquito Bite at Work Led to Compensable West Nile

Allen v. Graphic Packaging International, Inc., No. 51,080-WCA (La. Ct. App. 01/11/17)

Ruling: The Louisiana Court of Appeal held that an operator established a work-related accident when he was bitten by a mosquito and contracted West Nile encephalitis. The operator was entitled to temporary total disability benefits.

What it means: In Louisiana, work-related insect bites or stings can be a compensable accident under the workers’ compensation law.

Summary: An assistant operator for Graphic Packaging International was sitting in the break room of the plant when he was bitten by a mosquito. Days later, he had fatigue and fever-related symptoms. He was eventually diagnosed with West Nile encephalitis. He filed a workers’ compensation claim. The Louisiana Court of Appeal held that he established a work-related accident.

The court found that the operator showed it was more probable than not that he was bitten on the job by a mosquito carrier of West Nile. The widespread outbreak of West Nile throughout the area and the summer conditions supporting the mosquito population demonstrated that the operator was exposed to other mosquitoes in the days before and after the accident. Also, the evidence and common sense established that the operator was exposed to mosquitoes away from work.

However, the operator’s time in the plant during the week before he experienced symptoms allowed for a conclusion that he was probably bitten during his 56 hours at work. Large doors to the plant were open allowing for exposure of mosquitoes to workers.

Also, the operator worked early in the morning and later in the afternoon, which were times that mosquitoes were the most active as confirmed by experts. The operator also pointed out that a coworker also contracted West Nile at work.

The court found that the operator was not entitled to permanent and total disability benefits before a proper evaluation of rehabilitation possibilities. The court found that he was temporarily totally disabled.

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

Reputational Risk

Under Siege

Driven by social media, political wars spill over into the corporate arena, threatening reputations.
By: | May 2, 2017 • 12 min read

On Jan. 28, the New York Taxi Workers Alliance called a strike at John F. Kennedy International Airport, one day after President Trump signed an executive order banning entry of foreign nationals from seven Muslim-majority nations, including a blanket ban on refugees. The strike was an act of solidarity with immigrants, and a public display of the Alliance’s opposition to the executive order.

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Uber, however, continued to service the airport, tweeting that it would halt surge pricing during the protests. Some saw it as an opportunistic ploy to get more riders to use Uber. A #deleteUber Twitter campaign was quickly born, with users tweeting screen shots of themselves removing the app from their smartphones.

More than 200,000 were estimated to have uninstalled the ride-sharing service over the course of the weekend.

Uber CEO Travis Kalanick reacted, creating a $3 million legal defense fund to provide lawyers and immigration experts for any of its drivers that were barred from the U.S., and promising that drivers would be compensated for lost wages.

Over the same weekend, in response to the travel ban, Starbucks CEO Howard Schultz announced that the company would hire 10,000 refugees worldwide over the next five years. Then it was Starbucks turn to get punished in the public arena. A #boycottStarbucks campaign was launched by people who felt the company should focus more on hiring American veterans.

Athletic shoemaker New Balance suffered blowback in November of 2016 when its vice president of communications, Matt LeBretton, told the “Wall Street Journal” in an interview that he believed “things are going to move in the right direction” under the new administration. Angry customers began posting pictures of themselves trashing or even burning their New Balance sneakers.

These social media-fueled public relations crises demonstrate how fickle public opinion can be. They also serve as warning signs of growing reputational risk for corporations.

Uber, for example, typically stops its surge pricing in the event of emergency so as not to exploit a crisis for its own benefit. To do so during the protests and taxi strike at JFK was perhaps meant to show its respect for the event.

Helen Chue, global risk manager, Facebook

Starbucks’ 10,000 refugee hires would be spread out across its locations around the globe, not just in the U.S., where the coffee conglomerate already promised to hire 25,000 veterans and military spouses by 2025.

New Balance’s LeBretton was speaking specifically about the Trans-Pacific Partnership during his interview, and how the deal could hurt sneaker production in the U.S. while favoring foreign producers — he wasn’t talking about Trump’s other proposed plans.

These companies, in reality, did nothing as abhorrent and scandalous as the Twitterverse may have led some to believe, but context isn’t always provided in 140 characters.

Public Pressure

Complaints and boycotts have been launched at companies via social media for perhaps as long as social media has existed. But the current contentious environment created by one of the most divisive leaders in American history now colors every public statement made by prominent business leaders with a political tint. Executives are stuck between a rock and a hard place. They’re exposed to reputational damage whether they oppose or endorse a Trump action, or even if they do nothing at all.

Take Elon Musk, for example, founder of Tesla and SpaceX and a well-known advocate for climate research and environmental protection. He came under fire for not publicly denouncing the travel ban and for keeping his seat on Trump’s business advisory council.

Musk has largely avoided the limelight on political issues, couching statements when he makes them at all — as most executives are wont to do. But he was prodded to defend himself on Twitter after some users suggested he was a hypocrite.

