Firm Newsletters

 by Joshua Brown

#MeToo and EPLI Policies

In response to the #MeToo movement, companies have begun taking an increased role to prevent and police sexual harassment in the workplace. Protecting employees from any form of sexual misconduct or harassment should undoubtedly be the primary goal of these efforts. However, any proactive measures cannot guarantee that no incidents will occur, and companies’ future interests will be at risk.  Consequently, counsel and risk managers should look to employment practices liability insurance (EPLI) which can provide coverage and pay for the defense of such claims. EPLI policies provide coverage for many types of the claims employees make against their employers that are not covered by workers compensation policies, including sexual harassment.

 

What is an EPLI Policy?

EPLI policies are generally sold on a claims-made basis, which means claims made against your company during the policy period are covered. There are some wrinkles to consider, however, if one is buying such a policy for the first time, or perhaps changing carriers for better terms or coverage. Most claims-made EPLI policies have a retroactive date, which provides that claims made during the policy period based on acts that took place before the “retro date” are not covered. When buying coverage new, negotiate for the earliest retro date you can get, taking into consideration relevant statutes of limitation. When switching carriers, one option sometimes available is to purchase “tail coverage” under the expiring policy that extends it to cover claims in the future, as long as the underlying acts took place before the policy expired. This can allow the new policy to have a retro date simultaneous with the policy inception. Also, consider giving notice under the expiring policy for potential claims that have not yet been made. Some policies require this. Others permit it at the policyholder’s discretion. Be careful when answering any questions on a policy application regarding known or potential claims, as this can be a minefield.

 

Coverage Basics

EPLI policies usually cover claims for discrimination on the basis of race, national origin, religion, sex (including pregnancy), age, or disability, including related claims for harassment. Policies commonly exclude claims arising under workers’ compensation laws and policies, and claims under federal labor laws unrelated to discrimination or harassment, such as union-related laws, the Worker Adjustment and Retraining Notification Act, the Fair Labor and Standards Act, the Employment Retirement Income Security Act and COBRA. Policies are not uniform, so read them carefully. Moreover, even if a policy excludes one of the above types of claims, it might be possible to have it added by endorsement.

 

One issue is the extent to which many of the claims purportedly covered under EPLI policies are insurable. Based on public policy, states often place limits on the extent to which intentional acts may be insured, and claims of discrimination or harassment can often include allegations of knowing and intentional acts. Thus, a company should consider carefully when purchasing an EPLI policy which state’s law likely will apply and whether that state has spoken on the public policy.

 

Definition of a “Claim”

A policyholder usually will receive notice of an employment claim in one of four ways:

  • Oral complaint from an employee.
  • Written notice from a claimant.
  • Written notice from an agency such as the Equal Employment Opportunity Commission.
  • Receipt of a lawsuit.

Whether any or all of the above will trigger coverage under a particular policy will depend upon the policy’s “claim” definition. This definition can affect when notice is due, when defense costs are covered, and other secondary but important matters.

Ideally, the definition will include provisions that the demand can be for relief other than monetary damages, including “reinstatement, reemployment or re-engagement.” Such a change does more than effect a change in when coverage is triggered — it can create a much broader substantive coverage grant.

 

Defense Costs and Related Issues

EPLI policies commonly require the insurance company to pay the costs of defending claims. Disputes may arise over whether the insurance company is required to advance defense costs, or reimburse the policyholder after a claim is resolved. Another common issue concerns the allocation of defense costs among covered and uncovered claims. Whether the insurance company may pay only costs associated with covered claims may depend upon the wording of the policy as well as the applicable state law

 

Fraudulent or Malicious Acts Exclusions

Most EPLI policies contain an exclusion for deliberate and seriously wrongful acts. The following example states that the insurance company will not be liable for any claim:

arising out of, based upon, or attributable to the committing in fact of any criminal or deliberate fraudulent act.

This exclusion seeks to preclude coverage for fraudulent and criminal acts, and omits an important protection for policyholders. Because so many claims contain such allegations, it is now common for these exclusions to contain an exception that provides that the exclusion applies only “if a judgment or other final adjudication adverse to the Insured establishes such a deliberately fraudulent act or omission.” This clause ensures that a policyholder who faces allegations of fraud will have its defense costs paid, and will only lose coverage if the fraud is proved. Another important exception provides that the criminal or fraudulent act of one policyholder will not be imputed to other policyholders.

 

Conclusion

Although there are many hurdles and prerequisites to securing insurance coverage for sexual harassment, employment discrimination, and other employee claims, a company’s insurance policies are a critical source for financial support against such claims. Should your company be faced with a claim related to its employment practices, immediately notify, in writing, all insurance companies that may possibly provide coverage for that claim. Forward all relevant information regarding the claim to the insurance company. And if the insurance company denies the claim, do not take no for an answer.

