View From the Bench

Workers’ Comp Docket

Key workers' comp legal decisions from around the country.
By: | March 7, 2014 • 9 min read
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Attorney Attempts to Skim Extra Fees Off of Injured Worker’s Benefits

Page v. McCain Foods, Inc., No. 40568 (Idaho 01/03/14)

Ruling: The Idaho Supreme Court held that a worker’s attorney was entitled to a 30 percent attorney’s fees award.

What it means: In Idaho, the Industrial Commission has the discretion to fix the amount of reasonable attorney’s fees awarded.

Summary: An injured worker and her attorney entered into a contingent fee agreement. The agreement stated that the attorney would be entitled to 30 percent of benefits obtained if a hearing in the matter was commenced and 40 percent of benefits obtained if the matter was appealed. After appeals, the worker was awarded benefits. The parties agreed that the worker’s attorney would receive 30 percent of the value of benefits awarded to the worker. The employer issued three checks — two for the worker’s benefits and one for attorney’s fees that equaled 30 percent of the other two checks. Rather than keeping the third check for attorney’s fees, the attorney added the three checks together and deducted 30 percent from the larger total. The calculation resulted in the attorney receiving 39 percent of the worker’s award. The Idaho Supreme Court held that the attorney was entitled to a 30 percent attorney’s fees award.

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The court pointed out that the parties stipulated to attorney’s fees of 30 percent. The court noted that the Industrial Commission did not find it reasonable to approve attorney’s fees that would take a portion of the fees from the worker’s awarded benefits rather than from the employer.

The court rejected the attorney’s argument that without the stipulation he would have been awarded a 40 percent award. The court explained that the attorney’s fee agreement recognized that the commission has the final word with regard to attorney’s fee awards.

The attorney also asserted that an attorney’s fees award constituted a “benefit” and he should be permitted to add the award to other benefits awarded before calculating his percentage. The court found that attorney’s fees and compensation are not the same. The attorney’s fees were granted so that the worker did not have to carry the burden of paying attorney’s fees from the benefits she received.

Employer Plays NAFTA Card in Attempt to Avoid Paying Comp

Porteadores Del Noroeste S.A. De, C.V. v. Industrial Commission of Arizona, No. 1 CA-IC 12-0038 (Ariz. Ct. App. 01/14/14)

Ruling: The Arizona Court of Appeals held that a Mexican employer was subject to Arizona’s workers’ compensation laws for a driver’s injury, so the driver was entitled to benefits.

What it means: In Arizona, an employer based in Mexico is subject to the state’s workers’ compensation laws.

Summary: A truck driver, who was a citizen of Mexico, was injured in an accident in Arizona. He received workers’ compensation benefits in Mexico and filed a claim for workers’ compensation benefits in Arizona. The employer, a company based in Mexico, did not have Arizona workers’ compensation coverage for its workers. The employer argued that requiring a foreign employer to comply with the state’s workers’ compensation laws would violate federal law. The Arizona Court of Appeals held that the driver was entitled to benefits and that the state was entitled to a credit for workers’ compensation benefits paid in Mexico.

The employer argued that the North American Free Trade Agreement and the North American Agreement on Labor Cooperation preempted a claim that was covered by Mexican law. The court explained that only the United States can challenge a state law or state action on the ground that it conflicts with NAFTA or NAALC. The prohibition against using NAFTA to invalidate state laws extends to any argument that a state law is “inconsistent” with NAFTA. Therefore, the employer’s argument was rejected.

The employer also asserted that application of Arizona’s workers’ compensation laws would “impair federal uniformity” because NAFTA and NAALC would be undermined. The court found no “specific indications of congressional intent” barring application of Arizona’s workers’ compensation laws to the employer. The court pointed out that NAFTA and NAALC do not discuss workers’ compensation. The court found no authority that the federal government adopted a uniform policy regarding workers’ compensation principles applicable to foreign companies doing business in the United States. Therefore, the court would not presume that the Foreign Commerce Clause barred application of Arizona’s workers’ compensation laws to foreign employers.

Worker Claims Poor Safety Practice Entitles Him to Extra Benefits

Veneris v. Domtar Paper Co., LLC f/k/a Wayerhaeuser Co., No. COA13-649 (N.C. Ct. App. 01/07/14)

Ruling: The North Carolina Court of Appeals held that a mechanic was not entitled to a 10 percent increase in his compensation.

