Case Law Update
BCPWQ Seminar
March 21, 2014
CAUSATION
Arising Out of and In the Course of – Parking lot
Mohney v. American International Group, (Michigan Supreme Court, June 21, 2013). Here, the claimant slipped and fell while walking from the parking lot to her employer’s premises at the start of the day. The parking lot was designated for employee parking, but the fall happened on non-employer premises. The sole issue was whether the injury arose out of and in the course of employment. The Commission initially noted the statutory presumption of compensability where the injury occurs on the employer’s premises within a reasonable time before and after work. It therefore held that the injury arose out of and in the course of employment because the claimant fell on a direct route between the designated lot and building. The Commission further noted that whether the employer owned, maintained, or controlled the parking lot was not dispositive. The Court of Appeals then affirmed the award of benefits. The Supreme Court, however, reversed. It did not disturb the extension of the presumption of compensability for premises injuries to injuries that occur while a claimant is traveling between a parking area owned, leased, or maintained by the employer and the work-site, even if the injury is not on premises. In the present case, however, the Court found no evidence that the employer owned, leased, or maintained the parking lot. It reversed for that reason.
Arising Out of and In the Course of – Work as the origin of injury
Delgrosso v. Zolten, Inc., 2013 ACO #97. This case involved a claimant who was a gas station store attendant. On her day of injury, she was visiting with a customer who asked for directions. She noticed the customer’s dog in his vehicle, and went outside of the store to the vehicle to play with the dog. The dog caused injuries to the claimant’s head and face. The claimant alleged it as a work injury on the grounds that being friendly to customers was part of her job duties. The Magistrate found that the injuries did not arise out of and in the course of employment, and the Commission agreed. Although there is a presumption of compensability for premises injuries, the Commission noted that work must be the origin or cause of a claimed injury. In making such a determination, the analysis must focus on the nature and duties of the claimant’s work in conjunction with the activities that caused the injury. While providing directions was an employment activity, the Commission found that continuing by going outside to visit with the dog was a different activity outside of her employment. The action of visiting the dog at the car was not in any sense originating from or stemming from work.
Arising Out of and In the Course of – Special mission
Yoh v. Northfield Trucking Co., 2013 ACO #30. The claimant here was a truck driver whose truck lost power and had to be taken to a repair facility. Claimant went to a local hotel to wait for the repair to be completed. This necessitated an overnight stay. The restaurant in the hotel was unavailable, so the claimant began walking to another restaurant, during which time he was injured. The Magistrate found that the injury arose out of and in the course of employment, and in the process he rejected the defendant’s “social and recreational” position. On appeal, the Commission invoked the “special mission” exception to the rule that injuries must arise out of and in the course of employment. Under this doctrine, injuries are compensable if they occur while the claimant is on a special act, mission, or errand at the instruction of the employer. Here, the claimant was directed by his employer to take the stalled truck to the repair shop, and then to stay nearby to retrieve it when repaired. The special mission was therefore not over until the truck was repaired, and the minor deviation to the restaurant did not end the mission.
Arising Out of and In the Course of – Death cases
Murad v. Metro Car Co., 2013 ACO #85. The claimant was the owner of a used car dealership. At the claimant’s direction, the dealership participated in fraudulent sales in violation of state and federal rules. This ultimately led to a federal raid on the dealership. The claimant was charged with money laundering, but was also used as a confidential source in the federal drug trafficking charges brought against a customer. Claimant was then murdered during work hours while on premises, with the assertion that he was murdered due to his involvement in the federal drug charges case. The Magistrate accepted that the claimant was murdered due to that involvement, and therefore found that the death did not arise out of and in the course of employment, despite the presumption of compensability for premises injuries. The Commission affirmed the finding on the grounds that the claimant had the burden of proving that the death was the result of random violence, which the claimant did not do. Given the non-work related motive for the killing, the Commission agreed that the death did not arise out of and in the course of employment.
Medically Distinguishable Condition/Pathologic Aggravation – Inflammation
Jensen v. Express LLC, 2013 ACO #56. Claimant in this case suffered a work slip and fall in December 2008. Although there was no actual evidence of pre-fall symptoms or pathology, the claimant’s medical witness testified that the claimant had an arthritic neck, and that the work fall pinched the nerve roots and caused nerve root inflammation. He further clarified that the fall caused symptomatic nerve roots, but not an objectively verifiable underlying change. These symptoms led to the need for surgery. The Magistrate found that Rakestraw was met in the form of inflamed nerve roots and the need for surgery. The Commission reversed, reiterating its prior position that neither inflammation nor the need for surgery are sufficient conditions that satisfy Rakestraw’s “medically distinguishable condition” requirement. The Commission did leave open the possibility that inflamed nerves could be an objective pathologic change if their presence were objectively identified, but not where they are inferred only based on symptoms.