 

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 by John Abraham

Acts of Employees that Reduce Compensation

There are a few defenses often overlooked when investigating a workers’ compensation claim and deciding whether to admit liability.  Some of those defenses include safety rule violations, willful misleading of the Employer regarding the claimant’s physical abilities, and intoxication defenses.  These defenses should always be considered as part of a checklist when determining compensability and benefits owed to the claimant.  Each defense can reduce compensation to the claimant by up to 50% and can be taken immediately upon the filing of the initial filing the admission with the Division.  It is important to note the distinctions with each defense as they must be noted in the remarks section of the admission when filing with the Division.

 

Safety Rule Violations

 

Section 8-42-112(1), C.R.S. provides as follows; “The compensation provided for in articles 40 to 47 of this title shall be reduced fifty percent:

(a)  Where injury is caused by the willful failure of the employee to use safety devices provided by the employer;

(b)  Where injury results from the employee’s willful failure to obey any reasonable rule adopted by the employer   for the safety of the employee”

 

The key phrase to keep in mind with regard to safety rule violations and/or safety devices is the use of the word “willful.”  The word has been defined by the Supreme Court as “deliberate intent.”  The claimant must have known the rule communicated by the Employer and deliberately chose not to follow the Rule or use the safety device.  Negligence on the part of the claimant is not enough to allow safety rule violation.  However, intent can be inferred by the ALJ where the facts lead the trier of fact to consider that the claimant knew of the Rule and specifically chose not to follow it.  The burden of proof regarding safety rule violations is always on the Respondents to prove in court.  If successful, the safety rule violation is a 50% reduction that applies to all indemnity throughout the life of the claim.

 

Misleading the Employer regarding the claimant’s physical abilities

 

Section 8-42-112(1)(d), C.R.S. provides as follows; “Where the employee willfully misleads an employer concerning the employee’s physical ability to perform the job, and the employee is subsequently injured on the job as a result of the physical ability about which the employee willfully misled the employer. Notwithstanding any other provisions of articles 40 to 47 of this title, the provisions of this paragraph (d) shall apply in addition to any other penalty that may be imposed under section 8-43-402.”

 

Again, in order for the Employer to take a 50% reduction in benefits pursuant to this statute, the Employer must prove that the claimant willfully mislead the Employer regarding the claimant’s physical abilities to perform the job.  Should proof and documentation exist regarding the claimant’s intent to deceive the Employer, the ALJ can make the inference that the claimant’s actions were deliberate in order to obtain employment with the Employer or seek a position in which the claimant could not perform the job functions.

 

Intoxication defense

 

Given the current state of the law and the legalization of marijuana within Colorado, Respondents must always consider the intoxication defense when analyzing defenses in a claim.  Although marijuana is legal, the Employer still retains the right to prohibit the employee from using marijuana or other controlled substances in the workplace.  Section 8-42-112.5, C.R.S, indicates as follows,

(1) “Non-medical benefits otherwise payable to an injured worker are reduced fifty percent where the injury results from the presence in the worker’s system, during working hours, of controlled substances, as defined in section 18-18-102 (5), C.R.S., that are not medically prescribed or of a blood alcohol level at or above 0.10 percent, or at or above an applicable lower level as set forth by federal statute or regulation, as evidenced by a forensic drug or alcohol test conducted by a medical facility or laboratory licensed or certified to conduct such tests. A duplicate sample from any test conducted must be preserved and made available to the worker for purposes of a second test to be conducted at the worker’s expense. If the test indicates the presence of such substances or of alcohol at such level, it is presumed that the employee was intoxicated and that the injury was due to the intoxication. This presumption may be overcome by clear and convincing evidence.

(2)  As used in this section, “non-medical benefits” means all benefits provided for in articles 40 to 47 of this title other than disbursements for medical, surgical, nursing, and hospital services, apparatus, and supplies”

 

The key aspects of the statute to remember are “during working hours” and “clear and convincing evidence.”  These two aspects of the statute may prove problematic for both the claimant and Respondents in court.  First, it is Respondents’ burden to demonstrate that the claimant was intoxicated during working hours.  Most commonly, drug testing aids the Employer in confirming this first aspect of the statute.  Whether it is alcohol, marijuana, or otherwise, the drug test administered shortly after the alleged injury can help aid the Employer in determining the level of intoxication that is present.  Next comes the shifting burden to the claimant to demonstrate by clear and convincing evidence that he/she was not intoxicated at the time of the incident.  This is the highest burden to prove in workers’ compensation claims and usually comes with little success on the claimant’s part at hearing.  Similar to the other acts reducing compensation, up to 50% can be taken against indemnity benefits for the life of the claim.

 

Keeping these defenses in mind will help reduce exposure for Respondents in an effective way.  Should the defenses be challenged, it is important to remember that each one involves specific findings of fact that must be made by an ALJ at hearing.  Should you have any questions regarding each of the defenses, please contact us for guidance prior to filing the initial admission on the claim.

 

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 by Fran McCracken

Injuries Resulting from Workplace Violence — When Are They Compensable?

We have all heard the grim news; a school in Parkland, a concert in Las Vegas, a nightclub in Orlando, a church in Charleston, a movie theater in Aurora.  The scenes have become far too common.  While we may think of the scenes of these places as serving a specific function, such as education, the location of each of these atrocities was also a workplace, making these acts a form of workplace violence.

