View From the Bench

Workers’ Comp Docket

Significant workers' compensation legal decisions from around the country.
By: | November 3, 2017 • 10 min read

Forfeiture Provision of Workers’ Comp Law Ruled Unconstitutional

Gibby v. Hobby Lobby Stores, et al., No. 114065 (Okla. 10/03/17)

Ruling: The Oklahoma Supreme Court held that the forfeiture provision based on a worker’s failure to attend medical appointments is unconstitutional.

What it means: In Oklahoma, the forfeiture provision based on a worker’s failure to attend medical appointments is unconstitutional.

Summary: A worker for Hobby Lobby injured his right wrist and left knee when he fell three to four feet from a pallet jack while in the course and scope of his employment. Hobby Lobby provided temporary total disability and medical benefits. The worker sought permanent partial disability benefits.

Hobby Lobby asserted that the forfeiture provision prohibited the worker from receiving further workers’ compensation benefits because he missed three scheduled medical appointments without a valid excuse or notice to Hobby Lobby. An administrative law judge found no extraordinary circumstances existed for the worker’s missed medical appointments.

The worker challenged the constitutionality of the forfeiture provision. The Oklahoma Supreme Court held that the forfeiture provision is unconstitutional.

The forfeiture provision stated that if a worker missed two or more scheduled appointments for treatment, he is no longer entitled to receive benefits unless his absence was caused by extraordinary circumstances or he gave the employer at least two hours of notice and had a valid excuse.

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The court explained that the provision operates to forfeit existing vested rights to workers’ compensation benefits. The court said that “rights that vest on injury may not be destroyed except by due process of law.”

The court also found that the forfeiture provision “tips the delicate balance achieved in the Greta Bargain too far in favor of employers and therefore fails to provide an adequate substitute remedy to injured workers.” The provision also reinstated the concept of fault into a no-fault system.

A dissenting judge opined that the worker did not show that the provision was “repugnant to the constitution” and noted Hobby Lobby could have sought reimbursement for the cost of the missed appointments.

Compensation Judge Must Apply Good Cause Standard to Rehab Benefits

Halvorson v. B&F Fastener Supply, et al., No. A16-0920 (Minn. 09/20/17)

Ruling: The Minnesota Supreme Court held that the compensation judge improperly terminated a worker’s rehabilitation benefits on the basis that she had obtained “suitable gainful employment.”

What it means: In Minnesota, an employer must show “good cause” before terminating a worker’s rehabilitation benefits.

Summary: A worker for B&F Fastener Supply sustained an injury to her right elbow and both knees at work. A compensation judge found that she was entitled to benefits, including rehabilitation services.

The worker eventually obtained part-time employment with another employer, which prompted B&F to seek the discontinuation of her rehabilitation services. The compensation judge concluded that the worker was no longer a “qualified employee” in light of her part-time job, which eliminated the need for further rehabilitation services.

The Workers’ Compensation Court of Appeals reversed, finding that the compensation judge failed to apply the “good cause” standard. The Minnesota Supreme Court agreed with the WCCA that the compensation judge improperly terminated the worker’s rehabilitation benefits.

The court rejected B&F’s argument that when a worker receiving rehabilitation benefits finds suitable gainful employment and no longer meets the definition of a qualified employee, a compensation judge can terminate benefits without applying the good cause standard.

B&F asserted that if a recipient of rehabilitation services is no longer a “qualified employee,” it would be absurd to delay or prevent the termination of rehabilitation services. The court explained that the law contains procedural requirements that must be satisfied before enforcing legal rights and obligations.

Here, the plan modification provisions required an employer to file a request and make a showing of good cause before terminating a worker’s rehabilitation services.

The court also found that B&F erroneously assumed that requiring a showing of good cause was equivalent to saying that the definitional provisions played no role in a decision to terminate benefits.

The court explained that a worker who could not reasonably be expected to return to suitable gainful employment through the provision of rehabilitation services would also tend to be unlikely to benefit from further rehabilitation services.

Dependency Benefits Denied When There Was No Marriage

Sanchez v. Carter, et al., No. A17A1135 (Ga. Ct. App. 10/17/17)

Ruling: The Georgia Court of Appeals held that a deceased worker’s partner was not entitled to dependency benefits.

What it means: In Georgia, one cannot recover dependency benefits arising from a living arrangement that did not include ceremonial or common-law marriage.

Summary: A worker for Carter suffered a fatal head injury when he fell from a roof during the course of his employment. Carter and its insurer agreed that the injury was compensable and paid the worker’s medical expenses.

The worker’s romantic partner lived with him from 2002 until his death in 2015. The worker and the partner were never ceremonially married, although they had discussed getting married and planned to be married in a church in 2015.

The partner became disabled in 2011, and the worker paid all of her living expenses, including the rent and utilities for their home. The partner filed a claim for dependency benefits. The Georgia Court of Appeals held that she was not entitled to benefits.

The court explained that the partner was not entitled to dependency benefits arising from her living arrangement with the worker because she was not married to him, either by ceremony or under the common law.

The partner pointed out that the legislature adopted a law stating that no common-law marriage can be entered into in the state after Jan. 1, 1997. The partner asserted that her relationship with the worker would have fallen within the definition of common-law marriage before it was abolished.

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The court explained that even if her relationship with the worker may have been considered a common-law marriage before 1997, she could not be deemed married by common law to the worker based on a relationship that began in 2002.

The court also explained that the Georgia Supreme Court previously held that one cannot recover dependency benefits arising from a living arrangement that did not include ceremonial or common-law marriage. This precedent prevented the partner from being awarded benefits.

