By Thomas A. Robinson
Copyright 2023.  All rights reserved.

Reprinted with permission.

 

As I have noted early each January for many, many years now, prior to the death of my mentor and friend, Dr. Arthur Larson, the original author of the oft-cited Larson treatises in workers’ compensation law (and in employment discrimination law, as well), Arthur and I began a quirky—though humorous—New Year’s tradition. Beginning in the mid-1980s, on an evening in early January, he and I would gather in his home on Learned Place, near Duke University’s campus here in Durham. Arthur would pour us a cocktail (or two). Then, we’d sit down and compare our respective lists of the previous year’s “bizarre” workers’ compensation cases.

Several years after his death, I began to craft my own annual list—in memory of Arthur—sending it out to half a dozen colleagues via snail mail. Later, the list grew. Then, when I launched my blog site (www.workcompwriter.com) in December 2011, I migrated the annual list to it, beginning in January 2012. Each year, this post gets more hits than any of my serious writing. As some of you know, a few years ago, my annual list was even featured on National Public Radio’s Saturday morning show, “Wait, Wait, … Don’t Tell Me.”

Please specifically note that, as is the case with all previous “Bizarre Lists,” I am ever mindful of the fact that while a case might be factually bizarre in an academic sense, it is intensely real for the participants and their families. These highlighted cases involve real injuries, some even fatal. Life has its bizarre moments and, since the workers’ compensation world is peculiarly representative of the larger world around it, the cases we see each year sometimes have quirky, truly bizarre, fact patterns.

In recent years, I have sometimes included cases that made the news, but not the actual reporter system. For better or worse, I’ve determined to return to one of Arthur’s original rules—that to be included, the case had to be reported by LexisNexis and West.

And so again, in the spirit of my annual January ritual, I offer ten bizarre cases that I hope give you a chuckle. Who knows? You might even learn something. Although the cases are numbered, they are listed randomly. Bizarre, like beauty, is in the eye of the beholder.

CASE #1: Falling Asleep in the Classroom

Most of us have experienced a dull classroom situation in which we’ve struggled to hold open our eyes. This case from Florida adds an interesting twist. A teacher worked within a special program for students who had been expelled for their involvement in severe incidents at other schools. The students were required to stay in one classroom all day, but were allowed to leave that room for lunch and for special elective classes. On the day of his injury, before dismissing the class for lunch, the teacher took a seat in his usual chair at his usual desk to sit for five minutes or less. He described the chair as being similar to the rolling chair in which he was seated for his workers’ compensation claim hearing before the JCC. As the teacher stood, he had no feeling in his left leg. the leg gave way, causing the teacher to fall on the linoleum floor and break his left femur. The parties stipulated that the teacher did not trip or stumble immediately before the fall, and that he did not strike the desk or any other work equipment as part of the fall. No one assaulted him or pushed him.

Two physicians testified that the teacher’s condition was relatively common, and that the teacher’s leg could have “fallen asleep” virtually anywhere. The JCC found that the sitting and standing described by the teacher were “routine movements” to which the teacher would normally be exposed in his non-employment life as well, so that the risk of the teacher’s leg going numb did not flow from his employment. Accordingly, the JCC denied the claim. The Florida appellate court affirmed. Quoting Larson’s Workers’ Compensation Law, and applying the state’s major contributing cause standard, the court stressed that the teacher’s leg phenomenon could have been triggered at any time by normal, everyday movement outside work. The teacher, therefore, had failed to show that the risk that his leg would fall asleep arose from the employment.

Silberberg v. Palm Beach County Sch. Bd., 2022 Fla. App. LEXIS 1078 (1st DCA, Feb. 16, 2022).

CASE #2: “Turn Thy Other Cheek”

If you have ever spent time at a large construction site, you may recall the cacophony of competing music choices, with some workers jamming to rock, others to reggae, still others to rap. In an unusual case from Mississippi, Hollis was employed as an acoustical grid installer at a construction site. Workers for a sprinkler installation company worked nearby. While there was a conflict in the testimony, it appeared that the workers installing the sprinkler system were listening to Christian rap music on a cellphone. Some of the acoustical grid installers working nearby complained that the Christian rap “music” was too loud. There may, or may not have been an exchange of harsh words at that time. In any event, things seemed to have calmed by lunch and the various crews ceased working for a bit.

While the versions of what happened after lunch differed significantly, Hollis and one of them became involved in a fight. In addition to punches, there apparently were some racial epithets thrown as well. Hollis testified that the Christian rapper got him in a choke hold after Hollis suggested country music was a better music genre (I’ve cleaned up the discussion a bit). Hollis was thrown to the floor and ultimately underwent surgery to repair a complete tear of the medial collateral ligament, a rupture of the anterior cruciate ligament, and a rupture of the medial collateral ligament of his right knee. He sought workers’ compensation benefits.

Following a hearing, the administrative judge found the claim was not compensable, since at the time of the injury both Hollis and the other worker had deviated from the employment. The Commission affirmed, with one Commissioner dissenting. The Commission found that Hollis had engaged in conducted intended to injure himself or another, in violation of Miss. Code Ann. § 71-3-7(1)(Rev. 2021). The appellate court affirmed, finding that the altercation’s cause had been an argument over music genres—and not the work being performed. Hollis’ injuries did not arise out of and in the course of the employment. The court added that the worker’s injuries also resulted from conduct that had been intended to cause injury to himself or another, in violation of Miss. Code Ann. § 71-3-7(1)(Rev. 2021).

Hollis v. Acoustics, Inc., 2022 Miss. App. LEXIS 337 (Sept. 27, 2022).

CASE #3: Did Radar Beams Cause Technician’s Death?

Johnson worked as an electronic technician for three weeks prior to his death on September 2, 2017. Almost two years later, his widow filed the instant workers’ compensation claim, contending her husband’s death had been caused by his exposure to “radar beams” at work. The medical evidence was conflicting. On the one hand, there was testimony that Johnson was “healthy,” never went to the doctor, and was not excessively overweight. On the other hand, other testimony indicated that Johnson smoked half a pack of cigarettes daily, had a “nightcap” one or two times per week, had been tired all the time during the period before his death, and sleepwalked three to four times per week. Related testimony indicated that Johnson had a metal plate implant in his jaw due to an earlier car accident.

Johnson’s widow presented the testimony of an environmental toxicologist who testified that Johnson’s cardiac arrest “was triggered by his exposure to radar in the test chamber.” The expert admitted the levels of radiation exposure in the test chamber were within the Federal Communications Commission’s guidelines but opined the exposure still harmed Johnson. The expert further testified that Johnson’s three weeks of radar exposure while at work, “for six to eight hours a day,” exacerbated by the metal implant, likely made Johnson “electrically hypersensitive” and caused his cardiac problems. Another expert, this one a cardiologist, testified that it was more likely than not that employer’s delay in retrieving and using a defibrillator contributed to Johnson’s death.

One of the employer’s medical experts, an industrial hygienist, rebutted the medical testimony offered by the widow. This expert opined that given the low radar exposure at the testing site—approximately 0.5% of the FCC’s limit—there was “zero potential for an extreme exposure” and the dangerous effects the widow’s expert had described. Another expert offered by the employer opined that Johnson’s death was more likely the result of his hypertension, mild obesity, and smoking and alcohol history.

Johnson v. General Dynamics Corp., 2022 Va. App. LEXIS 61 (Mar. 8, 2022).

CASE #4: Polish “Bear Hug” Was No Assault

In a case that illustrates a core rule in most jurisdictions, that the Board, Commission, or other agency administering claims has broad discretion in weighing the credibility of witnesses, a Pennsylvania appellate court affirmed a decision by the state’s Workers’ Compensation Appeal Board that had denied a claim filed by a union carpenter against his purported employer following what the claimant contended was an assault by a co-worker. The carpenter claimed that while he was signing out for the day, a co-worker, Lewandowski, assaulted him. The claimant contended that Lewandowski grabbed him from behind, lifted him off the ground, and violently tossed him back and forth like a pendulum. He testified the incident lasted more than 20 seconds, causing injury to his neck, lower back, and abdomen. The WCJ denied the claim, however, noting that the claimant did not report the incident that day, did not report the “assault” to the police, and waited two months before filing his workers’ compensation claim. The Board affirmed and the claimant appealed.

The appellate court indicated the testimony of two other co-workers had helped undermine the carpenter’s claim. They testified that the incident actually a “hug” from behind, that claimant was not lifted off the ground at all, and that the impetus for the incident the fact that the claimant had given Lewandowski a tee shirt he’d purchased at a Polish festival as a friendly gesture. Lewandowski had meant no harm, was not angry, and was just trying to thank him. Based on the foregoing, the appellate court agreed there had been no such assault.

Stanis v. Workers’ Comp. Appeal Bd. (Brand Energy Servs.), 2022 Pa. Commw. Unpub. LEXIS 220 (May 23, 2022).

CASE #5: Light a Fire Under Him

In the first of two firecracker cases, Durance worked for Amtrak as a baggage handler in Seattle. During his shift, Durance entered the employee restroom which was only accessible via keycard. Just as Durance sat on the toilet seat, he heard an explosion and felt “the most pain” he’d ever experienced in his life. He lifted the toilet seat and saw a red object, which appeared to him to be a firecracker, fall to the floor. Durance was given an ultrasound, a tetanus shot, and pain medication for his injury. Ultimately, neither Amtrak detectives nor officers from the Seattle Police Department ever discovered the identity of the perpetrator. Durance filed suit against Amtrak pursuant to the Federal Employers’ Liability Act (FELA). A Washington state appellate court affirmed a decision granting summary judgment in favor of Amtrak. While the railroad owed Durance a duty to provide a safe workplace for its employees, the scope of that duty was limited by the reasonable foreseeability of the harm. The court agreed that the harm done to Durance was not reasonably foreseeable. Amtrak was, therefore, not liable under the FELA.

Durance v. Nat’l R.R. Passenger Corp., 2022 Wash. App. LEXIS 2051 (Oct. 31, 2022).

CASE #6: Wonder if This One is Still Any Good?

The second firecracker case—this one from Illinois—also turned on credibility findings. Claimant, who worked for a job staffing company, was performing manual labor at a city reservoir. He had been instructed to remove tree branches and to mow the lawn on the property. While walking on the lawn, the claimant picked up a round object that was lying on the ground with his right hand. The object was a firework, which exploded while the claimant was holding it. The explosion caused extensive injuries to the claimant’s right hand and fingers and burns to his left hand, chest, and torso.

The parties disputed how the accident occurred. Claimant contended it went off spontaneously. The employer’s experts said otherwise. Claimant had admitted that he carried a lighter on the day of his injury. The employer’s experts testified that the location of the lighter and the nature of the claimant’s injuries suggested that the claimant was holding the lighter in his left hand at the time of the explosion and that the lighter had been near the firework when it exploded. They further testified that the location where the lighter was found, the burnt condition of the lighter, the presence of carbon on the lighter, and the lack of any burns to the claimant’s pants, belt, or belt loops suggested that the lighter was close to the firework and was not clipped to the claimant’s pants at the time of the explosion, as the claimant alleged. Moreover, both experts testified that the firework at issue could not have exploded without an ignition source. This evidence cast considerable doubt on the veracity of the claimant’s account of the incident. The Commission’s decision to credit the two experts’ opinions over the evidence offered by claimant was reasonable. The Commission’s finding was not against the manifest weight of the evidence. Recovery was denied.

Junior v. Illinois Workers’ Comp. Comm’n, 2022 IL App (4th) 210341WC-U, 2022 Ill. App. Unpub. LEXIS 645.

CASE #7: What’s That Hissing Noise?

