Top 10 Appellate Decisions During the 100 Years of NCCI

By Thomas A. Robinson, JD., MDiv

Copyright © 2023Thomas A. Robinson, all rights reserved.

Reprinted with permission.

Heartiest congratulations to the National Council on Compensation Insurance (NCCI) as it celebrates 100 years of service to the workers’ compensation system. “Our” system has seen substantial changes over the years and NCCI has deftly adapted along with it. Recently, as I contemplated NCCI’s strength and resiliency, I thought it would be interesting to highlight and discuss some of the truly significant workers’ compensation appellate decisions that have been handed down since 1923. The winnowing was not easy. By way of context, in my 37 years of working on “the Treatise” [Larson’s Workers’ Compensation Law, 17 vols., Matthew-Bender/LexisNexis (Larson)], I have read—sometimes only skimmed—more than 60,000 appellate decisions from across the nation. Reporting here on just a handful inevitably results in omitting some important decisions. Your list would assuredly be different from mine. Nevertheless, with some bit of presumptuousness, and with a parenthetical note included in the following paragraph, I offer below—in no particular order—my assessment of 10 significantly important decisions over the life of NCCI.

May I initially allow that one of the most significant decisions in our field, this one by the U.S. Supreme Court in New York C. R. Co. v. White, 243 U.S. 188, 37 S. Ct. 247, 61 L. Ed. 667 (1917), is excluded from my list because it predates NCCI’s founding by six years. You likely know the important backdrop of the White decision. In 1910, the first New York Act was passed, with compulsory coverage for certain “hazardous employments.” However, that Act was declared unconstitutional in 1911 by the state’s Court of Appeals in Ives v. South Buffalo Ry. Co., 201 N.Y. 271, 94 N.E. 431 (1911). Ives, it should be recalled, was handed down on March 24, 1911, one day before the tragic fire at the Triangle Shirtwaist Factory in Greenwich Village, which resulted in the deaths of 146 workers. The Ives court found that the imposition of liability without fault upon an employer was a taking of property without due process of law under the state and federal constitutions. After Ives, the State of New York amended its constitution to require that most employers provide “workmen’s [sic] compensation” to employees who were disabled or killed while in the scope of employment. In White, the U.S. Supreme Court upheld New York’s constitutional amendment. With such a pronouncement from our nation’s highest court, the stage was set for the expansion of a state-by-state system of providing indemnity benefits and medical expenses for thousands of injured employees. Now, to my list:

Odd-Lot Principle

Lee v. Minneapolis St. Ry., 230 Minn. 315, 41 N.W.2d 433, 436 (1950)

As observed in Larson, § 83.02, “total disability” in workers’ compensation law is not to be interpreted literally as utter and abject helplessness. Evidence that claimant has been able to earn occasional wages or perform certain kinds of gainful work does not necessarily rule out a finding of total disability nor require that it be reduced to partial. The task is to phrase a rule delimiting the amount and character of work a person can be able to do without forfeiting his or her totally disabled status. The term “odd-lot” was used first by Judge Moulton in the early King’s Bench case of Cardiff Corp. v. Hall, (1911) 1 K.B. 1009, but the best early example of the doctrine in the United States is found in Lee v. Minneapolis St. Ry. The rule was expertly summarized by Justice Matson of the Minnesota Supreme Court in the following language:

An employee who is so injured that he or she can perform no services other than those which are so limited in quality, dependability, or quantity that a reasonably stable market for them does not exist, may well be classified as totally disabled [41 N.W.2d at 436].

Claimant, a streetcar flagman, as a result of being caught between two streetcars, suffered the loss of his left eye, 75 percent loss of use of his left arm, 10 percent loss of use of the right ankle and foot, and severe post-traumatic neurosis. He worked for short periods thereafter as a conductor, as an income tax worker, as a house-to-house canvasser, and as a detective, all with great difficulty and discomfort. The Supreme Court, applying the rule quoted above, held that the sporadic employment and earnings shown were not inconsistent with the concept of total disability.

