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View From the Bench

Workers’ Comp Docket

Significant workers' compensation legal decisions from around the country.
By: | May 12, 2017 • 11 min read

Obtaining Job Under False Name Doesn’t Preclude Benefits

Mera-Hernandez v. U.S.D. 233, No. 112,760 (Kan. 03/24/17)

Ruling: The Kansas Supreme Court upheld the Court of Appeals’ determination that a school custodian was eligible for workers’ compensation benefits despite the fact that she obtained the job using a false name and identification documents.

What it means: Because workers’ compensation laws frequently provide the exclusive remedy for a worker injured on the job, many states, including Kansas, liberally construe the term “employee” when determining eligibility for coverage.

Here, Kansas’ broad definition of employee, which essentially includes anyone who has entered into an employment arrangement with an employer, made an employer responsible for benefits.

Summary: A school custodian’s use of a false name and identification documents to obtain employment with a Kansas school district did not let the district off the hook for workers’ compensation benefits when the custodian injured her back.

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Because the custodian fell within the broad definition of “employee” set forth in Kansas’ Workers’ Compensation Act, the district could not exclude her from coverage, the Kansas Supreme Court ruled. It upheld the state Court of Appeals’ decision, which in turn affirmed a determination by the state Workers’ Compensation Board that the custodian was entitled to benefits for her work-related back injury.

The district asserted that because the custodian’s fraudulent conduct induced it to hire her, her employment contract was void from the beginning. Without an employment contract, it argued, she could not recover any benefits under the state’s workers’ compensation system.

Noting that the district’s argument “has been rejected at every level to this point,” the court explained that the definition of “employee” “should be liberally construed to bring workers within the provisions of the Act.”

Under the workers’ compensation law, an employee is “any person who has entered into the employment of or works under any contract of service or apprenticeship with an employer,” the court added. As the custodian fit the broad definition of employee, she was entitled to coverage.

The court also pointed out that in another case it declined to “read a public policy exception based on immigration status into the Act.” Instead determining that because the employee met the statutory definition of employee, she was covered.

Finally, it observed, the state legislature amended the act in 2011 but did not alter the definition of ‘employee.’”

Expert Testimony Connects Employee’s Cancer to Workplace Mercury Exposure

Paradise Valley Unified School District, et al. v. Industrial Commission of Arizona, et al., No. 1 CA-IC 16-0020 (Ariz. Ct. App. 03/28/17)

Ruling: The Arizona Court of Appeals upheld an administrative law judge’s finding that a school district technician’s bladder cancer was caused by exposure to mercury from crushed light bulbs. He was therefore entitled to workers’ compensation benefits for his industrial injury.

What it means: Employers in Arizona should ensure that workers who handle toxic materials are provided with adequate safety equipment, and comply with user manual instructions, as well as applicable state and federal safety regulations.

Summary: A technician for a school district was the primary operator of a “bulb-eater machine” his school district purchased. The machine was used to crush and dispose of all fluorescent bulbs that burned out in the district. The technician testified that he crushed approximately 20,000 bulbs over the course of his employment.

Four years after he started using the machine, he was diagnosed with an aggressive form of bladder cancer. He sought workers’ compensation benefits for his condition. An administrative law judge ruled in his favor, and the district appealed. The Arizona Court of Appeals held that he was entitled to benefits.

The court explained that to secure benefits, the technician had to show not only that his injury arose of his employment, but that industrial exposure to mercury caused him to develop cancer.

He satisfied the first element, legal causation, by demonstrating that operating the machine over a period of years inside a closed warehouse was part of his job duties, the court noted.

According to the ALJ, the court continued, the technician “was exposed to mercury vapor from broken and exploding fluorescent tubes and in fact was covered with dust containing mercury while performing his work.”

As to the second element, medical causation, the court highlighted the testimony of one of the technician’s treating physicians. He testified that the technician was “fairly young” to have bladder cancer and that he lacked any of the “usual risk factors, such as smoking, second-hand smoke, or a genetic predisposition.”

An expert witness added that the paper mask the technician used “did not provide the level of filtration necessary to protect against mercury exposure.” Based on the totality of the evidence, the court held that the technician was entitled to workers’ compensation benefits.

Board Must Take Second Look at Softball Injury After Applying Incorrect Standard

Morris James LLP v. Weller, No. N16A-05-006 FWW (Del. Super. Ct. 03/16/17)

Ruling: The Delaware Superior Court reversed a decision by the Industrial Accident Board finding that a paralegal’s injury during a softball game was compensable and sent the case back to apply the correct standard.

What it means: In Delaware, a worker’s injury during a recreational activity not sponsored by the employer is compensable if it occurred on the employer’s premises, the employer required participation, or the employer derived a substantial benefit beyond the intangible value of improvement in employee health and morale.