 

While large-scale violent attacks grab the headlines, a Bureau of Justice Statistics Study found that 80 percent of workplace violence is non-life-threatening, verbal or physical assault.  http://www.bjs.gov/content/pub/press/wv09pr.cfm.   The U.S. Department of Labor Occupational Safety and Health Administration (OSHA) defines “workplace violence” broadly, as “violence or the threat of violence against workers”.  It can occur at, or outside, the workplace and can range from verbal threats and abuse to physical assault and homicide. However it manifests, workplace violence is a growing concern for employers and employees alike.  OSHA estimates some 2 million American workers are victims of workplace violence each year.  https://www.osha.gov/OSHDoc/data_General_Facts-workplace-violence.pdf.  Co-worker altercations, domestic situations brought to the workplace, and customer retaliation are all situations falling under OSHA’s broad definition of workplace violence. All could lead to compensable workers’ compensation claims, significant injuries, including death, and the associated financial loss.   But not all incidents of workplace violence causing injury result in a compensable claim.

 

Under Colorado’s Workers’ Compensation Act, an injury must arise out of, and in the course and scope of, employment to be compensable.  An injury occurs “in the course of” employment when it takes place within the time and place limits of the employment relationship and during an activity connected to the employee’s job-related functions.  An injury “arises out of employment” when it has its origin in an employee’s work-related functions and is sufficiently related to those functions to be part of the employee’s employment contract.

 

The Colorado Supreme Court has determined injuries which result from workplace violence are divided into three categories of causation, some of which are compensable, some not. The first category is assaults that have an inherent connection to the employment because of “enforced contacts” which result from the duties of the job. This includes assaults originating in arguments over work performance, work equipment, delivery of a paycheck or termination from work.

 

The second category is assaults which result from a “neutral force”.  A “neutral force” is one that is neither particular to the claimant nor the employment. This type of assault has been analyzed under the “positional risk” or “but for” test and is applied to injuries which result from stray bullets, roving lunatics, drunks, assaults by mistake and completely unexplained attacks.

 

The third category is assaults which are the result of a private dispute which the parties import to the work place. (E.g., Claimants shot by a co-worker who believed that the claimants had made obscene calls to the co-worker’s spouse). This category has been expanded to include assaults where the victim was specifically chosen or targeted.

 

Injuries from workplace violence resulting from “enforced contacts”, specifically resulting from the claimant’s job duties are compensable. However, the issue of whether the assault resulted from the “duties of the job” requires a factual determination you may want to present to an Administrative Law Judge.  Assault injuries from a “neutral force”, such as a completely unexplained shooting, are also compensable. In such situations, the Courts consider whether, “but for” the conditions and obligations of employment, the claimant would have been injured.

 

In contrast, injuries caused by a work place assault which results from a private or personal dispute imported to the workplace are not compensable. Thus, where the assault has no inherent connection to employment activities, compensability of the claimant’s injuries depends on whether the claimant was specifically targeted for the assault.

 

When evaluating the compensability of workplace violence claims, the employer should also be mindful of the exclusivity provisions of the Workers’ Compensation Act.  An employer that has complied with the Act is granted immunity from common-law actions for damages, such as pain and suffering, mental distress, loss of enjoyment of life, lost earning capacity, etc., and its employees are limited to the remedies specified in the Act.  If an employee’s injuries result from an assault that is inherently connected to the employment or is attributable to neutral sources that are not personal to the victim or perpetrator, those injuries arise out of the employment for the purposes of workers’ compensation and the employee is barred from bringing a tort claim against his or her employer. However, employee claims are not barred by the Workers’ Compensation exclusivity provisions if the assault originates in matters personal to one or both parties.

 

Have questions? Please contact us!

 

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 by Frank Cavanaugh

DIMEs ARE NOT WORTH A DIME and/or ICAO’S DESCENT (VIA DISSENT) INTO MADNESS

BACKGROUND

On February 26, 2018 Industrial Claim Appeals Office (ICAO) issued an opinion captioned Yeutter v. CBW Automation, Inc. Dimes not worth a Dimeand Pinnacol Assurance, W.C. No. 4-895-940. The decision sparked great interest in the workers’ compensation community and was a primary topic of discussion at the recent Spring Update CLE as well as the latest Case Law Update. The decision raises questions over how causation over different components of an injury can/should be litigated during the progression of a claim.

 

FACTS

Claimant worked as an engineer performing robotic programming tasks. He was hurt on August 24, 2012 when he was struck in the face by a carbon fiber pole. His injuries included a skull fracture, nerve damage, a broken arm, broken orbital skull sockets and a torn rotator cuff. In November 2013 Claimant began complaining to his treaters that he was experiencing fatigue and sleep disturbance. Claimant underwent a sleep study showing that he had narcolepsy. Claimant was prescribed Adderall, which he began taking in larger and larger doses to stay employed. Claimant had to reduce his Adderall use, but was unable to perform his job and ultimately stopped working in February 2015.
Claimant was placed at MMI effective August 26, 2015. Claimant was diagnosed as suffering from a traumatic brain injury that induced narcolepsy. Claimant received 67% whole person rating. Respondents requested a DIME. The DIME deferred to the treating doctor over whether Claimant’s injuries included post-traumatic narcolepsy and gave Claimant a 39% whole person rating. Respondents filed a FAL on March 2, 2016 based on the DIME.

