Wisconsin Workers Comp Conundrum – Who Is or Is Not Employee?

February 7, 2018 By JL Risk Management Consultants

Recent Court Decision Causes Wisconsin Workers Comp Conundrum For Temporary Agencies

A recent Wisconsin Workers Comp Appeals Court decision redefines the definition of an employer and employee. My definition of exclusive remedy is – Employers cannot be sued in tort/civil court if a valid workers comp policy that covers an injured employee for an incident is in effect.

picture of winning Wisconsin workers comp cheese

Wikimedia Public Use License

Exclusive remedy articles I have written over the years usually mentions a court affirming the doctrine can be found in this article search.

The case is:

IN RE THE ESTATE OF CARLOS ESTERLEY CERRATO RIVERA:
RAOUL R. EHR, SPECIAL ADMINISTRATOR, GUINIFER LIZETH
CERRATO NUNEZ AND YULY MELISSA CERRATO NUNEZ,
PLAINTIFFS-APPELLANTS,

WEST BEND MUTUAL INSURANCE COMPANY AND ALPINE INSULATION,
D/B/A A&B DRYWALL ROCK SOLID,
DEFENDANTS-RESPONDENTS.

You can find the full decision here.

two judge of Wisconsin Workers Comp making dicision

public domain by Moshe Pridan

This case stirred a large amount of Workers Comp press buzz over the last week. I usually do not mention “well worn” stories unless they may apply to your specific Workers Comp situation. As I have often said – “Coming to a State Near You.”

Wisconsin Workers Comp remains unto itself. Many major differences exist between the Badger State and other states. The lack of a medical fee schedule remains one of the major differences in Wisconsin Workers Comp and most of the US.

Another reason I am mentioning this case is this is not an isolated incident. Many court systems have ruled that what was thought to be a non-employee as a direct employee. Stats such as South Carolina were the subjects of articles on this situation. (See above article search link)

One area that I noticed was the reaction by the PEO community. PEO’s are different than temp agencies. However, NAPEO (PEO National Association) published an article yesterday which directly referenced this matter.

The Court’s final conclusion is below (emphasis in bold):

CONCLUSION

¶31 In summary, we conclude the exclusive remedy provision does not bar a temporary employee from bringing tort claims against his or her temporary employer. We further conclude, based on the statute’s plain language, that WIS.STAT. § 102.29(6)(b)1. bars only those temporary employees who make claims for compensation under the Act from pursuing tort claims against their temporary employers. In this case, it is undisputed the Estate has not made any claim for compensation under the Act. As a result, § 102.29(6)(b)1. does not bar the Estate from pursuing tort claims against Alpine and West Bend. Similarly, even if Rivera was a loaned employee of Alpine, § 102.29(7) does not bar the Estate’s tort claims. The circuit court therefore erred by granting Alpine and West Bend summary judgment.

By the Court.—Judgment reversed and cause remanded.

This case will likely end up in the Wisconsin State Supreme Court on appeal. You may want to download the PDF – see first link above- and read it for your own reference. The court decision is not a very long document.

If any new developments occur, I will provide any updates on this Wisconsin Workers Comp case.

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What If Workers Comp Was Eliminated Tomorrow?

July 15, 2015 By JL Risk Management Consultants

Workers Comp Was Eliminated – Then What?

What if Workers Comp was eliminated in the Sunshine State or any other state for that matter?

Graphic Map of Florida Workers Comp Was Eliminated USA State Sunshine

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The Florida State Supreme Court will very likely rule on the constitutionality of Workers Comp in the near future.

Let us look at the insurance landscape if all Workers Comp was eliminated in total.

The first thing that would be affected is the current WC claims. What would happen to those injured employees? Would the elimination of WC be retroactive? That would be a fine mess.

The second thing that would probably happen is the carriers would be so heavily affected that some would actually go into receivership very quickly. The state guaranty funds would then have to pick up the tab. That would be a heavy liability for the states.

The third thing that would happen is Work Comp would become a litigious liability situation. Employers would bring lawsuits against their employee or negligence or contributory negligence.

The fourth set of occurrences would involve employees suing their employers when injured as liability cases. This development and third one would clog court systems for years to come.

The employers would not have liability coverage except possibly under the Employers Liability clauses in the Workers Comp policies.

Any type of network discount for medical treatment would be thrown out as fee schedules would be heavily affected overall. Workers Comp providers would have to renegotiate all contracts.

What would each of the states’ Workers Comp departments do as most of their jurisdiction and need for employees would be eliminated very quickly.

Picture of Workers Comp Was Eliminated Group of Businesspeople

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Would employers have to cover all employees under ERISA coverages similar to the current Opt-out employers in Oklahoma and Texas?

How would Workers Comp claim staffs respond as most of them are not trained in adjusting straight liability claims?