Summary: A group of a law firm’s employees decided to form a softball team to compete in the Wilmington Lawyers’ Softball League. The firm paid for the team’s jerseys, bats, and meals after each game.

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A bankruptcy paralegal previously managed the team and worked on softball-related activities at work. He left work early to get a cooler and buy beverages for the game.

During the game, the paralegal was running around the bases when his Achilles tendon ruptured. The controller of the law firm suggested that he file a workers’ compensation claim. The law firm’s carrier denied the claim.

Later, the Industrial Accident Board determined that the paralegal’s injury occurred within the course and scope of his employment. The law firm argued that the board applied the incorrect standard. The Delaware Superior reversed the board’s decision and sent the case back for it to apply the correct standard.

The board found that the Wilmington Lawyers’ Softball League, not the law firm, sponsored the softball games. The court found that the board applied factors that apply to a company-sponsored recreational event.

The court said that a different standard applies when a recreational event is not sponsored by an employer. A worker’s injury during a recreational activity not sponsored by the employer is compensable if it occurred on the employer’s premises, the employer required participation, or the employer derived a substantial benefit beyond the intangible value of improvement in employee health and morale.

The court pointed out that only one of the factors must be satisfied to support a finding that an injury is compensable. Also, the third factor requires an employer to derive a “substantial benefit” form the activity.

The court said that in the context of a recreational event, such as a softball game, a direct benefit to an employer includes business advertising, publicity, and monetary gain.

School Employee Scores Benefits for Wipeout During Senior Prank Day

Field v. Pinckneyville Community H.S. Dist. 101, 25 ILWCLB 12 (Ill. W.C. Comm. 2016)

Ruling: The Illinois Workers’ Compensation Commission awarded a teacher permanent partial disability benefits based on 35 percent loss of use of the left leg and medical expenses of $80,791 for injuries sustained while walking from her vehicle to the building where she worked.

What it means: In Illinois, when a teacher parks in an area that is much farther away than the normal area because students are participating in a senior prank day by blocking teachers from parking in their customary parking spaces, the prank day is implicitly approved by the school administrators, and the blocking of the teachers from parking in their customary parking spaces is a known activity, the teacher was within the scope of her employment.

Summary: A high school art teacher testified she was en route to her employer when she found the entrances to the school parking lot were blocked off by vehicles as part of a senior prank day. Therefore, she parked next to the football practice field, which was across a side street that bordered the school.

As she walked across the morning grass, she fell and fractured her lower left leg. The grass was not flat but had a slight decline from the sidewalk to the parking lot. The arbitrator found the teacher’s accident arose out of and in the course of her employment and awarded benefits.

The arbitrator noted that although the teacher parked in a spot that was much farther away from her customary parking space, it was the most direct route from her car to the school doors.

The school tradition of Senior Prank Day was not a school-sponsored event, but it was implicitly approved by the school administrators, and the blocking of the teachers from parking in their customary parking spaces was a known activity.

Accordingly, the teacher was within the scope of her employment when she parked across the street from the school.

After she parked, the teacher took the most direct route from her car to the school doors while maintaining a distance from the students, their music, and their vehicles.

The teacher testified that although she was not scared of the students, she was focused on their activities and desired to avoid close contact. She was not sure whether she slipped on the morning grass or tripped in an unseen hole.

Under these circumstances, she, as a teacher and therefore an intended target of the prank, experienced an increased risk of harm than that of the general public. Furthermore, her choice of route across the mowed grass and away from the students and vehicles was reasonable.

Upon review, the commission affirmed and adopted the decision of the arbitrator.

Suit for Injuries Resulting From Stroke at Work Moves Forward

Baiguen v. Harrah’s Las Vegas, LLC d/b/a Harrah’s Casino Hotel, et al., No. 70204 (Nev. Ct. App. 02/28/17)

Ruling: The Nevada Court of Appeals reversed a grant of summary judgment to an employer on a worker’s suit. The evidence did not show that the worker’s injuries arose from his employment.

What it means: In Nevada, a worker’s injury arose from his employment when there is a causal connection between the injury and the nature of the work or workplace.

Summary: A worker for Harrah’s Casino Hotel suffered a stroke sometime between driving to work and prior to the start of his shift. His coworkers saw him exhibiting signs of distress in the parking lot and the clocking-in area before work, but nobody realized that his condition was as serious as a stroke.

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A group of coworkers drove him home, where he remained unattended for two days and eventually suffered permanent injuries. The worker sued Harrah’s for negligence, claiming that its failure to render him timely medical aid reduced his chances of avoiding permanent harm from the stroke. Harrah’s sought summary judgment, arguing that the worker’s sole remedy was workers’ compensation.

The District Court granted summary judgment to Harrah’s, finding that the suit was barred by the exclusive remedy of the workers’ compensation law. The Nevada Court of Appeals reversed.

