Source: https://www.insurancelawhawaii.com/insurance_law_hawaii/workers-compensation/
Timestamp: 2019-04-22 06:48:47+00:00

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Overruling its prior decision, the Texas Supreme Court held that newly enacted legislation did not waive governmental immunity for suits based on a political subdivision's alleged retaliation against an employee filing a workers compensation claim. See Travis Century Appraisal Dist. v. Norman, 2011 Tex. LEXIS 324 (Tex. April 29, 2011).
Ms. Norman started work for the Travis Central Appraisal District (TCAD) as a probationary employee in January 2006. She was terminated six months later, shortly after filing a workers compensation claim. Ms. Norman claimed she was terminated for seeking workers compensation benefits and sued TCAD for retaliatory discharge under the Texas Anti-Retaliation Law. The trial court and court of appeals agreed with Ms. Norman that governmental immunity had been waived for the retaliatory discharge claim.
In City of LaPorte v. Barfield, 898 S.W. 2d 288 (Tex. 1995), the Texas Supreme Court analyzed two provisions of the Texas Labor Code, the Anti-Retaliation Law and the Political Subdivisions Law. The court determined that the Political Subdivisions Law effectively waive governmental immunity for retaliation claims under the Anti-Retaliation Law. The Anti-Retaliation Law created a cause of action against a "person" who discharged or discriminated against an employee for filing a workers compensation claim in good faith. The statute did not define the word "person." Although there was no clear and unambiguous waive of immunity in the Anti-Retaliation Law itself, Barfield held that the Political Subdivisions Law waived governmental immunity for retaliation claims.
Subsequent to Barfield, however, a 2005 amendment to the Political Subdivisions Law broadly provided, "nothing in this chapter waives sovereign immunity or creates a new cause of action." This current version of the Political Subdivisions Law was too internally inconsistent to be a clear and unambiguous waiver of governmental immunity. Therefore, the Political Subdivisions Law no longer waived immunity for retaliatory discharge claims.
Because a retaliatory discharge claim could not be brought against the government without its consent and the Political Subdivisions Law no longer provided such consent by waiving the government's immunity, Ms. Norman's claim had to be dismissed.
The insured employer adequately pled its claims against the California State Compensation Insurance Fund (SCIF), allowing it to survive a demurrer. Edward Carey Constr. Co. v. State Compensation Insurance Fund, 2011 Cal. App. LEXIS 457 (Cal. Ct. App. March 25, 2011, certified for publication April 20, 2011).
Edward Carey Construction Co. (CCC) had a workers compensation policy from SCIF. During the policy period, CCC's employee, Edward Carey, suffered a work-related injury. When notified of the injury, SCIF respond that the policy had been cancelled. As a result, CCC was required to pay for Carey's medical treatment not covered by his health insurance. CCC also had to hire counsel to obtain benefits under the policy.
CCC was successful in obtaining a ruling in arbitration that its policy with SCIF was in full force and effect at the time of Carey's injury. When SCIF refused to reimburse CCC's attorney fees for the arbitration and the full amount of benefits owed under the policy, CCC filed suit.
SCIF filed a demurrer, arguing that the Workers Compensation Appeals Board had exclusive jurisdiction over the claims alleged in the complaint. The trial court granted the demurrer.
The Court of Appeals reversed. The court relied on a host of cases addressing similar issues, including Courtesy Ambulance Serv. v. Superior Court, 8 Cal. App. 4th 1504 (1992), Sec. Officers Service, Inc. v. State Compensation Ins. Fund, 17 Cal. App. 4th 887 (1993), and Maxon Indus., Inc. v. State Compensation Ins. Fund, 16 Cal. App. 4th 1387 (1993). These cases established that the insured employer had different and distinct rights against its workers' compensation carrier than an employee claimant. Moreover, as a party to the insurance contract, the employer could sue for breach of contract if the insurer failed to perform. This included suing under"bad faith" principles for tortuous breach of the implied covenant of good faith and fair dealing. Legal fees incurred in enforcing its rights under the policy were also recoverable by CCC.
An upcoming article in the Pace Law Review will address the use of social networking in insurance and worker's compensation litigation. The abstract and draft article are here. The article addresses the intersection of professional responsibility, discovery, privacy, and evidence with social networking in state workers’ compensation systems.
Thanks to the authors, Gregory M. Duhl, Associate Professor of Law at William Mitchell College of Law in St. Paul, Minnesota, and Jaclyn Miller of Fitch, Johnson, Larsen, & Held P.A. for sending us the link to the abstract and draft article to post on our blog.