In yet another explosion case—this one without firecrackers—Van Sciver worked for Jersey Mechanical Contractors, Inc., a small family-owned business that provided mechanical contracting services at various job site locations primarily in New Jersey. Van Sciver’s tasks usually included using a Jersey Mechanical truck to make deliveries to the company’s job sites. He often delivered tanks of acetylene gas (B-Tanks), which were used to solder pipes. On the day of the injury, Van Sciver’s boss directed Van Sciver to perform several tasks, which included exchanging two empty B-Tanks for full ones at a store that serviced B-Tanks; delivering one full B-Tank to a job site in Livingston; and delivering paychecks to Jersey Mechanical employees at five job sites. When he arrived at one of the job sites, the representative there asked if he was delivering a full B-Tank, indicating further, that one was needed badly. Van Sciver advised that he had not been instructed to do so.

At the end of the workday, Van Sciver returned to Jersey Mechanical’s facility and dropped off the company’s work truck. Acting on his own initiative, Van Sciver then loaded a full B-Tank into the hatchback of his personal vehicle with the intent of delivering it to the job site that had requested it. He could not deliver it that day, because the site had closed for the day, so Van Sciver decided to deliver it the next morning. That next morning, as Van Sciver was talking to his supervisor on a cellphone from his personal vehicle, he heard a “hissing” sound. Accordingly, he stopped on the side of the road, opened all the windows, got out of his car, and went to the rear of his vehicle. As Van Sciver opened the hatch of his vehicle, the B-Tank exploded. That explosion caused serious and severe injuries to petitioner. Following the explosion, he was rushed to a trauma hospital where he underwent multiple surgeries and extensive medical treatment. Petitioner was in a coma for eight days, he suffered traumatic brain injuries, and he lost the use of one of his eyes. Van Sciver later filed a workers’ compensation claim, which was denied by Jersey Mechanical. It contended the injuries had not occurred in the course and scope of the employment. The New Jersey appellate court, contemplating the denial by the employer, essentially said, “Yeah, right,” and affirmed the award of benefits.

Van Sciver v. Jersey Mech. Contrs., 2022 N.J. Super. Unpub. LEXIS 2169 (Nov. 15, 2022).

CASE #8: “One Toke Over the Line”

In a case that proves that not cannabis users are as mellow as Sergeant Oddball, in the 1970 movie hit, Kelly’s Heroes (expertly played by Donald Sutherland)—“Don’t hit me with those negative ways so early in the morning”—a Nevada appellate court, in an unpublished decision, reversed a decision that had denied coverage for injuries sustained by an employee of a cannabis dispensary who sustained a fractured hip in an altercation with an unruly customer. An employee, Durst, observed one of his coworkers seeking the assistance of the store’s supervisor in handling the rowdy customer. The supervisor told the customer that he would have to leave the story, but the customer persisted in his confrontational manner. Durst thought he would come to the aid of his supervisor. He later testified that he thought two employees might better convince the agitated customer to leave, so he left his work station and went to assist the supervisor.

As they were walking toward the store’s exit, the customer made physical contact with the supervisor. Durst said that he feared for the supervisor’s safety, and so he put the customer in a bear hug. In the ensuing struggle, Durst and the customer fell to the floor and Durst fractured his hip.

Durst sought workers’ compensation benefits for his injuries, but the insurer denied the claim. A hearing officer reversed the insurer’s determination and the employer and carrier appealed. At a hearing before the appeals officer, the employer introduced a one-page excerpt from the company policy containing a workplace violence prevention policy that provided, in part, that if appropriate, employees were to call local law enforcement; they were not to place themselves in peril. At the hearing, Durst acknowledged that he was aware of the employer’s policy.

The appeals officer then reversed the hearing officer’s decision, thereby denying Durst’s claim for industrial insurance benefits. In relevant part, the officer found that Durst had “inserted himself” into the situation, that he had “escalated the situation from words into a physical altercation with the customer,” and that Durst had placed himself in peril when he grabbed Lester. In the findings, the appeals officer stressed that Durst had not been required, as part of his work duties, to render assistance had his belief that Dolan was about to be punched, been correct. The appeals officer ultimately concluded that Durst did not establish a compensable injury arising out of the incident.

The appellate court reversed the appeals officer’s decision, finding that the officer had focused too narrowly on an employee’s work-related duties and had not considered the totality of the circumstances in determining if the employee’s injury had arisen from a risk of the employment. Quoting extensively from Larson’s Workers’ Compensation Law, the court said the case must be remanded for a proper determination as to whether the employee’s actions in trying to restrain the customer had been undertaken in good faith in an effort to assist a co-employee in the latter’s performance of his work.

Durst v. Silver State Cultivation, 2022 Nev. App. Unpub. LEXIS 67 (Feb. 17, 2022).

CASE #9: “You’ll Grab Me Where?”

In various court filings, Donald Weed alleged, among other things, that he was illegally discriminated against and retaliated against by a supervisor after a medical condition sidelined him for a short period. In relevant part, in February 2019, Weed began experiencing pain in his groin and learned he had a hernia, unrelated to his work. Weed scheduled surgery for the end of March and submitted paperwork to Spraying Systems so he could take leave under the Family and Medical Leave Act. Weed expected to return by the end of April, but he developed a hydrocele (swelling caused by fluid collecting) in one of his testicles, leading to excruciating pain. These complications pushed Weed’s return to May 13. Weed’s doctor recommended a two-week, twenty-pound lifting limit upon his return. But he continued to experience pain, especially when using the bathroom, until at least August 2019.

In a deposition, Weed later testified that on the day that he returned to work, he looked in on his supervisor and was told to sit down in the supervisor’s office. Weed contended that the supervisor immediately started yelling, demanding to know why Weed “was out for so long” and “at least ten times,” told Weed that “he could kick [his] ass.” Weed said he started to panic and said something to the effect of “I don’t think you’ll do that.” Weed alleged that the supervisor then threatened to “grab [Weed] by [his] swollen testicle, squeeze it, and kick [his] ass.” Weed then filed a multi-count complaint in New Hampshire state court, which was removed to federal court.

The U.S. District Court Judge found that several of Weed’s claims involved triable factual issues that must be reserved for the jury. Spraying Systems’ motion for summary judgment was, therefore, denied.

Weed v. Spraying Sys., Co., 20-cv-731-PB, (D.N.H. Jul. 5, 2022).

CASE #10: “Wait a Minute, Honey, My Truck Hit a Bump”

Lovato, Bustos, and Case were employed on a construction project at F.E. Warren Air Force Base near Cheyenne, Wyoming. Case operated a truck which transported wet concrete to the job site, and Lovato worked with a crew forming and finishing the wet concrete. Bustos was a foreman on the job and acted in a supervisory role. On the date of injury, Bustos directed both Case and the finishing crew to move to a new concrete pour site. Bustos and Lovato walked in front of Case’s concrete truck. Bustos waved to Case, signaling him to move the truck forward. As he drove, Case felt a bump and thought he had hit a curb or a concrete form with the truck. In fact, he had run over Lovato, injuring his foot, leg, back, and shoulder. Case said he did not see Lovato in his truck’s path, and he admitted to using his cell phone to call the concrete or ‘batch’ plant. He then also admitted that at the time of the accident, he “possibly” might have been talking to his girlfriend, and not paying attention to his path.

Lovato received workers’ compensation benefits for his injuries but also sued Case and Bustos, claiming they were liable as his co-employees “for reckless, willful, wanton and/or reprehensible conduct.” Bustos settled his dispute with Lovato and was dismissed from the action. Case moved for summary judgment, claiming he was immune from civil liability because his actions were not willful and wanton. The district court granted Case’s motion for summary judgment, and Lovato appealed. The Wyoming Supreme Court affirmed, holding that Lovato had not presented evidence that Case acted in reckless disregard of a known and highly probable risk to the victim. The district court properly granted summary judgment because Lovato failed to establish a genuine issue of material fact as to whether, pursuant to Wyo. Stat. Ann. § 27-14-104(a), Case was aware, or should have been aware, that his conduct under the circumstances was highly likely to result in harm.

Lovato v. Case, 2022 WY 151 (Dec. 1, 2022).

Greetings from the President

By Pamela B. Johnson
Tennessee Court of Workers’ Compensation Claims
Knoxville, TN

As you know, the NAWCJ is an organization focused on education, collaboration, and networking opportunities. In early March, we held our New Judges’ Virtual Boot Camp, where 38 new adjudicators learned from experienced judges and legal experts on matters of transitioning from advocate to adjudicator, judicial writing, conducting hearings and handling discovery disputes, weighing evidence and ruling on objections, and dealing with unrepresented litigants.

In a few short months, we will hold our Annual Educational College in sunny Orlando, Florida from August 20-23, 2023. The curriculum will include topics ranging from judicial writing, assessing credibility, determining evidentiary objections, gig economy and worker claims, comparative law panels, ethics and professionalism, and making causation determinations in light of statutory presumptions. The Annual College will also include a joint NAWCJ and SAWCA reception and presentation of the 2023 Hall of Fame Class of Inductees.  The agenda and registration will be available in the next few weeks. In the meantime, mark your calendars, and I hope to see you there.

I will conclude by encouraging all of you to become and remain involved with the NAWCJ. Join a committee, attend the Lunch and Learn programs, and/or volunteer with the Moot Court program and Give Kids the World events. Every NAWCJ activity is an opportunity to learn and engage with judges from across the country.

We offer many opportunities to get involve. Please mark your calendars and save the date for these upcoming NAWCJ events and programs:

• June 7, 2023, at 12:30 p.m. ET – Virtual Lunch and Learn: Repetitive Use Injuries
• July 28, 2023, from 10:00 a.m. ET to 5:00 p.m. ET – E. Earle Zehmer National Moot Court Competition Virtual Preliminary Rounds – VOLUNTEERS NEEDED
• August 20, 2023, beginning at 11:30 a.m. ET – E. Earle Zehmer National Moot Court Competition Quarter & Semi-Final Rounds – VOLUNTEERS NEEDED
• August 20-23, 2023 – Annual College, Orlando, Florida
• December 6, 2023, at 12:30 p.m. ET – Virtual Lunch and Learn: Gig Workers

If you wish to get more involved, or if I can be of any assistance, please feel welcome to email me at pamela.johnson@tn.gov.

By Thomas Wyatt
Judge, Tennessee Bureau of Workers’ Compensation
Chattanooga, TN

 

SOMETHING TO THINK ABOUT

A poll of lawyers and judges would certainly find overwhelming support for rules of evidence.  Some would say these rules promote orderly trials and decisions based on reliable documents and testimony.  Others would point out that evidentiary rules keep judges from admitting improper evidence simply because it fits the judge’s view of the case.  Some lawyers like rules of evidence because they give them an advantage over less diligent opponents.

But not all litigants are represented by lawyers.  In the Tennessee Court of Workers’ Compensation Claims we see many self-represented litigants, most of them injured employees.  The percentage of cases on my docket that are prosecuted by self-represented employees has varied between twenty to thirty percent.

The number of self-represented litigants is sizeable enough that we have implemented multiple strategies to assist them.  Our Court has authored a handbook alerting unrepresented parties to the basics of navigating a claim through court, including the requirement that they comply with rules of evidence.  We have also produced a video of a hypothetical case proceeding through a trial.  The script includes several scenes involving common evidentiary issues encountered by self-represented litigants.  Further, the Tennessee Bureau of Workers’ Compensation has an Ombudsman Program that includes access to attorneys.  Unrepresented parties may speak to ombudsman representatives to obtain information about substantive, procedural, and evidentiary issues they encounter as their case progresses.

As judges, it is easy to overlook how daunting it is for unrepresented persons to seek resolution of a case in court, especially when they face a party represented by skilled counsel.  Look at it this way: how would you feel if, tomorrow, you were told you had to make your living as a roofer or a welder?  Even if your new employer gave you some time to learn your new craft (on your own, unpaid, time of course) and provided booklets, videos, and people to talk to about what to expect on the job, I doubt any of us would relish such a change in our lives.  We would know that, at some point, we would be required to perform a job for which we might not be physically or skillfully capable.  We would be required to work alongside trained and experienced people who expect us to work efficiently and productively.  I don’t know about you, but just thinking about working as a roofer or a welder makes me anxious and uncomfortable and causes me to doubt whether I could make a living.