The court found that the worker’s injury occurred during the course of employment. He was on the premises of his place of employment and was proceeding to work when he experienced the stroke.

The court found that the facts of the case raised a question regarding whether the risk of the worker’s injuries were personal and neutral. The court determined that the worker’s injuries did not arise from his employment.

If the risk was personal, he would have suffered the stroke regardless of his employment. If the risk was neutral, the record did not show that his work duties or the working conditions increased the risk of the stroke.

Clerk’s Claim For Depression Not Barred

Wilson v. Charleston County School District, No. 5475 (S.C. Ct. App. 03/22/17)

Ruling: The South Carolina Court of Appeals held that a clerk’s change of condition claim was not barred by the doctrine of res judicata and was filed within the 12-month deadline.

What it means: In South Carolina, a change of condition claim for depression is not barred by res judicata when the depression was not raised in the worker’s initial claim.

Summary: A data clerk for a school district was a bystander to a fight between two students. The students inadvertently pushed into her and pinned her against a marble countertop, which resulted in injuries to her neck and back.

The clerk received workers’ compensation benefits. Later, she filed a claim alleging a change of condition, asserting that her back injury was affecting her mental health. The clerk had been diagnosed with endogenous depression.

The school district argued that the claim was barred by the doctrine of res judicata and was not timely filed. The South Carolina Court of Appeals held that the clerk’s change of condition claim was not barred by the doctrine of res judicata and was filed within the 12-month deadline.

The doctrine of res judicata ensures that no one is sued twice for the same cause of action. Here, the clerk experienced prior episodes of depression following her husband’s death and an episode related to anxiety.

However, she said that she did not experience significant depression until pain from her back injury increased significantly. No doctor opined that she had work-related depression before the initial hearing.

The court found that the evidence showed that the clerk’s psychological condition worsened after the initial hearing and before she filed her claim alleging the change of condition. The clerk did not raise the issue of depression in her initial hearing. At that time, it had not progressed to endogenous depression. Therefore, the claim was not barred.

The court also found that the clerk satisfied the requirement that a claim be filed within a 12-month deadline. She filed the notice of claim alleging a change of condition within 12 months of her last payment of compensation.

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

Cyber Resilience

No, Seriously. You Need a Comprehensive Cyber Incident Response Plan Before It’s Too Late.

Awareness of cyber risk is increasing, but some companies may be neglecting to prepare adequate response plans that could save them millions. 
By: | June 1, 2018 • 7 min read

To minimize the financial and reputational damage from a cyber attack, it is absolutely critical that businesses have a cyber incident response plan.

“Sadly, not all yet do,” said David Legassick, head of life sciences, tech and cyber, CNA Hardy.

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In the event of a breach, a company must be able to quickly identify and contain the problem, assess the level of impact, communicate internally and externally, recover where possible any lost data or functionality needed to resume business operations and act quickly to manage potential reputational risk.

This can only be achieved with help from the right external experts and the design and practice of a well-honed internal response.

The first step a company must take, said Legassick, is to understand its cyber exposures through asset identification, classification, risk assessment and protection measures, both technological and human.

According to Raf Sanchez, international breach response manager, Beazley, cyber-response plans should be flexible and applicable to a wide range of incidents, “not just a list of consecutive steps.”

They also should bring together key stakeholders and specify end goals.

Jason J. Hogg, CEO, Aon Cyber Solutions

With bad actors becoming increasingly sophisticated and often acting in groups, attack vectors can hit companies from multiple angles simultaneously, meaning a holistic approach is essential, agreed Jason J. Hogg, CEO, Aon Cyber Solutions.

“Collaboration is key — you have to take silos down and work in a cross-functional manner.”

This means assembling a response team including individuals from IT, legal, operations, risk management, HR, finance and the board — each of whom must be well drilled in their responsibilities in the event of a breach.

“You can’t pick your players on the day of the game,” said Hogg. “Response times are critical, so speed and timing are of the essence. You should also have a very clear communication plan to keep the CEO and board of directors informed of recommended courses of action and timing expectations.”

People on the incident response team must have sufficient technical skills and access to critical third parties to be able to make decisions and move to contain incidents fast. Knowledge of the company’s data and network topology is also key, said Legassick.

“Perhaps most important of all,” he added, “is to capture in detail how, when, where and why an incident occurred so there is a feedback loop that ensures each threat makes the cyber defense stronger.”

Cyber insurance can play a key role by providing a range of experts such as forensic analysts to help manage a cyber breach quickly and effectively (as well as PR and legal help). However, the learning process should begin before a breach occurs.

Practice Makes Perfect

“Any incident response plan is only as strong as the practice that goes into it,” explained Mike Peters, vice president, IT, RIMS — who also conducts stress testing through his firm Sentinel Cyber Defense Advisors.

