View From the Bench

Workers’ Comp Docket

Significant workers' comp legal decisions from around the country.
By: | September 14, 2015

Widow Entitled to Interest on Death Benefits Award

Stenz v. Industrial Commission of Arizona, No. CV-14-0298-PR (Ariz. 07/20/15)

Ruling: The Arizona Supreme Court held that a widow was entitled to interest on an award of death benefits from the time the carrier received notice of her claim.

What it means: In Arizona, death benefits are liquidated and interest on them accrues from the time a carrier receives notice that a survivor filed a claim with the Industrial Commission.

Summary: A worker suffered a work-related injury and filed a claim with his employer’s insurance carrier, Pinnacle Risk Management. Pinnacle accepted the claim and paid benefits. Four years later, the worker died. Alleging that his death resulted from the work injury, the worker’s widow filed a claim for death benefits. Pinnacle denied this claim. An administrative law judge upheld the denial, but the Court of Appeals set aside the denial. Nearly four years after the widow filed her claim, the ALJ entered a final order awarding benefits. Pinnacle paid the benefits dating back to the worker’s death but did not pay interest on the unpaid benefits. The widow alleged that she was owed interest on the unpaid benefits from the time the claim was originally filed. The Arizona Supreme Court held that the widow was entitled to interest.

The court explained that interest accrues when there is a legal indebtedness or other obligation to pay benefits and the carrier has notice of the obligation to pay. A claim for death benefits is subject to a fixed payment schedule. The amount to be paid did not depend on the ALJ’s later award. Because the obligation to pay was created by statute and was for a liquidated amount prescribed by the state’s schedule, Pinnacle had notice of the obligation when it received notice of the widow’s claim. The court found that interest began to accrue on that date.

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Pinnacle argued that mechanisms already existed to prevent carriers from withholding benefits in bad faith. The court pointed out that allowing interest may induce insurance companies to act more quickly, but the primary purpose is to protect a worker’s right to be “made whole” after an injury. The court explained that the recovery of interest furthered the purpose of the workers’ compensation law. A contrary ruling would deprive a worker of the full value of the benefit owed while encouraging carriers to prolong litigation to delay paying benefits.

A concurring judge opined that interest should accrue from the date of death rather than the date the carrier received notice of the claim but noted that the parties did not make that argument and the monetary difference would be relatively small in this case.

Special Event Injury Compensable If Employer Benefits

Jacobitz v. Aurora Cooperative, No. S-14-903 (Neb. 07/10/15)

Ruling: Finding that the workers’ compensation court used an incorrect standard in determining that a laborer was acting in the course of employment when he was injured, the Nebraska Supreme Court reversed and sent the case back for a determination under the correct standard.

What it means: In Nebraska, recreational or social activities are within the course of employment when the employer derives a substantial direct benefit from the activity beyond the intangible value of improvement in employee health and morale that is common to all kinds of recreation and social life.

Summary: Aurora Cooperative held a customer appreciation supper. The manager said that he invited employees, including a general laborer, for morale but attendance was not required. The laborer delivered the invitations for the supper to the post office during his work hours. He also helped set up tables for the supper in the community building during work hours. He said he did not know what trouble he would get into for not attending and said he went to the function as part of his job. The laborer did not assist in preparing the food, serving the food, or cleaning up. The manager towed a smoker used to cook the meat for the supper to a shed on the co-op’s property. The laborer walked to the shed. When the manager was driving back to the community building, the laborer got into the bed of his truck. During the ride, the laborer fell out, sustaining head injuries. The workers’ compensation court awarded benefits, finding the laborer was injured in the course of employment because the co-op received a substantial benefit from his attendance at the event. The Nebraska Supreme Court found that the compensation court used an incorrect standard in its decision and sent the case back for a determination using the correct standard.

The court agreed with the co-op’s argument that the compensation court erred in finding that the co-op derived a “substantial benefit” because the correct legal standard for finding that the event arose in the course of employment is a “substantial direct benefit.” The court explained that using “direct” as a part of the analysis has importance and must be applied when determining whether a worker was injured in the course of employment. The compensation court erred in failing to consider whether the benefit to the co-op was both substantial and direct.

The compensation court found that the co-op received a “substantial benefit” from the laborer’s participation in the supper. The compensation court found that the laborer visited with customers at the supper. However, the compensation court did not consider whether that substantial benefit was direct, as required.

Helicopter Transport to Hospital Is Reasonable, Necessary Treatment

Chavez v. Stokes, No. 42589 (Idaho 07/07/15)

Ruling: The Idaho Supreme Court held that a worker’s medical transport on a helicopter after his injury was reasonable and necessary medical treatment.