Recently, I came across a podcast on which the participants discussed whether rules of evidence in non-jury cases are fundamentally unfair to self-represented litigants.  The podcast is a part of a series of discussions collectively known as “Excited Utterance” hosted by Professor Edward Cheng at Vanderbilt University Law School.  By the way, Professor Cheng provides outstanding training on evidence to our Court.

The podcast in question, dated October 12, 2022, contained discussions between Professor Cheng and Professor Andrew Budzinski of the Clark School of Law at the University of the District of Columbia.  Professor Budzinski has authored an article in the University of Richmond Law Review entitled “Overhauling Rules of Evidence in Pro Se Courts.”  He suggests that rigid application of rules of evidence poses an obstacle to assuring fundamental fairness and due process of law to those whom, almost always because of financial limitations, seek legal redress without representation of counsel.

Professor Budzinski raises numerous arguments supporting relaxation of rules of evidence in courts where many cases involve unrepresented parties.  Foundationally, he argues that rules of evidence historically arose to protect against juries deciding cases on improper evidence.  He points out that most cases with unrepresented litigants are decided by trained judges, who are better equipped than jurors in assessing the reliability of evidence.  He also argues that, while rules of evidence may seem neutral because they apply to all parties, these rules, in fact, disadvantage unrepresented litigants in courts where adversarial parties possess the financial means to retain skilled counsel for representation.

We see the issue identified by Professor Budzinski play out scores of times each year in the Tennessee Court of Workers’ Compensation Claims.  In Tennessee, the employee must prove every element of his or her case.  That includes proving that their claimed injury arose primarily out of and in the course and scope of employment.  Proof of this element must include medical expert testimony based on a reasonable degree of medical certainty that the work injury contributed more than fifty percent to the causation of the employee’s disability and need for treatment, considering all causative factors (such as pre-existing conditions and injuries.)

In our court, the Tennessee Rules of Evidence apply by statute.  Further, under Tennessee law, physicians are exempt from subpoena power.  This means that a party wishing to present medical expert testimony in court must pay the physician’s deposition fee, hire a court reporter to transcribe the deposition testimony, and then present the physician’s opinions by asking questions that are not leading or otherwise objectionable under the Tennessee Rules of Evidence.

The Workers’ Compensation Act also allows parties to present medical evidence by form.  That process requires the payment of a fee to the physician.  It also requires strict compliance with statutory mandates such as introduction into evidence under the original signature of the physician and inclusion of the physician’s curriculum vitae.

Our observation as judges has been that even lawyers stumble at times in complying with the rules of evidence.  Unfortunately, we have also noted that self-represented litigants are almost never able to navigate the financial and procedural requirements to introduce the essential medical evidence needed to give them a chance to succeed at trial.  Judges in Tennessee can do very little to lighten the load of the self-represented litigant in introducing evidence.  Our appellate courts have ruled that unrepresented parties are held to the same standard as attorneys in complying with applicable procedural and evidentiary rules.  Judges have been held in error for instructing a self-represented party about requisite details such as obtaining signatures on forms and sworn signatures on affidavits.

So, what does Professor Budzinski recommend to address this problem?  He did not advocate total relaxation of rules of evidence in non-jury cases.  He did suggest removing some of the “hoops” required by rules of evidence.  For instance, he hypothesized a custody case in family court in which a parent sought to introduce a child’s report cards to prove the child’s worsening grades.  He suggested that a copy of the report cards on the form used by the school should be admissible.  He saw little substantive need for the testimony of a custodian of records to lay the foundation of the report cards falling under the business or official records exception to the hearsay rule.  He argued that a trained judge could appropriately assess whether the submitted copy had sufficient indicia of reliability to justify the court’s consideration of the report cards as evidence.

Applying the spirit of Professor Budzinski’s recommendation to the workers’ compensation context, a court might admit into evidence medical causation letters on the physician’s letterhead, signed by the physician, and accompanied by the treatment records.  A party introducing causation evidence by report would be required to share the report with adversary parties sufficiently in advance of trial so that the party could take the deposition of the doctor to cross-examine the opinion.

Of course, no easy answers exist to the above concerns.  Represented parties are entitled to fundamental fairness, too.  In our court, relaxation of the Tennessee Rules of Evidence will require statutory and regulatory change after slow and complex procedures.  At this point, all we workers’ compensation judges can do is be aware of the difficult road facing self-represented litigants and assure they receive the available information to prepare their cases for trial.

 

By Steven A. Minicucci
Administrative/Association Judge
Rhode Island Workers’ Compensation Court

 

The impact of the fire was far-reaching including the horrific deaths, debilitating, and disfiguring injuries, the political and criminal fallout in diminutive Rhode Island which was likened in court to the state’s own version of a 9/11 tragedy. In the aftermath of the fire, Rhode Island tightened its lax fire codes, removed grandfather laws for old buildings, required sprinklers in most all places of public assembly, and reformed the State Fire Marshall’s office. Beyond criminal prosecution of the club’s owners and the band’s manager, the only other legal accountability was found through the prosecution and eventual settlement of civil suits against more than ninety defendants alleged to have varying degrees of liability in causing the calamity. Untreated packing foam misapplied to walls as soundproofing and other foam wall treatments lacking adequate warnings anchored the civil litigation. However, a negligently installed fire alarm which failed to deactivate the air handling system or silence the sound system as it blasted loud music over the alarm sound as intended, the aforementioned lack of sprinklers, faulty building inspections, overcrowding, questionable government and insurance inspections, and a band lighting fireworks off in a confined space were also all alleged to have contributed to the mayhem. Novel promoter liability claims were also advanced with some success.

From the standpoint of workers’ compensation considerations, the two owners of the Station Nightclub business, who are brothers, had failed to obtain legally required workers’ compensation insurance to cover their employees. Ironically, one of the brothers was a local news reporter who was present in his own club on that fateful night filming a news piece on nightclub safety in the wake of a nightclub stampede just a month earlier in Chicago. So, while the brothers were fined for not possessing the required workers’ compensation insurance, they filed for bankruptcy and none of the proceeds of the fines under bankruptcy law were legally permitted to be used to compensate the victim-employees. Instead, they were left without any avenue to collect workers’ compensation death benefits or scarring compensation otherwise available to employees under the workers’ compensation act in Rhode Island.

The state trial lawyer association had tried for years without success to convince lawmakers to create an uninsured fund to provide needed compensation to injured workers who were victimized by unscrupulous employers who tried to sneak by in business without carrying required workers’ compensation coverage. Such action is presumably undertaken by scofflaws hoping to reduce their overhead and render their businesses more competitive or worse, more profitable. This type of unlawful business practice and in some cases coupled with intentional misclassification of employees to avoid insurance, was felt to epitomize the adage “profits over people” by those advocating for establishment of an uninsured employer fund. Uninsured funds in other states cover injured employees with no other recourse against uninsured employers such as the Station Nightclub owners were in this case.

Unfortunately, it took this very public and disastrous fire, littered with senseless death and injury which altered the lives of so many, to silence the previously unyielding opposition. Opponents had for years been defeating the legislation needed to provide some measure of compensation to victim-employees who had no way to pay bills or bury loved ones when employers thumbed their noses at the law requiring them to carry workers’ compensation insurance. Fueled by the wave of reforms introduced in the wake of the Station Nightclub fire, coupled with settlement of the civil suits stemming from the tragedy which freed state and local government to act, in 2007 Rhode Island passed R.I.G.L. § 28-53-1 et al. the Rhode Island Uninsured Protection Fund (UPF). While the funding needed to capitalize this Fund took several additional years to accumulate, the UPF was finally passed by the legislature. The long-perceived short-coming in Rhode Island’s workers’ compensation system was now addressed.

The UPF in Rhode Island is a system that does not provide full compensation benefits for victims who qualify, but it provides something for these workers to feed families and pay bills. Benefits are limited and due to the Medicare Set-Aside concerns of potentially needing to fund a huge set-aside to account for Medicare’s interests potentially exhausting the fund.  Medical expenses are not directly compensated. There is no specific compensation for disfigurement or loss of function provided and each claim is capped with payments not to exceed $50,000 in any one case. Hopefully, as the Fund becomes further capitalized the benefits available from the UPF may be expanded. The thinking after the fire was something for future victims of uninsured employers would be better than nothing.

Any payments made by the UPF are vehemently pursued by the Fund for subrogation reimbursement from the uninsured employer. While this UPF did not help the Station Nightclub employees injured in the fire, it is clearly their legacy and their suffering which helped to provide this remedy for any such future victims in Rhode Island. While this fact provides no true solace to the victims or their loved ones, nor eases their terrible grief, it is certainly one of the small positives to have been born out of this horrendous tragedy.

As Rhode Island reflects upon the passage of twenty years since the awful Station Night Club Fire It is also worth noting that the Rhode Island Department of Labor and Training along with the forces of organized labor, the judiciary and the State Attorney General have since formed a misclassification task force which works tirelessly to address every perceivable loophole and plug any breeches in the legal damn to ensure that all employers who are required to carry workers’ compensation insurance do indeed have it or they face work stoppages, fines, and in some cases criminal prosecution. Small positives born of tragedy.

By: Hon. Steven A. Minicucci, Administrative/Associate Judge R.I. Workers’ Compensation Court. At the time of the Station Nightclub Fire the author was a practicing lawyer who represented several decedents and victims of the Fire in the civil lawsuits as a member of the Plaintiff’s Steering Committee. Also, He was the President of the R.I. Trial Lawyers Association who was involved with a legion of many who worked together to win passage of the UPF in Rhode Island. The author was named to the Bench in R.I. in 2017.

By Douglas W. Gott
Chief Administrative Law Judge
Kentucky Department of Workers’ Claims

 

I.     Overview of MSAs.

Congress established the Medicare program in 1965 to pay medical expenses for the elderly and disabled. It paid those expenses without regard to whether the treatment was also covered by an employer group health plan. Congress made Medicare a secondary payer to such plans with enactment of the Medicare as Secondary Payer Act in 1980. The purpose of the statute is to prevent shifting of liability for medical treatment from a primary payer to the Medicare system.

Applied to workers’ compensation, the MSP statute precludes Medicare from paying for medical services to the extent that they fall under, or can reasonably be expected to be fall under, an applicable workers’ compensation law. 42 USC 1395y(b)(2)(A); 42 CFR §411.20(a)(2). This prevents an injured worker from spending settlement proceeds allocated to future medical treatment on anything other than that designated purpose, and then seeking to have taxpayer-funded Medicare pay for treatment when he or she becomes eligible for it.

42 CFR §411.46 requires all parties to a workers’ compensation case protect Medicare’s interests if a settlement resolves future medical benefits. If Medicare’s interests are ignored, it may disregard the settlement and refuse to pay an injured worker’s medical bills; and the federal agency that administers Medicare, the Central Office of the Centers for Medicare and Medicaid Services (CMS), “has a direct priority right of recovery against any entity…” – which would appear to include beneficiary, insurer, and attorney – “…that has received any portion of a third-party payment directly or indirectly. CMS also has a subrogation right with respect to any such third-party payment.” 42 USC §1395Y(b)(3)(A); 42 CFR 411.24; CMS WCMSA Reference Guide v3.2, §3.0, (“Ref Guide,” infra).

The only method recognized by CMS to allocate a portion of a settlement for future injury-related medical expenses that are covered by Medicare, and to require the funds be used for that purpose (essentially placed in trust), is a Workers’ Compensation Medicare Set-Aside Arrangement (WCMSA or MSA). An MSA attempts “to estimate, as accurately as possible, the total cost that will be incurred for all medical expenses otherwise reimbursable by Medicare for work-related injury conditions during the course of the claimant’s life…” Ref Guide §3.0. A properly funded MSA must be exhausted, and the funds appropriately spent, before Medicare becomes a primary payor for treatment of the work injury.

