Posts Tagged ‘Compensability’

Fifty States, Fifty Different Laws: A Peter Rousmaniere Analysis

Monday, February 1st, 2016

According to the Bureau of Labor Statistics’ (BLS) Consumer Price Index calculator, what you bought for $100 in 1973 would today cost $533.82. Despite this, during that same period wage growth for the median hourly worker grew by less that 4%. 

Moreover, as the following chart from the Economic Policy Institute (EPI) shows, while wages flattened out after 1973, productivity continued to increase at a steady pace through 2010.

Everything seems to be going up across America except hourly compensation. That helps explain why our recent economic high hard one to the head, known as The Great Recession, has left so many families living paycheck to paycheck, one crisis away from living under a bridge. It also illuminates why the indemnity and medical benefits of workers’ compensation are critical to economic survival following a work injury.

In 2015, ProPublica and NPR published a series of exposès that showed widespread disparity in the way the various states deal with work injuries. Workers’ comp professionals didn’t like the series much, complaining en masse that it was biased, agenda-driven and just plain wrong. Silly me, I thought the series actually made some important points, especially around the level of compensation for loss of function.

Into this battle now rides Peter Rousmaniere, friend, colleague, Harvard MBA, WorkCompCentral columnist and all-around deep thinker.

Mr. Rousmaniere spent a good portion of 2015 researching the economic consequences to injured workers with respect to how the different state workers’ compensation laws deal with the early days of a work injury. He illustrates his findings in The Uncompensated Worker: The Financial Impact of Workers’ Comp on Injured Workers & Their Families, published as a workcompcentral special report.

In the Uncompensated Worker, Peter Rousmaniere creates the metaphorical Tim, a New York electrician earning the median wage for New York electricians. He then goes really deep into the take home pay hit Tim experiences following a work injury. He shows how Tim will always suffer earnings losses while injured regardless of how long he’s out of work, and he does it by considering the waiting period (the number of calendar days between the injury and when indemnity payments will begin), the “shortfall” (“The difference between a workers’ after-tax take-home pay and the amount of the replacement wages”), the “retroactive” calculation (the number of days an injured worker has to lose from work before being paid indemnity for the waiting period) and the maximum weekly benefit cap.

Here’s how Rousmaniere describes what happens to Tim if he misses three, six or ten days due to the injury:

While Tim’s 6% shortfall may not seem unreasonable, additional deductions further reduce his replacement wages. First, there’s a waiting period during which a worker receives nothing, a retroactive period (in most states) and a maximum weekly benefit cap. The amount Tim actually receives depends on the number of days he missed work. We can correlate work and calendar days for Tim by looking at a calendar and figuring his first lost work day on a Monday. If Tim misses three days of work, he receives nothing; losing six days of work yields close to one work day of replacement wages, and losing 10 work days yields five work days (seven calendar days) of replacement wages.

With that New York backdrop, Rousmaniere then shows how Tim would fare in each of the other states. But he goes even farther. Drawing from Economic Policy Institute estimates, which create basic monthly household budgets based on household size and location “to attain a modest yet adequate standard of living,” he builds an EPI-estimated monthly basic budget for Tim and his family of four. He then lays out what happens to the family economy when Tim is out of work due to injury for an extended time, say more than a month. If Tim’s spouse works part-time, the family can’t afford the basic budget in 29 states; if the spouse doesn’t work, they’re under water to the tune of $2,200 a month in every state.

This is sobering stuff. The 50-state and District of Columbia chart at the end of the report is nearly totally comprised of negative numbers.

Reading the report, I’m left with this: Assume (as most claim adjusters tell me) that well over 90% of injured workers really are injured and want to get back to work as expeditiously as possible. Should those workers suffer economic deprivation simply because they had the misfortune to be injured at work? Does society have an obligation to ensure that families, already perilously close to the edge of the financial cliff, are not booted into the abyss because of that work injury? And, finally, is it time for indemnity and medical benefit parity among the states (for example, if Tim were injured in New Jersey he’d fare considerably better than in New York)?

Peter Rousmaniere has performed a valuable service with The Uncompensated Worker. When (it should not be “if”) you read it, you’ll come away admiring the level of research and detail that went into producing it. I also hope you come away thinking their just might be a better way.