“Be proactive in your plans to mitigate the aftermath and how to communicate. Own up to error. Be transparent. Salvage your crown jewel.” —Helen Chue, global risk manager, Facebook

A strategy of avoidance may no longer work as consumers, employees and the public at large pressure companies to make a statement or take action in response to political events.

“A large segment of the population expects the people they do business with and the companies they buy from to support their point of view or respond to political or social issues in a certain way,” said Chrystina M. Howard, senior vice president, strategic risk consulting, Willis Towers Watson.

In a damned-if-you-do, damned-if-you-don’t environment, reputation risk is expanding, and risk managers need to re-evaluate how they assess their exposure and build mitigation strategies.

A True Crisis?

The challenge begins with determining whether a negative public relations event is really a crisis. Is it a temporary blow to a brand, or does it have the potential to do long-term reputation damage? Misreading the signs could lead companies to overreact and further tarnish their image.

“These sudden public relations crises are a source of panic for companies, but sometimes it sounds much worse than it actually is. The financial ramifications may not be anywhere near what was feared,” Howard said.

“Uber is probably a good example of what not to do,” said Jeff Cartwright, director of communications at Morning Consult, a brand and political intelligence firm.

“They maybe went over the top in trying to reverse the way they handled the protests at JFK.”

Tracking brand value in real time can give risk managers insight into the true impact of a negative social media campaign or bad press.  Michael Ramlet, CEO and co-founder of Morning Consult, said most events don’t damage brands as much as trending hashtags make it appear.

Morning Consult’s proprietary brand tracking tool allows companies to measure their brand perception against influencing events like a spike of Twitter mentions and news stories. More often than not, overall brand loyalty remains on par with industry averages.

In Uber’s case, Twitter mentions spiked to roughly 8,800 on Jan. 29, up from about 1,000 the day before. By Jan. 31, though, the number was back down to around 1,250 and quickly settled back down to its average numbers. From the beginning of the #deleteUber campaign through the end of February, Uber’s favorability shrunk from 50 percent to roughly 40 percent, based on a series of polls taken by 18,908 respondents.

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It’s a significant dip, but likely not a permanent stain on the company’s reputation, especially after Kalanick’s public show of support for immigrants and rejection of the travel ban. Uber’s favorability rating remained higher than competitor Lyft’s throughout the ordeal.

“The #deleteUber campaign turned out to be a very local thing that didn’t have a widespread impact,” Ramlet said.

“Twitter at best is an imputed analysis of what people are saying. The vocal minority might be very active, but there might be a silent majority who still think fondly of a brand, or at least have no negative opinions of it.”

He said risk managers can also benefit by breaking down their brand perception into geographic and demographic subsets. It can, for example, show whether a brand is favored more heavily by Democrats or Republicans.

“If you have that data on day one, it can help you determine how to respond if, say, Trump tweets at you,” Ramlet said.

Of course, some spikes in news media and social media attention are indicative of much deeper problems and true reputational risk.

After the Wells Fargo dummy-account scandal broke, for example, unfavorability ratings as measured by Morning Consult jumped from roughly 20 percent to nearly 55 percent, while favorability dropped from 50 percent to 30 percent. Net favorability, which stood at 33 percent pre-scandal, fell to -4 percent post-scandal.

“They went from being the most popular bank to the least popular in less than four months, according to our data,” Ramlet said.

The contrast between Uber’s and Wells Fargo’s stories demonstrates the difference between a more surface-level public-relations event that temporarily hurts brand image, and a true reputation event.

“Failures that produce real and lasting damage to reputation include failures of ethics, innovation, safety, security, quality and sustainability,” said Nir Kossovksy, CEO of Steel City Re.

“Activists make a lot of noise that can be channeled through various media, but for the most part in the business world, stakeholders are interested in the goods and services a company offers, not in their political or social views. As long as you can meet stakeholder expectations, you avoid long-term reputational damage.”

Wells Fargo’s scandal involved a violation of ethics, sparked an SEC investigation and forced the resignation of its CEO, John Stumpf. It’s safe to say stakeholders were severely disappointed.

That’s not to say, however, that a tarnished brand name doesn’t also impact the bottom line.

“Even if a bad event is short-lived, the equity markets react quickly, so there may be sharp equity dips. There may be some economic impact even over the short term,” Kossovsky said, “because sharp dips are dog whistles for activists, litigators and corporate raiders.”

Social Media Machine

The root of reputation risk’s tightening grip lies in the politicizing of business, and consumers’ increased desire to buy from companies that share their values. Social media may not be driving that trend, but it acts as a vehicle for it.

“Social media has really changed the game in terms of brand equity, and has given people another way to choose who they give their money to,” Howard of Willis Towers Watson said.

Platforms like Twitter make it easier for consumers to directly reach out to big companies and allow news to travel at warp speed.

“Social media are communication channels that can take a story and make it widely available. In that regard, the media risk is no different than that posed by a newspaper or radio channel,” Kossovsky said.