As a former multi-line adjuster, there is a night-and-day difference between a Workers Comp claim and a liability claim. Most liability claims are much more slowly paid or settled – the nature of the beast.

How about the injured employee and their family? They, unless they had a side disability policy (AFLAC, etc.), would not receive weekly benefit payments.

In my humble opinion, Florida may get what they ask for – but not in a good way. If Workers Comp was eliminated, the state insurance system would likely end up in shambles unless the State Legislature comes to the rescue.

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Exclusive Remedy Affirmed by North Carolina Appeals Court

February 19, 2015 By JL Risk Management Consultants

Exclusive Remedy – North Carolina Affirms

The North Carolina Court of Appeals has ruled the doctrine of exclusive remedy is still intact. The legal environment of today has begun to erode exclusive remedy.

North Carolina Exclusive Remedy Court of Appeals

Wikimedia Commons – NC Court of Appeals

Workers Compensation was originally structured to be the only remedy for injuries suffered on the job. Employees cannot bring suit against their employers as general liability claims. Employers are not able to deny the claim due to the employee’s negligence. This balance was the underpinning of WC for many years.

There are states that have been eroding exclusive remedy over time such as California. Recently, I came across a North Carolina Court of Appeals case that concerned exclusive remedy.

The first case was taken from the 2015 North Carolina Court of Appeals opinions. If you want to view the complete decision, please follow the link.

Plaintiff Jeffrey Bowden was injured at work. While his workers’ compensation claim was pending, he sued First Liberty Insurance Corporation, the insurer handling the claim, for intentional infliction of emotional distress and bad faith. Bowden alleged that First Liberty engaged in a host of intentionally wrongful conduct while handling his claim and that he suffered various emotional injuries as a result.

Graphic North Carolina Exclusive Remedy Map

First Liberty moved to dismiss the claims on the ground that the Industrial
Commission had exclusive jurisdiction. The trial court denied the motion and First
Liberty appealed.
We reverse. This case is controlled by Johnson v. First Union Corp., 131 N.C. App. 142, 143-44, 504 S.E.2d 808, 809 (1998) and Deem v. Treadaway & Sons Painting & Wallcovering, Inc., 142 N.C. App. 472, 477-78, 543 S.E.2d 209, 212 (2001). In Johnson and Deem, this Court held that claims arising from an employer’s or insurer’s processing and handling of a workers’ compensation claim—even intentional torts—fall within the exclusive jurisdiction of the Industrial Commission.

We agree with First Liberty that the claims asserted in this case are indistinguishable from those we previously held to be within the exclusive jurisdiction of the Industrial Commission in Johnson and Deem. Accordingly, we reverse the trial court and remand for dismissal of the claims against First Liberty for lack of subject matter jurisdiction.
____

The Woodson v Rowland case from 1991 did allow for an intentional tort to have jurisdiction outside of the North Carolina Industrial Commission.

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Texas Supreme Court Says Temps Are Employees For Workers Comp

February 1, 2012 By JL Risk Management Consultants

Texas Supreme Court Exclusive Remedy

According to an article in Business Insurance, the Texas Supreme Court ruled that even temporary employees are to be covered under a company’s Workers Comp policy. The case is Casados v Port Elevator.

Wikimedia commons – Government of Texas

A similar ruling was handed down in Texas approximately 10 years ago. A ruling such as this can have a chilling effect on employers” Workers Compensation policies in Texas – and possibly in other states.

The three basic concerns I have with this ruling are:

The employers are already paying for Workers Compensation insurance in the fee markup by the temporary agency. Requiring an employer to pay double for coverage is a violation of the basic rules on insurance. The temp agency had a valid Workers Comp policy in place at the time of the accident.
Insurance carriers will likely have no choice except to charge for temporary employees when the policy is written or at the time of the premium audit. The risk of having to cover temporary workers in now in place.
The worst effect is employers may decide to not hire temporary employees if part of the agency fee will also have to be paid again to the employers’ Workers Compensation carrier. Employers should not be discouraged with using temps in this economy.

Wikimedia Commons – Jarek Tuszyński

The case was a 2005 death case that involved a temporary worker who was killed his third day on the job in a grain storage facility accident. The Texas Supreme Court did make the proper decision on exclusive remedy. A jury did not apply the exclusive remedy doctrine and awarded the employee’s family $2.7 million. The appeals court upheld the award.

The bottom line is the Texas Supreme Court’s exclusive remedy part of their ruling was correct. The mistake was made when the temporary agency’s Workers Comp carrier was not held 100% liable as is usually the case. This was a weird take on the exclusive remedy doctrine.