Pike’s Pique: The Stress of Behaving Badly

Monday, July 29th, 2013

John Pike may be the most (in)famous campus cop in America. He was video taped on November 18, 2011, at the University of California, Davis, spraying seated demonstrators with pepper spray. His demeanor was remarkably casual, as if he were spraying bushes for an infestation of bugs. He is now the subject of a meme that has spread across the internet, with images of Pike spraying Christina, in the famous painting by Andrew Wyeth, among other things. While we live in a culture where many are famous for being famous (the Kardashians come to mind), Pike is famous for one moment of his policing career.
An internal investigation by the university recommended that Pike be demoted. New police chief Michael Carmichael – the original chief had resigned – rejected that recommendation, deciding, in July of 2012, to fire Pike. There were a number of problems with Pike’s behaviour: he used an unapproved pepper spray that was three times stronger than the university’s preferred brand and he violated university protocol by spraying people in the face at close range.
Enter Workers Comp
Pike has filed a stress claim under the California workers comp statute. The state used to be famous for its lenient criteria for stress claims: only 10 percent of the stress had to be work related for a claim to be compensable. (How could work not comprise at least 10 percent of what is wrong in one’s life?) Over time, California tightened up the compensability guidelines, which now total six (as outlined by the Kenton Koszdin Law Office):
1.The employment must be six months or more. Check
2.The employee must have a psychiatric condition that is listed in DSM IV. Probably a check.
3.The employee must prove that the actual events of employment are the predominant cause of the psychiatric condition (51% or more). Definitely a check.
4.A psychiatric condition that is substantially caused (35%–45%) by good faith, non discriminatory personnel action(s) is not compensable as a work-related injury. Examples of good faith personnel actions are criticism of the employee’s work or attendance, change in work assignments, and decision about raises or promotion. The employer has the burden of proof on this issue. DNA.
5.A psychiatric injury that is caused by the litigation process is not compensable. Examples of psychiatric injury caused by the litigation process are an employees reaction to the denial of their claim, dealing with an abusive claims adjuster, or having their benefits terminated.DNA
6.A stress claim or mental–mental psychiatric injury claim filed after termination or notice of termination is not compensable unless the employer know of the injury or medical records of treatment for the psychiatric dated prior to the termination exist. He filed on June 10, presumably before the notice of termination.
A Mental-Mental Claim
Pike must prove compensability of the notoriously difficult “mental-mental” claim. In many states, there must be a physical injury that precedes the mental disability. In this case, the physical injury was limited to the protesters; the university settled their claims for $1 million. In the immediate aftermath of the incident, Pike in his new-found infamy has been subject to harassment, threats and humiliation. He is the principal subject of a meme that has spread throughout the internet. Stressful? Certainly. Compensable? Possibly, but by no means a certainty.
Pike’s former employer will try to show that he violated policy in spraying the students, including the use of an unapproved spray. Pike will undoubtedly try to show the ambiguity of the university’s policies, perhaps a lack of training specific to the circumstances he faced.
In the meantime, Pike has lost a job that paid in excess of $100,000 per year. He has achieved indelible fame for a single, ill-advised work-day decision. He is without a doubt suffering from work-related stress – stress of his own making – but the compensability of that stress is another matter altogether. We await the results of the August conference with great interest.

