View From the Bench

Workers’ Comp Docket

The latest workers' comp court decisions on cannabis reimbursement, safety criteria in hiring practices, attorney fees, interstate claims and more.
By: | May 2, 2018 • 14 min read

Employer’s Concern Over High BMI Boosts Applicant’s Claim

Shell v. Burlington Northern Santa Fe Railway Co., No. 15-CV-11040 (N.D. Ill. 03/05/18)

Ruling: The U.S. District Court, Northern District of Illinois denied summary judgment to a railway company on a worker’s Americans with Disabilities Act claims. The court held that there were triable issues as to whether the employer regarded the worker as disabled and whether it could successfully assert the business necessity defense.

What it means: Where an employer takes adverse action against an employee who does not currently have a disability, but who it fears will develop a disability in the future, the employee may be able to state a claim under the regarded as prong of the ADA.

Summary: A worker with obesity applied for a safety-sensitive position with a railway company. He was offered the job contingent on passing a physical examination.

The company did not hire applicants whose body mass index was more than 40 (Class III obesity) for safety-sensitive positions because they are at a “substantially higher” risk of developing sleep apnea, diabetes, and heart disease, all of which may lead to sudden incapacitation.

The worker did not have these conditions or an underlying disorder, but his BMI was 47.5. The company withdrew its offer “due to the health and safety risks associated with his BMI.”

The worker sued under the ADA. The U.S. District Court, Northern District of Illinois held that there were triable issues as to whether the company regarded him as disabled and whether it could assert the business necessity defense.

The company contended that obesity is an ADA-defined impairment only when it results from an underlying physiological cause. Adopting the majority view, the court agreed.

The company did not believe the worker’s obesity was the result of a physiological disorder or that he was unable to perform his physical job functions as a result of his weight. Therefore, it did not regard him as disabled by his obesity. Rather, it acted based solely on the correlation between obesity and sleep apnea, diabetes, and heart disease.

The worker argued that the company regarded him as disabled because it refused to hire him based on its fears that he might develop one of those conditions.

The court concluded that there were triable issues as to whether the company treated him “as if he did suffer from those conditions” or were a “ticking time bomb” who at any time could be unexpectedly incapacitated by one of those conditions.

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If he actually had any of these impairments, he would fall within the scope of the ADA, and the court saw “no reason why the company should be held to a lesser standard merely because it is engaging in adverse employment actions before an impairment arises.”

The company contended that it was protected by the business necessity defense. The evidence showed that individuals with Class III obesity are at a “substantially higher” risk of developing certain medical conditions that “frequently manifest” as sudden incapacitation.

The court concluded that the terms “substantially higher” and “frequently” were too indefinite to convey the actual risk, and it was therefore impossible to determine whether it was truly necessary to exclude individuals with Class III obesity from safety-sensitive positions.

Regulations Block Officer from Obtaining Reimbursement for Medical Marijuana

Newville v. Michigan Department of Corrections, 32 MIWCLR 6 (Mich. W.C.B.M. 2017)

Ruling: The workers’ compensation magistrate held that an officer suffered personal injuries arising out of and in the course of his employment, he required medical treatment as a result of those injuries, and the treatment he was currently receiving — Oxycodone, Fentanyl, and medical marijuana — was reasonable and necessary.

However, pursuant to the workers’ compensation law and the Medical Marihuana Act, the magistrate could not order the employer to reimburse the officer for the cost of the medical marijuana.

What it means: In Michigan, pursuant to the workers’ compensation law and the Medical Marihuana Act, the magistrate cannot order the employer to reimburse for the cost of medical marijuana even though the worker’s reasonable use of marijuana allows him to reduce his use of prescribed opioids for his work-related pain.

Summary: A corrections officer injured his lower back on several occasions while working. The magistrate found that his injuries, sustained as a result of altercations with inmates, were clearly responsible for the current condition of his back.

As for the officer’s medical treatment, the magistrate found that based on the officer’s condition and level of pain, his prescription of both Oxycodone and Fentanyl were reasonable and necessary. As for the officer’s use of medical marijuana, the magistrate noted that the officer consumed one edible per night along with two puffs per night from a joint.

This was reasonable and necessary as an alternative source to control his pain and to allow him to sleep. With the use of medical marijuana, the officer was able to reduce his Oxycodone by half and eliminate use of the Fentanyl patch. Further, the officer provided unrebutted testimony that there was no drug seeking behavior.

The magistrate explained that case law allows an employer to terminate an employee who tests positive for marijuana even though the employee has a registry card and the use was after a compensable workers’ compensation injury.

Also, the workers’ compensation law specifically excludes from reimbursement any professional service that was not subject to state registration or licensure before Jan. 1, 1998. The registration and licensure of medical marijuana services did not commence until 2008.

