View From the Bench

Workers’ Comp Docket

Key workers' comp decisions from around the country.
By: | March 21, 2014 • 8 min read
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Test Proves Worker’s Intoxication Before Fall

Kamarad v. DRK, Inc., No. A-13-471 (Neb. Ct. App. 02/04/14)

Ruling: The Nebraska Court of Appeals held that a worker was not entitled to benefits because he was intoxicated at the time of his accident.

What it means: In Nebraska, a worker is not entitled to benefits if he was intoxicated at the time of his accident and his intoxication was a proximate cause of the accident.

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Summary: A worker was working in the bar and dining area of a restaurant. While he was working, he ate a meal, watched a volleyball game with customers, and consumed a number of shots of liquor. He fell, injuring his head and tailbone. A blood test at the hospital revealed a blood alcohol level of .221. The worker sought workers’ compensation benefits, alleging that he choked on a piece of food, causing him to fall. The Nebraska Court of Appeals held that he was not entitled to benefits.

The worker testified that he could not recall anything about the fall. A toxicologist explained that a person with a blood alcohol level of .221 might experience a loss of critical judgment, impairment of perception, memory, and comprehension, sensory-motor incoordination, impaired balance, drowsiness, and impairment of swallowing. The toxicologist opined with “reasonable scientific certainty” that the worker’s actions in becoming significantly intoxicated led to the impairments that caused his injuries. The court agreed with the trial court’s finding that the worker was intoxicated and his intoxication was a proximate cause of his fall.

The court rejected the worker’s argument that he should have been afforded the presumption of acting with due care and diligence because there was no other witness testimony or explanation of how his fall occurred.

Failure to Install Safety Blocks Doesn’t Bar Exclusive Remedy

Gonzalez v. Seal Methods, Inc., No. B246825 (Cal. Ct. App. 01/24/14)

Ruling: The California Court of Appeal held that a worker’s suit against her employer was barred because her exclusive remedy was in workers’ compensation.

What it means: In California, the power press exception to the workers’ compensation exclusive remedy provision applies when an employer fails to attach or remove guards or devices that are capable of being permanently installed by the manufacturer or employer.

Summary: A worker for Seal Methods Inc. was operating a power press in “manual” mode. The press activated while the worker was loading material onto the die, crushing her hand. She sued Seal Methods. The power press exception to the workers’ compensation exclusive remedy provision allows an injured worker to sue her employer where the injuries were “proximately caused by the employer’s knowing removal of, or knowing failure to install, a point of operation guard on a power press.” The worker argued that Seal Methods failed to install safety blocks on the press. The California Court of Appeal held that the worker’s suit was barred and that her exclusive remedy was in workers’ compensation.

Considering the language of the statute, the court concluded that a “point of operation guard” did not include an unattached device such as a safety block that the worker moved in and out of the point of operation. The court found that a point of operation guard was a device capable of being permanently attached to the power press. The safety guard at issue was not a point of operation guard, and therefore, the power press exception did not apply.

The court pointed out that the legislature could have drafted the exception to apply when the worker’s injury was proximately caused by the employer’s failure to follow the manufacturer’s communicated safety directives. However, the legislature did not do so.

Employer Must Pay WC Premiums for Non-Employees

Continental Casualty Co., et al. v. Theraco, Inc., No. M2012-02100-COA-R3-CV (Tenn. Ct. App. (01/14/14)

Ruling: The Tennessee Court of Appeals held that a company had to pay its workers’ compensation carriers additional premiums for physical therapists who were independent contractors because they presented a litigation risk.

What it means: In Tennessee, an employer can be required to pay workers’ compensation insurance premiums for its independent contractors if its policy proves that it is liable for paying premiums for individuals presenting a risk of loss.