A Fine Line Between Willful Intent and No Fault

Wednesday, February 20th, 2013

The severe injuries to a utility lineman in Tennessee delineate the fine line where “no fault” ends and “willful intent” begins. In January 2009, Troy Mitchell and his crew were replacing a forty-foot power pole with a new pole forty-five feet in height. Mitchell was in a bucket lift near the top of the new pole preparing to attach a lightning arrestor when a copper ground wire that he held in his bare hands came into contact with a transformer on the older, charged pole some five feet below. Mitchell received an electrical shock of approximately 7,200 volts. He suffered severe burns and injuries to both hands. Clearly, Mitchell was in the course and scope of employment, but he had removed the safety gloves that would have prevented the injury. So is this a case of no fault coverage or willful disregard of safety rules? Are Mitchell’s injuries compensable?
There is no doubt about the severity of the injuries. Mitchell underwent eight surgeries–five on the left hand and three on the right. Procedures included cleaning the wounds, cutting away dead tissue, and removing healthy skin from Mitchell’s forearms and upper arm to suture into the hands. Following these surgeries, he underwent physical and occupational therapy for ten-months in an effort to reduce the swelling in his hands and increase strength and flexibility. He was also treated for burn injuries to his side. Just over one year after the accident, Mitchell was able to return to work in the same position he held at the time of the accident.
Before considering the compensability issues, let’s take a moment to applaud Mitchell for his gritty recovery and his fierce determination to get back to work. You could hardly ask for a more motivated worker.
An Initial Determination of Compensability
A trial court found the injuries to be compensable. They awarded Mitchell a vocational disability rating of 39% permanent partial disability to the body as a whole–one and one-half times the 26% medical impairment rating to the body as a whole. The court noted that Mitchell is “apparently a tough guy. He’s back at work. He and the doctor worked together to make sure there were no restrictions. This is a profound injury. He has deformity on both of the hands. It’s quite visible.”
In addition to an award of $117,312.00 for permanent partial disability, the trial court granted $23,462.40 in attorney’s fees and $1,669.20 in discretionary costs. (As much as we would like to explore the concept of “permanent partial disability” ratings for people who are able to perform their original jobs, we must set that aside for another day.)
The Appeal
Mitchell’s employer appealed the compensability determination. In Tennessee – as in most states – there is a four-pronged test for willful intent. No one questioned that the first three tests had been met: (1) at the time of the injury the employer had in effect a policy requiring the employee’s use of a particular safety appliance; (2) the employer carried out strict, continuous and bona fide enforcement of the policy; (3) the employee had actual knowledge of the policy, including a knowledge of the danger involved in its violation, through training provided by the employer.
The crux of the matter arises in the fourth test: (4) the employee willfully and intentionally failed or refused to follow the established policy requiring use of the safety appliance. In other words, the sole issue was whether Mitchell’s removal of his gloves while in the performance of his duties was a willful disregard of safety policy.
Mitchell testified that he had worn his protective gloves when lifted in the bucket and when he covered the “hot” lines on the lower pole with rubber blankets and hosing. Having done that, he believed that he was in a “safe zone” and “clear” of the danger five feet below. He then took off his gloves to hammer a metal staple, which was to secure a lightning arrestor into the crossarm of the new, taller pole. Mitchell explained that it was easier to hammer without the gloves and, further, that he “didn’t want to puncture a hole” in the gloves. After removing the gloves, he remembered being struck by a “ball of fire.” He later realized later that the copper ground wire he was handling at the time must have come into contact with the transformer on the lower pole. He further testified that because he had removed his gloves under similar circumstances on previous occasions, he did not believe that he was exposing himself to danger.
On cross-examination, Mitchell acknowledged that the employer’s policy was that “any time from cradle to cradle, which is when the bucket closes, you have to wear your rubber gloves if you’re around anything hot․” He admitted that when he was “around” the hot wires, the rule required him to wear his gloves for safety reasons. He further understood that the employer’s policy required leather gloves as an additional covering to guard against puncturing the rubber gloves. He agreed that his gloves were in perfect condition and that he should have kept them on as he attached the staple. Mitchell conceded that his failure to do so violated the safety rules. When asked whether he could hammer the staples with the gloves on, he responded, “Yes, but it’s hard.”
The cost of replacement gloves was not an issue: the company’s safety coordinator confirmed the gloves were provided by the employer and were immediately replaced when punctured or worn out. As a result, it appears that Mitchell was just trying to save his employer a few bucks by not ruining the gloves!
The Supreme Court of Tennessee determined that Mitchell had indeed willfully disregarded company safety policy and thus was not eligible for benefits under workers compensation.
A Compelling Dissent
Justice Holder dissented from the majority opinion. She noted that Mitchell believed he was in a “safe zone” and was not in danger of electrocution when he removed his rubber gloves. Holder quotes the trial court: “it is plausible that [Mr. Mitchell] believed the pole he was working on was not hot.” Holder goes on to note that although Mitchell’s conduct in this case may rise to the level of negligence or recklessness, the removal of his gloves when he assumed he was in a safe zone should not be deemed willful misconduct.
Mitchell, an experienced lineman, made a judgment that he had protected himself from potential harm by covering the lower power lines with insulated blankets. He removed the gloves to more easily complete the installation process. He made a mistake, he was certainly at fault, but the action, in the opinion of Justice Holder, did not rise to the level of willful misconduct.
This case falls within the perpetual gray zone in which most disputes on compensability are argued. While the majority was technically correct in their determination, and while the law does not discriminate between worthy and unworthy employees, it is difficult not to side with Justice Holder in her dissent: Mitchell is in so many respects an exemplary worker. If the rules of comp could be made to bend toward justice, perhaps they would bend in the direction of this stoic and stalwart man. Unfortunately, that’s not the way this system works.