Medically Distinguishable Condition/Pathologic Aggravation – Last day worked claims
Oldham v. AJ Steel Erectors, 2013 ACO #11. In this case, the claimant had a non-work low back injury in 2002 with surgery in 2004. He then worked for one employer through May 2008, and then began working for the defendant employer from June 2008 through August 2008. Subsequently, he underwent another low back surgery in 2009. The testimony established that there was work-related pathologic change between the 2004 and 2009 surgeries, although no testimony explicitly implicated the work for the defendant employer in 2008. Nonetheless, the Commission re-affirmed its prior pronouncement that when an employee suffers a pathologic change caused by multiple employments that subjected the employee to the same conditions, then the LDW employer carries exposure, even where the evidence does not show a distinct change attributable to the last employment.
Proximate cause
Dasho v. BASF Wyandotte Corp., 2013 ACO #25. This claim involved a claimant who suffered work-related asbestos, and then later died due to renal failure. The claimant’s beneficiary brought a claim for death benefits on the grounds that the work asbestos caused the death. In making the claim, the plaintiff urged the Court to simply find whether work caused the death, and not whether work caused the asbestos, along with the additional issue of whether the work exposure and associated asbestos was the proximate cause of the claimant’s death. The Magistrate denied death benefits, and the Commission affirmed. In so doing, the Commission noted that Supreme Court precedent addressed such a case where a claimant suffers a work injury and claimed disability, and then later dies from the alleged work condition. In these causes, there must be a proximate causation between the injury and death, which is a different/separate finding from causation of the work injury itself. The Court defined proximate cause as there being a natural and continuous sequence of causation unbroken by any new, independent cause which produces the injury, without which such injury would not have occurred. Given the testimony in this claim, plaintiff did not meet this standard of proving that the work injury was the proximate cause of death.
DISABILITY
During closed periods
Tatar v. Ryder Integrated, (Court of Appeals, November 26, 2013). In Tatar, the claimant suffered a claimed injury on November 26, 2008 and then returned to full duty employment on May 25, 2009. Therefore, it was a closed period claim. The claimant did not present vocational proofs at trial. The Magistrate awarded full wage loss benefits for the closed period. The Commission reversed on the grounds that claimant did not prove Stokes disability for the closed period. The Court of Appeals upheld the Commission’s reversal, based on its adjudication of the issue of whether Stokes and its requirements for proving disability applied only to open claims or equally to both open and closed period claims. The Court held that Stokes applied to closed period claims, and claimants therefore had to meet their Stokes burdens to be entitled to closed period benefits. The Court reasoned that the Stokes decision made no such distinction between closed and open claims.
Plaintiff Testimony vs. Vocational Testimony
Thompson v. Pollard Banknote, LTD, 2013 ACO #37. In Thompson, the claimant underwent surgery for a work-related injury and then proceeded to trial before she had reached post-operative maximum medical improvement. As a result, the testifying physicians did not identify precise restrictions in their testimony. The Magistrate, however, found total disability based on the claimant’s testimony that she cannot do any work. The Defendant appealed this finding on the grounds that the plaintiff’s own testimony as to her vocational abilities cannot meet Stokes, and in doing so it cited a 2012 Commission case (Peterson v. Consumers Energy) that said a doctor’s testimony can in most instances not stand in the place of vocational evidence. The Commission agreed by drawing a parallel between the insufficiency of medical restrictions with the insufficiency of the claimant’s statements of being unable to work. It reversed and found that plaintiff’s own pronouncement of an inability to work, by itself, is insufficient to show partial or total disability. There must be evidence of medical restrictions, and pursuant to Thompson, a claimant’s mere conclusion that he/she is unable to work within those restrictions is insufficient. In so finding, the Commission noted that prior decisions that suggested that the claimant’s testimony by itself was sufficient were decided before the burden of disability became more formidable under Stokes.