Substantially Certain Rule as a Departure from “Pure Intent”

Mandolidis v. Elkins Industries, Inc., 161 W. Va. 695, 246 S.E.2d 907 (1978)

In virtually all US jurisdictions, an intentional assault by the employer upon the employee, when the employer acts in person as distinguished from constructively through an agent, will ground a common-law action for damages. The same holds true if the assailant is the alter ego of the employer. Several legal theories have been advanced to support this exception to exclusivity. The best is that the employer will not be heard to allege that the injury was “accidental,” and, therefore, was under the exclusive remedy provision of the workers’ compensation act when the employer intentionally committed the assault.

Generally, for more than 60 years, appellate courts across the nation routinely held that since the legal justification for the common-law action was the non-accidental character of the injury from the defendant employer’s standpoint, the common-law liability of the employer could not be stretched to include accidental injuries caused by the gross, wanton, wilful, deliberate, intentional, reckless, culpable, or malicious negligence, breach of statute, or other misconduct of the employer short of a conscious and deliberate intent directed to the purpose of inflicting an injury [see Larson, § 103.03].

In the 1978 Mandolidis decision, West Virginia was the first jurisdiction to depart from what might be called the “pure intent” standard. The West Virginia Supreme Court took the position that the state’s statute permitting damage suits against the employer “if the injury or death of such employee results from the deliberate intent of the employer to produce such injury or death” also permitted such suit for “wilful, wanton, and reckless misconduct.” That exception to the pure intent standard subsequently became known as the “substantially certain” rule.

Short-Lived Oklahoma Opt-Out Law

Vasquez v. Dillard’s, Inc., 2016 OK 89, 381 P.3d 768

Much ink has been spilled regarding Oklahoma’s unsuccessful attempt to emulate the workers’ compensation system utilized by her giant neighbor to the south. In Texas, the employer need not provide coverage to its employees at all and, to the extent that it desires its employees to be covered by the state’s Act, it must affirmatively elect such coverage [see Larson, § 102.01].

In 2013, the Oklahoma legislature passed—and the governor signed—its controversial “opt out” statute, allowing employers to choose between a rather standard workers’ compensation act and an individualized written “benefit plan” that provided benefits generally in line with the state’s standard plan, but which also allowed significant differences in, inter alia, notice requirements, statutes of limitations, and allowance for attorney’s fees. The stage was set for a constitutional battle.

In Vasquez, the Supreme Court of Oklahoma, in a 7–2 decision, held the core provision of the Oklahoma Opt Out Law (Okla. Stat. tit. 85A, § 203) created “impermissible, unequal, disparate treatment of a select group of injured workers” and, therefore, was an unconstitutional special law under the Oklahoma Constitution, art 2, § 59 [Opinion, ¶ 1].

Employee or Self-Employed Contractor?

Re/Max of New Jersey, Inc. v. Wausau Insurance Cos., 162 N.J. 282, 744 A.2d 154 (2000)

It is almost always said, both in the common law of master and servant and in workers’ compensation law, that the fundamental test of employment relation is the right of the employer to control the details of the work, and that all other tests are subordinate and secondary. The rule is often best put negatively: An owner or general contractor, who wants to get work done without becoming an employer, is entitled to as much control of the details of the work as is necessary to ensure that it gets the end result from the contractor for which it has bargained. The line, however, may be quite difficult to draw in the case of skilled or experienced workers, e.g., real estate salespersons, since the same skills and experience allow performance of the job without supervision or interference.

The difficulty is exhibited in Re/Max of New Jersey, Inc. v. Wausau Insurance Cos., wherein the New Jersey Supreme Court held that real estate agents should be treated as employees and not as independent contractors for purposes of computing workers’ compensation insurance premiums.