Annals of Compensability: These Boots Ain’t Made for Walking…

Friday, November 16th, 2012

John Pearson was diagnosed in his mid-20s with diabetes and was insulin dependent. About fifteen years after the diagnosis, he was working for an Arkansas temporary placement agency, Worksource, which sent him to a steel fabricator. His temporary employer gave him a pair of steel toe boots and assigned him the task of covering warm steel bundles with blankets. The job required a lot of rapid walking across a large field, as the bundles emerged from the plant at odd intervals. In the course of the day he experienced discomfort in his left foot and at the end of the day he found a blister on his left great toe. The next day he requested a wider pair of boots, but none were available. The employer suggested he buy them, but he could not afford to do so before being paid – and payday was still a couple weeks away.
Two weeks later Pearson was diagnosed with “diabetic neuropathy and cellulitis.” Worksource sent him to another doctor, who diagnosed a diabetic ulcer and cellulitis and placed him on light duty, restricting his standing and walking. (The court is silent on how long Pearson continued to work at the steel fabricator.) Ultimately, surgery was performed on the toe, which fortunately did not require amputation, and Pearson was able to begin working again, albeit with (temporary) restrictions. Pearson took a job in a Waffle House, where he was able to resume full time work. In the meantime, he was faced with lost wages and formidable medical bills.
Proving Compensability
Pearson filed a workers comp claim, which at first was accepted and then denied on appeal to the Arkansas Workers Compensation Commission. The denial was based upon an interpretation of state law:

(4)(A) “Compensable injury” means:
(i) An accidental injury causing internal or external physical harm to the body
or accidental injury to prosthetic appliances, including eyeglasses, contact lenses, or
hearing aids, arising out of and in the course of employment and which requires
medical services or results in disability or death. An injury is “accidental” only if it
is caused by a specific incident and is identifiable by time and place of occurrence;
(ii) An injury causing internal or external physical harm to the body and arising
out of and in the course of employment if it is not caused by a specific incident or is
not identifiable by time and place of occurrence, if the injury is:
(a) Caused by rapid repetitive motion.
[Arkansas Code Annotated section 11-9-102(4)(A) (Supp. 2011)]

The Arkansas Court of Appeals agreed with the commission that the injury did not meet first criteria: there was no specific incident identifiable by time and place. However, the Court found that the injury was caused by “rapid repetitive motion,” applying a two-pronged test that is stunning in its obviousness: did injury involve “repetition” and did it involve “rapidity”?
The “repetitive” part involved walking itself: Pearson walked up and down the field in tight boots, watching for the steel bundles as they emerged from the plant. The rapid part involved his walking briskly to protect the bundles as they appeared. He walked from bundle to bundle, as fast as he could, performing the job as instructed. In doing so, the boots rubbed his toe continuously over the course of the day, resulting in a blister. For most people, a blister is no big deal. For a diabetic, it could lead directly to amputation.
Lessons for management?
It is difficult to draw conclusions from this unusual case. Because Pearson was a temporary employee, the steel company had no awareness of his diabetes and no reason to be aware of it: he was able to perform the work as assigned. Theoretically, they could have done better on Pearson’s request for wider boots, but they had no reason to anticipate a serious problem beyond a bit of discomfort. Pearson himself was probably unaware of the risks involved in wearing the tight boots. He obviously was feeling pressure to earn money and probably thought the discomfort, while painful, was not a serious matter.
Perhaps the most important aspect of this case is Pearson himself: despite a life-altering health problem, he is strongly motivated to work. In the few months described in the court narrative, he tries hard to do what he’s supposed to do and he keeps working as best he can. Given comfortable footwear, Pearson will do just fine.