The mandate to protect Medicare’s interests in a settlement of medical benefits has existed for many years now, but reporting requirements, enforcement warnings, and recent reimbursement actions by CMS to recover benefits have caused parties to take it more seriously. Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 added mandatory insurer reporting requirements to the MSP statute. Insurance providers and plans are now required to notify Medicare when they accept a claim filed by a Medicare beneficiary, and when “the injured party is a Medicare beneficiary and payments for medical care are claimed and/or released, or the settlement, judgment, award, or other payment has the effect of releasing medicals.” MSP Non-Group Health Care Plan User Guide, Chapter II, Version 6.2, page 3-2 (more commonly referred to as “Section 111 reporting”).

II.     MSAs are not required, but…

All settlements with funds allocated to future medical expenses must adequately consider Medicare’s interests. 42 CFR 411.46. Period. Exclamation point. (And it doesn’t matter whether the amount of settlement satisfies the CMS review criteria. See Ref Guide §8.1 and “IV” below.)

But no statute or regulation requires use of an MSA to protect Medicare’s interests. Nevertheless, CMS solely identifies MSAs as a means to protect Medicare’s interests. In guidance memos issued prior to release of the Reference Guide, CMS said submission of an MSA proposal to it for review and approval is “the recommended method to protect Medicare’s interests.” CMS Memos 7/24/06, 5/11/2011.

Separately, CMS says an MSA is “unnecessary” if all the following conditions are present, because they indicate Medicare’s interests are already protected:

• The facts of the case demonstrate that the injured individual is only being compensated for past medical expenses (i.e., for services furnished prior to the settlement);
• There is no evidence that the individual is attempting to maximize the other aspects of the settlement (e.g., the lost wages and disability portions of the settlement) to Medicare’s detriment; and
• The individual’s treating physicians state in writing that to a reasonable degree of medical certainty the individual will no longer require any Medicare-covered treatments related to the work injury. Ref Guide4.2.

Thus, MSAs are not required, but recommended to the point of seeming that they are. Nothing says they are “necessary,” or “required,” but there are specific circumstances under which they are “unnecessary.” Clear enough?

My conclusion is that MSAs should more often than not be considered as “required” even though no statute or regulation states it. A Medicare compliance attorney who spoke at a Kentucky conference in 2013 said in an outline: “You need a Medicare Set Aside every time you settle the medical portion of a workers’ compensation claim and the injured claimant is anticipated to require future medical care for the work injury.” I generally agree with that statement – an exception being for the younger claimant who has returned to work and whose injury and treatment history suggests he or she is highly unlikely to still be treating for the work injury upon becoming a Medicare beneficiary. (But even in that situation the agreement should include language demonstrating that Medicare’s interests have been considered.)

A preference for MSAs does not mean I will not approve a settlement of future medical benefits that lacks an MSA. I might find that the injured worker has not jeopardized entitlement to future Medicare benefits if the terms of the settlement are such that Medicare is not likely to find its interests were not adequately considered. Especially for an unrepresented claimant on the Frankfort motion docket, I most likely will schedule a phone conference to alert the claimant to the requirement to protect Medicare’s interests, and the consequences for not safeguarding those funds and using them for the intended purpose.

III.     CMS recommends its review of MSAs, but…

Just like there is no requirement to obtain an MSA, there is no required review or approval process for an MSA if you choose to use one. Ref Guide §1.0, §4.2, §8.0. And just like CMS says MSAs are the “recommended” method to protecting Medicare’s interest in settlements of future medical benefits, it says its review process for MSAs is also “recommended” for establishing them. Ref Guide §4.2. But while there is no limitation on the cases for which an MSA can be used, CMS limits its review of them to cases in which:

• The claimant is currently a Medicare beneficiary and the total settlement amount is greater than $25,000; or
• The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.

CMS says, “These thresholds are created based on CMS’ workload, and are not intended to indicate that claimants may settle below the threshold with impunity. Claimants must still consider Medicare’s interests in all WC cases and ensure that Medicare pays secondary to WC…” Ref Guide, §8.1. In other words, there is no “safe harbor” in these thresholds.

The “total settlement amount” referenced in the first threshold is a single lifetime number that includes indemnity, medical, attorney fees, total payout of annuities, any prior settlement funds on the same injury claim, and the amount of any Conditional Payment Liens. (It is not the settlement amount minus attorney fees and costs.) Ref Guide §10.5.3.

For the second review threshold, CMS says the following are among the circumstances that constitute a “reasonable expectation” of enrollment in Medicare within 30 months:

• The individual has applied for social security disability benefits;
• The individual has been denied social security disability benefits but anticipates appealing that decision;
• The individual is in the process of appealing and/or re-filing for social security disability benefits;
• The individual is 62 years and 6 months old (i.e., may be eligible for Medicare based upon his/her age within 30 months); or
• The individual has end-stage renal disease. Ref Guide, §8.1

The $250,000 amount in the second threshold again includes indemnity, medical, attorney fees, total payout of annuities, any prior settlement funds relative to the same injury claim, and the amount of any existing Conditional Payment Liens.

In settling future medical expenses with a claimant who is a Medicare beneficiary but whose total settlement amount is less than the CMS review threshold, the employer or carrier should still obtain an MSA estimate and allocate at least that much consideration for future medical benefits as demonstration of protecting Medicare’s interests.

IV.     More on “protecting Medicare’s interests.”

My impression is that many people confuse the above review threshold criteria with whether an MSA is “required,” but such is apples to oranges. Again, an MSA is never required. But Medicare’s interests have to be taken into account in any settlement involving future medical benefits, so it is erroneous to conclude that “you don’t need an MSA” because it falls below the review threshold criteria; falling below the thresholds only means that CMS will not review it, not that you don’t need to protect Medicare’s interests by having one. The safest way to protect Medicare’s interests is to have an MSA whose funding is based on a professional MSA estimate or allocation.

The latest version of the CMS Reference Guide leaves little doubt on this point. The Guide discusses two examples of cases that do not meet the review thresholds, but allocate money to future medical benefits. It states: “The settling parties must consider Medicare’s future interests even though the case would not be eligible for review. Failure to do so could leave the settling parties subject to future recoveries for payments related to the injury up to the total value of the settlement.” (Ref Guide, §8.1, emphasis added) Since the “settling parties” include both sides to the claim, Medicare thus believes it can recover from the carrier in addition to the claimant and his or attorney. The significance of this is that it leaves the carrier at risk for twice the exposure – payment to the claimant and then reimbursement to Medicare. As stated in 42 CFR 411.24(i)(1): “If Medicare is not reimbursed as required by paragraph (h) of this section, the primary payer must reimburse Medicare even though it has already reimbursed the beneficiary or other party.”

I used to regularly see agreements that said something like this (fortunately not so much anymore): “The plaintiff is not enrolled in Medicare and has no reasonable expectation of being enrolled in Medicare. Thus, Medicare’s interests have been considered and protected.” Again, these are incongruous concerns. Statements that an injured worker does not meet the review thresholds, is not enrolled in or eligible for Medicare, or has no reasonable expectation of becoming enrolled or eligible for Medicare has nothing to do with whether Medicare’s interests are being protected; further, saying that Medicare’s interests have been considered without explaining how that has been done seems to me an empty statement that CMS may more readily disregard.

V.     Effect of CMS review, non-review, approval.

After CMS approves an MSA in a settlement involving an injured worker not yet on Medicare, it will regularly check the National Medicare Enrollment database  to determine when the injured worker becomes enrolled or eligible. It will not monitor the money spent from an MSA until the claimant becomes Medicare-eligible (a beneficiary). Ref Guide §18.0.

If funds are exhausted in an MSA that was approved by CMS, and the funds were appropriately spent, Medicare will pay ongoing medical bills for the work injury that are otherwise covered and reimbursable by Medicare regardless of the amount of care the injured worker continues to require. 42 CFR §411.46(a), Ref Guide §8.0. (“When CMS reviews and approves a proposed WCMSA amount, CMS stands behind that amount.” Ref Guide §4.2)

If funds from a self-administered MSA are used for other than Medicare-allowable medical expenses related to the work injury, Medicare will deny all work injury related claims until the injured worker can demonstrate appropriate use equal to the full amount of the MSA. Ref Guide §17.3.

For a settlement funding future medical care that is not reviewed by CMS (regardless of whether placed in an MSA), Medicare may reject the settlement as not adequately protecting its interests. If Medicare makes that determination, it may refuse to pay for medical treatment until the entire proceeds of the settlement have been exhausted. Ref Guide §3.0, §4.1.4.

(The MSA management company Ametros conducted a study that found over 30,000 claims were denied each year from 2018-2020 because MSA funds were deemed responsible for their payment.)

VI.     Effect of ALJ decision on future medical benefits.

The Reference Guide says:  “…when a state WC judge…approves a WC settlement after a hearing on the merits, Medicare generally will accept the terms of the settlement, unless the settlement does not adequately address Medicare’s interests. Ref Guide, §4.1.4.

The reference to “a settlement after a hearing on the merits” is a bit confusing to me. Perhaps it is referring to a procedure like that used by our neighbors in Tennessee, for example, where, unlike in Kentucky, hearings are conducted over approval of settlements. Perhaps the CMS language suggests that if the ALJ finds certain treatment non-compensable in an Opinion following a “hearing on the merits,” then Medicare will honor that. But as to those partial settlements where the parties ask the ALJ to decide compensability of future medicals, a question arises as to whether the “hearing on the merits” language requires a formal hearing instead of submission on the record before CMS will recognize? My Medicare compliance sources tell me that their experience is that CMS equates a “hearing on the merits” to “zealous” representation and argument by both sides – that the judge cannot appear to be rubber stamping a predetermined decision.

(Speaking of our friends in Tennessee, its judges issued a post on their agency blog that said: “…the Court has determined that we must require CMS approval for closed-med settlements involving employees who meet the CMS review thresholds.” And: “…the Court may require professional administration in some cases where the medical treatment is particularly extensive or complex, or there are questions about the employee’s ability to attest to appropriate exhaustion of the funds to CMS.” (10/20/22)

VII.    Requirements on administration of MSAs – both self-administered and professionally administered.

CMS guidelines on administration of an MSA require:

1)         Funds deposited into an interest-bearing account.

“You must deposit the total WCMSA amount (future medical treatment and future prescription drug treatment) in an interest-bearing account, separate from any other account such as a personal savings or checking account.” Ref Guide §17.2. (The interest is taxable and may be paid from MSA funds.)

2)         Funds to be used only for Medicare covered expenses.

“WCMSA funds may only be used to pay for medical services and prescription drug expenses related to your work injury.” Ref Guide §17.3.

3)         Bills paid according to the appropriate fee schedule (since any MSA       will be based on fee schedule versus full retail rate).

“CMS uses either the WC fee schedule or the full actual charges for its review of a proposed WCMSA based on whichever methodology is used by the individual or entity submitting the proposal….The administrator of the WCMSA (both professional administrators and self-administrators) should make payments from the WCMSA on the same basis.” Ref Guide §10.5.2.

4)         Annual report submitted to CMS.

“Every year, beginning no later than 30 days after the 1-year anniversary of settlement, the administrator must sign and send a statement that payments from the WCMSA account were made for Medicare-covered medical expenses and Medicare-covered drug expenses related to the work-related injury, illness, or disease.” Ref Guide §17.5.

These requirements apply whether the MSA is self-administered or professionally administered; and whether the individual is a Medicare beneficiary or not. Ref Guide §17.4.

An MSA must be “registered” with CMS only if the claimant is already a Medicare beneficiary (or becomes one after the onset of the MSA).