The Re/Max agents enjoyed a particularly high level of independence and autonomy. For example, the agents’ hours were not regulated by the “employer,” agents engaged in their own advertising, and all franchise/agency documentation designated the agents as independent contractors. Perhaps the strongest evidence of independent status was the commission policy. Unlike agents associated with most other real estate companies, the Re/Max agents did not share their commissions with the sales office. Instead, each agent paid his or her share of overhead and related expenses. Notwithstanding the relative autonomy allowed each agent, the Court viewed the arrangement as a whole, holding it to be “simply another sophisticated attempt to thwart the employer-employee relationship.”

Actions by Spouses or Dependents

Snyder v. Michael’s Stores, Inc., 16 Cal. 4th 991, 68 Cal. Rptr. 2d 476, 945 P.2d 781 (1997)

Under the most common type of exclusive remedy clause in a state workers’ compensation act, suits by husbands for loss of the wife’s services and consortium, by wives for loss of the husband’s services and consortium, by parents for loss of minor children’s services, by dependent children, and by next of kin under wrongful death statutes are all barred following an employee’s work-related injury. These claims are deemed to be derivative of the employee’s injury and untenable [see Larson, 101.02]. Where the claim is not derivative, but due to an alleged direct to the family member, the result is often different.

The leading decision on this issue is from the Supreme Court of California in Snyder v. Michael’s Stores, Inc., in which a pregnant employee, Snyder, was exposed to toxic levels of carbon monoxide that had accumulated within the poorly ventilated store. Snyder and at least twenty other employees and customers became ill and were taken to a nearby hospital for treatment. Subsequently, Snyder gave birth to a daughter who suffered from cerebral palsy, allegedly due to oxygen deprivation brought about by the increased levels of carbon monoxide in the store. The California Supreme Court determined that the child’s injuries were not dependent upon injury to the mother. The court held the child’s claim was not derivative and that the workers’ compensation exclusivity rules did not apply.

Quite recently, the issue arose in a case involving COVID-19. In Kuciemba v. Victory Woodworks, Inc. (2023) 2023 Cal. LEXIS 3733, the Supreme Court of California, responding to two questions certified to it by the Ninth Circuit Court of Appeals, answered that if an employee contracts COVID-19 at the workplace and brings the virus home to a spouse, the derivative injury rule of California’s workers’ compensation law does not bar the spouse’s negligence claim against the employer. The Court tempered the strength of that answer, however, by also answering that the employer does not owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members. The Court stressed that although it was certainly foreseeable that an employer’s negligence in permitting workplace spread of COVID-19 might cause members of employees’ households to contract the disease, recognizing a duty of care to non-employees in this context would impose an intolerable burden on employers and society in contravention of public policy.

Injury vs. Occupational Disease

Booker v. Duke Medical Center, 297 N.C. 458, 256 S.E.2d 189 (1979)

At one time in many states, designation of an employee’s condition as an occupational disease, instead of an accidental injury arising out of and in the course of the employment, was crucial. The original workers’ compensation acts provided no coverage at all for occupational diseases. Now, of course, every American jurisdiction provides some level of compensation for occupational diseases. Still, some distinctions between occupational injuries and occupational diseases are important. Moreover, some fact patterns fall between the two categorizations.

For example, in Booker v. Duke Medical Center, the claimant’s decedent was an employee at Duke Medical Center’s clinical chemistry laboratory, where he did blood work, including the handling of hepatitis-contaminated blood. He contracted serum hepatitis in 1971 and died of the disease in 1974.

The intermediate appellate court held that the hepatitis had not been contracted by accident, since the deceased frequently handled and spilled blood on himself, and an occurrence which is frequent and regular could not be considered an accident. Alternatively, however, serum hepatitis could not be considered an occupational disease for a laboratory technician because it was not caused by a gradual series of events of similar nature but instead transmitted by one single event. Nor was hepatitis within the well understood definition of occupational disease as intended by the legislature.

The Supreme Court of North Carolina reversed. The high court acknowledged that the definition of occupational disease in force at the time of the employee’s death generally referenced diseases “peculiar to a particular … employment,” but noted as well that the definition excluded “all ordinary diseases of life to which the general public is exposed …” [N.C. Gen. Stat. 97-53(13)]. The Court stressed that “peculiar” did not mean “unique” to the employment. It was enough that the employment increased the risk. Here, the employee had contracted an infectious disease because of his employment; it fell, therefore, within the general definition of “occupational disease.”