“The difference today that changes the strategy for risk managers and boards is that social media has been weaponized: Stories shared on social media don’t necessarily have to contain truthful content, and there’s not always an obvious difference between what’s true and what’s not.”

Helen Chue, Facebook’s global risk manager, agreed.

“More influential than social media platforms is today’s culture of immediacy and headlines. Because we are inundated with information from so many sources, we scan the headlines, form our opinions and go from there,” she said.

“It’s dangerous to draw conclusions without taking a balanced approach, but who has the time and patience to sift through all the different viewpoints?”

An environment of political divisiveness, driven by speed and immediacy of social media, creates the risk that false or half-true stories are disseminated before companies have a chance to clarify. This is what happened to Uber and New Balance.

“It creates the opportunity to turn a non-problem into a problem,” Kossovksy said.

“That’s how social media changes the calculus of risk management.”

Risk Mitigation

The best way to battle both political pressure and social media’s speed is through an ironclad communication strategy; a process that risk managers can lead.

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“Risk managers play a crucial role in mitigating reputation risk,” Howard said.

“They bring with them the discipline of managing and monitoring a risk, having a plan and responding to crisis. Now they really have to partner with communications, marketing and PR.”

They also have to get the attention of their board of directors.

“If you let a gap form between what you say and what you do, that gap is the definition of reputation risk.” — Nir Kossovksy, CEO of Steel City Re

“This is both a company-wide risk and personal leadership risk, so the board needs to drive a company-wide policy that protects the board as well,” Kossovsky said.

The art of mitigating reputation risk, he said, comes down to managing expectations. Corporate communications should clearly convey what a company believes and what it does not believe; what it can do and what it can’t do. And those stated values need to align with the operational reality. It comes down to creating credibility and legitimacy.

“If you let a gap form between what you say and what you do, that gap is the definition of reputation risk,” he said. A strong communication strategy can prevent adverse events from turning into reputational threats.

Willis Towers Watson helps clients test their strategies through a table-top exercise in which they have to respond to a social media-driven reputation event.

“We’ll say, ‘Something happened with X product, and now everyone’s on Twitter lambasting you and calling for resignations, etc.’ What do you do on day one? What do you do a week out? How long do you continue to monitor it and keep it on your radar?” Howard said.

“If you have that plan in place, you can fine-tune it going forward as circumstances change.”

Sometimes, though, the communication strategy fails, and a company falls short of meeting stakeholders’ expectations. Now it’s time for crisis management.

“Volatility creates vulnerability. If you stumble on your corporate message, it creates an opportunity for activists, litigators and corporate raiders to exploit. So you need to have authoritative third parties who can attest to your credibility and affirm the truth of the situation to open-minded stakeholders,” Kossovsky said.

Owning up to any mistakes, reaffirming the truth and being as transparent as possible will be key in any response plan.

Insuring the Risk

Recouping dollars lost from reputation damage requires a blend of mathematics with a little magic. While some traditional products are available, reputation risk is, for the most part, an intangible and uninsurable risk.

“Many companies have leveraged their captive insurance companies in the absence of traditional reputation products in the marketplace,” said Derrick Easton, managing director, alternative risk transfer solutions practice, Willis Towers Watson.

“It goes back to measuring a loss that can include lost revenue, or increased costs. Some companies build indexes in the same way we might create an index for a weather product, using rainfall or wind speed. For reputation, we might use stock price or a more refined index,” he said.

“If we can measure a potential loss, we can build a financing structure.”

While there’s no clear-cut way to measure losses from reputation damage, “stock performance and reported sales changes are some of the best tools we have,” Howard said.

Some insurers, including Allianz and Tokiomarine Kiln, and Steel City Re, an MGA, do offer reputation policies. When these fit a company’s needs, they have the ancillary benefit of affirming quality of governance and sending a signal that the insured is prepared to defend itself.

“Because reputation assurance is only available to companies that have demonstrated sound governance processes, it helps to convince people that if a bad piece of news happens, it’s idiosyncratic; it doesn’t reflect what the company really stands for,” Kossovsky of Steel City Re said.

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“And it tells activists, broadly defined, not to look for low-hanging fruit here.”

In a volatile political environment, companies fare best when they simply tell the truth.

“The American public will accept an apology if delivered quickly and if it’s sincere,” said Stephen Greyser, Richard P. Chapman professor (marketing/communications) emeritus, of the Harvard Business School.

“Tell the truth. Don’t stonewall. A bad social media campaign can be an embarrassment, but if you stick to the facts and apologize when you need to, people forget about the bad quickly.”

“Reputation is the crown jewel,” Chue said. “Given the power of social media’s reach, one individual can have a tsunami-like influence. And it can happen when you least expect it, and it will probably be something you thought was innocuous or even positive that sets off a maelstrom.

“Plan for the worst-case scenario. Be proactive in your plans to mitigate the aftermath and how to communicate. Own up to error. Be transparent. Salvage your crown jewel.” &

Katie Siegel is a staff writer at Risk & Insurance®. She can be reached at [email protected]