In addition, the Medical Marihuana Act specifically disallows forcing a carrier or employer to reimburse the costs. Therefore, the magistrate could not order the employer to reimburse the cost of the medical marijuana even though this result encourages the officer to decrease his use of addictive opioids.

Educator Wins Benefits for Spider Bite at Correctional Center

Jeffers v. State of Illinois/Tamms Correctional Center, 26 ILWCLB 23 (Ill. W.C. Comm. 2017)

Ruling: The Illinois Workers’ Compensation Commission held that the worker, who was teaching at a correctional center, established that she sustained a work-related accident arising out of and in the course of her employment. The commission awarded medical expenses and found the claimant permanently partially disabled to the extent of 5 percent loss of use of the right arm.

What it means: In Illinois, an educator at a prison is exposed to a greater risk of encountering insects and spiders at the facility than the general public, especially where the worker’s classroom is not open to the public and the classroom has had a pest and insect problem in the past.

Summary: An educator at a correctional center worked in a classroom that was not open to the public. The educator was in the classroom when she felt a bite or sharp pinch on her right arm. She testified she was wearing sleeves but noticed “little legs or something.”

She knew that an insect had bit her. She had previously seen spiders in the classroom, and the employer had provided her with glue traps to trap them. She sought treatment and was diagnosed with a brown recluse spider bite and treated with antibiotics, pain medication, and steroids.

The arbitrator denied benefits, reasoning that the educator failed to prove her injury arose out of and in the course of her employment.

Upon review, the commission reversed and awarded benefits.

The commission noted that the educator’s injury was not an employment-related risk or a risk that was incidental to the employment. The risk of a spider bite had no relation to her job duties as a classroom teacher or what she was required to do to fulfill those duties.

The commission also found that the claim did not involve a personal risk, such as a physical disability, that led to her injury. The evidence supported a finding of accident under a neutral risk quantitative analysis. The educator was exposed to a greater risk of encountering insects and spiders at the prison than that of the general public.

The area where the claimant was injured was not open to the public. In addition, the employer was on notice and aware of its pest problem as it had previously sprayed for pests and had provided the educator with glue traps to trap the insects. The commission found the educator sustained a work-related accident arising out of and in the course of her employment.

Employer Must Pay Attorney’s Fees from Benefits Awarded to Worker

Arkansas Game & Fish Commission v. Gerard, No. CV-17-896 (Ark. 03/29/18)

Ruling: The Arkansas Supreme Court held that an employer was required to pay one-half of the attorney’s fees and one-half from the benefits awarded to the worker before any offset.

What it means: In Arkansas, an employer must pay one-half of the attorney’s fees and one-half from the benefits awarded to the worker before any offset for disability retirement compensation.

Summary: A worker for the Game & Fish Commission suffered a compensable injury. His treating back surgeon opined that he attained maximum medical improvement with a 16 percent impairment. The employer accepted liability for the 16 percent impairment rating and a 10 percent wage loss.

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Later, two doctors independently evaluated the worker and determined that his impairment rating was 23 percent. The employer accepted the 23 percent impairment rating. The worker claimed that he was entitled to additional benefits due to the 7 percent increase in his impairment rating.

The administrative law judge found that the worker was entitled to additional benefits and attorney’s fees. The ALJ found that the employer was liable for one-half of the attorney’s fees and one-half would be paid out of the benefits awarded to the worker.

The worker argued that his disability retirement compensation exceeded the amount of additional benefits, and an offset depleted the benefits from which attorney’s fees should be paid. The Arkansas Supreme Court held that the attorney’s fees should be paid from the benefits awarded before the offset was applied.

The court explained that based on the plain language of the statute, the worker’s one-half of attorney’s fees was derived from the sum the employer paid him for his injury. The amount comes from the payable amount owed to the worker before any offset.

The court said that to hold otherwise would defeat the purpose of the workers’ compensation law and would punish an injured worker involved in a controverted claim.

Unexpected, Unusual Weight of Cheese Box Leads to Compensable Injury

Doran v. The Fresh Market, Inc., et al., No. COA17-836 (N.C. Ct. App. 04/03/18)

Ruling: The North Carolina Court of Appeals held that a specialist suffered a compensable injury by accident when he lifted a heavy box of cheese.

What it means: In North Carolina, lifting a box that is heavier than expected and heavier than usual can constitute an interruption in a worker’s usual lifting routine leading to an unforeseen event and accident.

Summary: A cheese specialist for The Fresh Market had worked in his position for nine weeks. He entered the store’s walk-in cooler to unload the day’s delivery of cheeses from a shipping pallet onto the cooler’s shelving.

He looked at a large box of cheddar cheese and believed it was light enough for him to lift and move without difficulty. He said the box was the heaviest thing he had lifted as a cheese specialist and was “significantly heavier” than other boxes. The box did not have the weight printed on it.