Mental-Mental Injuries/Conditions

Bailey v. American Gen. Ins. Co., 154 Tex. 430, 279 S.W.2d 315 (1955)

For decades after the passage of the first state workers’ compensation acts, few seriously suggested that an employee should be able to recover benefits resulting from a mental injury caused by a work-related mental stimulus. Some early decisions awarded benefits where there had been a distinct physical accident or trauma that subsequently manifested itself into a mental condition [see Larson, § 56.03]. These were explained by the doctrine that an employer is generally responsible for all “sequelae” that flow from the primary work-related injury.

The greater hurdle, of course, occurred where there was no such physical trauma. Could the employee recover for a mental condition caused by a mental stimulus? In the Bailey decision, the Texas Supreme Court offered one of the most cogent discussions of the relevant points. There, the claimant and another worker were on a scaffold when one end gave way. The other worker, in sight of the claimant, plunged to his death. Claimant thought he himself was about to be killed, but he was caught in the cable and did not fall. He managed to jump to the roof of another building. After this experience, he tried to resume his employment, but, although he had trained for it all his life, and was considered one of the better structural steel workers, he could not continue. He experienced multiple health issues and concerns, including sleep issues and violent nightmares.

What makes the Bailey case especially noteworthy is the fact that the award was made under a statute defining “injury” as “damage or harm to the physical structure of the body.”

The court gave an unqualified answer of “yes” to this question, reversing the Court of Civil Appeals. In supporting its conclusion, the court, in effect, said: look at this worker’s symptoms; obviously the worker’s body no longer functions properly; therefore, can you say as a matter of law that a body which no longer functions properly has suffered no harm to its physical structure? The physical structure is not just bones and tissues considered as if they were mechanical objects; it is the entire interrelated, living, functioning organism.

Reimbursing Employee for Medical Marijuana

Vialpando v. Ben’s Automotive Servs., 331 P.3d 975 (N.M. Ct. App. 2014), writ denied, 331 P.3d 924 (N.M. 2014)

The use of medical marijuana to treat disease and alleviate pain has grown significantly since the use of the substance, at least within limited medical parameters, has been legislatively authorized in a number of states.

The first reported decision involving the medical marijuana reimbursement question within the workers’ compensation context was Vialpando v. Ben’s Automotive Servs. There, the employee sustained a low back injury that required multiple surgical procedures. Following those surgeries, the employer stipulated that the employee had reached MMI and that he had sustained a 99 percent PPD. A treating physician indicated that of the thousands of patients he had treated, the employee’s pain level was among the highest the physician had ever seen.

Doctors had unsuccessfully treated the employee’s pain levels with multiple opioids and anti-depressant medications. Eventually, the employee filed an application for approval of a medical marijuana regime pursuant to New Mexico’s Lynn and Erin Compassionate Use Act (“the Compassionate Use Act”) [N.M. Stat. Ann. §§?26-2B-1 to 26-2B-7, et seq.]. Following a hearing, the WCJ found that the employee was entitled to ongoing and reasonable medical care, that the employee was qualified to participate in the state’s Medical Cannabis Program authorized by the state’s Compassionate Use Act, and that such treatment would be reasonable and necessary medical care under the Workers’ Compensation Act.

The employer appealed, contending in pertinent part that the New Mexico Workers’ Compensation Act required that medical care and services be provided by a “health care provider” (as defined under the Act), that it was illegal for such a health care provider to provide marijuana to an injured worker, and that under the federal Controlled Substances Act, the employer could not be required to make the reimbursement.

The appellate court disagreed with the employer’s premise. The court stressed that the Workers’ Compensation Act required only that a health care provider have the responsibility for the provision of the reasonable and necessary services. Some reasonable medical services could be provided by persons who did not meet the statutory definition of “health care provider.”