Presumption Laws: Wide Open Door to Benefits

Monday, October 22nd, 2012

Jimmy Walters worked for the Florida Department of Corrections. In December 2009, he came down with a cold, but continued to work for a week. He suffered from chills and nausea on his days off and then experienced chest pain. He went to a hospital, where he was treated for “heart symptoms” and subsequently diagnosed with myopericarditis and cardiomyopathy. He was hospitalized for several days. He filed a workers comp claim, under the Sec 112.18, the “firefighter’s presumption” which creates a rebuttable presumption of occupational causation for disabling heart disease.
For most workers, there would be no conceivable issue of compensability for flu-caused heart problems, but most workers do not work in the public safety arena and most workers are not protected by presumption laws. The facts of the case were not in dispute: there was a direct causal relationship between Walters’s stomach flu and subsequent heart problems. His initial claim was denied by the state of Florida and by a judge on appeal, who ruled that Walters had not proven that his viral gastroenteritis was an occupational disease or that the exposure was traceable to the workplace.
The District Court of Appeal overturned the ruling and awarded benefits for the treatment of heart disease. The judges noted that the presumption statute shifts the burden of proof from the claimant to the employer: “The state had the burden to prove he did not get the virus at work, and failed to carry its burden.” Some burden! The chain of causality is stark and rather crude: for public safety employees, any heart ailment caused by illness is compensable, unless the employer can trace the exposure to specific, non-work conditions. Where the cause/exposure is unknown – as in most cases – there can be no outcome other than the awarding of benefits.
By facilitating benefits to firefighters and police who may develop cancers or heart desease related to employment, law makers acknowledge the unique exposures for the people who protect us.[Back in 2008, my colleague Julie Ferguson provided the background for presumption laws.] But the generous language of these statutes may open the door to compensability far wider than any prudent legislature would intend.
The Politics of Presumption
In practice, presumption laws may create as many problems as they solve. For stressed taxpayers who ultimately foot the bills, cases of questionable compensability can be shocking: the firefighter with lung cancer who smokes two packs a day, the obese cop with heart disease, and now, the corrections officer with a flu-caused heart problem. Are these truly work related? For most people, the answer would be “no way.” For the public safety employees covered by presumption laws, compensability is a given. Their safety net is woven of much finer cloth than that which protects most people in the working world.

Compensable Meningitis?

Tuesday, October 9th, 2012

The alarming crisis precipitated by contaminated steroids has implications for the workers comp system. In Framingham, MA, two towns over from where I write, the New England Compounding Center has been shut down, but not before it shipped over 17,000 vials of methylprednisolone acetate, each potentially contaminated by fungal meningitis. Across 23 states, eight people have died and over 100 others have been sickened. As Denise Gray writes in the New York Times, the incubation period appears to be between a few days and a month; the last doses of the tainted medications were administered on September 17, so there are literally thousands of people at risk for a potentially fatal illness.
Because the steroid is used for the treatment of back pain, this crisis intersects with the workers comp system. Lower back injuries are among the most prevalent in workers comp; across the country, injured workers are receiving all forms of treatment, ranging from physical therapy to surgery to injections. An unknown portion of those sickened by the tainted drugs will have been treated for work-related injuries. These unlucky few will require lengthy and costly treatment, along with extensive hospitalization. They will be eligible for long-term indemnity payments, including support for any qualified dependents. These claims will total hundreds of thousands of dollars. Should an injured worker suffer a stroke – one of the many side effects of the disease – the claim is likely to become a permanent total disability.
[NOTE to comp attorneys: New England Compounding is out of business. The prospects for subrogation are remote.]
Exposure: Limited But Deadly
The good news, if indeed there is any, is that the source of the contamination is highly specific: it involves only drugs shipped by New England Compounding. Thus any injured workers receiving lumbar injections over the past few months can know for sure whether they are at risk. But that – and the fact that most people exposed to the drug will not become ill – is the extent of the good news.
Anyone exposed to the fungus is advised to seek medical help immediately if they experience any of the following symptoms: severe headache, fever, stiff neck, dizziness, weakness, sensitivity to light or loss of balance. For those who have received tainted injections, just reading that list would probably give rise to real or imagined symptoms.
Early treatment is essential and might save a patient’s life. The untreated fungus can cause strokes. So logic might indicate that everyone exposed should receive preventive treatment. Unfortunately, the life-saving treatment itself carries risk: antifungal drugs must be administered for months and they can have serious side effects, including kidney damage. Thus those anxiously awaiting the first signs of illness can only watch the days tick by until they are beyond the incubation period. (Even if they do not become ill, individuals exposed to the risk might be tempted to pursue claims for PTSD, given the magnitude of the stress they are experiencing.)
Manufacture Versus Assembly
The Wall Street Journal points out that a 2002 Supreme Court ruling placed limits on any federal role in the oversight of drug compounding:

[The FDA] has been stymied by, among other factors, a 2002 Supreme Court decision. In the majority opinion, written by Justice Sandra Day O’Connor, the court struck down as unconstitutional the portion of a 1997 law setting out how the FDA would decide which compounding pharmacies it would regulate

The compounding – as opposed to manufacturing – of drugs is considered a pharmaceutical procedure, so the only oversight comes from the states. And given limited resources, states are not in a position to do the job thoroughly or consistently. As Representative Ed Markey (D-MA) put it, “compounding pharmacies currently fall into a regulatory black hole.”
Most of the people receiving the tainted medication will soon be able to resume their normal lives. For the relatively small number who become ill, or even die, the promise of relief from back pain has been transformed by a scandalously unregulated industry into a broken promise of life-altering proportions. For those wondering what role, if any, government should play in free markets, this surely is an example of a place where government belongs.

