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Legal Briefs


Workers comp doesn't cover injury at company picnic

The Supreme Court of Tennessee denied an employee's claim for workers compensation arising out of an injury occurring during a company-sponsored picnic.

Phyllis Young began working for Taylor-White L.L.C. in 1999. In September 2002, the employer sponsored a company picnic that was held outside of work hours at a public park. The employer informed employees about the picnic by posting signs on its plant's bulletin boards and by word of mouth.

Ms. Young attended the picnic with a friend, who was also an employee. She participated in a number of games at the picnic, and she was injured when she fell while participating in a three-legged race.

Neither employees nor management were required to attend the picnic. There were no adverse consequences if an employee signed up but did not attend. Ms. Young filed for and was awarded workers compensation for her injury. The employer appealed.

The appellate court said that although a disc jockey hired by the employer to organize the picnic games encouraged Ms. Young to participate in the race, neither mere encouragement nor the offer of a nominal cash prize was enough to transform what would otherwise be a voluntary activity into one within the course of employment.

The court concluded that because the race was not within the course of her employment, Ms. Young's injury was not compensable. The trial court decision was reversed.

Young vs. Taylor-White L.L.C., Supreme Court of Tennessee, Oct. 20, 2005 (BI/01/Ju.-$10)

Product distribution a single occurrence

The distribution of an allegedly defective product was a single occurrence for the purpose of determining whether a per occurrence limit or aggregate limit applied under a commercial general liability insurance policy, according to the Supreme Court of South Carolina.

The product liability case arose from the sale of Parex, a synthetic stucco distributed by CGD Inc. The defective stucco allegedly caused water intrusion that damaged many properties. The property owners brought a class-action suit against CGD. The company was covered under a CGL policy issued by Owners Insurance Co. The policy defined "occurrence" as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. If distribution of the stucco to various buyers is considered one occurrence, the policy's per occurrence limit of $1 million applied; if each sale was an occurrence, the aggregate limit of $2 million applied. The insurer brought this suit in federal court seeking to have the court declare that the policy did not cover the multiple water intrusion suits.

The federal trial court said the question of which limit applied should be decided by the Supreme Court of South Carolina.

The Supreme Court of South Carolina said that the case involved the distribution of inherently defective goods, and not the defective distribution of otherwise satisfactory goods. According to the court, there was no indication CGD defectively distributed the product in question. Further, the court said that the policy here provided coverage for an "occurrence." Because the distributor had taken no distinct action giving rise to liability for each sale, it concluded under this policy definition that placing a defective product into the stream of commerce was one occurrence.

Owners Insurance Co. vs. Salmonsen, Supreme Court of South Carolina, Nov. 7, 2005 (BI/01/My.-$10)

Benefit curtailment supported by record

An Employee Retirement Income Security Act long-term disability administrator's decision to discontinue a participant's benefits was sufficiently supported by the record, according to the U.S. Court of Appeals for the Fifth Circuit.

Lois Albert worked as a tax supervisor at American General for approximately 25 years. Ms. Albert participated in the employer's long-term disability plan, which was administrated by the Life Insurance Co. of North America.

In August 2000, Ms. Albert went on medical leave after undergoing surgery to remove a portion of her right lung. In October 2000, she returned to work. However, her condition worsened and she again departed from work. She applied for and received short-term disability benefits under the ERISA plan.

She also applied for long-term disability benefits, but her application was denied. She appealed and the insurer reversed its decision and awarded her benefits. Four months later, however, Ms. Albert was subjected to a battery of tests after which the insurer determined that she was no longer entitled to long-term benefits. Ms. Albert brought suit in federal court but lost. She appealed.

The appellate court concluded that the plan administrator's decision to discontinue Ms. Albert's benefits was supported by the record and, thus, there was no abuse of discretion. According to the court, the evaluator selected by the administrator conducted a functional capacity examination of Ms. Albert and concluded that she was capable of performing her job as a tax analyst.

Furthermore, the court noted that a doctor who performed an independent medical examination of Ms. Albert found no physical reason or obvious cognitive reason why she could not perform her job duties.

The court emphasized that even though Ms. Albert legitimately disputed the evidence, the administrator's decision to deny her long-term disability benefits was not required to be supported by indisputable evidence. The trial court decision was affirmed.

Albert vs. Life Insurance Co. of North America, 5th U.S. Circuit Court of Appeals, Dec. 2, 2005 (BI/03/My.-$10)

Going, coming rule not applicable in suit

A truck driver's trip to his home fell under the exception to the general "going and coming" rule, according to a Kansas appellate court.

On Sept. 30, 2002, Chris A. Sumner, a truck driver for Meier's Ready Mix Inc., died as a result of a one-vehicle accident.

Although Mr. Sumner was driving a company truck at the time of the accident, the parties stipulated that at the time of the accident, he was engaged in a personal errand with no business purpose. As Mr. Sumner was driving between deliveries for his employer, he received word that there was an emergency at his home.

His company's assistant manager gave him permission to go home and Mr. Sumner was killed in an accident while driving there. It was established that the employer allowed Mr. Sumner to keep its truck at his residence at night. Mr. Sumner's wife filed for and was awarded workers compensation death benefits.

However, the Workers Compensation Board reversed that decision and Mr. Sumner's wife appealed.

The appellate court said that Mr. Sumner routinely kept the company's truck at his home between his shifts.

In this particular instance, the court said, there was no time to make the second delivery that day. Thus, the court said that Mr. Sumner's trip to his home fell within the going and coming exception rule because the employer's policy in allowing Mr. Sumner to take the company truck home furthered the employer's interests.

The board's decision was reversed.

Sumner vs. Meier's Ready Mix Inc., Court of Appeals of Kansas, Jan. 13, 2006 (BI/05/My.-$10)