What it means: In Idaho, there is no specific test for the reasonableness of medical treatment. The totality of the circumstances should be considered.

Summary: An irrigator on a farm suffered a partial amputation of his left pinky finger when his hand slipped into the chain of a motor on an irrigation line. Paramedics who responded observed that the irrigator appeared in considerable pain. The paramedics requested a helicopter transport to another hospital, noting that the finger may have been able to be surgically fixed. The irrigator was transported to the hospital on the medical helicopter, but his finger could not be reattached. A hand specialist amputated the finger. The irrigator sought workers’ compensation benefits. The farm owner conceded that all reasonable and necessary medical expenses were due to the irrigator but disputed whether the helicopter transport was reasonable and necessary. The Idaho Supreme Court held that the helicopter transport was reasonable and necessary medical treatment.

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The court found that there should not be a specific test for the reasonableness of medical treatment. The totality of the circumstances should be considered. The court also explained that whether the worker’s condition gradually improved should not be determinative of whether treatment is reasonable.

Here, a paramedic made the determination that it was possible to reattach the irrigator’s finger and that taking him to another hospital was his best chance of success for the procedure. No evidence showed that the call for transport “was a mistake.” The court recognized that the transport could be seen as unnecessary in hindsight, but the evidence showed that the transport was reasonable medical treatment at the time of the injury.

Company President’s Stroke Compensable Despite Decision Not to Obtain Coverage

Harper v. Banks, Finley, White & Co. of Mississippi, P.C., No. 2012-CT-00811-SCT (Miss. 07/02/15)

Ruling: The Mississippi Supreme Court held that the president of an accounting firm’s fatal stroke was compensable. Even though the firm had not obtained workers’ compensation coverage, it was obligated to compensate the president’s dependents.

What it means: In Mississippi, an uninsured employer can be obligated to compensate a worker for his injuries even if the worker was the one who decided not to obtain coverage.

Summary: The president of the accounting firm Banks, Finley, White & Company of Mississippi was diagnosed with high blood pressure and he intermittently took medication. He suffered a stroke. Two weeks later, he returned to his usual work schedule of working approximately 11 hours per day. One year later, he had another stroke and died. His dependents sought workers’ compensation benefits. The firm had not obtained workers’ compensation coverage because the president had erroneously determined that it did not have the requisite number of employees to mandate coverage. The Mississippi Supreme Court held that the president’s strokes were compensable and that the firm was obligated to compensate his dependents.

The court explained that there was no policy providing coverage to any of the firm’s employees. It employed five people, so it fell within the law requiring coverage. Nothing showed that the firm provided any written notice that it was electing to exempt the president. Therefore, he was covered under the workers’ compensation laws at the time of his death.

The court also found that the medical testimony showed that the president had labile hypertension, a condition that causes a person’s blood pressure to rise due to stress. Also, other than high blood pressure, there were no medical causes for the president’s strokes. The evidence showed that the president was under a considerable amount of stress from work that was more than the usual and everyday work stress.

The court found that the stress was so much that it caused an increase in the president’s blood pressure, which in turn caused his stroke and his death.

A dissenting judge pointed out that the president’s dependents were seeking the very workers’ compensation benefits that the president failed to procure. Also, the president could have been held criminally and civilly liable for failure to procure coverage. Another dissenting judge opined that the medical testimony was speculative and did not show a causal link.

Employment Did Not Facilitate Assault Motivated by Worker’s Sex Offender Status

McDaniel v. Western Sugar Cooperative, No. A-14-793 (Neb. Ct. App. 07/14/15)

Ruling: The Nebraska Court of Appeals held that a worker’s injury resulting from an assault by a coworker was not compensable.

What it means: In Nebraska, assaults motivated by personal reasons are not compensable under workers’ compensation even if the assault occurred at work.

Summary: A worker for Western Sugar Cooperative was walking and talking with a coworker at work. Then the coworker began assaulting the worker with a brass hammer and calling him a child molester because the coworker had learned that the worker was a registered sex offender. The worker suffered injuries to his nose, clavicle, and left shoulder.

The worker did not know the coworker outside of work, but they lived near each other in the same small town. The worker sought workers’ compensation benefits. The Nebraska Court of Appeals held that the worker was not entitled to benefits.

The court concluded that the assault did not arise out of the worker’s employment. In order for an assault for personal reasons to arise out of the employment, the employment must have exacerbated the animosity or dispute or facilitated an assault that would not otherwise have been made.

The worker argued that but for his shared employment with the coworker, the two men never would have encountered each other and the coworker never would have known about his criminal history. The worker asserted that the employment facilitated the assault and that he should be entitled to compensation.