 

Claimant claimed permanent total disability (PTD). The employer’s long-term disability program generated expert reports that concluded Claimant was not so disabled from his injury as to be unable to work. Respondents also obtained evaluations from various experts that concluded Claimant’s condition should not keep him from work. These evaluations included a neuropsychological evaluation the concluded it was not possible to state that the traumatic brain injury caused narcolepsy. The ALJ ultimately determined that medical evidence was too speculative for a causal connection to be established between Claimant’s injury and the narcolepsy.

 

RULING

The ALJ found that, even assuming Claimant’s employability was limited by narcolepsy, he remained employable. The ALJ determined that Claimant failed to prove entitlement to maintenance medical benefits, citing to an IME doctor’s opinion the Claimant’s need for narcolepsy medication was not related to the injury.

 

HOLDING

Claimant appealed arguing, in part, that the DIME’s findings were binding on the parties. The ICAO affirmed the ALJ, basically citing to the ALJ’s ability to resolve evidence and upholding an ALJs factual findings, so long as they are supported by substantial evidence in the record. Addressing Claimant’s argument over the binding effect of the DIME opinion regarding causation of the narcolepsy, the ICAO cited to the clear and convincing evidence burden given to the DIME over MMI and impairment, but that the DIME’s opinions on other issues are just another medical opinion. About half of the majority ICAO’s opinion is directed at arguments raised in a dissent.

 

THE DISSENT

The dissent disagrees with the decision in that it allows the ALJ to conclude Claimant’s narcolepsy is not a part of the original injury. The dissent disagrees with this because it allows the Respondents to simultaneously stipulate that the narcolepsy was part of the work injury for permanent disability purposes while contending that it is not part of the work injury for maintenance medical benefits and PTD benefits. The dissent relies heavily on Leprino Foods, Co. v. Industrial Claim Appeals Office, 134 P.3d 475 (Colo. App. 2005). In that case, Claimant had an elbow injury with a possible shoulder component. A DIME took place and found Claimant was not at MMI due to the shoulder. Respondents did not challenge the DIME and it was determined that Claimant’s entitlement to TTD received a clear and convincing evidence burden based on the DIME’s determination Claimant was not at MMI due to his shoulder. The dissent basically takes the position that it is unfair for Respondents to accept Claimant’s narcolepsy as a source of impairment producing an admission of liability in accordance with the DIME, but allow Respondents to challenge this condition as not work-related in a PTD and maintenance medical hearing.

 

IMPLICATIONS

Use of Yeutter: The Yeutter case is likely being appealed further. The case raises several issues. First, the case currently exists just as an ICAO decision, so it does not have precedential value in front of ALJs. In the event that the Court of Appeals thinks a decision it comes to in Yeutter clarifies how a DIME’s opinion can be applied, it may be selected for publication, which would provide for precedential value. A rare dissent at ICAO may lead to a published decision from the Colorado Court of Appeals.

DIMEs: DIMEs only receive a clear and convincing evidence burden over the numbers, meaning MMI and impairment. The issues of MMI and impairment are tied directly to Claimant’s physical condition, including whatever body parts may have been injured. In this case it appears undisputed that Claimant had narcolepsy and that the narcolepsy was disabling. Further, the DIME deferred to the treating physician over whether narcolepsy was related to the work injury. The treating physician’s opinion was that the narcolepsy was work injury related. A primary dispute at the PTD hearing was whether Claimant’s narcolepsy was related to the injury. It should be noted that the ALJ insulated his opinion, at least as to PTD, by finding that, even if narcolepsy was related to the work injury and disabling, Claimant was still able to earn wages. Regardless, the issue remains over how to untangle the DIME numbers from the physical condition of Claimant and what untangling these things means in a claim.

Incentives: Respondents may have different incentives to contest a body part as not related to the work injury through the progression of the claim. For instance, respondents may elect to pay medical benefits for conditions that may not be part of the work injury. It simply may not be worth challenging treatment for a condition when balancing that issue against the cost of care. In Yeutter, Respondents accepted an impairment rating in the context of a clear and convincing evidence burden over that number. The incentive to challenge the narcolepsy was significantly higher in the context of a PTD, thus the challenge to the narcolepsy.

 

BOTTOM LINE

If further appealed, the Yeutter case may flesh-out some logical inconsistencies. There is a fundamental fairness in not having Claimant go into every hearing prepared to litigate compensability of body parts that have previously been accepted as a part of the work injury in terms of treatment and even impairment. Further, Respondents should make a decision whether or not to challenge a body part as related to the work injury at some determinable point in a claim, knowing that determination will become a part of the claim moving forward. A DIME opinion over relatedness of a body part, whether a component of MMI or impairment, may be that determinable point for that decision. In the alternative, this could be the subject of a legislative fix.