Witnessing Coworker Being Shot Leads to PTD Benefits for Driver

Evans v. Alliance Healthcare Services, No. W2016-00653-SC-WCM-WC (Tenn. 09/26/17, unpublished)

Ruling: In an unpublished decision, the Tennessee Supreme Court held that a driver was permanently and totally disabled by post-traumatic stress disorder caused by witnessing the shooting of a coworker. She was entitled to medical expenses for hospitalizations related to the traumatic event.

What it means: In Tennessee, a worker’s mental injury is compensable when it resulted from a specific, acute, sudden, unexpected, and stressful event such as witnessing a coworker being injured in a shooting.

Summary: A bus driver for Alliance Healthcare Services was transporting a coworker, a counselor, to a patient’s home. When they reached the residence, the patient ran to the door carrying a gun.

As the driver and coworker entered the house, the patient shot the coworker. The driver subsequently witnessed two other shootings.

The driver was subsequently diagnosed with acute stress disorder and post-traumatic stress disorder. She sought workers’ compensation benefits.

The Tennessee Supreme Court held that she was permanently and totally disabled and that she was entitled to medical expenses for hospitalizations related to the traumatic event.

The court found that the shooting was a specific, acute, sudden, unexpected, and stressful event that caused the driver to develop PTSD. Therefore, her mental injury was compensable.

Alliance asserted that as the years went by, the major causes of the driver’s mental difficulties were preexisting conditions and stressful events in her personal life.

The court agreed with the trial court’s decision to give greater weight of the testimony to the driver’s treating physician.

It followed that the driver’s continuing symptoms were caused by the shooting and subsequent shootings witnessed by the driver and her ongoing difficulties with family did not constitute an independent intervening cause of her symptoms.

The court also found that the driver was permanently and totally disabled as a result of her compensable mental injury.

Both the driver’s physician and a physician who conducted an independent evaluation testified that she was unable to work. The driver also said that she did not believe she could hold a job because she was afraid to leave her residence alone.

The driver sought $196,461 in medical expenses for various hospitalizations. Alliance asserted that the hospitalizations were due to the driver’s suicide attempts, issues arising from her long-term drug use, and issues after the driver’s weight loss surgery.

The driver’s physician opined that all of the episodes and treatment were causally related to the original traumatic event. Therefore, the court ordered Alliance to pay the medical expenses.

Tuition Benefits Included in Calculation of Director’s AWW

Haller v. Champlain College, No. 16-332 (Vt. 09/29/17)

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Ruling: In a case of first impression, the Vermont Supreme Court held that tuition benefits should be included in the calculation of a director’s average weekly wage.

What it means: In Vermont, tuition benefits should be included in the calculation of a college employee’s average weekly wage.

Summary: A recruitment director for Champlain College suffered a work-related injury, which the college accepted as compensable.

During the time of her employment, the director took numerous classes at the college pursuant to its “tuition benefits” policy.

Under the policy, college employees, spouses, and eligible dependents can take undergraduate and graduate courses on a space-available basis, tuition free. Tuition benefits valued at more than $5,250 per calendar year were reported as taxable wages on employees’ tax forms.

During the 26 weeks before the injury, the director took 10.5 credits of coursework at the college. The parties disputed whether the tuition benefits were part of the director’s wages.

The Vermont Supreme Court held that tuition benefits should be included in the calculation of the director’s average weekly wage.

The court explained that “wages” are defined to include “bonuses and the market value of board, lodging, fuel, and other advantages which can be estimated in money and which the employee receives from the employer as part of his or her remuneration.”

Here, the court found that tuition benefits were “other advantages.” The director received the free tuition benefit, and the value was readily ascertainable. The benefit was provided directly to her, and it benefited her directly and quantifiably.

The court found that it was part of her compensation paid in consideration of her work for the college. The free tuition was also one of the reasons the director chose to work for the college.

Dissenting judges opined that the fringe benefits of free tuition could not be considered remuneration. One judge also opined that consideration of such fringe benefits in determining wages violated the premise and construction of the workers’ compensation law.

Comp Covers Worker’s Punctured Breast Implant

Bellanco v. Wood Co., 32 PAWCLR 148 (Pa. W.C.A.B. 2017)

Ruling: The Pennsylvania Workers’ Compensation Appeals Board affirmed the workers’ compensation judge’s ruling that a worker sustained a work-related rupture of her right breast implant. However, the WCJ erred in granting the worker unreasonable contest attorney’s fees.

What it means: In Pennsylvania, medical testimony that the worker had no problems with her right breast implant before the work accident, along with credible medical opinion that the worker’s right breast implant leak was directly related to a work incident while lifting a heavy item at work, constitutes sufficient evidence that the worker sustained a work-related compensable accident at work.

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Summary: The board affirmed the WCJ’s ruling that a worker, who felt a pop in the right side of her chest while lifting a heavy rack of glasses at work, sustained a work-related rupture of her right breast implant.

The worker presented the report of her doctor, who established that before the work incident, the worker had no problems with her right breast implant.

Another doctor explained that the worker’s right breast implant leak was directly related to the work incident. This evidence, which was found credible by the WCJ, was sufficient to sustain the worker’s burden on her claim petition.

The board also found that the WCJ erred in finding the employer’s contest was unreasonable. While the employer did not present its doctor’s medical report, in which he opined that the rupture was not work-related, until about a year after the work injury, the employer had information in its possession sufficient to justify its continued contest.

It was not until after the worker’s surgery that her doctor opined there was a link between the work injury and the puncture discovered in the worker’s breast implant.

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

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]