The court disagreed, explaining that no evidence showed any employment-related dispute between the worker and coworker or any animosity over work performance. Although the sole relationship between the two men was as coworkers, the motivation for the assault was the coworker’s personal feelings toward discovering that the worker was a sex offender.

The court explained that the cause of the assault was entirely disconnected from Western Sugar’s business and the employment of the two men. It was plausible that because the men lived near each other in a small town they would have encountered each other and the coworker would have had the ability and opportunity to carry out the assault elsewhere.

Shoe Program Improperly Required Workers to Contribute to Cost of Compensation

Lewings v. Chipotle Mexican Grill, Inc., No. B255443 (Cal. Ct. App. 07/01/15, unpublished)

Ruling: In an unpublished decision, the California Court of Appeal held that Chipotle violated the law by requiring workers to contribute to the cost of compensation.

What it means: In California, no employer can receive from any employee a contribution, either directly or indirectly, to cover the cost of workers’ compensation.

Summary: A company called Shoes for Crews marketed its nonslip shoes to employers by offering to reimburse them for workers’ compensation expenses if a worker is injured in a slip and fall while working. Chipotle Mexican Grill implemented a Shoes for Crews program in which workers were permitted to buy shoes directly from Shoes for Crews or through a payroll deduction. This was considered a safety program or good safety practice by workers’ compensation carriers. Based on its workers wearing the Shoes for Crews shoes, Chipotle obtained a reduction in its workers’ compensation premiums. On two occasions, Chipotle deducted money from a worker’s wages for the shoes. At one point, Shoes for Crews paid $25,000 to offset the cost of medical bills arising from injuries sustained by Chipotle workers. The worker sued on behalf of all nonexempt or hourly workers who worked for Chipotle in California, alleging that it violated the law by requiring workers to bear the cost of workers’ compensation expenses. The California Court of Appeal held that Chipotle violated the law when it required workers to contribute to the cost of compensation.

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The court found that the warranties offered by Shoes for Crews covered a part of compensation. Any time Chipotle was self-insured, the warranties directly covered the cost of compensation by paying medical expenses. Any time Chipotle had workers’ compensation insurance, the warranties indirectly covered the cost of compensation by defraying increases in insurance premiums and replacing lost dividends.

The court also found that the Chipotle workers contributed to the cost of compensation. When the workers purchased shoes, they indirectly contributed to the cost of compensation because their purchases resulted in Chipotle receiving warranties from Shoes for Crews designed to offset their workers’ compensation medical expenses.

The court rejected Chipotle’s argument that it did not violate the law because the shoe purchases were voluntary. The court explained that a contribution can be received or deducted by Chipotle regardless of whether it is voluntary or involuntary. The court also rejected Chipotle’s argument that the worker did not have standing to sue because she did not allege that she suffered a slip and fall, filed a workers’ compensation claim, or that the $25,000 payment made by Shoes for Crews had anything to do with her. When the worker and coworkers purchased Shoes for Crews shoes, they secured at least part of the cost of compensation.

Teacher Establishes Causal Relationship Between Work, Allergies

Paradise Valley Unified School District v. Industrial Commission of Arizona, No. 1 CA-IC 14-0066 (Ariz. Ct. App. 06/30/15, unpublished)

Ruling: In an unpublished decision, the Arizona Court of Appeals held that the aggravation of a teacher’s allergies was compensable.

What it means: In Arizona, a symptomatic aggravation of a preexisting condition that requires additional medical treatment or results in additional disability can be compensable.

Summary: A kindergarten teacher for Paradise Valley Unified School District developed headaches, a burning throat, and a runny nose during her workdays, but her symptoms resolved at night after she got home. She also developed chest tightness, difficulty breathing, muscle aches, a fever, and chills. All of the teacher’s symptoms improved when she was away from her classroom. The school hired experts to perform an environmental assessment of the classroom. The assessment revealed cladosporium mold and elevated carbon dioxide levels. The teacher sought workers’ compensation benefits. The Arizona Court of Appeals held that she was entitled to benefits.

The teacher’s treating internist did not know specifically which toxins in the classroom caused the symptoms, but he opined that there was a direct connection between her symptoms and the time she spent in her classroom. An independent medical evaluator stated that the teacher was exposed to mold and carbon dioxide in her classroom, but there was no evidence that she developed a diagnosable condition based on that exposure. The evaluator opined that the exposure temporarily aggravated the teacher’s preexisting allergic rhinitis and required additional testing and treatment. The court found that the medical testimony was sufficient to find a causal relationship between the teacher’s work and the temporary aggravation of her allergies.

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]

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