VIII.  Professional administration versus self-administration.

Professional administration is preferred over self-administration because:

1)        It is in the best interest of the injured worker. The other items that follow all relate back to this. Professional administration prevents the injured worker from, unintentionally or not, squandering the funds from a self-administered MSA payout and incurring problems with Medicare.

2)         If an injured worker acknowledges the requirements to place MSA funds in a separate account; use them to pay bills only for Medicare-covered expenses; and submit annual reports and the ultimate depletion report to CMS, then why wouldn’t he or she want someone else to do that at no cost to them? If the injured worker does not intend to abide by the MSA requirements, then the settlement shouldn’t be approved in the first place.

3)         The unsophisticated injured worker attempting to self-administer an MSA will likely face higher costs than if an MSA is professionally administered. When an employer or carrier calculates costs needed to fund an MSA, it uses current costs based on Kentucky’s workers’ compensation fee schedule. A claimant on his or her own is subject to billing by providers at out-of-network, higher retail rates (a “cash pay” patient, with inflation increasing those costs each year), and will exhaust the funds quicker. Suppose an injured worker exhausts a $20,000 MSA sooner than he or she otherwise would have because he or she overpaid the fee schedule by $2,500. In that instance, CMS may determine the $20,000 paid to have been insufficient to protect Medicare’s interests, in turn prompting it not to assume primary payer status until the injured worker pays the next $2,500 in medical bills.

Some companies that offer professional administration market themselves as having associations with certain providers or networks that accomplish savings below the fee schedule rate at which the MSA was calculated. That allows the MSA funds to stretch further for the injured worker, which in turn increases the protection of Medicare’s interests.

4)         Professional administration is inexpensive. From my experience, a carrier is readily willing to pay a nominal fee of around $1,000 to set up professional administration if it settles a claim and closes a file.

5)         The professional administrator somewhat assumes the role of the adjuster or nurse case manager with whom, ideally, the injured worker has had a positive, supportive relationship. The worker is not turned loose with an unfettered sum of money and no continued support system.

(A benefit of an MSA to the injured worker whose relationship with the carrier has been less than ideal is that he or she gets out of ongoing challenges to treatment by way of medical disputes. MSA funds can be used for any treatment as long as related to the injury and covered by Medicare. Ref Guide 3.0. So, for example, the worker does not have to battle the carrier over whether further recommended injections, therapy, or diagnostic studies are reasonable and necessary.)

6)        CMS says self-administration is “subject to the same rules and reporting requirements as any other WCMSA.” Thus, CMS “highly recommends” professional administration, especially in cases where the injured worker continues to take opioids. Ref Guide §17.1. CMS first included this “highly recommended” language in its October 10, 2019, revision to its Reference Guide (version 3.0), and there must be a reason it did that.

7)         When an MSA is submitted to CMS for review, the injured worker is required to sign a Consent to Release form. As of April 1, 2020, the CTR form must “include language indicating that the beneficiary reviewed the submission package and understands the WCMSA intent, submission process, and associated administration. This section of the CTR must include at least the beneficiary’s initials to indicate their validation.” (Ref Guide §10.2). This new requirement would seem to further enable CMS’s ability to seek recourse against the injured worker who does not self-administer his or her MSA by the rules.

8)         Last but not least for the lawyers…professional administration protects attorneys on both sides of a settlement. If the self-administering claimant misappropriates funds or happens to get Medicare to pay for work-related treatment, Medicare’s targets in seeking reimbursement can include the lawyers involved in the settlement.

IX.  Funding of MSAs – lump sum and structured:
        What happens when funds for a given year are depleted during the term of a structured MSA?

When an MSA is designated as a lump-sum “commutation” settlement, Medicare will not make any payments for expenses related to the work injury until all funds within the MSA have been exhausted, including interest earned on the funds in the account. Ref Guide §3.0, §4.1.1.

An MSA can also be structured – where payments are made to the account on a defined schedule to cover expenses projected for future years. The initial deposit (seed money) must equal the first surgical procedure and two years of annual payments. Unused funds in a given year carry forward and are added to the next annual deposit. If funds in a given year are exhausted, Medicare will pay primary for further injury-related medical expenses during that period if the claimant is already a Medicare beneficiary. (Unused funds for a given year include any roll-over amount. Ref Guide §19.3.1.) If the claimant is not a Medicare beneficiary, he or she must pay out-of-pocket for treatment until the MSA is funded again the next year. Ref Guide §5.2; CMS Self-Administration Toolkit for WCMSAs, §11.

X.     Evidence-Based MSAs.

In reviewing an MSA to determine whether Medicare’s interests have been adequately considered, CMS says, “Reviewers use evidence-based rationale for their determinations, taking into account both published guidelines and current peer-reviewed medical literature.” Ref Guide, §9.4.3. However, advocates for employers and insurance carriers argue that CMS does not really apply evidence-based medicine, or does so inaccurately, resulting in higher cost projections than should reasonably be expected. For example, in projecting future cost of prescriptions, CMS bases its allocation on the injured worker’s usage rate over a life expectancy regardless of whether the worker will, or should, continue taking the drug for that long. Perhaps traditional MSAs submitted for CMS review are sometimes overpriced, but that is the result of CMS being motivated to guard against having Medicare prematurely assume the role of primary payer.

Enter a “Non-Submit” product called an Evidence-Based MSA. The projection for future medical costs in an EBMSA is based on information that may include: a retained or consulting physician review; opinions of a retained medical evaluator; communication with a treating physician over ongoing care; or assurances from a physician or patient that certain treatment or prescriptions will cease, be limited, or not be billed to Medicare. An EBMSA cannot be submitted to CMS for approval because CMS will not consider these sources in a review, and, thus, will not approve an MSA based on them. (See “X.4.”, infra)

It cannot be disputed that an EBMSA is an effort to limit, or downgrade, the allocation of dollars into an MSA. Viewed at its worst, an EBMSA seeks to inappropriately reduce the settlement amount by arbitrarily removing otherwise compensable and anticipated costs. In most any instance, the EBMSA will be funded with fewer dollars than would be expected in an allocation for an MSA approved by CMS. From the carrier/defense perspective, that’s a good thing in that a more realistic (i.e., lower cost) projection frees up more money to put in an injured worker’s pocket in settling a claim.

But the EBMSA projection seems to allow a carrier to summarily resolve a lifetime’s worth of medical disputes in its favor. Usually a carrier is willing to pay a premium to rid itself of an ongoing claim for medical expenses. So what benefit is it to the injured worker to concede these potential medical disputes on the front end; have an MSA funded with less money than one reviewed by CMS; and risk a determination by CMS that the EBMSA is inadequate? And if the worker is represented, what risk is his or her lawyer taking by relying on a carrier’s expert in determining the MSA amount, which, again, is not being approved by CMS?

The carrier’s response to that will be that even though the MSA is limited to treatment foreseen by evidence-based medicine, the injured worker is free to spend the funds on whatever work related Medicare-covered treatment he or she wishes. Further, the MSA vendor will contract with the injured worker to indemnify him or her and hold them harmless from any claims made by Medicare if the funds in the EBMSA are depleted (underfunded) or if CMS should find that the MSA had not adequately protected its interests. (The MSA vendor will usually extend separate indemnification agreements for the injured workers’ attorney and a defense attorney, as applicable.)

But what if the vendor’s carrier presents a defense or “slow plays” the injured workers’ claim for indemnification while he or she is dealing with Medicare? Or what if the vendor or carrier is no longer in business, or bankrupt, by the time such a claim is made? An indemnification agreement I reviewed said a condition precedent to the obligation to indemnify was “proper administration of the EBMSA,” so a failure to abide by the rules of self-administration voids that obligation and causes a potentially harsh result (another reason professional administration is preferred). I continue to have concerns about EBMSAs, especially when the settlement involves an unrepresented claimant. The skeptic in me says that the EBMSA is not a legally based solution – grounded in a statute or regulation – to the requirement to protect Medicare’s interests. (I have had a defense firm tell me it refuses to be involved in settlements using an EBMSA.)

Parties wishing to use an EBMSA might see its chances of approval increase if professional administration is used. If the EBMSA is a realistic estimate of future medical costs, and a professional administrator is able to stretch the settlement fund dollars (as discussed in VIII, 3.), then the product becomes more palatable.

This paper has been a work in progress for nearly four years. The fundamentals of the MSA process remain steady, but there has been a substantive change on “non-submits.” (It took me a while to recognize that “non-submit” was synonymous with EBMSAs.) Version 3.5 of the Reference Guide (1/10/22) added a new section, 4.3, addressing the use of “non-CMS-approved products” including EBMSAs. This section startled the MSA world with its pronouncement that “non-submits” would be considered a presumptive effort of cost shifting in contravention 42 CFR 411.46. CMS said it “will” deny payment for medical services in a non-submit up to the amount of the settlement. (Referring back to the discussion at “II” and “III,” if MSAs and CMS review is voluntary, how can CMS say medical payments “will” be denied if an MSA lacks CMS approval? And, remember, you can’t get CMS approval for an MSA that doesn’t meet the review thresholds.) But after a firestorm, version 3.6 of the Reference Guide (3/21/22) softened that language to “may” instead of “will”; and it provided that the parties could still show that “both the initial funding of the MSA was sufficient and utilization of MSA funds was appropriate.” (You can bet that CMS will review an exhausted EBMSA for original sufficiency of funding.)

XI.     Effect of new 780-week limitation on medical expenses on MSA allocation.

Among the changes to KRS Chapter 342 in 2018 was a 780-week limitation on medical benefits for injuries occurring on or after July 14, 2018; previously, an award of medical benefits was for a lifetime. KRS 342.020(3). This new limitation begs the general question of whether Medicare will recognize a state law that abbreviates liability for a primary payer and transfers it to Medicare? And, specific to Kentucky, whether CMS will permit a reduction of an MSA to 780 weeks (or the balance thereof) since KRS 342.020(3) allows an injured worker to request an extension of medical benefits payments beyond 780 weeks?

The Reference Guide states at §9.4.5: “CMS will recognize WC state-specific statutes addressing the limits of future treatment regarding the length or nature of future treatment, provided that the submitter has demonstrated that Medicare’s interests have been adequately protected…Submitters requesting alteration to pricing based upon state-legislated time limits must be able to show by finding from a court of competent jurisdiction, or appropriate state entity as assigned by law, that the specific WCMSA does not meet the state’s list of exemptions to the legislative mandate.”

Thus, the answer to the first general question above appears to be “yes,” Medicare may recognize a state statute that limits the liability of a primary payer; but the answer to the second question specific to Kentucky appears to be “no.” You probably cannot reduce an MSA to the balance of the 780-week award of medical benefits because KRS 342.020(3) provides for the request for an extension of medical benefits. If parties cannot obtain a decision that no exception in the law allows for additional benefits, then CMS will likely take the position that an exception (here, the ability to request an extension) allows for additional benefits and thus require an MSA to be fully funded for the life expectance.

XII.    Non-Medicare covered medical expenses.

Often lost in the negotiation for a buy-out of future medical benefits are non-Medicare covered medical expenses. The carrier’s request for a vendor to quote an allocation for future medical treatment is usually limited to Medicare-covered treatment, while compensable non-Medicare covered treatment has often been reimbursed by the carrier leading up to a settlement. Examples of non-Medicare covered expenses are: certain medications, typically off-label prescriptions; over-the-counter supplies; attendant/non-skilled home care; certain chiropractic treatment; hearing aids; acupuncture; cosmetic surgery; some dental and eye care; mileage; transportation; and home modification.

A settlement involving a waiver of future medical benefits should alert the reviewing ALJ as to whether the claimant’s past medical benefits have included those that are not covered by Medicare, and, if so, how provision is being made for those expenses beyond the money used to fund the MSA.