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 by Karen Treece

The Workers’ Compensation System as a Prescription for Addiction

The workers’ compensation (WC) system provides the perfect prescription for opioid addiction. There are three types of injured workers that fall into this lair: active addicts, recovered addicts who relapse after taking medications following a work injury, and the neophyte who becomes addicted following their work injury. Thus, the system, although well-intentioned, creates and perpetuates dependency and addiction.

 

A WC claim can provide a lifetime funding source for medication and temporary and permanent disability benefits. One of the most frequent claims is a back claim. Pain cannot be objectively measured. The injured worker complains of pain that is aggravated by work. His physician prescribes opioids and restricts him from working. He is paid for his lost wages. The system for rating permanent impairment automatically qualifies him for an impairment rating after six months of medically documented pain, which then translates to an award of permanent disability benefits often worth as much as –one to two years’ of income.

It is well known that workers with opioid abuse have higher claim costs.

 

While estimates vary, it is believed that the top 5 percent of opioid users likely account for more than half of total opioid use.

When those individuals find their way into the WC system, insignificant injuries turn into nightmare claims. These often involve multiple medical procedures, permanent total disability, and sometimes drug overdose and death. These are difficult and expensive to settle due the thresholds established by Center for Medicare and Medicaid Services requiring that a Medicare Set-Aside fund be established as part of a settlement to ensure Medicare does not have to pay for any medical treatment that it deems to be the responsibility of WC. The lifetime projected cost of the opioid medication alone can often cost half a million dollars.

 

In the late 1990s, it was thought that doctors were undertreating pain and that opioid analgesics could safely ease the suffering. Following the increase in opioid prescriptions, deaths began to escalate. In response, the Center for Disease Control (CDC) released new guidelines concerning prescribing opioids for chronic pain in March 2016. According to the CDC, from 1999 through 2014, more than 165,000 people died from opioid-related deaths in the U.S.

 

In 2012, health care providers wrote 259 million prescriptions for opioid medications. That is one prescription for every adult in the U.S.

 

The guidelines have caused some backlash from physicians and patients who believe the government is interfering with the patient-physician relationship. However, there is a fundamental agreement that more oversight and education is needed at all levels.

 

Long-term opioid use can be counterproductive in workers’ compensation and can be a contributing factor in an injured worker not returning to the workplace. The use of opioids for acute pain and cancer pain is accepted, where symptom relief rather than functional outcome is the goal. However, the use of opioids for chronic pain is controversial; it could be contraindicated and may “do harm.” Opioids cause known side effects of hyperalgesia, constipation, hypogonadism, dizziness, drowsiness, overdose potential, etc. The CDC guidelines[1] note that opioid use disorder “is manifested by specific criteria such as an unsuccessful effort to cut down or control use resulting in social problems and a failure to fulfill major role obligations at work, school, or home.”

 

The Colorado Division of Workers’ Compensation (CDOW) issued amended medical treatment guidelines (MTG) for Chronic Pain Disorder and for Chronic Regional Pain effective November 30, 2017. CDOWC relies heavily on the CDC guidelines. The guidelines, though not binding on any physician, are peer-reviewed by both experts in the field and industry stakeholders.

 

The MTG suggest that chronic use of opioids is not recommended if the patient has an active or previous history of substance abuse or for workers in safety-sensitive positions. Opioids for chronic pain should not be prescribed unless there was a failure of pain management alternatives by a motivated patient including active and cognitive behavioral therapies. A full physical and psychological assessment must be performed. The physician must consider risk factors, including history of severe post-operative pain, opioid tolerance, chronic pain, sleep apnea, being off work for over six months, depression, anxiety, psychiatric disease or disorder, history of substance use disorder, complaint of all-over body pain, opioid sensitivities, and history of intrathecal pump use or spinal cord stimulator.

 

When opioids are prescribed, the physician should continue prescriptions only if “meaningful improvement” in pain and function outweighs the risk of continued use. The guidelines recommend that the patients demonstrate a 30 percent improvement in pain scores and function to justify continued opioid use. In other words, opioids must be used as a method to improve function rather than just sustain the status quo condition. The physician should actively review patient history of controlled substances, document improved function, consult the Prescription Drug Monitoring Program, and conduct random drug screenings.

———————————

[1] The CDC guidelines can be found at www.cdc.gov/mmwr/volumes/65/wr/mm655051e1.htm.

“This article was originally published with Best Lawyers® “Legal Insights” on www.BestLawyers.com.”

 

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 by Joseph Gren

Settlement Procedures in Workers’ Compensation

Member Joseph Gren co-authored an article for the Colorado Lawyer, July 2017 edition. The article, Settlement Procedures in Workers’ Compensation, is an in-depth explanation of the unique procedural requirements governing settlement of Colorado Workers’ Compensation Claims.

