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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

Insurtech

Kiss Your Annual Renewal Goodbye; On-Demand Insurance Challenges the Traditional Policy

Gig workers' unique insurance needs drive delivery of on-demand coverage.
By: | September 14, 2018 • 6 min read

The gig economy is growing. Nearly six million Americans, or 3.8 percent of the U.S. workforce, now have “contingent” work arrangements, with a further 10.6 million in categories such as independent contractors, on-call workers or temporary help agency staff and for-contract firms, often with well-known names such as Uber, Lyft and Airbnb.

Scott Walchek, founding chairman and CEO, Trōv

The number of Americans owning a drone is also increasing — one recent survey suggested as much as one in 12 of the population — sparking vigorous debate on how regulation should apply to where and when the devices operate.

Add to this other 21st century societal changes, such as consumers’ appetite for other electronic gadgets and the advent of autonomous vehicles. It’s clear that the cover offered by the annually renewable traditional insurance policy is often not fit for purpose. Helped by the sophistication of insurance technology, the response has been an expanding range of ‘on-demand’ covers.

The term ‘on-demand’ is open to various interpretations. For Scott Walchek, founding chairman and CEO of pioneering on-demand insurance platform Trōv, it’s about “giving people agency over the items they own and enabling them to turn on insurance cover whenever they want for whatever they want — often for just a single item.”

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“On-demand represents a whole new behavior and attitude towards insurance, which for years has very much been a case of ‘get it and forget it,’ ” said Walchek.

Trōv’s mobile app enables users to insure just a single item, such as a laptop, whenever they wish and to also select the period of cover required. When ready to buy insurance, they then snap a picture of the sales receipt or product code of the item they want covered.

Welcoming Trōv: A New On-Demand Arrival

While Walchek, who set up Trōv in 2012, stressed it’s a technology company and not an insurance company, it has attracted industry giants such as AXA and Munich Re as partners. Trōv began the U.S. roll-out of its on-demand personal property products this summer by launching in Arizona, having already established itself in Australia and the United Kingdom.

“Australia and the UK were great testing grounds, thanks to their single regulatory authorities,” said Walchek. “Trōv is already approved in 45 states, and we expect to complete the process in all by November.

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group.” – Scott Walchek, founding chairman and CEO, Trōv

“On-demand products have a particular appeal to millennials who love the idea of having control via their smart devices and have embraced the concept of an unbundling of experiences: 75 percent of our users are in the 18 to 35 age group,” he added.

“But a mass of tectonic societal shifts is also impacting older generations — on-demand cover fits the new ways in which they work, particularly the ‘untethered’ who aren’t always in the same workplace or using the same device. So we see on-demand going into societal lifestyle changes.”

Wooing Baby Boomers

In addition to its backing for Trōv, across the Atlantic, AXA has partnered with Insurtech start-up By Miles, launching a pay-as-you-go car insurance policy in the UK. The product is promoted as low-cost car insurance for drivers who travel no more than 140 miles per week, or 7,000 miles annually.

“Due to the growing need for these products, companies such as Marmalade — cover for learner drivers — and Cuvva — cover for part-time drivers — have also increased in popularity, and we expect to see more enter the market in the near future,” said AXA UK’s head of telematics, Katy Simpson.

Simpson confirmed that the new products’ initial appeal is to younger motorists, who are more regular users of new technology, while older drivers are warier about sharing too much personal information. However, she expects this to change as on-demand products become more prevalent.

“Looking at mileage-based insurance, such as By Miles specifically, it’s actually older generations who are most likely to save money, as the use of their vehicles tends to decline. Our job is therefore to not only create more customer-centric products but also highlight their benefits to everyone.”

Another Insurtech ready to partner with long-established names is New York-based Slice Labs, which in the UK is working with Legal & General to enter the homeshare insurance market, recently announcing that XL Catlin will use its insurance cloud services platform to create the world’s first on-demand cyber insurance solution.

“For our cyber product, we were looking for a partner on the fintech side, which dovetailed perfectly with what Slice was trying to do,” said John Coletti, head of XL Catlin’s cyber insurance team.

“The premise of selling cyber insurance to small businesses needs a platform such as that provided by Slice — we can get to customers in a discrete, seamless manner, and the partnership offers potential to open up other products.”

Slice Labs’ CEO Tim Attia added: “You can roll up on-demand cover in many different areas, ranging from contract workers to vacation rentals.

“The next leap forward will be provided by the new economy, which will create a range of new risks for on-demand insurance to respond to. McKinsey forecasts that by 2025, ecosystems will account for 30 percent of global premium revenue.

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“When you’re a start-up, you can innovate and question long-held assumptions, but you don’t have the scale that an insurer can provide,” said Attia. “Our platform works well in getting new products out to the market and is scalable.”

Slice Labs is now reviewing the emerging markets, which aren’t hampered by “old, outdated infrastructures,” and plans to test the water via a hackathon in southeast Asia.

Collaboration Vs Competition

Insurtech-insurer collaborations suggest that the industry noted the banking sector’s experience, which names the tech disruptors before deciding partnerships, made greater sense commercially.

“It’s an interesting correlation,” said Slice’s managing director for marketing, Emily Kosick.

“I believe the trend worth calling out is that the window for insurers to innovate is much shorter, thanks to the banking sector’s efforts to offer omni-channel banking, incorporating mobile devices and, more recently, intelligent assistants like Alexa for personal banking.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.”

As with fintechs in banking, Insurtechs initially focused on the retail segment, with 75 percent of business in personal lines and the remainder in the commercial segment.

“Banks have bought into the value of these technology partnerships but had the benefit of consumer expectations changing slowly with them. This compares to insurers who are in an ever-increasing on-demand world where the risk is high for laggards to be left behind.” — Emily Kosick, managing director, marketing, Slice

Those proportions may be set to change, with innovations such as digital commercial insurance brokerage Embroker’s recent launch of the first digital D&O liability insurance policy, designed for venture capital-backed tech start-ups and reinsured by Munich Re.

Embroker said coverage that formerly took weeks to obtain is now available instantly.

“We focus on three main issues in developing new digital business — what is the customer’s pain point, what is the expense ratio and does it lend itself to algorithmic underwriting?” said CEO Matt Miller. “Workers’ compensation is another obvious class of insurance that can benefit from this approach.”

Jason Griswold, co-founder and chief operating officer of Insurtech REIN, highlighted further opportunities: “I’d add a third category to personal and business lines and that’s business-to-business-to-consumer. It’s there we see the biggest opportunities for partnering with major ecosystems generating large numbers of insureds and also big volumes of data.”

For now, insurers are accommodating Insurtech disruption. Will that change?

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“Insurtechs have focused on products that regulators can understand easily and for which there is clear existing legislation, with consumer protection and insurer solvency the two issues of paramount importance,” noted Shawn Hanson, litigation partner at law firm Akin Gump.

“In time, we could see the disruptors partner with reinsurers rather than primary carriers. Another possibility is the likes of Amazon, Alphabet, Facebook and Apple, with their massive balance sheets, deciding to link up with a reinsurer,” he said.

“You can imagine one of them finding a good Insurtech and buying it, much as Amazon’s purchase of Whole Foods gave it entry into the retail sector.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.