XIII.  Miscellaneous.

1. In a settlement in which the claimant is represented and has counsel able to negotiate the term, I will respect a provision in an MSA that allows the carrier to capture unused funds at the claimant’s death; however, I typically frown on a reversionary clause if the claimant is unrepresented. If a carrier’s desire to close a file is strong enough to buy-out its obligation for continuing medical benefits, then it should be willing to pay appropriate consideration for that without an expectation of receiving unused funds upon the injured worker’s death. Payments made in these settlements should inure entirely to the claimant, and to his or family if there are unused funds at death.

2. An MSA does not need to be indexed for inflation and may not be discounted to present-day value. CMS Memo 10-15-04, p.

3. If a settlement does not specify past versus future medical expenses, the amount allocated to medical benefits will be considered entirely for future medical expenses once Medicare has recovered any conditional payments it made. This means that Medicare will not pay for work related medical expenses that are otherwise reimbursable under Medicare until the entire settlement is exhausted. Ref Guide §10.5.1.

4. Parties cannot reduce an MSA by waiving certain treatment or agreeing that certain treatment will not be billed in the future. CMS will not recognize settlements that promise not to bill Medicare for certain services in lieu of not including them in an MSA. Ref Guide §15.2.2. (See also EBMSA discussion above.)

5. The protection of Medicare’s interests in settlements funding future medical care has included prescription drug treatment since January 1, 2006. CMS Memo 7/24/06.

6. “If it is necessary for CMS to take legal action to recover from the primary payer, CMS may recover twice the (primary payment amount)…” 42 CFR 411.24.

7. The Reference Guide is updated frequently. CMS is now on version 3.7. I do not go back through this paper and change the references unless there has been a substantive change. When I started this project in 2019, CMS was on version 1.9.

8. This paper is long enough, but I thought I would acknowledge the lack of discussion of the “Zero Dollar MSA.” These are a frequent topic of discussion with the MSA world. Essentially, if a carrier has paid nothing in a denied claim or a treating doctor states the injury has resolved and no future treatment is expected, then CMS may approve an unfunded MSA – the purpose of which is to allow a carrier to settle a claim without dealing with Medicare concerns. As much as some may deal with them, they just don’t come up very often in Kentucky.

9. When I got into this project I found myself contacting two Medicare compliance attorneys I had heard speak so well on these issues at national conferences. My thanks to Rafael Gonzalez of Tampa, Florida, and Christine Hummel of Ferdinand, Indiana, for being generous with their time to me. Over the last few years I have invited them to speak at various Kentucky conferences and both were very well received.

XIV.  Preferred attachments to a Form 110 Agreement as to Compensation.

An agreement involving an MSA should include the following language or attachments:

1. For a self-administered MSA where an allocation has been done, the report documenting the projected amount of future medical expenses. If an allocation has not been done, the best practice is not just to say “X” dollars are being provided for future medical care, but to explain the basis for that amount in the agreement. If done even in the most general terms, that will better support a later challenge to whether Medicare’s interests were adequately considered at the time of settlement.

2. For the injured worker’s reference in self-administering an MSA:

a) the instructional form titled “Administering Your Lump Sum Workers’ Compensation Medicare Set-Aside Arrangement” or “Administering your Structured Workers’ Compensation Medicare Set-Aside Arrangement.” (attached)

b) the attestation form titled “Workers’ Compensation Medicare Set-Aside Arrangement – Account Expenditure for Lump Sum Account.” (attached)

3. Language on who is responsible for reimbursing Medicare for any conditional payments made by Medicare after settlement.

4. Language that an MSA cannot be charged more than the fee schedule. This is more relevant to an agreement being reviewed by CMS, but the added language can only assist an unrepresented claimant who is self-administering an MSA in dealing with billing matters with his or her provider.

5. An agreement with a professionally administered MSA should include an allocation report and the agreement with the administrator. (That agreement does not need to be executed before the Form 110 is approved.)

By Suzette Carlisle Flowers, Ph.D.
Administrative Law Judge
Missouri Division of Workers’ Compensation

 

NAWCJ presidents devote their time, vision, energy, and creativity to advancement of the organization, as members, committee chairs, secretary, treasurer, president-elect, and as president.  After years of service, the fast and furious pace abruptly ends.  But what happens to past presidents when they call their last meeting, and put out the last fire?   Two past presidents answer this question through a one-on-one interview about life after the presidency.  Deneise Lott and Bruce Moore take us on that journey.

 Deneise Turner Lott

1. Full name and title:

Deneise Turner Lott. I am a retired Administrative Law Judge where I served on the Mississippi Workers’ Compensation Commission (“MS”) as a staff attorney for four years and as an administrative law judge for 34 years.

2. Current work status:

 I retired from the MS Workers’ Compensation Commission on June 30, 2022.  I currently serve as Vice-President of the newly formed Kids’ Chance of MS, the state chapter of Kids’ Chance of America.  I am also on the board of the MS Bar’s Workers’ Compensation Section’s Mediation Project, which recruits and trains workers’ compensation attorneys to mediate cases.  The attorney mediators donate $50.00 of every mediation hour’s fee to the Kids’ Chance Scholarship Fund.

3. Brief history of career: positions/tenure:

 After a stint in private practice, I joined the Workers’ Compensation Commission as a staff attorney.  I worked with the Administrative Judges for a year and with the Commissioners for three years.  The last two years that I worked with the Commissioners, I also taught Workers’ Compensation Law as an adjunct faculty member of The Mississippi College School of Law.

A position became open as an Administrative Judge with the Commission.  In Mississippi, the Commissioners hire the Administrative Judges with the consent of the Governor.  How deeply a Governor is involved in the hiring process depends on all the vagaries of state politics.  I suspected I was too young and unproven to get the job the first time I applied for it, and I was right!  But I did make my intentions known as a contender.  The second time I applied for an opening as an Administrative Judge, I was “out politiced,” which was not hard to do in my case.  The third time was the charm, although my luck was surely enhanced by the endorsement of a remote, but kind and sympathetic social contact: my childhood best friend’s former boyfriend was a colleague of and former speech writer for the Governor.

I had the honor and privilege to serve as an Administrative Judge for thirty-four years before retiring last summer.   During the last twenty plus years of my tenure, I was the senior judge (meaning I had more years on the bench, not necessarily more birthdays, than my fellow brethren).  Since retiring from the bench in 2022, I have enjoyed spending time on the east coast with Susannah Rose, my two-and-a-half-year-old granddaughter.  I am excited about the arrival of Susannah’s baby brother or sister in the summer of 2023.

4. How did you become acquainted with NAWCJ?

I was introduced to NAWCJ through my association with SAWCA, the Southern Association of Workers’ Compensation Administrators.  It, too, is an organization of workers compensation administrators and adjudicators, and the two organizations’ membership rolls overlap.  From NAWCJ’s inception in 2008-2009, I was impressed with its leadership and its mission to educate the workers’ compensation judiciary and improve the justice system.  Chief Judge David Langham, in particular, encouraged me to attend the annual Judiciary College in Orlando.  The quality of the programming, the easy kinship of the group which was limited to adjudicators, and the chance to learn from and commiserate with judges in my field from all over the country “hooked” me.

5. In additional to past president, what leadership roles have you held in the organization and when?

I was a board member for several years before being asked to join the Executive Committee and serve as Secretary and President-Elect.  I also helped plan the New Judges’ College and served on the faculty of several Judiciary Colleges.

6. List an achievement, event or person you believe made a significant contribution to the organization’s history during your tenure with the organization?

NAWCJ is a good example of synergy:  the combined efforts of the organization are greater than the sum of its parts.  The Judiciary College is the premier event each year, rivaled only by the New Judges’ College because of its equally impressive programming.  In between these events, Lex and Verum and Lunch and Learn virtual programs enlighten and entertain.  Likewise, I cannot single out one person’s achievement.  NAWCJ has many talented, selfless jurists whose vision, persistence, and expertise contribute to its success, including Chief Judge Langham, current and past presidents, newsletter editors, and committee chairs.

7. Do you believe the organization remains relevant today? More than ever.

8. If so, in what way?

A wise judge once told me, “Never get used to it.”  No matter how many hearings we hold or how many orders we write, each case is unique and there is more to learn – about the law, our craft, and our role in promoting confidence in the justice system. Through NAWCJ, we can hone our skills, broaden our perspective, and continually reset our expectations so we never get used to it.

9. How can members get more involved with the organization?

Attend the Judiciary College and get to know your colleagues inside and outside the classroom.  Contact board members or committee chairs and offer to work on a committee.  New talent is always welcome!  Write an article for the newsletter.  Sign up to judge the National Moot Court competition.  Volunteer to speak on a topic of special interest or expertise.  Suggest a topic you would like to read about in the Lex and Verum or hear discussed during a Lunch and Learn program.  The Conference Committee always needs help with logistics during the week of the Judiciary College, even if it is to ferry a fellow judge or two to Smokey Bones for dinner on Tuesday night.

10. How can the board do more to reach members and expand membership?

NAWCJ offers members an excellent return on investment, professionally and personally.  The benefits of membership sell themselves.  We can broadcast these benefits by continuing to strengthen ties with other professional groups, attending their conferences, and developing a “speakers’ bureau.” Innovation is also important to growth.   Actively recruiting Millennials and young Gen-Xers will help attract a whole new demographic who are eager to share their ideas and make a mark.  They are often masters of social media because they grew up with the internet in a competitive marketing environment.

11. Is there anything you would like to add about the organization yourself?

Life is about relationships, and the relationships forged through my involvement with NAWCJ still encourage and inspire me.  NAWCJ also provides a forum to think creatively and to contribute in ways my more tightly scripted life as a judge did not allow. In that regard, value added would be an understatement.

Judges John Lazzara (Florida), Karl Aumann (Maryland), and Deneise Lott (Mississippi)

 

 

 

 

 

 

 

 

 

Susannah Rose, age 21/2, Judge Lott’s granddaughter

 

 

 

 

 

 

 

 

Bruce E. Moore

1. Please state your full name and title.

Honorable Bruce E. Moore, Administrative Law Judge, Kansas Department of Labor, Division of Workers’ Compensation

2. What is your current work status?

I still work full time, and I look forward to retirement in 2026.  Retirement may include relocation to Colorado and enjoying cruise trips.

3. Please state a brief history of your career, i.e., positions and dates.

I graduated from law school in 1980 and entered private practice in Kansas City.  For about eleven years, I worked both as a claimant’s attorney and as a respondent’s attorney.  I relocated to Salina in 1991 after my wife finished her residency and began her pathology practice.

After moving to Salina, I planned to be a stay-at-home Dad to our three children.  However, after a short time, I longed to return to work.  For four years I worked as a prosecutor in the Saline County Attorney’s Office. In 1995, I was hired as an Administrative Law Judge with the Kansas Department of Human Resources (now the Kansas Department of Labor), Division of Workers’ Compensation.  I currently serve on this bench.  We have an office cat named Simone who is blind in one eye, but she is a real asset to our two-person office.  Simone goes home with me at night. My wife agreed the cat could stay provided she could name her, which she did.   I have two grandchildren.

4. How did you become acquainted with NAWCJ?

In 2010, during NAWCJ’s third year of existence, a flyer was sent to my agency, advertising the judiciary college. My director forwarded the flyer to me.  I was intrigued and applied for a scholarship. The scholarship was granted, and I’ve been coming back ever since. The second year I paid my own way.  The Director attended and became sold until the administration changed and the State lost interest.  However, the Director continued to attend.  Now Kansas judges can attend if they want to but it is not encouraged.  I asked Mike Alvey how I could get involved and he introduced me to the committee structure.

5. In addition to being a past president, what other leadership roles have you held in the organization?

I was elected Secretary in 2016. At that time, officers served two years, rather than 1, so I served two years as Secretary.  In 2018, I was elected President-elect, and assumed the Presidency for the 2019-2020 term. I have also worked on the Conference and Curriculum committees and chaired the Curriculum Committee for two years before assuming the presidency.