As to the employer’s contention that requiring reimbursement would be tantamount to being ordered to disobey federal law, the court countered that the employer had not cited any specific federal statute that it would be forced to violate if it were ordered to reimburse the injured worker for medical marijuana. Based on the foregoing, the Court of Appeals agreed with the WCJ that the New Mexico Workers’ Compensation Act authorized reimbursement to the injured employee.

Deceit by the Employer

Johns-Manville Products Corporation v. Contra Costa Superior Court (Ruskin), 27 Cal. 3d 465, 165 Cal. Rptr. 858, 612 P.2d 948 (1980)

Generally, the cases involving allegations of deceit, fraud, and false representation on the part of the employer can best be sorted out by distinguishing those in which the deceit precedes and helps produce the injury, and those in which the deceit follows the injury and produces a second injury or loss [see Larson, § 104.03]. In the first category, a tort action has usually been found barred, since the deceit, so to speak, merges into the injury for which a compensation remedy is provided. If, however, after the basic compensable injury or disease has occurred, the employer fraudulently deceives the employee as to the existence of this condition, a separate action in deceit may lie, unaffected by the exclusive remedy clause. The leading case for this point is the decision of the California Supreme Court in Johns-Mansville Products Corporation v. Contra Costa Superior Court (Rudkin).

The plaintiff’s complaint alleged that the employer fraudulently concealed from him, and from the doctors treating him, that he was suffering from an asbestos-related disease, and that, as a result, his condition was aggravated by further exposure that he otherwise would have avoided. Moreover, he was prevented from receiving treatment he would have obtained if he had known of his condition.

The Supreme Court of California held that this stated a cause of action, free of the exclusive remedy bar. The court reaffirmed that, if the employer’s only alleged misconduct was intentionally concealing the initial hazard of the work environment because of asbestos exposure, and failing to provide protective devices, the only remedy would be under the compensation act, even if governmental regulations on dust levels were violated.

But the court assimilated this case to the class of cases identified by Dr. Larson as “dual injury.” The second injury—concealing the existence of the first, and thereby inflicting additional harm—was an independent wrong and hence not within the exclusive remedy clause.

Compensation for Undocumented Workers

Correa v. Waymouth Farms, Inc., 664 N.W.2d 324 (Minn. 2003)

During the past several decades, we’ve seen a number of difficult issues arise regarding workplace injuries (or diseases) sustained by undocumented workers. In one important decision, Correa v. Waymouth Farms, Inc., Correa sustained a work-related injury, was paid medical benefits and other workers’ compensation benefits, and returned to light duty work for the employer. Nearly a year after the injury, the employer notified Correa that it had received information that Correa did not have a valid alien registration number, that the social security number he had provided did not correspond to his identity, and that there was no valid alien registration number and social security number in Correa’s name. He was given 48 hours to provide adequate documentation and was fired when he could not do so.

The employer also sought to discontinue compensation benefits on the grounds that as an undocumented worker, Correa could not accept a job offer and, therefore, could not pursue a reasonable job search. The Workers’ Compensation Court of Appeals disagreed and refused to allow discontinuation. The state Supreme Court affirmed.

The high court acknowledged that Immigration Reform and Control Act (IRCA) was intended to prevent employers from hiring undocumented workers and that it was also intended to prevent such workers from using fraudulent work papers to gain employment. The court stressed, however, that IRCA was not intended to prevent the payment of otherwise valid workers’ compensation benefits. Entitlement to temporary total disability benefits was conditioned upon the establishment of a causal link between the work-related disability and the inability to find and keep a job, such as through a “diligent job search.” The court observed that In Redgate v. Sroga’s Standard Service, 421 N.W.2d 729 (Minn. 1988), the court had defined a “diligent job search” as one that was “reasonable under all the facts and circumstances.” Immigration status, indicated the Correa court, was but one of many facts and circumstances to be considered. The court concluded that payment of compensation benefits was not precluded the IRCA.