WAGE LOSS
Effect of job search efforts
Seyfried v. Cassens Transport, 2013 ACO #60. This case involved a claimant who suffered a work-related injury. Based on the vocational proofs, the Magistrate found that the claimant proved disability under Stokes, but that the disability was only partial because the claimant retained some level of residual employability. However, the Magistrate considered the claimant’s post-injury job search efforts and awarded full benefits because the claimant could not successfully find work within his retained employability. Defendants challenged this decision. Although the Commission noted that the statute does not expressly direct that full benefits are owed when a partially disabled claimant cannot successfully find work within the residual earning ability, it interpreted such a position from the precedential case law related to partial disability. It held that if the Magistrate finds that the claimant could not secure employment consistent with the identified residual wage earning capacity, then full benefits can be awarded. The Commission made clear that a diligent job search alone does not meet the legal requirements of proving total disability. But a diligent job search, following the development of legally sufficient vocational proofs that identify a reduced but partial earning ability, can be used to award full benefits.
Cassler v. Damico Contracting, Inc., 2013 ACO #65. This case was decided by the Commission shortly after Seyfried, and addressed the similar issue of an award of full benefits for a claimant who was found by the Magistrate to have some retained post-injury employability. Unlike the Magistrate in Seyfried, however, the Magistrate in this case awarded partial benefits even in light of the claimant’s failed job search efforts. Therefore, it was the claimant who appealed and tried to argue for full benefits on the same grounds used by the Magistrate in Seyfried, namely that he attempted to look for work within his partial employability but could not secure same. The Commission affirmed the award of only partial benefits, primarily because the claimant failed to apply for the jobs identified by his own vocational expert. Because the claimant did not apply for these jobs, he was unable to show that he unsuccessfully attempted to secure employment with his retained employability, which is a requirement to be entitled to full benefits.
effect of post-injury school enrollment
Thrun v. Trinity Health Michigan, 2013 ACO #88. Here, the claimant was injured while working as a nurse, although she worked post-injury and was ultimately terminated in 2009. From the period of May 2010 through December 2011, the claimant testified that she took online school courses to pursue a Masters in Science and Nursing, but that she was also looking for work during this time. She specifically testified that she spent four hours per day during this period during online coursework, but that she would have put off schooling if she found work during that period. The Magistrate found that the claimant was partially disabled, even during the period of schooling, because the Magistrate made a determination that the claimant was looking for work during this time. The Commission held that her pursuit of her master’s degree did not automatically necessitate a finding that claimant was not looking for work and therefore not entitled to partial benefits. A claimant can attend school and look for work simultaneously, and can be awarded benefits if there was a good faith job search.
Miscellaneous
Independent contractor vs. employee
Auto-Owners Insurance Co. v. All Star Lawn Specialists Plus Inc. (Court of Appeals, December 3, 2013). This case involved the interpretation of the independent contractor/employee issue for injuries prior to January 1, 2013. In this case, the claimant was injured while working on a lawn crew for defendant. Claimant filed a personal injury action against the employer, as well as a no-fault auto claim and workers’ compensation claim. To identify which policy was applicable, the court had to decide whether the claimant was an independent contractor or employee. The statutory language defining an employee establishes that an employee is someone who “does not maintain a separate business, does not hold himself or herself out to and render service to the public, and is not an employer subject to this act.” Courts have previously interpreted this statutory language as requiring a person to meet all three conditions to be an employee. In other words, the claimant must not do any of the three things listed to be an employee, and being guilty of any of the three establishes a claimant as an independent contractor. Because the statutory language is written in the negative, courts have extracted a three-factor test written in the positive to analyze this issue. The test is whether the individual (1) maintains a separate business; (2) holds himself out to and renders service to the public; and (3) is an employer subject to the act. Because the prior interpretation of the statutory language in the negative requires a claimant to not do any of the three things to be an employee, courts have interpreted this three-factor test written in the positive to mean that an individual who meets just one of these factors is not an employee. The Court of Appeals in the present case, however, re-interpreted the statutory language and reversed the old interpretation outlined above. The Court here held that an individual is only transformed from an employee to an independent contractor if he meets all three of the positive requirements. In other words, the claimant can meet one or two of those factors and not be divested of employee status.
Elde v. Castles Brothers, Inc. (Court of Appeals, June 4, 2013). This case dealt with interpretation of two of three factors used to analyze employee/independent contractor issues for injuries prior to January 1, 2013 (“maintains a separate business” and “holds himself out to and renders service to the public”). Here, the claimant worked as a kitchen and bathroom remodeler. From 1990 through 2008, claimant earned almost all of his personal income doing jobs for the defendant employer. The claimant also had a business called “Bob Elde, Builder,” but did not advertise. He also had personal business cards, but did not use or update them after 2000. Plaintiff would also perform two or three side jobs per year for friends, primarily through word of mouth. Claimant then got hurt in 2008 while doing a job at defendant’s request. Both the Magistrate and Commission found that claimant was an employee, despite defendant’s position that claimant was an independent contractor because he maintained a separate business and held himself out and rendered service to the public. Regarding maintenance of a separate business, the Court noted that the claimant primarily worked 40 hours per week for defendant, and that he did not maintain his business checking account or business cards beyond 2000. The Court also found that the claimant’s performance of side jobs two or three times per year for friends did not rise to the level of holding himself out and rendering service to the public, primarily because he did not do it through advertising and because the miscellaneous jobs were occasional in nature for friends.