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Exclusive Remedy Doctrine – Two Views From Two States

June 29, 2010 By JL Risk Management Consultants

Two Views From Two States-Exclusive Remedy Doctrine

I received a note today on the Workers Compensation Exclusive Remedy Doctrine to ask if there are any recent updates. The last two that I have seen are from Connecticut and West Virginia.

Picture Of Supreme Court Exclusive Remedy Doctrine With Gavel

123RF

A recent CT decision ruled that the Exclusive Remedy Doctrine should be held in place for Workers Comp cases. A correctional facility worker had sued ACE as the Third Party Administrator and the State of CT for breach of contract and unfair dealing when his psych benefits were determined to be palliative. ACE would not approve any more treatment.

The CT WC court ruled on a summary judgement citing the Exclusive Remedy Doctrine. When the plaintiff appealed, the Appellate Court also ruled for ACE citing the Exclusive Remedy Doctrine. Daniel D’Amico vs. ACE Financial Solutions Inc. et al.

The Appellate Court’s decision is the type that will not spike the advisory rates set by NCCI. That decision saved the employers in CT millions in premiums.

Graphic Of Hands Heart Shape Exclusive Remedy Doctrine Sunset Background

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The other side of the coin is a decision that will indirectly affect West Virginia’s Workers Comp policyholders for possibly years to come. The case involved an issue of race and that the plaintiffs were denied the right to sue under the Human Rights Act if the Doctrine of Exclusive Remedy were to be followed. This decision sent shockwaves through the West Virginia insurance industry. While this is not a Workers Compensation case, the case could be used as a springboard for eroding the Doctrine in the future.

According to the June 25th issue of The Insurance Journal Southeast Edition. “The insurance industry was surprised by the decision, according to Jill Bentz, an attorney with Dinsmore & Shohl LLP in Charleston who is also president of the West Virginia Insurance Federation. She said insurers are concerned it will lead to an explosion of lawsuits and drive up insurance costs, as was happening before the Legislature enacted reforms in 2005.

Bentz said third-party suits were costing insurers in the state more than $160 million a year five years ago and discouraging other private insurers from entering the state. According to Bentz, in 2005 the Legislature eliminated private third-party causes of action from the courts, moving them instead under the jurisdiction of the state insurance commissioner.

Cupped Hands Exclusive Remedy Doctrine Presenting Dollars

StockUnlimited

“Without a doubt the Legislature and Governor intended to prohibit these suits,” Bentz said, claiming the most recent court decision ignores this history. “Now five years later, we have an unraveling of that effort.”

Bentz said she expects insurers will seek a legislative remedy as they did in 2005.

My concern is that West Virginia already has a group of court decisions in the Workers Compensation area that have pierced the exclusive remedy veil. This case could easily be used as a basis to attempt to sue the Workers Comp carrier, TPA, or adjuster directly. Decisions such as these will never allow a free and open market in WV that Governor Manchin and Insurance Commissioner Cline have worked so hard to preserve. The legislative remedy may be the best method to prevent insurance carriers and TPA’s from starting to reduce or cease writing Workers Comp coverage in the state.

Exclusive Remedy Doctrine in Workers Compensation

June 29, 2010 By JL Risk Management Consultants

Term Of The Day – Exclusive Remedy Doctrine

The Exclusive Remedy Doctrine makes Workers Compensation claims a no-fault process.

The Workers Compensation insurance provided by an employer will cover the employee no matter who is at fault or even if the incident was purely an accidental occurrence. An injured employee’s benefits may be decreased if they did not used a supplied safety device. The reductions are extremely rare.

Graphic Of Law Book Exclusive Remedy Doctrine With Magnifying Glass

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The no-fault keeps the employer from denying the claim if it was the employee’s fault. The employer benefits as the employee cannot sue the employer if they were negligent for some reason.

Employees and their attorneys have tried to pierce this veil of no-fault insurance coverage and sue the employer as if the accident was covered by liability insurance. The courts have stuck to the spirit of the doctrine for the most part.

An insurance carrier cannot write business in a state where lawsuits are allowed that circumvent the Workers Comp insurance structure. The insurance carrier does not collect premium as if liability suits would be allowed against their insureds. There have been a few incidences where a liability suit can be brought against an insured even if the accident was covered by Workers Compensation.

The reaction of many carriers is to immediately cease writing coverage in that state or to increase premiums dramatically.

Recently, the West Virginia Supreme Court has allowed such a lawsuit. I am not sure if this would counteract all of the good work that Governor Manchin and the WV Department of Insurance have done to provide a free and open market for Workers Comp insurance.

2019 Update – The courts have allowed a few challenges to Exclusive Remedy. The doctrine stood the test of time and now keeps the jurisdiction of an industrial accident in the workers’ compensation courts.

2021 update – with the new rush of COVID-10 claims, the Exclusive Remedy doctrine of workers comp will likely be challenged numerous times in the future.