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Court rulings challenge workers comp sector in 2017

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The workers compensation industry contended with several state Supreme Court decisions in 2017, most notably a Pennsylvania Supreme Court ruling that upended the state’s workers comp system. 

Pennsylvania Supreme Court throws comp system for a loop: In June, the Pennsylvania Supreme Court struck down the state’s impairment rating evaluation process as unconstitutional. The process allowed employers to request an impairment evaluation where a physician determined the degree of an injured employee’s impairment under the Pennsylvania Workers Compensation Act after an injured worker has been out of the workplace for 104 weeks. But the court ruled in Protz v. Workers Compensation Appeal Board (Derry Area School District) that the General Assembly unconstitutionally delegated the authority to establish criteria for evaluating permanent impairment to the American Medical Association. In October, a state legislator responded by introducing a bill that would reinstate the 104-week permanent disability marker for requesting impairment evaluations in the face of potentially rising comp premiums. 

Employee’s disobedience may preclude comp recovery: In February, the Georgia Supreme Court ruled that an employee who disobeys an employer’s instructions and acts in a dangerous fashion may not be entitled to workers compensation benefits. Adrian Burdette was employed by Eatonton, Georgia-based Chandler Telecom L.L.C. as a cellphone tower technician in November 2012. A supervisor instructed Mr. Burdette and other crew members to climb down the tower, but Mr. Burdette attempted a controlled descent despite the repeated protests of the crew’s lead tower hand who was with him. During the controlled descent, Mr. Burdette fell and landed on an ice bridge, injuring his ankle, leg and hip, according to Chandler Telecom L.L.C. et al. v. Burdette.

Injured exotic dancer was employee, not independent contractor: In April, the South Carolina Supreme Court ruled that an exotic dancer injured in a nightclub shooting was an employee of the club rather than an independent contractor, and should receive workers comp benefits. Additionally, the state high court ordered the South Carolina Workers’ Compensation Commission to reconsider its award of $75 per week in workers comp disability benefits for the woman because it said the commission failed to show how it reached that figure, according to LeAndra Lewis v. L.B. Dynasty Inc. 

Employer must face discrimination claim in medical marijuana case: In July, the Massachusetts Supreme Court ruled that a company that fired a worker who tested positive for marijuana even though she was authorized to use it by her physician must face a claim of handicap discrimination. Cristina Barbuto accepted a position at Advantage Sales and Marketing in 2014. Ms. Barbuto, who was authorized by her physician to use marijuana to stimulate her appetite and help with symptoms of Crohn’s disease, told Advantage she would test positive for marijuana on drug screens. A supervisor told Ms. Barbuto her medicinal use of marijuana “should not be a problem,” but a human resources representative later told her she was being terminated for failing a drug test, according Cristina Barbuto v. Advantage Sales and Marketing L.L.C.

Tennessee high court upholds disability claim: In December, the Supreme Court of Tennessee upheld a woman’s disability claim despite her employer’s assertion that her impairment rating should be capped after she resigned her position following her inability to perform her job functions as result of a workplace injury. Alicia Hunt was working at a makeup counter inside a Dillard’s department store in Memphis, Tennessee, in 2013 when she slipped off a stool, injuring her ankle and knee. In early 2014, after her compensable injury was found not healing, a doctor recommended surgery, but the employer denied the operation, according to Alicia Hunt v. Dillard’s Inc. While on work restrictions in late 2014, Ms. Hunt testified that her supervisor pressured her to take a lower-paid position, but she resigned instead, had surgery, and then unsuccessfully tried to get her job back.

At the federal appeals court level, the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, handed down several noteworthy decisions in the workers compensation/workplace safety arena in 2017. 

Mixed decision in Berkshire Hathaway workers comp policy case: In August, a three-judge panel of the 4th Circuit affirmed in part and reversed in part a district court decision involving a daycare that challenged a Berkshire Hathaway Inc. subsidiary’s insurance business practices related to a workers comp policy in the Commonwealth of Virginia in Minnieland Private Day School Inc. v. Applied Underwriters Captive Risk Assurance Co. Inc. Applied Underwriters moved to compel arbitration under a reinsurance participation agreement that specified that disputes would be handled via binding arbitration in the British Virgin Islands. Minnieland argued Virginia insurance law prevents disputes from being moved out of Virginia’s jurisdiction. The appeals court held that a district court correctly denied Applied Underwriters’ motion to compel arbitration, but incorrectly applied the doctrine of judicial estoppel in holding that the reinsurance participation agreement constituted an insurance contract. 

Safety whistleblower’s lawsuit against railroad reinstated: Also in the 4th Circuit, the appeals court in August unanimously vacated a lower court’s decision granting summary judgment to CSX Transportation Inc. in a lawsuit filed by an employee who said his employer retaliated against him for reporting safety concerns. Evard DeMott sued Jacksonville, Florida-based CSX under the Federal Railroad Safety Act alleging that CSX retaliated against him for engaging in protected activity, according to Evard DeMott v. CSX Transportation Inc.-Baltimore Division. CSX disciplined him for leaving a locomotive unattended with a control switch left in the on position, speeding, failing to report a problem with a speed indicator, allowing another employee to calibrate that speed indicator and being insubordinate, according to court documents. However, Mr. DeMott contended he was disciplined in retaliation for reporting various unsafe workplace conditions, publishing a safety bulletin and filing a complaint with the U.S. Occupational Safety and Health Administration.

Employer’s liability for black lung benefits upheld: In November, the 4th Circuit upheld an employer’s liability for black lung benefits to a coal miner it cumulatively employed for more than a year. Frontier-Kemper Constructors Inc. appealed a decision and order of the U.S. Department of Labor Benefits Review Board holding the Sylmar, California-based construction services firm responsible for the payment of benefits to coal miner Grat M. Smith under the Black Lung Benefits Act. Frontier-Kemper did not contest Mr. Smith’s eligibility for benefits but disputed its liability for the claim — a stance rejected by the appeals court in Frontier-Kemper Constructors Inc. v. Director, Office of Workers Compensation Programs, U.S. Department of Labor, Grat Smith.

Piping firm loses fight against safety fine: In December, the 1st U.S. Circuit Court of Appeals let stand a fine against a Massachusetts-based piping manufacturer whose employee lost several fingers in a workplace accident. The court denied a petition to review a final order of the Occupational Safety and Health Review Commission affirming the fine, which was levied against Thomas G. Gallagher Inc. by OSHA for two violations of the agency’s workplace health and safety standards, according to Thomas Gallagher Inc. v. Occupational Safety and Health Review Commission. The company contested that it had knowledge of the two violations and asserted an affirmative defense of unpreventable employee misconduct both of which were rejected by an administrative law judge.

Reversal recognizes OSHA regulation in New York mining citations: In December, the 2nd U.S. Circuit Court of Appeals reversed an Occupational Safety and Health Review Commission decision that upheld an administrative law judge’s vacating of OSHA citations issued against an employer. The Secretary of Labor filed an action against Cranesville Aggregate Cos. Inc. to enforce citations for safety hazards issued by OSHA under the Occupational Safety and Health Act, according to the appellate court’s decision in Sec. of Labor v. Cranesville Aggregate Cos. Inc. An administrative law judge vacated the citations after concluding that federal mining regulators had authority over the cited working conditions, but the appeals court found the judge gave no deference to the secretary’s authority to issue the citations under OSHA regulations.