As the specialist was maneuvering to place the cheese on the shelf, he heard a snap and felt sharp pain in his right shoulder and arm. He was later diagnosed with a proximal biceps tear, a torn rotator cuff, and impingement with AC arthrosis. He filed a workers’ compensation claim. The store denied the claim.

The North Carolina Court of Appeals held that he suffered a compensable injury by accident.

The specialist testified about his usual work routine. He said that the pallet was typically loaded with boxes of various weights, but none were more than 25 pounds, and most were between five and 10 pounds.

The evidence showed that the 40-pound box of cheddar cheese was heavier than those usually lifted by the specialist and heavier than expected, and that lifting the box was not within his usual work routine. The court found that the unusual and unexpected weight of the box constituted an unusual condition resulting in an injury by accident.

The store argued that a worker’s routine would expand each time he performed a new task and that a new worker would “basically have no regular routine.”

The court rejected this argument, explaining that new conditions of employment don’t become part of a worker’s regular course of procedure until he “has gained proficiency performing in the new employment and become accustomed to the conditions it entails.”

Texas Insurer Not Liable for Worker’s Injury in Louisiana

O’Bannon v. Moriah Technologies, Inc. et al., No. 2017 CA 0728 (La. Ct. App. 03/29/18)

Ruling: The Louisiana Court of Appeal held that an insurer was not obligated to defend, indemnify, or reimburse an employer for a worker’s claims.

What it means: Applying Texas law in Louisiana, a worker who lived and was injured in Louisiana is not covered by an insurance policy that covers only Texas employees.

Summary: A worker who lived in Louisiana was injured in Louisiana while in the course and scope of his employment. He worked for Moriah Technologies, a Texas corporation that was insured by the Texas Mutual Insurance Co. The worker filed a workers’ compensation claim in Louisiana.

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Moriah sought reimbursement for attorney’s fees and costs incurred in the defense of the matter and reimbursement for benefits paid to the worker from Texas Mutual. The Louisiana Court of Appeal held that Texas Mutual was not obligated to defend, indemnify, or reimburse Moriah for the worker’s claims.

The court noted that while a prior appeal was pending, Texas Mutual obtained a judgment in Texas finding that Texas Mutual had no duty to defend, indemnify, or reimburse Moriah regarding the worker’s claim for workers’ compensation benefits in Louisiana. In this case, the court pointed out that “Louisiana courts are required to give full faith and credit to judgments of its sister states.”

The court found that the worker and Moriah were not entitled to coverage under the policy based on the limited reimbursement endorsement for Texas employees injured in other jurisdictions. The endorsement applied only to Texas employees.

There was no evidence that the worker’s injury would have been compensable if it had occurred in Texas. Also, the worker did not have significant contacts in Texas. He was hired following a meeting in Texas but immediately departed to Tennessee to begin work. The court also noted that his employment was not principally located in Texas.

Claim Not Undermined by Fact That Teacher Could Have Fallen Outside of Work

Cartersville City Schools v. Johnson, No. A17A1469 (Ga. Ct. App. 03/16/18)

Ruling: The Georgia Court of Appeals held that a teacher’s injury arose out of the course of her employment and was compensable.

What it means: In Georgia, in considering whether an injury arose out of the employment, the focus should be on the causal link between the injury and the worker’s work-related conditions or activity.

Summary: While instructing students, a fifth-grade teacher walked to her desk to put an image on the smartboard. She then turned from her computer and desk to walk back to the front of the classroom and fell, injuring her knee. Following surgery, she filed a workers’ compensation claim.

The administrative law judge found that her injury was causally connected to her employment and granted benefits.

The Appellate Division reversed, concluding that the teacher’s knee injury was not compensable because the act of turning and walking was a risk to which she would have been equally exposed outside of her employment and that her injury was caused by an idiopathic fall. The superior court reversed. The district appealed.

The Georgia Court of Appeals held that the ALJ properly found that the teacher’s injury arose out of her employment and was compensable.

The district did not dispute that the teacher sustained her injury in the course of employment because she fell while she was teaching in her classroom.

The court found that the Appellate Division erred in its analysis with respect to the legal framework for determining whether an injury arises out of employment.

The appellate division found that because the teacher could have fallen outside of work while walking and turning, and nothing particular about the classroom appeared to have caused the fall, her injury resulted from an idiopathic fall and was not compensable.

The court said that just because a worker could be exposed to a hazard outside of work does not render an injury resulting from that workplace hazard noncompensable.

The court explained that to be a compensable injury that arises out of the employment, the injury must either be caused by activity the employee engaged in as part of her job or the injury must result from a special danger of the employment.

The court also found that the teacher’s injury was not idiopathic. She was engaged in the movements and behaviors required of her employment when she was injured as a result of those movements. &

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 Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

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Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

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“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

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But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

Bar-Lessons-Learned---Partner's-Content-V1b

Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]