The Colorado Workers’ Compensation Act (the Act) has permitted settlement of workers’ compensation claims since at least 1919. As in civil cases, the Act and accompanying Division of Workers’ Compensation (DOWC or Division) rules permit both represented and pro se parties to settle workers’ compensation claims, though there are procedural safeguards unique to the workers’ compensation system. Similar to legal matters outside of the workers’ compensation context, settlement is often an attractive resolution for parties, as settlement can expedite finality and reduce overall risk and exposure. Legal authority for settlement of workers’ compensation claims lies in statute, case law, and the Workers’ Compensation Rules of Procedure (WCRP). DOWC recently amended and renumbered the procedural rules related to settlement effective April 15, 2016, and September 14, 2016.

This article provides a practical overview of the settlement procedure for Colorado workers’ compensation claims and highlights recent changes to administrative rules.

Click this link, or the link in the article name, to read the full article. A new tab will open with the PDF.

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 by Fran McCracken

LEGISLATIVE UPDATE — FIRST RESPONDERS’ COVERAGE FOR PTSD

2017 saw more legislative action related to workers’ compensation than Colorado has seen for the past few years.  Three bills were introduced in the Colorado Legislature and all three passed.  One of the newly enacted bills, HB 17-1229, was enacted on June 5, 2017, with an effective date of July 1, 2018 (subject to exception)[1].  It amends section 8-41-301, C.R.S., relating to the conditions of recovery for claims of mental impairment.  Under the current law, an employee can file a “mental only” (i.e., there is no associated physical injury) claim only as a result of employment-related situations consisting of a “psychologically traumatic event that is generally outside of a worker’s usual experience and would evoke significant symptoms of distress in a worker in similar circumstances”.   The claimed mental impairment must be proven by the testimony of a licensed physician or psychologist.  Strict judicial interpretation of this statutory language resulted in the de facto disqualification of police officers, firefighters, EMTs and other first responders from the receipt of mental impairment benefits for PTSD claims because violent and bloody incidents, including the deaths of others, were deemed to be within their “usual” work experience.   While it is true some of these professionals do encounter repeat exposure to horrific events as part of their typical work experience without impact, others struggle to secure the coverage and psychiatric care they need to help them deal with gruesome work situations, which might be “expected” in their occupation, but are still somewhat atypical.  Section 8-41-301, C.R.S., as amended, allows workers to claim workers’ compensation coverage for PTSD in a limited set of circumstances, based on repeated exposure to violent incidents.  It also retains the statute’s existing requirement that, outside the few exceptions that apply primarily to peace officers and first responders, mental impairment coverage is implicated only when an incident is outside a worker’s usual experience.  As before, a mental impairment shall not be considered to arise out of and in the course of employment if it results from a disciplinary action, work evaluation, job transfer, lay off, demotion, promotion, termination, retirement, or similar action taken in good faith by the employer. To qualify for mental impairment benefits under the amended statute, the worker must be diagnosed with PTSD by a licensed psychiatrist or psychologist following exposure to one or more of the following events:

 

  • The worker is the subject of an attempt by another person to cause the worker serious bodily injury or death through the use of deadly force, and the worker reasonably believes the worker is the subject of the attempt;
  • The worker visually witnesses a death, or the immediate aftermath of the death, of one or more people as a result of a violent event; or
  • The worker repeatedly visually witnesses the serious bodily injury, or the immediate aftermath of the serious bodily injury, of one or more people as the result of the intentional act of another person or an accident.

 

These changes to the mental impairment statute achieve a balance that is fair to first responders, while maintaining appropriate limitations on coverage for others in nonviolent occupations, and protecting the interests of employers and insurers.  The act applies to injuries sustained on or after its effective date, July 1, 2018.

If you have questions about the recently enacted workers’ compensation legislation, or any questions about workers’ compensation, please contact us.

 

[1] This act takes effect July 1, 2018; except that, if a referendum petition is filed pursuant to the applicable state constitutional provision, then the act will not take effect unless approved by the people at the November 2018 general election.

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 by Joshua Brown

OBAMA-ERA FAIR LABOR STANDARDS ACT OVERTIME RULE DEFEATED

Last year, the Department of Labor instituted a new overtime rule under the Fair Labor Standards Act (FLSA), which required employers to pay a little more than $47,000 annually to qualify under the white-collar exemptions.  This rule had previously been in limbo given that a Texas Federal District Court judge prevented its enforcement last Thanksgiving.  The same judge has now recently struck down the rule permanently.  Accordingly, short of a successful appeal, employers can now feel safe that the new rule will not be implemented.

 

The FLSA requires that employers pay non-exempt employees overtime for any hours worked beyond 40 hours in a week. An employee must satisfy three conditions to be considered exempt from overtime requirements:

 

  1. the employee must be paid a fixed salary;
  2. the salary must meet a minimum threshold; and
  3. the position must meet certain duties requirements applicable to executive, administrative, or professional positions.

 

Under the Obama administration, the DOL more than doubled the minimum salary requirement, taking it from $455 per week to $915 per week. Additionally, the threshold would have been scheduled to increase again in the year 2020 under an automatic 3-year increase the rule sought to implement.