Favored work
Spalding v. Doan Construction Co., 2013 ACO #43. This claim involved a claimant who was injured in May 2009, and who was then offered employment within his restrictions in July 2010. Five days after the job offer, the claimant presented to his treating physician, who took him completely off work. The treating physician testified that the claimant’s physical condition had not changed between the prior evaluation where restrictions were imposed to the re-presentation five days after the job offer where total disability was given. The only change was the claimant’s pain complaints. The Magistrate found total disability. The Commission disagreed as to the total disability finding, and instead found only partial disability. In doing so, the Commission highlighted the physician’s testimony as to the lack of significant change supporting the shift from restrictions to off work status, including no new diagnosis or clinical/pathologic change, as well as the claimant’s own testimony that led the Commission to believe he considered himself totally disabled and uninterested in obtaining employment. The Commission therefore remanded to the Magistrate to further analyze the issue of partial disability in light of the applicable restrictions.
Household services
Downs v. McDonalds Corp. 2013 ACO #99. In Downs, the claimant suffered significant head and upper extremity injuries that left her with cognitive issues and in need of attendant care. The claimant was married, and her husband was unemployed and also disabled. Given the claimant’s disability, she needed help with certain household tasks. While the husband assisted with some household tasks, neither were able to fully perform some tasks such as cooking, driving for groceries, house cleaning, and running other errands. The issue at trial was the scope of the claimant’s entitlement to attendant care services, including certain household tasks such as cleaning, meal prep, and laundry. The Magistrate denied the request for benefits to cover these types of services on the grounds that they are “ordinary household tasks” that could be performed by a spouse, and therefore are outside the scope of attendant care based on precedential case law. The Commission reversed on the grounds that the Magistrate too broadly applied its prior case law that denied benefits for household services. The Commission reasoned that when ordinary household tasks are in fact performed by a spouse and the spouse then seeks payment for those services rendered, those benefits can be denied as ordinary household tasks. The rule, then, extends to forbid payment for ordinary household tasks that are actually provided by a spouse, but not necessarily to forbid payment of ordinary household tasks that simply could be provided by a spouse.
Joint employment
Pardee v. Montgomery, Inc., 2013 ACO #50. In this case, the claimant was injured while working for a site employer (AES) through a labor broker (Montgomery). Per the claimant’s testimony, the site employer controlled his work day and work conditions. The claimant considered the site employer to be his employer. The Magistrate found that the labor broker was the employer and denied the labor broker’s position that the site employer was a co-employer under the WDCA, even though the Magistrate agreed that the labor broker acted more as a payroll company than actual labor broker and the facts of the case suggested co-employment. The Magistrate nonetheless felt that he was bound by the contractual relationship between the labor broker and site employer. The Commission affirmed the ruling that the site employer was not a co-employer also liable for workers’ compensation benefits. In doing so, the Commission also relied upon the contracts that established the labor broker–site employer relationship, including the insurance policies bought by all parties based on that relationship. Specifically, the labor broker bought a policy to cover its employees and the site employer’s employees, and the site employer only had a policy to cover its clerical employees but no other class of employees.
Coordination and reimbursement
Smitter v. Thornapple Township, (Michigan Supreme Court, June 19, 2013). In this claim, the claimant was injured while working for a township fire department. At the same time, he had dual employment at a private company. The claimant received unreduced/uncoordinated works compensation benefits based on the dual employment rate, although the employer was entitled to reduction for sickness and accident benefits received. After paying unreduced benefits, the employer sought reimbursement from the State Second Injury Fund for the portion of unreduced dual employment benefits paid. The Second Injury Fund took the position that it was only required to reimburse for the portion of benefits due and owing had benefits been reduced based on the available coordination. To decide the issue of the amount that the Fund has to reimburse, the Michigan Supreme Court first noted that the portion of the WDCA that allows for benefit reduction based on coordinatable benefits received (MCL 418.354) indicates that workers compensation benefits shall be reduced by other coordinatable benefits. The Court interpreted the “shall” language as requiring mandatory coordination/reduction, not at the employer’s discretion. Because the Fund’s liability is derivative of the employer’s liability—and because the employer’s liability should have been reduced based on mandatory coordination—the Fund’s reimbursement liability does not extend to the unreduced benefits that should have been coordinated but were not. The Court held that the Fund only had to reimburse the employer for the portion of dual employment benefits due on the basis of the coordinated amount of weekly benefits owed.