What it means: In North Carolina, if an employer believed that it provided appropriate safety gear to workers, it will not be liable for a willful failure to follow safety regulations.

welder230X300Summary: A utility mechanic for a paper company was often exposed to welding light while assisting welders. The company provided with him with safety glasses not rated for welding. Welders were provided with welding shields. The mechanic’s eyes were burned by the welding arc. He noted an impairment to his central vision. A neuro-opthamologist concluded that he probably suffered from welder’s arc retinopathy, a condition caused by exposure to intense welding light. The deputy commissioner found that the mechanic’s eye injury was compensable. The mechanic asserted that he was entitled to a 10 percent increase in compensation because of the company’s willful failure to follow occupational safety and health regulations. The North Carolina Court of Appeals held that he was not entitled to a compensation increase.

The court found that the company’s safety and security manager’s testimony indicated that the company believed it was providing OSHA compliant protective gear to workers and that the company was unaware of the hazard faced by mechanics.

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The mechanic asserted that the company knew the hazards of welding light, knew he worked in close proximity to welding light, knew he would be affected by the welding light, and knew about the safety regulation, yet provided him with safety glasses that were not rated for welding. The court found it did not follow that the company deliberately avoided its obligation to provide the mechanic with appropriate eye protection. The company could have believed, even mistakenly, that utility mechanics exposed to welding light did not require the same level of eye protection that it afforded to welders.

Benefits Payer Claims Man Was Already Totally Disabled Before Back Injury

Scott v. Treasurer of the State of Missouri, No. WD76602 (Mo. Ct. App. 01/14/14)

Ruling: The Missouri Court of Appeals held that an owner could be entitled to benefits from the second injury fund.

What it means: In Missouri, the second injury fund is liable where a worker establishes that his preexisting partial disability combined with a disability from a subsequent injury to create a permanent and total disability.

Summary: The owner of an excavation company had impaired hearing and several preexisting physical injuries, including a hernia which was diagnosed but not treated. While driving a bulldozer over rough terrain, the owner injured his back. He underwent surgery. In the course of treating him for his back problems, his doctor diagnosed him with two hernias and he underwent surgery for the hernias. The owner eventually returned to work operating machinery and supervising his employees. Later, he injured his chest and shoulder while attempting to position a 115-pound battery in a piece of equipment. He stopped working after that injury. The owner sought workers’ compensation benefits for his back injury, hernias, and chest and shoulder injuries. He settled his claim with the company, but his claims against the second injury fund remained. The Missouri Court of Appeals held that he could be entitled to benefits from the second injury fund.

The Industrial Relations Commission denied the owner’s claim, finding that he was already permanently and totally disabled before his back injury. The court reversed the commission’s decision, finding that several of the factual findings underlying the decision were not supported by the evidence.

The medical evidence did not support a finding that the owner’s doctors told him to stop working before his back injury. Before the back injury, he resumed performing lifting, loading, and vehicle maintenance duties and operated heavy equipment. Even after his hernias, his doctor released him to return to his general activities. His doctors’ records did not show that the doctors believed he was completely and totally disabled before his back injury. The owner said he was not advised to stop working until after the back injury. The court said if a doctor advised him to stop working after the back injury, part of that consideration would have involved the restrictions resulting from the back injury.

Also, the court found that a vocational expert’s report did not show that the owner was unemployable in the open labor market before his back injury. The vocational expert’s opinion took into account the owner’s restrictions as a result of his back and shoulder injuries.

Employer Must Pay for Surgery It Didn’t Authorize

Downing v. McDonald’s Sirloin Stockade, No. SD32683 (Mo. Ct. App. 01/17/14)

Ruling: The Missouri Court of Appeals held that a waitress was entitled to an award for past medical expenses.

What it means: In Missouri, an employer must provide medical treatment as may reasonably be required after a worker’s injury to cure and relieve the effects of the injury.

waitress230X300Summary: A waitress had back pain. Later, she had a constant, sharp pain in her hip and leg and thought the pain was related to her work. The employer referred her to a surgeon, who ordered an MRI. A claims representative for the employer’s workers’ compensation insurer authorized payment for the MRI. The MRI revealed a herniated disk. The waitress requested permission to undergo surgery. The claims representative told the waitress the surgery was not authorized because the insurer needed more information. The waitress underwent surgery and filed a claim for compensation. The Missouri Court of Appeals held that she was entitled to an award for past medical expenses.

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The court rejected the employer’s argument that it should not pay past medical benefits because the treatment was not authorized and the surgery was not needed on an emergency basis. The court explained that the surgery was performed by the employer-authorized treating doctor. The claims representative said that the surgery was not authorized because she needed additional time to make the decision whether to deny the claim.

The court found that the medical evidence showed the surgery was reasonable and necessary in light of the worker’s job-related condition. The employer never asserted that additional investigation would have changed that determination.

The court pointed out that the waitress notified the employer of her condition, and the claims representative and employer were notified of her need for surgery before the surgery.

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]

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Hank Greenberg: We did something last week.

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

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

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

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

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

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

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

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

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

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

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

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

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