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.


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.


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)


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.


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

Risk Focus: Cyber

Expanding Cyber BI

Cyber business interruption insurance is a thriving market, but growth carries the threat of a mega-loss. 
By: | March 5, 2018 • 7 min read

Lingering hopes that large-scale cyber attack might be a once-in-a-lifetime event were dashed last year. The four-day WannaCry ransomware strike in May across 150 countries targeted more than 300,000 computers running Microsoft Windows. A month later, NotPetya hit multinationals ranging from Danish shipping firm Maersk to pharmaceutical giant Merck.


Maersk’s chairman, Jim Hagemann Snabe, revealed at this year’s Davos summit that NotPetya shut down most of the group’s network. While it was replacing 45,000 PCs and 4,000 servers, freight transactions had to be completed manually. The combined cost of business interruption and rebuilding the system was up to $300 million.

Merck’s CFO Robert Davis told investors that its NotPetya bill included $135 million in lost sales plus $175 million in additional costs. Fellow victims FedEx and French construction group Saint Gobain reported similar financial hits from lost business and clean-up costs.

The fast-expanding world of cryptocurrencies is also increasingly targeted. Echoes of the 2014 hack that triggered the collapse of Bitcoin exchange Mt. Gox emerged this January when Japanese cryptocurrency exchange Coincheck pledged to repay customers $500 million stolen by hackers in a cyber heist.

The size and scope of last summer’s attacks accelerated discussions on both sides of the Atlantic, between risk managers and brokers seeking more comprehensive cyber business interruption insurance products.

It also recently persuaded Pool Re, the UK’s terrorism reinsurance pool set up 25 years ago after bomb attacks in London’s financial quarter, to announce that from April its cover will extend to include material damage and direct BI resulting from acts of terrorism using a cyber trigger.

“The threat from a cyber attack is evident, and businesses have become increasingly concerned about the extensive repercussions these types of attacks could have on them,” said Pool Re’s chief, Julian Enoizi. “This was a clear gap in our coverage which left businesses potentially exposed.”

Shifting Focus

Development of cyber BI insurance to date reveals something of a transatlantic divide, said Hans Allnutt, head of cyber and data risk at international law firm DAC Beachcroft. The first U.S. mainstream cyber insurance products were a response to California’s data security and breach notification legislation in 2003.

Jimaan Sané, technology underwriter, Beazley

Of more recent vintage, Europe’s first cyber policies’ wordings initially reflected U.S. wordings, with the focus on data breaches. “So underwriters had to innovate and push hard on other areas of cyber cover, particularly BI and cyber crimes such as ransomware demands and distributed denial of service attacks,” said Allnut.

“Europe now has regulation coming up this May in the form of the General Data Protection Regulation across the EU, so the focus has essentially come full circle.”

Cyber insurance policies also provide a degree of cover for BI resulting from one of three main triggers, said Jimaan Sané, technology underwriter for specialist insurer Beazley. “First is the malicious-type trigger, where the system goes down or an outage results directly from a hack.

“Second is any incident involving negligence — the so-called ‘fat finger’ — where human or operational error causes a loss or there has been failure to upgrade or maintain the system. Third is any broader unplanned outage that hits either the company or anyone on which it relies, such as a service provider.”

The importance of cyber BI covering negligent acts in addition to phishing and social engineering attacks was underlined by last May’s IT meltdown suffered by airline BA.

This was triggered by a technician who switched off and then reconnected the power supply to BA’s data center, physically damaging servers and distribution panels.

Compensating delayed passengers cost the company around $80 million, although the bill fell short of the $461 million operational error loss suffered by Knight Capital in 2012, which pushed it close to bankruptcy and decimated its share price.

Mistaken Assumption

Awareness of potentially huge BI losses resulting from cyber attack was heightened by well-publicized hacks suffered by retailers such as Target and Home Depot in late 2013 and 2014, said Matt Kletzli, SVP and head of management liability at Victor O. Schinnerer & Company.


However, the incidents didn’t initially alarm smaller, less high-profile businesses, which assumed they wouldn’t be similarly targeted.

“But perpetrators employing bots and ransomware set out to expose any firms with weaknesses in their system,” he added.

“Suddenly, smaller firms found that even when they weren’t themselves targeted, many of those around them had fallen victim to attacks. Awareness started to lift, as the focus moved from large, headline-grabbing attacks to more everyday incidents.”

Publications such as the Director’s Handbook of Cyber-Risk Oversight, issued by the National Association of Corporate Directors and the Internet Security Alliance fixed the issue firmly on boardroom agendas.

“What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.” — Jimaan Sané, technology underwriter, Beazley

Reformed ex-hackers were recruited to offer board members their insights into the most vulnerable points across the company’s systems — in much the same way as forger-turned-security-expert Frank Abagnale Jr., subject of the Spielberg biopic “Catch Me If You Can.”

There also has been an increasing focus on systemic risk related to cyber attacks. Allnutt cites “Business Blackout,” a July 2015 study by Lloyd’s of London and the Cambridge University’s Centre for Risk Studies.

This detailed analysis of what could result from a major cyber attack on America’s power grid predicted a cost to the U.S. economy of hundreds of billions and claims to the insurance industry totalling upwards of $21.4 billion.

Lloyd’s described the scenario as both “technologically possible” and “improbable.” Three years on, however, it appears less fanciful.

In January, the head of the UK’s National Cyber Security Centre, Ciaran Martin, said the UK had been fortunate in so far averting a ‘category one’ attack. A C1 would shut down the financial services sector on which the country relies heavily and other vital infrastructure. It was a case of “when, not if” such an assault would be launched, he warned.

AI: Friend or Foe?

Despite daunting potential financial losses, pioneers of cyber BI insurance such as Beazley, Zurich, AIG and Chubb now see new competitors in the market. Capacity is growing steadily, said Allnutt.

“Not only is cyber insurance a new product, it also offers a new source of premium revenue so there is considerable appetite for taking it on,” he added. “However, whilst most insurers are comfortable with the liability aspects of cyber risk; not all insurers are covering loss of income.”

Matt Kletzli, SVP and head of management liability, Victor O. Schinnerer & Company

Kletzli added that available products include several well-written, broad cyber coverages that take into account all types of potential cyber attack and don’t attempt to limit cover by applying a narrow definition of BI loss.

“It’s a rapidly-evolving coverage — and needs to be — in order to keep up with changing circumstances,” he said.

The good news, according to a Fitch report, is that the cyber loss ratio has been reduced to 45 percent as more companies buy cover and the market continues to expand, bringing down the size of the average loss.

“The bad news is that at cyber events, talk is regularly turning to ‘what will be the Hurricane Katrina-type event’ for the cyber market?” said Kletzli.

“What’s worse is that with hurricane losses, underwriters know which regions are most at risk, whereas cyber is a global risk and insurers potentially face huge aggregation.”


Nor is the advent of robotics and artificial intelligence (AI) necessarily cause for optimism. As Allnutt noted, while AI can potentially be used to decode malware, by the same token sophisticated criminals can employ it to develop new malware and escalate the ‘computer versus computer’ battle.

“The trend towards greater automation of business means that we can expect more incidents involving loss of income,” said Sané. “What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.

“We’re likely to see a growing number of attacks where the aim is to cause disruption, rather than demand a ransom.

“The paradox of cyber BI is that the more sophisticated your organization and the more it embraces automation, the bigger the potential impact when an outage does occur. Those old-fashioned businesses still reliant on traditional processes generally aren’t affected as much and incur smaller losses.” &

Graham Buck is editor of He can be reached at