i-LIMB prosthetics
Hanson-Bayerl v. Menominee Acquisition Corp., 2013 ACO #104. This case involved a claimant who suffered an upper extremity injury that necessitated a prosthetic. After using one type of prosthetic, the claimant began using a more expensive i-LIMB device. The defendant initially disputed that the device was reasonable and necessary, and the Commission remanded to the Magistrate to analyze the reasonableness and necessity of the i-LIMB device in light of the cheaper alternative. In essence, the Commission asked for a cost-benefit analysis. On remand, the Magistrate found that the i–LIMB was reasonable and necessary because it was more functional/useful and less intrusive than the alternative. The Magistrate outlined detailed findings comparing the benefits of the i-LIMB to the other prosthetic. Based on these findings, the Commission affirmed the finding as to the reasonableness and necessity of the i-LIMB, primarily because of its increased function and increased ability to allow the claimant to work.
RICO claims
Jackson v. Sedgwick Claims Management Service, Inc. (U.S. Court of Appeals, September 24, 2013). This decision is the latest in the development of appellate case law on the issue of RICO suits arising out of workers’ compensation denials.
The case involved a suit initiated by a group of employees who claimed work-related injuries while working for the defendant. The defendant denied workers’ compensation benefits in each cased based on independent medical evaluations. As a result, the plaintiffs alleged that they were fraudulently denied workers’ compensation benefits in violation of the Racketeer Influenced and Corrupt Organization (RICO) Act due to a combined scheme among the employer, insurance carrier, and evaluating doctors. The RICO Act was initially intended to target organized crime. Nonetheless, it gives individuals a private cause of action in Federal civil court against a criminal enterprise that deprives it of a business or property interest.
In 2010, the U.S. District Court dismissed the claim in Brown v. Cassens Transport Co based on the “exclusive remedy” provision of the Workers’ Disability Compensation Act. Under that provision, employees seeking to recover benefits, or to argue that they were improperly denied benefits, must utilize the WDCA’s administrative process. As such, the district court reasoned that this provision precludes a claim under the RICO Act. Even without such preclusion, the district court indicated that a claim under the RICO Act would fail because the RICO Act only allows recovery for injuries to business and properly, not for personal injuries.
However, the U.S. Court of Appeals heard the appeal in 2012 (Brown v. Cassens Transport Co., U.S. Court of Appeals, April 6, 2012) and reversed the district court, thereby allowing the RICO claim to proceed. In doing so, the Court of Appeals held that the U.S. Constitution prevents the Michigan state legislature, through the WDCA, from declaring that its state remedy supersedes or excludes any available federal remedies, such as the RICO Act. Even more, the Court of Appeals held that the RICO suits did involve property, so as to invoke a potential RICO violation. The Court found that while workers’ compensation benefits may arise out of a personal injury, the entitlement to the benefits qualifies as property, such that the deprivation or devaluation of those benefits is a sufficient injury to property under the RICO Act. The Court of Appeals’ reversal allowed the RICO suit to proceed in district court, but did not address the merits of the claim.
Subsequent to Brown, and in a case involving the same type of claimants and cause of action, a different panel on the Sixth Circuit U.S. Court of Appeals reversed Brown and reinstated a district court’s dismissal of a RICO claim brought by a workers’ compensation claimant. Jackson v. Sedgwick Claims Management Service, Inc. (U.S. Court of Appeals, November 2, 2012). Because the Brown decision in favor of the claimants and the Jackson decision in favor of the defendants were decided by three-judge panels, the Sixth Circuit U.S. Court of Appeals agreed to hear the case en banc, where a majority of the judges hear the case and decide the issue.
This led to the most recent decision of Jackson v. Sedgwick Claims Management Service, Inc. (U.S. Court of Appeals, September 24, 2013). Ultimately, the en banc Court held that the claimant’s alleged injury is a personal injury and not an injury to “business or property” as required to bring a RICO claim. It therefore continued to reverse Brown and affirmed the dismissal of the case in Jackson. At present, therefore, the precedent is that workers’ compensation claimants do not have a cause of action under RICO against the employer, carrier, and medical evaluator for workers’ compensation denials.