Workers' Compensation

Larson’s Spotlight on Recent Cases: Claimant’s Unpaid Work for Wife’s Business Did Not Constitute Fraud

Larson's Spotlight on Fraud, Unfair Settlement Practices, Penalty for Late Payment, and Altercation. Larson's surveys the latest case developments that you need to know about. Thomas A. Robinson, the staff writer for Larson's Workers' Compensation Law, has compiled the list below.

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OH: Unpaid Work for Wife's Business Warranted Forfeiture of Benefits, But Not Finding of Fraudulent Activity

In virtually all states, if an employee misrepresents the nature of his or her injury, claiming that the worker is unable to work and yet evidence is presented that the employee was engaged in gainful activity inconsistent with his or her injured state, the employee is not only disqualified from receiving workers' compensation disability benefits, he or she may have to repay some or all of the benefits already received.  In truly egregious situations, the employee may also be subjected to civil or criminal penalties.  Particularly when these additional penalties or criminal liability are to be levied, there must be strong evidence of actual intent to defraud.

The point is illustrated by a recent decision by the Supreme Court of Ohio.  Affirming a decision of a lower level appellate court, the high court held that while a claimant could not receive temporary total disability (TTD) benefits for any period in which he or she worked [Ohio Rev. Code § 4123.56(A)], a finding that the claimant committed fraud by submitting disability paperwork to the Industrial Commission and the Bureau of Workers' Compensation could not stand under the specific facts of the case.  The claimant completed paperwork that certified that he was not working, when in fact he had performed unpaid activities for his wife's business. Citing earlier decisions, the court held that where the activities were not minimal and directly generated income for a separate entity, they might be considered "work" and could disqualify a claimant from receiving TTD benefits, even where no pay was received. A finding of fraud, however, was another thing. The court indicated that there must be evidence that claimant had knowledge that his unpaid activity constituted "work" as contemplated by the statute.  The court held that here there was no such evidence. The fraud declaration could not stand.

See State ex rel. McBee v. Industrial Comm'n, 2012 Ohio 2678, 2012 Ohio LEXIS 1531 (June 19, 2012).

See generally Larson's Workers' Compensation Law, § 39.03.

TX: Unfair Settlement Claims Against Workers' Compensation Carrier May Not Proceed

Withdrawing its opinion of August 26, 2011 (reported at 2011 Tex. LEXIS 600, 54 Tex. Sup. J. 1642, and in a 5-4 decision (with one additional justice concurred with the majority), the Supreme Court of Texas reversed the state court of appeals and held that (1) claims against workers' compensation insurers for unfair settlement practices may not be made under the Insurance Code, but (2) claims under the Insurance Code may be made against those insurers for misrepresenting provisions of their policies, although in this case there was no evidence the insurer did so.  The high court also overruled Aranda v. Insurance Co. of N. Am., 748 S.W.2d 210 (Tex. 1988), by holding that an injured employee may not assert a common-law claim for breach of the duty of good faith and fair dealing against a workers' compensation carrier.  The high court indicated that in light of the specific substantive and procedural requirements built into the Act, particularly after the 1989 substantial amendments, and the detrimental effects on carriers flowing from penalties that can be imposed for failing to comply with those requirements, the court concluded that the Legislature did not intend for workers' compensation claimants to have a cause of action against the carrier under the general provisions of the Insurance Code.

See Texas Mut. Ins. Co. v. Ruttiger, 2012 Tex. LEXIS 501 (June 22, 2012).

See generally Larson's Workers' Compensation Law, § 114.04.

WI: Chapter 11 Bankruptcy Petition and Automatic Stay Prevent Imposition of Penalty for Late Payment

A Wisconsin appellate court recently reversed a trial court's order that affirmed an order entered by the Labor and Industry Review Commission that awarded a workers' compensation claimant a "bad faith" penalty because the employer was late in paying the claim.  Observing that the employer did not pay the required lump sum payment until 72 days after the settlement agreement had been approved and that the order approving the settlement required payment within 21 days, the appellate court also noted prior to the expiration of the 21-day period, the employer filed a Chapter 11 petition in bankruptcy.  That filing triggered application of the so-called automatic-stay provisions of 11 U.S.C. § 362.   Once that stay was in place, the Department's order could not be enforced, although the employer could pay the lump sum voluntarily, as it did in this case.  No penalty could, therefore, be assessed against the employer.

See Grede Foundries, Inc. v. Labor and Industry Review Comm'n (Northcott), 2012 Wisc. App. LEXIS 491 (June 19, 2012).

See generally Larson's Workers' Compensation Law, § 135.02.

NY: Injuries in Shuttle Bus Altercation Did Not Arise From Employment

A New York appellate court recently held that a claimant's injuries from an altercation with another passenger on the shuttle bus ride to a satellite parking lot did not arise out of the claimant's employment.  Acknowledging that an assault such as this one, that arose in the course of employment was presumed to have arisen out of the employment unless substantial evidence was presented that the assault was motivated by purely personal animosity, the court indicated the altercation occurred when the claimant, who suffered from an unidentified disability, asked the other passenger if claimant could exit the bus first.  When it took claimant longer to exist than the other passenger thought reasonable, a verbal argument became physical and claimant was injured.  The court agreed that the assault arose from personal hostilities unrelated to the employment.

See Claim of Belaska v. New York State Dep't of Law, 2012 N.Y. App. Div. LEXIS 4994 (June 21, 2012).

See generally Larson's Workers' Compensation Law, § 8.02.

Source: Larson's Workers' Compensation Law, the nation's leading authority on workers' compensation law.

Larson’s Workers’ Compensation Law

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