 

Overview of the Recent Decision

The judge determined that the Department of Labor exceeded its authority in promulgating a new rule, with a salary requirement so high to essentially eliminate the requirement that exempt employees perform executive, administrative, or professional duties.  The judge was clear that the Department of Labor still retains the ability to issue a salary threshold test but the Department went too far.  There is no incite from the decision as to what would be a proper threshold.  The effect of this decision is that the Department’s authority to implement a salary test is now limited.

 

Takeaway for Employers

A sigh of relief can now be taken by all employers who did not want to see the exemption salary requirements increased.  Accordingly, employers do not have to raise salaries of exempt employees to meet the rule’s new threshold or change previously exempt employees to non-exempt status where salaries fell below the threshold.  If an employer has already adjusted its compensation scheme to comply with the new rule, it can consider whether reversing course will impact the workforce.

 

Please contact us with any questions!

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 by Frank Cavanaugh

SETTLEMENTS POST ENGLAND

The Colorado Supreme Court issued an opinion on May 30, 2017 in England v. Amerigas Propane, 395 P.3d 766 (Colo. 2017).  This case involved settlement of workers’ compensation matters and may even affect settlement of liability matters in a personal injury case.  The case has significant ramifications for employers and carriers moving forward.

 

BACKGROUND

Mr. England was a truck driver for the employer. He injured his shoulder at work in December 2012 and filed a workers’ compensation claim.  He had two surgeries in the first half of 2013 to address the shoulder injury.  Respondents conducted an IME in July 2013 and the physician offered an opinion that the claimant was approaching MMI and would likely reach MMI in about two months.  Claimant agreed to settle his workers’ compensation case in September 2013, despite still having some pain, for $35,000.  The current standard settlement form from the Division was used to settle the claim pursuant to W.C.R.P. 9-9(A). The form contains standard language that cannot be altered per the Rule. Paragraph 4 incorporates the statutory right to reopen for a mutual mistake of material fact under Section 8-43-204(1), C.R.S., and paragraph 6 contains claimant’s waiver of any “unknown injuries.”  Mr. England attempted to reopen his settlement, after it was approved in October 2013, when diagnostic testing revealed a scapular fracture.  It was undisputed that the parties did not know a fracture existed at the time of settlement and there was no evidence that the fracture definitively existed at the time of settlement.  Instead, there was testimony that the fracture could have existed at the time of settlement or could have developed later.  Mr. England’s basis for trying to reopen the settlement was that the scapular fracture was a mutual mistake of material fact and he would not have settled had he known it existed.

At hearing, the ALJ found that the scapular fracture existed at the time of settlement, but reopened the claim on the mutual mistake of fact that the parties believed claimant was approaching MMI when the case was settled.  She further found that, had claimant known that he had a scapular fracture, he would not have settled.  The ALJ’s Order was affirmed at the ICAO level and was appealed further to the Colorado Court of Appeals.  The Colorado Court of Appeals reversed the ICAO and the ALJ’s decisions, finding that the scapular fracture fell into the category of unknown injuries that claimant waived in paragraph 6 of the settlement agreement; ignoring that the mutual mistake relied upon by the ALJ to reopen was that claimant was approaching MMI.

The Colorado Supreme Court took the case and reversed the Colorado Court of Appeals.  The Supreme Court held that the paragraph 6 waiver does not apply to conditions unknown, but existing at the time of settlement.  In this instance, the Supreme Court held that the mutual mistake of fact between the parties was the existence of claimant’s scapular fracture.

 

ANALYSIS

The Colorado Supreme Court has effectively taken two categories of facts existing at the time of settlement, known and unknown, and carved-out a third type of fact that can serve as a basis to reopen settlement, “unknown, but existing facts.”   The logic of this is confusing.  For a fact to be mutually mistaken between the parties, it requires the fact to be known, rather than unknown.  Notwithstanding this logical conundrum, the question remains how to proceed with settlements moving forward.

 

AFTER ENGLAND

The Division settlement form allows for additions in paragraph 9.  9(A) can contain settlement language that is both specific to the settlement agreement and involves an issue that falls within the Workers’ Compensation Act.  Paragraph 9(B) can reference exhibits attached to the settlement agreement related to the workers’ compensation claim, such as Medicare set-aside arrangements.  Paragraph 9(C) can reference other attached written agreements that include matters outside of the Workers’ Compensation Act, such as employment releases, or bad-faith waivers.  Material referenced in paragraphs 9(B) and 9(C) are outside of the enforcement parameters of a Division or Office of Administrative Courts.

Recent attempts have been made to build-around the England decision by including language in paragraph 9(A), and having claimant expressly waive any ability to reopen a claim based on an unknown condition resulting from the work injury.  In some instances, this has been met with objection and a motion to strike this language under 9(A).  At least one pre-hearing conference order has been issued striking this type of language as contrary to the England holding that the paragraph 6 waiver cannot limit the right to reopen under paragraph 4.

Other recent attempts have been made to protect against the effects of the England decision by including terms requiring repayment by claimant of any settlement amounts if the claim is reopened based on a mutually mistaken existing, but unknown, condition.  This has also been met with resistance but Lee + Kinder LLC is unaware of any prehearing conference order striking this type of language.