6. List an achievement, event, or person you believe has made a significant contribution to the organization during your years of service.

I don’t recall a single event of significance in NAWCJ’s genesis, but there is a person who’s always working behind the scenes to advance NAWCJ and its programs:  David Langham.  Judge Langham was around when NAWCJ was first formed, he knows EVERYBODY, and has been on the board both officially and unofficially (whether on the board or not, he would gladly do anything for NAWCJ). He has declined leadership roles and avoids formal recognition for his efforts, but the strength of NAWCJ is, in no small part, a product of his efforts and commitment.

7. Do you believe the organization remains relevant today?  Absolutely!!

8. If so, in what way?

NAWCJ provides the workers’ compensation judiciary an organization geared specifically to its needs, with tailor-made educational programming, the opportunity to learn other states’ approaches to common issues affecting the workers’ compensation arena, and the ability to network with judges from across the country.

9. How can members get more involved with the organization?

That’s easy!! If someone wants to get involved, they should contact any current or past officer or board member, and say “how can I help?” There are many opportunities to serve NAWCJ, depending on one’s individual interests.  Opportunities include planning for and presenting at the annual judiciary college and related activities; planning and presenting our “Boot Camps” for new and newer judges; and writing for the Lex and Verum newsletter; among other opportunities. A great way to start would be to write a letter to the Lex and Verum, introducing yourself and your organization, and expressing an interest in getting involved.  I guarantee an enthusiastic response!

10. How can the board do more to reach members and expand membership?

That’s more difficult. We communicate with the membership (and prospective members) largely by email, but we are all inundated with emails on a daily basis. It’s hard to get and hold someone’s attention with an email, particularly one that was not solicited, assuming it even got by the agency’s spam controls. Even emailed flyers can get lost in the myriad of junk mail we tend to receive.  Personal contact would be the best, maybe having a NAWCJ representative at a table at IAIABC and SAWCA events.  We also need to identify and make contact with other regional groups like SAWCA, and establish a presence at their gatherings.

11. Is there anything you would like to add about the organization, yourself, etc.?

 NAWCJ is a great organization.  I had already been a judge for almost 15 years when I found NAWCJ, and I was getting a little stale. NAWCJ rejuvenated me. I am one of 10 workers’ compensation judges in Kansas, and I staff a satellite office. The office has just my administrative assistant and me, and I was feeling isolated. With NAWCJ, I realized that, even though I was slogging through an endless docket of workers compensation claims, I was not and am not alone. Judges decide workers compensation claims in states all around me.  They may have different titles, use different terminology, and employ procedures that I may consider foreign, but we are all doing the same thing and confronting the same issues. We can learn from one another. The NAWCJ judiciary college is important in another way: Held in Florida in conjunction with the WCI conference, attendees are presented with irrefutable proof that workers’ compensation is a respected and dynamic area of the law. In some states, workers’ compensation ranks right up there in prestige with traffic court. Administrative Law Judges may be viewed by state courts and appellate judges as the “bottom of the judicial bucket” – not “real” judges, and not worthy of much respect. Attend the NAWCJ Judiciary College, meet your peers from across the country, and return home with your head held high. You/we are doing important work.

Bruce E. Moore – Kansas

By Timothy W. Conner
Judge, Workers’ Compensation Appeals Board
Knoxville, TN

 

According to preliminary results released by the U.S. Census Bureau in December 2020, there are approximately 332.6 million people living in America.[1]  Most Americans live in what are defined as “urban,” or densely-populated, areas while a minority live in what are defined as “rural” areas.  One way of viewing the difference between urban and rural populations is that eighty percent of Americans live on only three percent of the country’s land mass (urban areas), whereas only twenty percent of the population occupies the remaining ninety-seven percent of the land mass (rural areas).[2]  Thus, of the 332.6 million of us, approximately 66.5 million people live in rural America.  Occasionally, questions arise regarding whether some of the laws and regulations designed to apply in urban areas are equally appropriate for rural communities.

In recent years, with the explosive growth of daily online interactions among millions of Americans, a new way of connecting workers and customers has developed: the “gig economy.”[3]  In the last five years, we have seen a vast proliferation of online services that offer to connect consumers who have a need with workers willing to meet that need.  According to one study, more than twenty-five percent of all workers engage in “non-standard work,” and more than ten percent of workers rely on gig work as their primary source of income.[4]  Applications (“apps”) such as Uber, Lyft, Grubhub, Instacart, Handy.com, TaskRabbit, and Care.com are just a few of the online platforms gig workers use to find work.  Connecting consumers with workers and arranging for easy payment are facilitated by such apps, but, and here is the rub, the people performing those services, by and large, are not considered to be employees of the company running the app.  Instead, they are treated as independent contractors who have registered with the app to indicate their willingness to perform the particular services requested by the app’s users.  As explained by one commentator:

[T]he argument centers on a debate as to whether a ‘marketplace platform’ is no more than a passive information clearinghouse offering ‘disinterested’ space for contractors and third-parties to enter into a contractual relationship without the platform having any input into what happens thereafter.[5]

As is common with any new societal structure, legal disputes have arisen that highlight the significant impact these internet-based services have on traditional socio-economic foundations.  Recently, U.S. Secretary of Labor Marty Walsh commented that “in a lot of cases gig workers should be classified as employees.”[6]  One commentator suggested that Secretary Walsh’s comments “were interpreted as [a] signal that the Labor Department could move more aggressively to crack down on the use of contract labor.”[7]

Two primary areas of concern have been identified: First, how much control can an app exert over its workers and still maintain that its workers are independent contractors and not employees?  Second, who bears the legal risks in a situation where the actions of a gig worker cause damage or injury to another’s person or property?  In other words, can the app be held legally liable for the negligence of one of its workers?  The purpose of this article is to highlight legal disputes that have arisen as a result of online applications classifying workers as independent contractors rather than employees and to consider whether such disputes should be viewed through different lenses when considering rural versus urban populations.

A Brief Historical Context[8]

As America emerged from the Industrial Revolution in the late nineteenth century, the agrarian culture of previous centuries gave way to mechanized production lines and technological innovations such as the steam engine, the cotton gin, and the introduction of interchangeable parts.  Millions of workers who previously would have labored on farms and in fields were now working in factories around heavy, fast-moving equipment.  An inevitable result of this development was a dramatic increase in workplace injuries.  In response to the social and economic impact of the industrial revolution, labor unions began to form in the nineteenth century to represent the collective interests of American workers.[9]

At the beginning of the twentieth century, as America entered the Progressive Era led by President Theodore Roosevelt, state and federal legislators began exploring ways to offer more protections to American workers.  Laws such as the Federal Employers’ Liability Act and state workers’ compensation statutes were enacted in the early decades of the twentieth century to address workplace injuries.[10]  In addition, regulatory agencies such as the U.S. Department of Labor were formed, and commentators such as attorney Crystal Eastman and novelist Upton Sinclair, as well as various labor unions, decried what they viewed as harsh working conditions in some American industries.

Over the course of the twentieth century, various other laws concerned with working conditions were passed such as the Fair Labor Standards Act,[11] the Federal Employees’ Compensation Act,[12] the Occupational Safety and Health Act,[13] and the Family and Medical Leave Act.[14]  As a result, given the myriad of employment laws in place today, any individual entering the American workforce as an “employee” is subject to and protected by laws and regulations that define certain aspects of his or her relationship with the employer.

As employment laws were implemented, companies and workers across the country explored the limits of the employer-employee definition by entering into arrangements intended to be outside that legal concept.  Thus, workers identified as “independent contractors,” not employees, were offered “freelance” work not necessarily subject to the laws and regulations governing the employer-employee relationship.  For example, if you started a lawncare service, you could enter into agreements with various individuals to care for their lawns without becoming those clients’ employee.  As a contract laborer, you would charge a certain amount for your services, and you would not expect to receive employee benefits such as paid vacation, FMLA leave, group health insurance, or workers’ compensation coverage.  Conversely, the client who entered into the agreement with you would understand they could not dictate your hours, prevent you from offering your services to others, or control the manner in which you performed the contract work as long as the end result met the specifications of the agreement.  Hence, it is important to understand that “freelance” work has existed for decades, and the online “gig economy” is but a technological innovation facilitating this kind of work arrangement.  “[I]t represents a digital version of the offline atypical, casual, freelance, or contingent work arrangements characteristic of much of the economy prior to the middle of the twentieth century.”[15]

As a result of the increasing use of freelance or “independent contractor” agreements, courts and legislatures examining the employer-employee relationship in the context of various employment laws developed tests and protocols for determining whether someone was an employee or an independent contractor.  One common hallmark of such tests is that the mere identification of a worker as an employee or independent contractor is legally insufficient to define the relationship.  Courts and legislatures acknowledged that, in a typical negotiation for the provision of labor, companies and workers are not on even footing.  Thus, in the view of many legislators, the law must impose safeguards to ensure that a company cannot use its superior negotiating leverage to impose a classification on workers who are ill-suited to argue the point.

For example, Tennessee’s Workers’ Compensation Law sets out a test for evaluating whether a worker is an employee or an independent contractor.[16]  This test requires the court or factfinder to consider seven factors:

1. The right to control the conduct of the work;
2. The right of termination;
3. The method of payment;
4. The freedom to select and hire helpers;
5. The furnishing of tools and equipment;
6. The self-scheduling of working hours; and
7. The freedom to offer services to other entities.[17]

Interestingly, the identification of a worker as an employee or an independent contractor is not one of the factors listed.  In applying this test, the Tennessee Supreme Court has made clear that these statutory factors are not absolutes that preclude examination of other factors.  The Court emphasized, however, that “the right to control the conduct of the work” is of particular importance to the analysis.[18]

Constitutional Concerns: Freedom of Contract and Due Process

Article 1, section 10 of the U.S. Constitution prohibits states from impairing the obligations of contracts.  However, early in the development of U.S. Supreme Court jurisprudence, this clause was narrowly interpreted to apply only to then-existing contracts.[19] Nevertheless, a powerful tool was found in the Fourteenth Amendment’s due process clause.[20]  In several notable dissents, Supreme Court justices in the late nineteenth century argued that the due process clause “protects the right to pursue an occupation free from unreasonable government interference.”[21]  After several other cases included offhand discussions of the freedom of contract, the Supreme Court firmly established the right to contract as protected by the Fourteenth Amendment’s due process clause in Allgeyer v. Louisiana.[22]

This freedom of contract, however, is not without its limits.  In Holden v. Hardy, the Court acknowledged that states can invoke police powers to enact health and safety measures even if such laws and regulations interfered with the freedom of contract.[23]  In the early part of the twentieth century, the Court upheld various state regulations as being within a state’s police powers.[24]  As explained by the Court in a 1923 case, “[t]here is no such thing as absolute freedom of contract.  It is subject to a variety of restraints.  But freedom of contract is, nevertheless, the general rule and restraint the exception; and the exercise of legislative authority to abridge it can be justified only by the existence of exceptional circumstances.”[25]  As freedom-of-contract jurisprudence has developed in the decades since, some courts have been more willing to allow regulation of employment conditions as a proper application of a state’s police powers, while others have struck down laws and regulations as having no rational basis.[26]  The question becomes whether laws and regulations that compel online platforms to treat purported independent contractors as employees have a rational relationship to legitimate state goals.