Valuing an insured's "net worth" for determining eligibility for benefits under the Hawai`i Insurance Guaranty Association Act was before the court in C. Brewer and Company, Ltd. v. Hawaii Insurance Guaranty Assoc., 2010 Haw. App. LEXIS 200 (Haw. Ct. App. April 28, 2010).
C. Brewer bought excess workers' compensation insurance coverage from The Home Insurance Company. In 2003, Home was declared insolvent by a New Hampshire court. By December 31, 2004, C. Brewer had paid out $322,000 in excess workers' compensation claims, which would have been covered under the Home policy. C. Brewer applied for reimbursement from Hawai`i Insurance Guaranty Association (HIGA).
The Hawai`i Insurance Guaranty Association Act created HIGA to provide claims coverage to insureds if their insurers became insolvent. An insured was eligible for reimbursement from HIGA if its net worth was less than $25 million. To prove its net worth as of December 31, 2002, C. Brewer submitted statements for fiscal years ending June 30, 2002 and 2003. Although these statements indicated that C. Brewer's total equity interest on December 31, 2002 was approximately $16 million, HIGA treated a $116 million debt owed C. Brewer as an asset and concluded that C. Brewer's "new worth" exceeded $25 million.
The parties disagreed on the meaning and method of valuing "net worth." C. Brewer argued that "net worth" referred to a company's shareholder's equity and was "book" or "balance sheet" net worth, as indicated on financial statements prepared in accordance with generally accepted accounting principles (GAAP). HIGA, on the other hand, argued that "net worth" should be calculated according to a common sense and universally accepted definition, which would mean C. Brewer's net worth exceeded the $25 million threshold. Therefore, the disagreement was not whether "net worth" was assets minus liabilities, but on the "assets" part of the equation, i.e., what value to assign a company's assets and whether an amount of money owed to a company should be considered an asset.
The trial court held that GAAP should be used to determine net worth and awarded damages to C. Brewer in the amount of $106,150. The ICA affirmed. For purposes of the statute, "net worth" was "book" or "balance sheet" net worth as governed by GAAP. This interpretation was consistent with the purpose of the Act, i.e., "to avoid excessive delay in payment and to minimize financial loss to claimants or policyholders because of the insolvency of an insurer." HRS 431:16-105.
Thanks to my Damon Key colleague and fellow blogger, Mark Murakami, (http://www.hawaiioceanlaw.com) for circulating this recent decision.
The liability of an insurance agent for failure to include coverage for workers compensation in the insured's policy was the issue in Williams v. HILB, Rogal and Hobbs Ins. Serv. of California, Inc., B203691, 2009 Cal. App. LEXIS 1496 (Cal. Ct. App. Sept. 9, 2009).
John Williams and Steve Simon obtained a dealership from Rhino USA to operate in California. Rhino installed spray-on linings onto the beds of pickup trucks. Rhino USA referred Williams to Robyn Thaw, an insurance agent who held herself out as the expert on the insurance needed for Rhino dealerships. Williams did not request any specific type of insurance, but asked Thaw for whatever insurance was needed to operate the business. Thaw was aware that sprayers had a dangerous job and it would be important for an employer to know if it had no coverage for a sprayer's on-the-job injuries. She also knew that workers compensation insurance was mandatory in California.
A policy with Travelers was sent to Williams, who scanned it briefly and assumed it contained all the insurance he needed to operate the business. No workers compensation was included, however. A year later, the policy was renewed with Hartford Casualty Insurance Company, but again it did not contain workers compensation coverage.
Subsequently, employee Kendall Mann suffered severe burn injuries in a fire at the Rhino dealership. When Williams called Thaw to report the accident, he learned for the first time that his Rhino dealership did not have workers compensation coverage. Mann sued and secured a judgment for $11 million, $6.8 of which the Rhino dealership was responsible. Hartford paid $1 million in partial satisfaction, leaving $5.8 million outstanding on the judgment.
Williams and Simon sued Thaw's employer, HRH, for negligence. Thaw testified that she discussed workers compensation coverage with Williams and told him the premium would be $6,204. Thaw wrote no memorandum to the file, however, to indicate that workers compensation coverage had been offered and declined. Her employer had a form entitled "telephone discussion record" which was to be completed for every call, but it was not used to memorialize Thaw's conversation with Williams. The trial court found William's testimony that he was never advised about workers compensation coverage more credible than that of Thaw. The trial court determined that That was negligent "as she failed to use the skill and care that a reasonably careful insurance professionals would have used in similar circumstances." Judgment was entered against HRH for $5.8 million.