 

BOTTOM LINE

The England decision certainly disrupts settlements of workers’ compensation claims.  It calls into question the one reason to settle the case, which is finality.  While there is potential for a legislative fix to this problem, settlements need to be negotiated and properly documented until this type of fix can be accomplished.  The England decision can still be built-around.  Agreements under paragraph 9(A) waving the right to reopen based on an unknown, but existing, condition may not work in that location; however, as a separate agreement exhibited under 9(B) and/or 9(C), they should be independently enforceable outside of the workers’ compensation system.  Further, repayment of settlement money in the event of a reopening should be enforceable under 9(A) in the workers’ compensation system or independently under 9(B) and 9(C).  If repayment is not made, whether as a lump or in some other arrangement, there’s also the possibility for stipulated judgment to enter to allow collection of settlement proceeds through civil procedure rules.

Settlements are contracts and there is a freedom of contract issue raised by England.  The Division has limited enforcement capacity and is holding itself by the England decision; however, the parties can agree to terms that can be enforced as contracts, attached as exhibits under 9(B) and 9(C).  Lee + Kinder LLC is using specific language on all settlements that the Firm believes is an enforceable contractual agreement.  If you have questions regarding settlements, please contact us and we will happy to answer those questions.

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 by Fran McCracken

A FIRST! FDA REQUESTS WITHDRAWAL OF OPANA® ER FROM THE MARKET; MANUFACTURER ACQUIESCES

Amid the nation’s ongoing and “unprecedented opioid epidemic”, (per the U.S. Department of Health and Human Services), on June 8, 2017, the U.S. Food and Drug Administration requested Endo Pharmaceuticals to voluntarily remove its opioid pain medication, reformulated Opana ER (oxymorphone hydrochloride), from the market. The request was based on concerns that the benefits of the drug no longer outweigh its risks related to abuse. This is the first time the FDA has taken steps to remove a currently marketed opioid pain medication due to the public health consequence of abuse.

Opana ER is an opioid first approved in 2006 for the treatment of moderate to severe pain when a continuous, around-the-clock opioid analgesic is deemed necessary. In 2012, Opana ER was reformulated to deter snorting and injecting. While the new product met the FDA’s standards for approval, based on new information about the risks associated with the reformulated product, the agency is now taking steps to remove Opana ER from the market.

Janet Woodcock, M.D., Director of the FDA’s Center for Drug Evaluation and Research, indicated, “The abuse and manipulation of reformulated Opana ER by injection has resulted in serious disease outbreak. When we determined the product had dangerous unintended consequences, we made a decision to request its withdrawal from the market. This action will protect the public from further potential misuse and abuse of this product.”

The FDA requested the manufacturer, Endo International, voluntarily remove reformulated Opana ER from the market. In another first, Endo has announced its plan to voluntarily comply with the FDA’s request. In a July 6, 2017 press release, Endo announced plans to work with the FDA to coordinate the orderly removal of the pain medication, “in a manner that looks to minimize treatment disruption and allows patients sufficient time to seek guidance from the health care professionals.”

The FDA has indicated it will continue to examine the risk-benefit profile of all approved opioid analgesic products and take further actions as appropriate as part of its response to the opioid public health crisis. For further information, read the FDA News Release.

 

What can you do to help manage the chronic prescription of opioids or narcotics on your claims?

• Obtain an independent medical evaluation if:
1. Opioids are prescribed for complaints of pain and there are inconsistencies in the diagnosis and objective findings;
2. There is no reported reduction in pain levels with ongoing prescription of opioids or narcotics;
3. There is no demonstrable improvement in function, including return to work, with ongoing prescription of opioids or narcotics;
4. Abuse, addiction, or deviation is suspected.

 

• Colorado’s Medical Treatment Guidelines address the appropriate use of Narcotics/Opioids in workers’ compensation claims including the following recommendations:
1. Screening for potential alcohol and drug abuse problems, as well as co-morbid psychiatric conditions, to identify those claimants who may be prone to dependence or abuse;
2. Long-term narcotics or opioids should only be offered after other therapies have failed to improve function;
3. Narcotics or opioids should result in demonstrable improvements in function, not just reported pain relief;
4. Random urine drug screens are required by the Guidelines for the chronic prescription of opioids or narcotics;
5. A narcotic pain contract, and compliance therewith, is required by the Guidelines for long term prescription of opioids or narcotics;
6. Periodic re-evaluation of function and side-effects is required for ongoing narcotic or opioid prescriptions;
7. Tapering and discontinuance of opioid or narcotic prescriptions are required when patient goals are not being met.

 

• Medical Utilization Review:
Provides a statutory, tiered, neutral medical review of the reasonableness and necessity of an authorized treating provider’s care, including the prescription of narcotic and opioid medications.
If you have any questions about challenging the ongoing prescription of narcotics or opioid pain medications, or any claim-related medical treatment, please contact us. We are always glad to discuss the facts of your case and work towards the most efficient way to end unreasonable, unnecessary, and/or unrelated medical treatment.

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