Recent Legal Disputes

Legal disputes hinging on the employment status of individuals has become a “hot topic” in the context of online marketplace platforms.  For example, in Olson v. California, a federal district court was asked to evaluate a new California law, known as Assembly Bill 5 (“AB 5”), that addresses the classification of workers as employees or independent contractors.  In reviewing the state of the law on that issue, the district court judge noted a 2018 opinion from the California Supreme Court in which that Court commented on laws designed to protect workers:

The basic objective of wage and hour legislation and wage orders is to ensure that such workers are provided at least the minimal wages and working conditions that are necessary to enable them to obtain a subsistence standard of living and to protect the workers’ health and welfare.[27]

The manner in which California courts broadly define the term “employee” is known as the “ABC test,” which deems all workers to be employees unless the hiring entity can prove the following three criteria:

• The worker is “free from the control and direction of the hirer in connection with the performance of the work”;
• The worker “performs work that is outside the usual course of the hiring entity’s business”; and
• The worker is “consistently engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.”[28]

Thus, in California cases where the parties dispute the nature of the working relationship, the burden of proof is on the “hiring entity” to prove the worker is an independent contractor.[29]  AB 5 codified the “ABC test” set out by the California Supreme Court and, as a result, several plaintiffs sued in federal court to enjoin the state from enforcing this law.  These plaintiffs argued that AB 5 violates both the California and U.S. Constitutions.  Two of the plaintiffs worked for Postmates and Uber, both of which maintain online marketplace platforms (apps) as described above.[30]  Both of these plaintiffs argued that they value the flexibility and autonomy of working for a marketplace platform, they do not want to be considered “employees” of these companies, and the enforcement of AB 5 would adversely impact their lives.[31]

In denying the plaintiffs’ claims for injunctive relief, the district court concluded AB 5 does not violate equal protection clauses of the state or federal constitutions by targeting “gig economy” marketplace platforms.  After acknowledging the parties’ agreement that the equal protection claims merit a rational basis scrutiny, the court concluded, “the State’s asserted interest in protecting exploited workers to address the erosion of the middle class and income inequality thus appears to be based on a ‘reasonably conceivable state of facts that could provide a rational basis’ for any ostensible targeting of gig economy employers and workers.”[32]  The court then explained, “[w]ithout judging the wisdom, fairness, or logic of legislative choices, the Court finds that AB 5 furthers the State’s legitimate interest in addressing misclassification [of workers].”[33]

The plaintiffs in Olson also argued that individual legislators had expressed animus toward marketplace platforms in pushing for the adoption of AB 5.[34]  In response, the court explained that “such targeting, even if it rises to the level of animus toward gig economy companies, does not establish an Equal Protection violation where the statute addresses legitimate concerns of deleterious misclassification of workers in many industries, not just the gig economy.”[35]  The trial court also rejected the plaintiff’s arguments with respect to the due process and right-to-contract clauses.[36]  Consequently, the court declined to award injunctive relief and prevent the implementation and enforcement of AB 5.[37]

Job Trends in Rural Communities

Online marketplace platforms have expressed concern that legislation like AB 5 and decisions like Olson, which mandate that certain workers be classified as employees rather than independent contractors, ignore the realities of evolving economies.  According to one Canadian commentator, as of 2017, almost fifty percent of millennials in Canada already used marketplace platforms for “freelance” work and over fifty percent of new Canadian jobs were considered “non-standard.”[38]  Seventy percent of Canadian gig workers participate in that employment model by choice, and such workers value the flexibility, control, and freedom that comes with gig work.[39]  Such findings are reflected in American studies, one of which noted that many gig workers report “appreciating the control this work allows them over their time and the flexibility of scheduling.”[40]  Finally, most gig workers report they look for gig work by choice rather than out of necessity.[41]

Another commentator noted that, in rural areas where job opportunities are more limited, “online platforms could provide a valuable lifeline.”[42]  With a lower cost of living in rural communities, online platforms offer “passive income” sources and a better work/life balance.[43]  “Studies worldwide have shown that freelancers have a higher level of job satisfaction in their work lives than those with traditional jobs by choice[, and] job satisfaction is directly linked to higher productivity.”[44]  A concern often expressed in rural communities is that there are not enough work opportunities to keep young people from leaving for more populated areas.  Marketplace platforms give such people work opportunities that can incentivize them to live in and contribute to rural communities.[45]

And yet, as with most issues where strong, opposing views are held, especially by those on the far ends of the spectrum, the middle ground may be closer to the truth.

The reality of the gig economy is more nuanced: the gig economy produces both good and bad jobs. Understanding this variability in the quality of jobs helps to better assess the conflicting benefits and costs associated with the spread of this emerging work arrangement[46]

As discussed above, some states’ legislatures have reacted to this proliferation of non-traditional work opportunities by trying to “exercise control and impose regulations that they believe are necessary to protect workers from what they call ‘precarious employment.’”[47]  Other legislatures, in contrast, have passed laws that mandate the identification of gig workers as independent contractors in most circumstances.  Neither position, at its most extreme, serves the interests of a majority of workers.

The problem with trying to control naturally occurring trends by imposing countermeasures is that there are usually unintended consequences. . . . If we can agree that employer and worker motivations can (and do) vary, and that a solution for one can have negative consequences for another, the natural conclusion is that we need to embrace and support choice in our communities.  Choice is the smart mantra for a new era of work and our ability to support and promote choice is going to give rural communities a competitive edge.[48]

Therefore, it is critical that legislators representing rural communities consider both the positive and negative aspects of non-traditional employment opportunities for their constituents.  Such legislators should recognize that the advent of freelance work is not a new phenomenon.  Workers have, for many decades, relied on gig work for income, and the online marketplace platform is but a new tool to facilitate such arrangements.  Workers in rural counties, where traditional employment opportunities may be more limited, can use easy access to online platforms to increase opportunities for income, which, in turn, can increase standards of living for the community as a whole.

Legislators should also recognize that laws and regulations are already in place that are designed to protect workers from overreaching companies.  In those instances where an online platform attempts to exert too much control over the conditions of employment, courts can address those situations and craft appropriate legal remedies using already-existing laws and well-established legal concepts.  In sum, laws that force all marketplace platforms to conform to traditional employer-employee paradigms, while possibly more appropriate in an urban setting, may unnaturally restrict job opportunities in rural areas by increasing overhead costs and forcing both parties into roles neither intended.

Conclusion

The “gig economy” is alive and well, and marketplace platforms are here to stay.  Instead of seeking to force a square peg into a round hole, legislators should consider ways to educate potential workers as to the pros and cons of such arrangements and use laws and regulations already in place to maintain certain minimum protections.  Legislators should keep in mind that marketplace platforms can provide additional job opportunities and sources of income in rural communities that can improve living standards, reduce dependence on government assistance, and incentivize young workers to stay in and contribute meaningfully to the rural way of life.

[1] Census Bureau Releases 2020 Demographic Analysis Estimates, https://www.census.gov/newsroom/press-releases/2020/2020-demographic-analysis-estimates.html (last visited Feb. 25, 2021).
[2] One in Five Americans Live in Rural Areas, https://www.census.gov/library/stories/2017/08/rural-america.html (last visited Feb. 25, 2021).
[3] Other labels for this phenomenon include the “sharing economy,” the “collaborative economy,” and the “platform economy.” Nicole Kobie, What is the Gig Economy and Why is it so Controversial?, WIRED, https://www. wired.co.uk/article/what-is-the-gig-economy-meaning-definition-why-is-it-called-gig-economy (Sept. 14, 2018).
[4] How Many Gig Workers Are There?, https://www.gigeconomydata.org/basics/how-many-gig-workers-are-there (last visited April 27, 2021).
[5] Michael C. Duff, All the World’s a Platform?: Some Remarks on ‘Marketplace Platform’ Employment Laws, Social Science Research Network (Jan. 30, 2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id =3520723.
[6] Eli Rosenberg, “Labor Secretary Says Gig Workers Should Be Classified as Employees in ‘A Lot of Cases,’” Washington Post, April 29, 2021.
[7] Id.
[8] General historical information included in this article taken from: A Century of Progress and Perspective: Workers’ Compensation in Tennessee, Tennessee Bureau of Workers’ Compensation (2019).
[9] Labor Movement, https://www.history.com/topics/19th-century/labor (last visited March 2, 2021).
[10] What is FELA?, https://www.railsafety.com/What-is-FELA-.aspx (last visited Apr. 13, 2021).
[11] 29 U.S.C. § 201 et seq.
[12] 5 U.S.C. § 8101 et seq.
[13] 29 U.S.C. § 651 et seq.
[14] 29 U.S.C. § 2601 et seq.
[15] Arne L. Kellerberg & Michael Dunn, Good Jobs, Bad Jobs in the Gig Economy, 20 Perspectives on Work 10, 11 (2016).
[16] Tenn. Code Ann. § 50-6-102(12)(D) (2020).
[17] Id.
[18] See, e.g., Masiers v. Arrow Transfer & Storage Co., 639 S.W.2d 654, 656 (Tenn. 1982).
[19] Ogden v. Saunders, 25 U.S. 213 (1827).
[20] The 14^th Amendment to the U.S. Constitution states, in pertinent part: “No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
[21] Davie E. Bernstein, Freedom of Contract, George Mason Univ. Law and Econ. Research Paper Series, https://www.law.gmu.edu/assets/files/publications/working_papers/08-51%20Freedom%20of%20Contract.pdf (last visited April 6, 2021).
[22] Id. at 2.
[23] Id. at 3.
[24] Id.
[25] Adkins v. Children’s Hospital, 261 U.S. 525, 546 (1923).
[26] Bernstein, supra note 20, at 8.
[27] Dynamex Operations W. v. Superior Ct., 416 P.3d 1, 32 (2018).
[28] Id. at 964.
[29] Id.
[30] Olsen v. California, No. CV-19-10956-DMG, 2020 U.S. Dist. LEXIS 34710, at *6 (C.D. Cal. Feb. 10, 2020).
[31] Id. at *9.
[32] Id. at *15 (quoting RUI One Corp. v. City of Berkeley, 371 F.3d 1137, 1154 (9th Cir. 2004)).
[33] Id. at *21 (internal citation omitted).
[34] Id. at *22-23.
[35] Id. at *23.
[36] Id. at *24-33.
[37] Id. at *46.
[38] Mary Doyle, “Should Rural Embrace the ‘Gig’ Economy,” https://ruralonpurpose.com (last visited Feb. 24, 2021).
[39] Id.
[40] Most Gig Workers Report Being Satisfied by their Work Arrangements, https://www.gigeconomydata.org/ basics/what-are-experiences-gig-workers (last visited April 27, 2021).
[41] Id.
[42] Gigonomy, Rural Work in the Gig Economy, https://gigonomy.info/rural-work-in-the-gig-economy/ (July 8, 2020).
[43] Id.
[44] Id.
[45] Mary Doyle, Should Rural Embrace the ‘Gig’ Economy, https://ruralonpurpose.com (last visited Feb. 24, 2021).
[46] Kellerberg & Dunn, supra note 14.
[47] Mary Doyle, Should Rural Embrace the ‘Gig’ Economy, https://ruralonpurpose.com (last visited Feb. 24, 2021).
[48] Id. (emphasis omitted).

Save The Date!

By Pamela B. Johnson
Tennessee Court of Workers’ Compensation Claims
Knoxville, TN

 

NEXT LUNCH AND LEARN: The NAWCJ will hold its next one-hour Lunch and Learn program on Wednesday, June 7, 2023, at 12:30 p.m. Eastern Time. The June discussion will focus on Repetitive Use Injuries. Join your fellow NAWCJ judges and engage in the discussion of this hot topic.

The NAWCJ launched this virtual initiative as a benefit for our members and to supplement discussions held at the “Boot Camp” and the annual Judicial College. We hope you join us to learn and discuss relevant and engaging workers’ compensation topics from the comfort of your home or office. The aim of this program is to gain knowledge, build collegiality, and develop professionally.

ZOOM LINK: Two weeks before the Lunch and Learn, the NAWCJ will send out an email blast to all members with a link to join the Zoom meeting.

FUTURE LUNCH AND LEARNS:

• December 6, 2023 – Gig Workers