The Court of Appeal affirmed. Thaw's failure to advise Williams of the necessity for workers compensation insurance, which was mandatory in California, and not include such coverage in the policy breached the duty she assumed by holding herself out as the expert to satisfy Rhino's insurance needs.
Whether the insured was acting within the course and scope of his employment contract was at issue when the Eighth Circuit Circuit reversed the District Court's determination of no workers' compensation coverage in Merriam v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, No. 08-3547, 2009 U.S. App. LEXIS 15698 (8th Cir. July 17, 2009).
In 2004, the insured contracted to become a truck driver and independent contractor for Landstar Ranger, an interstate trucking company. The contract required the insured be covered under a workers' compensation policy. Accordingly, the insured secured a Contractor Protection Plan (CPP) from National Union. The policy allowed recovery for occupational accident benefits at $1,000,000 per accident and nonoccupational accident benefits at only $7,500. "Occupational" accident was defined as one which "occurs or arises out of or in the course of the Insured Person performing services within the course and scope of contractual obligations to the Contractee (Landstar)."
The insured was performing a run from Sparks, Nevada to Cedar Rapids, Iowa, when he stopped at his home in Boone, Iowa for a mandatory federal Department of Transportation break. He noticed his gravel driveway had a sinkhole, making it impossible to park his truck. The insured used his own dump truck to lower gravel into the sinkhole. When he was unable to put the bed of the dump truck into neutral, he reached under the truck bed to see whether a cable had caught. The truck bed fell on him, causing serious injury.
Aware the insured was injured while using a personal vehicle, National Union determined the accident was nonoccupational-related and issued benefits of only $7,500. The insured sued for breach of contract and bad faith. The District Court granted summary judgment to National Union. The District Court reasoned that Landstar could not have reasonably foreseen that plaintiff's act of fixing a personal vehicle would fall "within the course and scope" of his contractual duties to haul cargo for Landstar.
The Eighth Circuit disagreed. The insured's decision to take his mandatory break at his home and to fill the sinkhole with gravel so he could park in his driveway could be viewed as attempting to fulfill specific contractual obligations to Landstar. These acts helped ensure the load was delivered with diligence, speed, and care. The insured's actions, therefore, fell within "the course and scope" of his obligations to Landstar under the independent contractor agreement. If the accident occurred as the insured claimed, it was "occupational" as defined by the policy. Therefore, summary judgment was premature.
The Eighth Circuit affirmed dismissal of the bad faith claim, however. National Union engaged in more than a cursory investigation into the claim. The claim was fairly debatable and National Union had an objectively reasonable basis for its denial.
If attorney fees based on a percentage of damages are unreasonably low, should the court depart from the statutory percentage and award reasonable fees? The court did so in Murray v. Mariner Health and Ace USA, No. SC07-244, 2008 Fla. LEXIS 2011 (Fla. Oct. 23, 2008).
Petitioner, a nurse, sought workers compensation benefits, including attorney fees, after suffering injury. The employer and its insurer denied benefits. At an administrative hearing, $3,244.21 in benefits were awarded. The Florida fee statute provided fees equal to 20 percent of the first $5000 of benefits secured. Elsewhere, the statute granted the successful claimant "reasonable attorney fees" from the employer and insurer. At a hearing on fees, evidence was presented that the prevailing rate in workers' compensation cases was established at $200 per hour. Nevertheless, the hearing officer award fees of $684.84, or $8.11 per hour, under the statutory formula.
On appeal, the Florida Supreme Court found an ambiguity because the statute called for "reasonable" attorney fees while simultaneously requiring use of a formula that could produce an unreasonable result. The Court turned to rules of statutory construction. Where two statutory provisions were in conflict, the specific provision controlled the general provision. The provision awarding "reasonable attorney fees" was more specific and controlling. Further, if the formula provision controlled, the reasonable fee provision would be rendered meaningless because the formula could result in adequate fees in some cases and excessive fees in other cases.
Hawai`i has a fee shifting statute allowing the prevailing party in assumpsit cases to receive fees up to 25% of the judgment. Haw. Rev. Stat. 607-14. An insured, however, would likely seek fees under the fee statute provided in the Insurance Code, Haw. Rev. Stat. 431:242, which allows reasonable attorney's fees when the insurer contests coverage and is ordered by a court to pay benefits under the policy.

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