Annals of Compensability: Heart Attacks at Work

Monday, October 1st, 2012

Over eight years ago, my colleague Julie Ferguson blogged on the issue of workplace heart attacks: compensable or not? (Workers Comp Insider just passed its ninth birthday, but we’ve been too busy to celebrate.) Heart attacks present a unique challenge to the courts overseeing workers comp. The general standard requires that something unusually stressful happened at work in the moments leading up to the incident; if people are doing their usual work in the usual manner, the heart attack does not arise “out of” employment. If, on the other hand, the demands of work are unusually stressful and beyond the ordinary, the incident might well be compensable.
Today’s case raises the isse of whether anything that happens on Super Bowl Sunday can be ordinary. Colleen Robert’s husband (no first name given in the court documents) normally worked as a receiver for Waldbaum’s Supermarkets in New York. While the 2010 superbowl did not involve any New York teams – the contest featured the Indianapolis Colts versus the New Orleans Saints – Super Bowl Sundays are always busy for super markets. Roberts was asked to manage the store during the unusually busy day. At one point, he engaged in a verbal altercation with a customer (which in itself may not be unusual for those working in New York). Later that same day, while still at work, Roberts suffered a myocardial infarction and died.
The case was first deemed compensable, then denied by an administrative law judge, and then finally adjudicated by the Appelate Division of the New York Supreme Court. The judges noted that any death at work is presumed to be work related, but they also looked for a causal connection between the fatal attack and the work being performed. The autopsy revealed that Roberts suffered from extensive cardiovascular disease and thus was a good candidate for a myocardial infarction. In arguing against compensability, the defense pointed to the lapse of time between the verbal altercation with a customer and the attack itself. However, the judges noted that the entire day was full of stress and excitement for Roberts, who was not performing his usual job in the usual manner. They determined that the fatal heart attack was compensable.
Best Practices
In a similar case involving a supermarket in Massachusetts, a 70 year-old man with a pacemaker collapsed and died on his break. Because he had a known heart condition, and because of his age, the market assumed the fatality was not work related and failed to report it to their insurer. Months later, the widow filed for comp benefits. Due to the absence of timely interviews with co-workers and supervisors, and due to the “death at work” presumption, the case was deemed compensable.
The lesson for employers is both simple and straight-forward: report any and all incidents of heart problems immediately. Regardless of the state jurisdiction, the courts are likely to apply the same standards as in New York. And if a heart attack occurs on Super Bowl Sunday, defense may have a tough time proving it was just another working day.

Texas: Coming and Going, Going, Gone

Tuesday, September 25th, 2012

One of the most compelling issues in the compensability of workers comp claims is determining the moment when coverage begins. For most workers, coverage begins at the worksite, often in the employer’s parking lot. Under the “coming and going” (or “to and fro”) rule, the commute to and from work is generally not covered. There are exceptions, of course, and these exceptions become the focus of litigation when an injury occurs during a commute. When a serious injury or, in today’s case, a fatality occurs, there is a lot at stake in the interpretation of this deceptively simple rule.
Juan de los Santos worked for Ram Production Services, a Texas company that services gas and oil leases. De los Santos was assigned to work on a gas lease located on a large piece of fenced ranchland. The employer furnished de los Santos with a company-owned truck and paid for work-related fuel expenses. The truck was not for personal use. De los Santos spent a significant part of his workday traveling to wells and job sites within a designated area known as the Buck Hamilton Ranch. De los Santos entered the ranch through the only entrance, a gate where he was signed in by a guard. De los Santos traveled to the exact same location each day to begin his work, which started at 6:00 a.m. He was a salaried employee, who was not paid extra for his travel.
One Fateful Day
In June of 2005, de los Santos was driving to work, on a public highway, when he was involved in an accident that resulted in his death. He was survived by his wife, Noela, and his daughter, Kimberly Ann. [Note that the litigation around the compensability of his death remained unresolved more than seven years later.] Noela filed for workers comp benefits, which were denied, then granted, and then finally resolved in the Texas Fourth Court of Appeals.
Mrs. de los Santos tried to develop a narrative of the accident that met the standard for a compensable claim: she noted that her husband was traveling in a company truck furnished as part of his employment contract, and that her husband’s travel originated in the employer’s business because he was taking a route to a remote job location, was on a “special mission” at the time of the accident, and was transporting tools and equipment to the worksite.
Deconstructed Narrative
The appeals court dismantled her narrative one piece at a time:
– Being in a company vehicle does not mean you are necessarily “in the course and scope” of employment;
– Yes, he was driving to a remote location, but that was his regular assignment, unchanging from week to week;
– Even though he was meeting a contractor at the jobsite, this did not mean he was on a “special mission” as he was headed to his usual workplace at the usual time;
– And the fact that he was carrying tools and equipment did not change the nature of the commute. [NOTE: had he been injured moving the equipment into the truck, he would have had a compensable claim.]
The court noted that “there is no bright line rule for determining if employee travel originates in the employer’s business; each situation is dependent on the facts.” And the facts, as the court interpreted them, did not favor the widow’s claim. They reversed the trial court’s ruling by rendering a “take-nothing” judgment. Take nothing, indeed.
Thus, after seven years, the case grinds to its conclusion. Mrs. de los Santos and her daughter are on their own.
Letter of the Law
The court was correct in its determination that de los Santos was on his ordinary commute to his regular workplace. While we all have moments when we might like to engage in social engineering – the widow and her daughter certainly could use a helping hand – the rules are the rules and the law is the law. Workers comp offers a formidable package of benefits to workers across America. The wage benefits are generous and the medical benefits superior to any conventional health plan. But the barrier to coverage is substantial: the injury – in this case, fatality – must arise “in the course and scope” of employment. In his drive seven years ago on that lonely and presumably quiet back road to his remote job site, de los Santos was commuting to work. He never made it to the Buck Hamilton Ranch. Now, years later, his widow must deal with the consequences of his not quite reaching the gate, where his compensable workday would have begun.