Summary: A Tennessee company, Theraco Inc., contracted with home health agencies to provide physical therapy sessions to patients. The company contracted with physical therapists, who were responsible for obtaining their own workers’ compensation insurance. Continental Casualty Co., the company’s workers’ compensation carrier, conducted an audit and concluded that it had been at risk for defending claims filed by the physical therapists. The company disputed that it was liable for paying additional premiums, asserting that the therapists were independent contractors. Theraco hired Travelers, which also calculated its premium to include the payroll of the therapists. Both policies provided that the company was liable for paying premiums for individuals who were employees or who presented a risk of loss to the insurers. The Tennessee Court of Appeals held that the company was liable for the additional premiums even though the therapists were independent contractors.

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The court agreed with Theraco that the company could not be charged premiums for the therapists based on their classification as employees. The company possessed little control over the means by which the therapists provided therapy to patients. The control the company exerted to ensure that they complied with state law was control over the quality of the service rather than control over the means by which the therapists provided services.

However, the court agreed with the insurers’ argument that even if the therapists were independent contractors, the insurers were at risk of defending a workers’ compensation lawsuit brought by therapists even if only to litigate their status. The court pointed out that the risk of loss provisions in the company’s policies did not require that potential lawsuits have a reasonable chance of success. The company was obligated by the policies to pay premiums for the therapists in return for shifting the risk of litigation to the insurers.

Shifting Pain Flattens Claim of Causation

Muckle v. Dolgencorp, LLC, No. COA13-653 (N.C. Ct. App. 01/07/14, unpublished)

Ruling: In an unpublished decision, the North Carolina Court of Appeals held that a manager was not entitled to benefits for her back injury.

What it means: In North Carolina, an expert medical opinion that there was a possibility of causation is not sufficient to establish medical causation.

Summary: A manager of a Dollar General store slipped and fell while collecting shopping carts in the store’s icy parking lot. She reported pain on the right side of her lower back down to her right thigh. Later, she reported to her doctor that her pain improved. She continued to work her regular hours, despite having light-duty work restrictions. She resigned from her job because of the pain. Later, she sought treatment for pain on her left side. An MRI revealed a herniated disc on her right side. The manager sought workers’ compensation benefits. The North Carolina Court of Appeals held that she was not entitled to benefits after her resignation.

The parties did not dispute that the manager was working within the scope of her employment when she slipped and fell in the store’s parking lot. The court concluded that the manager’s symptoms after she said her pain improved were not causally related to the work injury. No medical expert stated an opinion that the manager’s injuries were causally related to her workplace fall. An examining doctor expressly refrained from offering such an opinion. The doctor explained that the mechanism of injury was possible, but it would be hard to establish causation based on the information that her pain switched from one side to the other. The doctor’s testimony that there was a generalized possibility of causation was insufficient.

Worker Can’t File Claim Months After Psychological Injury

Shea v. RPRD Dyckman, Inc., 21 ILWCLB 211 (Ill. W.C. Comm. 2013)

Ruling: The Illinois Workers’ Compensation Commission denied benefits to a driver for an alleged mental disability sustained after his involvement in a motor vehicle accident.

What it means: In Illinois, for a psychological injury caused by nonphysical stimulus to be compensable, the worker must experience a sudden, severe, emotional shock, and psychological injury must be immediately apparent.

Summary: A semi-truck driver was involved in a motor vehicle accident while working. Immediately after the accident, he heard a woman screaming and saw a man lying in the road with part of his head missing and his clothes torn. He testified that he experienced shock and horror and felt sick. Five days later, he drove another route. He stated that he was still feeling shock and horror and that he worried constantly. The employer did not assign any more work to the driver due to litigation regarding the motor vehicle accident. The driver testified that he became irritable and agitated and had difficulty sleeping. He sought treatment seven months after the accident. The commission affirmed and adopted the decision of the arbitrator denying benefits.

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The arbitrator pointed out that the driver did not seek immediate medical attention but waited until seven months after the accident. Also, the driver was able to perform the same job duties within days of the accident. When the employer no longer employed him, the driver looked for jobs as a truck driver with other carriers. The arbitrator noted that if the driver was truly mentally and emotionally unable to drive a truck because of the accident he would not have looked for another position as a truck driver. The driver failed to prove he sustained an accident arising out of and in the course of his employment.

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]