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Unless companies have an ethical hacker or certified information security officer on board who can conduct sophisticated simulated attacks, Peters recommended they hire third-party experts to test their networks for weaknesses, remediate these issues and retest again for vulnerabilities that haven’t been patched or have newly appeared.

“You need to plan for every type of threat that’s out there,” he added.

Hogg agreed that bringing third parties in to conduct tests brings “fresh thinking, best practice and cross-pollination of learnings from testing plans across a multitude of industries and enterprises.”

“Collaboration is key — you have to take silos down and work in a cross-functional manner.” — Jason J. Hogg, CEO, Aon Cyber Solutions

Legassick added that companies should test their plans at least annually, updating procedures whenever there is a significant change in business activity, technology or location.

“As companies expand, cyber security is not always front of mind, but new operations and territories all expose a company to new risks.”

For smaller companies that might not have the resources or the expertise to develop an internal cyber response plan from whole cloth, some carriers offer their own cyber risk resources online.

Evan Fenaroli, an underwriting product manager with the Philadelphia Insurance Companies (PHLY), said his company hosts an eRiskHub, which gives PHLY clients a place to start looking for cyber event response answers.

That includes access to a pool of attorneys who can guide company executives in creating a plan.

“It’s something at the highest level that needs to be a priority,” Fenaroli said. For those just getting started, Fenaroli provided a checklist for consideration:

  • Purchase cyber insurance, read the policy and understand its notice requirements.
  • Work with an attorney to develop a cyber event response plan that you can customize to your business.
  • Identify stakeholders within the company who will own the plan and its execution.
  • Find outside forensics experts that the company can call in an emergency.
  • Identify a public relations expert who can be called in the case of an event that could be leaked to the press or otherwise become newsworthy.

“When all of these things fall into place, the outcome is far better in that there isn’t a panic,” said Fenaroli, who, like others, recommends the plan be tested at least annually.

Cyber’s Physical Threat

With the digital and physical worlds converging due to the rise of the Internet of Things, Hogg reminded companies: “You can’t just test in the virtual world — testing physical end-point security is critical too.”

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How that testing is communicated to underwriters should also be a key focus, said Rich DePiero, head of cyber, North America, Swiss Re Corporate Solutions.

Don’t just report on what went well; it’s far more believable for an underwriter to hear what didn’t go well, he said.

“If I hear a client say it is perfect and then I look at some of the results of the responses to breaches last year, there is a disconnect. Help us understand what you learned and what you worked out. You want things to fail during these incident response tests, because that is how we learn,” he explained.

“Bringing in these outside firms, detailing what they learned and defining roles and responsibilities in the event of an incident is really the best practice, and we are seeing more and more companies do that.”

Support from the Board

Good cyber protection is built around a combination of process, technology, learning and people. While not every cyber incident needs to be reported to the boardroom, senior management has a key role in creating a culture of planning and risk awareness.

David Legassick, head of life sciences, tech and cyber, CNA Hardy

“Cyber is a boardroom risk. If it is not taken seriously at boardroom level, you are more than likely to suffer a network breach,” Legassick said.

However, getting board buy-in or buy-in from the C-suite is not always easy.

“C-suite executives often put off testing crisis plans as they get in the way of the day job. The irony here is obvious given how disruptive an incident can be,” said Sanchez.

“The C-suite must demonstrate its support for incident response planning and that it expects staff at all levels of the organization to play their part in recovering from serious incidents.”

“What these people need from the board is support,” said Jill Salmon, New York-based vice president, head of cyber/tech/MPL, Berkshire Hathaway Specialty Insurance.

“I don’t know that the information security folks are looking for direction from the board as much as they are looking for support from a resources standpoint and a visibility standpoint.

“They’ve got to be aware of what they need and they need to have the money to be able to build it up to that level,” she said.

Without that support, according to Legassick, failure to empower and encourage the IT team to manage cyber threats holistically through integration with the rest of the organization, particularly risk managers, becomes a common mistake.

He also warned that “blame culture” can prevent staff from escalating problems to management in a timely manner.

Collaboration and Communication

Given that cyber incident response truly is a team effort, it is therefore essential that a culture of collaboration, preparation and practice is embedded from the top down.

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One of the biggest tripping points for companies — and an area that has done the most damage from a reputational perspective — is in how quickly and effectively the company communicates to the public in the aftermath of a cyber event.

Salmon said of all the cyber incident response plans she has seen, the companies that have impressed her most are those that have written mock press releases and rehearsed how they are going to respond to the media in the aftermath of an event.

“We have seen so many companies trip up in that regard,” she said. “There have been examples of companies taking too long and then not explaining why it took them so long. It’s like any other crisis — the way that you are communicating it to the public is really important.” &

Antony Ireland is a London-based financial journalist. He can be reached at [email protected] Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]