South Carolina: The Bare Essentials of Independent Contractors, Revisited

Friday, September 21st, 2012

Back in 2009 we blogged the fate of strippers at the ironically named King Arthur lounge in Chelsea MA. The club treated the women as independent contractors, but the court found that they were employees and ordered the lounge to pay back wages to the strippers. (I wonder if they were able to collect.) Today we examine a similar situation with a dramatically different outcome: the saga of LeAndra Lewis, a free-lance stripper in the Carolinas.
The 19 year old Lewis worked a network of strip clubs in North and South Carolina. She traveled from one club to another, bringing her own (skimpy) costumes and working on her own schedule. She would approach a given club, uninvited and unannounced, and ask for access to the stage. She would pay an enrollment fee (about $70) and then dance as she wished to dance, collecting tips from the customers. If a given customer really liked her work, he might “make it rain” with dollar bills. At the end of the evening, she would pay a portion of her tips to the club owner. Lewis grossed an estimated $82,000 a year, but no one knows for sure, as she did not bother filing a tax form.
In June of 2008 she found herself working in L.B. Dynasty, DBA Boom Boom Room Studio 54 – you have to love the Studio 54 tag, adding a touch of New York glamour – and some white powder? – to an otherwise marginal venue. A fight broke out while Lewis was in the club. A random bullet hit her in the stomach, causing severe internal injuries. She filed for workers comp benefits; the club did not carry insurance (surely no surprise), so the claim reverted to the South Carolina Uninsured Fund. Her claim was denied on the basis that she was an independent contractor, not an employee of the club.
The Usual Criteria in an Unusual Setting
In its ruling on Lewis’s claim, the South Carolina Appeals Court upheld the denial. They used the typical four pronged analysis for independent contractors to determine her work status:

1. The right or exercise of control: Lewis was free to come and go and free to dance as she chose; there were rules of behavior, but these did not constitute an employment relationship;
2. Furnishing of equipment: the court observed that the provision of a stage, a pole and music were practical matters, as a traveling stripper would not be able to bring these to each venue;
3. Method payment: the club did not actually pay Lewis anything, as she herself paid a fee to dance and a portion of her earnings to the club.
[NOTE: As we noted above, Lewis paid no taxes on her earnings, and it goes without saying the club paid no benefits on her behalf.]
4. The right to fire: the court determined that the right to throw Lewis out for violation of club rules did not make her an employee.

Judge Short dissented from the majority opinion, noting instances in other states where strippers were determined to be employees – he did not site the King Arthur Lounge case. But sad as Lewis’s story is, and tragic as the results for her have been, the court probably got this one right. Lewis worked as an itinerant stripper, with no real base of operations. She walked into clubs, offered her services, and was given a stage on which to perform. She moved on when she felt like it. Had she been a regular at the Boom Boom Room, she could have made a stronger case. But this 19 year old woman was very much on her own. The money was good while it lasted, but she now finds herself unable to have children and, due her scars, unable to perform her chosen work. Like all truly independent contractors, Lewis was on her own that fateful day in 2008 and she must live with the consequences for the rest of her life.

Missouri: The Roofer’s Conundrum

Tuesday, September 18th, 2012

Five years ago we blogged Missouri’s tough-on-workers reforms that made it more difficult to collect benefits in the “show me” state. Among the provisions in the new law was a 20 to 50 percent reduction in indemnity for workers who are injured while wilfully ignoring the employer’s safety program.
Which brings us to Dennis Carver, a roofer who worked for Delta Innovative Services in Kansas City. Carver was carrying a 100-pound roll of composite weather barrier up a ladder – no easy task! – when he injured his back, resulting in a permanent total disability. The problem was that Delta had a safety policy that required three point contact with a ladder at all times: it would be physically impossible to carry a 100 pound roll and maintain three point contact. Because he violated the policy, Carver’s indemnity was cut in half, from $743 per week to $371.
Carver admitted that he went to work with the intent of violating the policy. He knew that instead of having the usual crew of 11 men on the job, the crew that day would total two people: himself as foreman and one other crew member working in a separate area. He knew full well that he was on his own. He also knew that company policy required that he use a hand pulley or power equipment – or request the assistance of a coworker – to lift materials to the top of a ladder.
Delta argued that Carver caused his own injury by failing to follow its “three-point” safety rule. Slam dunk for the employer? Here is the statute:

[w]here the injury is caused by the failure of the employee to use safety devices where provided by the employer, or from the employee’s failure to obey any reasonable rule adopted by the employer for the safety of employees, the compensation and death benefit provided for herein shall be reduced at least twenty-five but not more than fifty percent; provided, that it is shown that the employee had actual knowledge of the rule so adopted by the employer; and provided, further, that the employer had, prior to the injury, made a reasonable effort to cause his or her employees to use the safety device or devices and to obey or follow the rule so adopted for the safety of the employees.§ 287.120.5
“The burden of establishing any affirmative defense is on the employer․ In asserting any claim or defense based on a factual proposition, the party asserting such claim or defense must establish that such proposition is more likely to be true than not true.” § 287.808.

The Checklist
Thus the statute presents a checklist for reducing indemnity payments:
1. that the employer adopted a reasonable rule for the safety of employees; CHECK
2. that the injury was caused by the failure of the employee to obey the safety rule; CHECK
3. that the employee had actual knowledge of the rule; CHECK and
4. that prior to the injury the employer had made a reasonable effort to cause his or her employees to obey the safety rule. NOT SO FAST!
Theory and Practice
While Delta’s owner, Danny Boyle, testified that “[n]ormally our guys are trained ․ [that] the only thing that should be carried on a ladder is the person himself,” he then testified that employees routinely violated that rule:
Q. Does that mean nobody ever carries anything?
A. Not at all. Guys tend to do things wrong all the time.[emphasis added]
Q. And that’s what–
A. I’m just being truthful.
Q. Sure. It happens. It’s faster to carry it up sometimes?
A. Yes.
Q. Because you’re trying to finish a job and get something done, you may carry something up a ladder as opposed to using the beam?
A. Yes.
Q. Or the pulley?
A. Yes.
Even though Boyle was aware of multiple instances in which employees had failed to follow the three-point rule, he was unable to provide any testimony concerning discipline imposed on noncompliant employees. In other words, the policy was not enforced. And because it was not enforced, Delta must own the consequences of employees failing to follow it.
The Court of Appeals remanded this case back the workers comp commission, for a closer examination of whether there were grounds for reducing the indemnity payments. In all likelihood, Carver will collect the full indemnity.
Roofers at Risk
Boyle’s testimony that “guys tend to do things wrong all the time” reminds me of a telling moment in a training session some years ago. I was explaining the implications of implementing a drug testing program and the owner of a small roofing company responded: “I could never do that. Half my guys would fail.” [Need I add that, following the seminar, I alerted the underwriter to flag that account for non-renewal?]
Would it surprise you to learn that roofing is one of the most expensive job classes in workers comp? The rates can run as high as $50.00 per $100 of payroll and even higher. It is difficult, demanding work. In some respects, there is no such thing as a good day for a roofer: it’s either too hot, too cold, or too windy. The exposures are relentless and the work itself, especially on the commercial side with hot tar involved, can be noxious.
Owners of roofing companies like Danny Boyle are faced with a daily conundrum: do I enforce the rules and slow down the work? Do I discipline employees for violations or let the work flow, hazards be damned? In the course of normal employment, it’s tempting to ignore the finer points of safety. But that puts workers at risk for serious injuries – and owners at risk for footing substantial bills.