Opinion ID: 2599666
Heading Depth: 2
Heading Rank: 4

Heading: Apportionment Of Liability Among Employers

Text: On remand, the Director will be faced with the task of determining which of the Employers are liable for the payment of Flor's workers' compensation benefits and the allocation of such liability. We note that the Workers' Compensation Law does not contain any express provisions regarding apportionment of liability among multiple employers. See Kalapodes v. E.E. Black, Ltd., 66 Haw. 561, 563 n. 1, 669 P.2d 635, 637 n. 1 (1983). In Kalapodes, the claimant sustained back injuries while in the employ of several consecutive employers, ultimately resulting in a permanent disability from work. He initially filed a workers' compensation claim against his last employer, but later joined the previous employers. The LIRAB determined that twenty-five percent of Kalapodes's disability was due to the injury received while working for one employer, five percent was due to the injury received while working for another, and the remaining seventy percent was not work-related, and ordered that the two employers pay him corresponding permanent partial disability compensation in accordance with HRS § 386-32(a) (1976) [8] and, pursuant to HRS § 386-33 (1976), [9] ordered the special compensation fund to pay the remaining seventy percent of his compensation. On appeal, the employers argued that the LIRAB was not authorized to apportion workers' compensation liability among successive employers. We affirmed, holding that the LIRAB did not actually apportion liability for Kalapodes's total disability, but, rather, determined the degree of permanent partial disability that Kalapodes had sustained as a result of each of his work-related injuries as if they were separate claims adjudicated in one consolidated hearing. Id. at 563-64, 669 P.2d at 637. In the context of workers' compensation claims arising out of injury caused by an occupational disease, we have noted in the past that the LIRAB has adopted the last injurious exposure rule to assign liability as between successive employers of the claimant. Miyake v. Welders, Inc., 71 Haw. 269, 271, 788 P.2d 170, 171 (1990). See also Survivors of Kinichi Gushikien, Deceased, v. Central Pacific Boiler and Piping and Hawaiian Ins. and Guaranty Co., Case No. AB 82-2 (LIRAB 1984), published in 84-1 Haw. Legal Rep. 84-0691 (1984). The last injurious exposure rule imposes full liability for [workers'] compensation benefits on the employer or insurance carrier at the time of the employee's last exposure to a cause of the disabling disease[.] Beason v. Red Ball Oxygen Co., Inc., 702 So.2d 26, 28 (La.Ct.App. 1997) (citing Gales v. Gold Bond Bldg. Products, 493 So.2d 611 (La.1986)). Pursuant to the last [injurious] exposure rule, determination of liability is not dependent upon the date of disability. The last [injurious] exposure rule is not a rule of causation. Instead,... liability falls on the last employer to expose [c]laimant to the occupational hazard for which claim is made. Crabill v. Hannicon, 963 S.W.2d 440, 444 (Mo.Ct.App.1998) (citing Johnson v. Denton Const. Co., 911 S.W.2d 286, 288 (Mo.1995)). The last injurious exposure rule is the majority rule in successive employer or insurer cases, either by judicial adoption or by express statutory provision. Larson [Workmen's Compensation Law], supra § 95.20 [ (1984) ]. It has been utilized in occupational disease cases including those involving asbestosis, silicosis, pneumoconiosis, tuberculosis, arthritis, dermatitis, occupational loss of hearing, and various other diseases produced by inhalation of chemicals and fumes. Id. at § 95.24. The last injurious exposure [rule] is particularly useful for allocating liability in occupational disease cases, which often involve a number of employers and insurers. Id. The rule avoids the necessity for identification of all employers and insurers as well as the assessment of the proportion of exposure during each employment and thereby prevents frequent and protracted delays in payments to claimants. See, Lowery v. McCormick Asbestos Company, 300 Md. 28, 475 A.2d 1168, 1174 ; Inkley v. Forest Fiber Products Company, 288 Or. 337, 605 P.2d 1175 (1980) and Larson, supra, § 95.24. Most courts have felt constrained to interpret the workers' compensation laws to adopt such a rule so as to best serve the interests of employees who suffer from occupational disease, rather than to attempt an adjustment of their rights in the light of equities that may exist between successive employers. See Wilson v. Van [Buren] Burner County, 198 Tenn. 179, 278 S.W.2d 685 (Tenn.1955). Even though the liability imposed under this rule can have a harsh result in a particular case, it is believed that there will be a spreading of the risk when the total picture of occupational disease litigation is considered on an industry-wide, long term basis. Osteen v. A.C. & S., Inc., 209 Neb. 282, 307 N.W.2d 514 (1981); Cordero v. Triple A Machine Shop, 580 F.2d 1331 (9th Cir.1978); Travelers Insurance Company v. Cardillo, 225 F.2d 137 (2nd Cir. 1955); Lowery, supra ; and Larson, supra, § 95.24. Another possible solution to the successive employer or carrier problem would be to apportion liability among all causative employers and their insurers on the basis of the employee's proportionate exposure to causative factors during each employment or coverage. As Professor Larson observes, this would be the ideal theory in a perfect world, i.e., a world in which all previous insurers were within the jurisdiction of the board, and the proportion of disability which occurred when each was at risk could be easily measured. Larson [at] § 95.12 (footnotes omitted). In summing up the problems and complications of the apportionment solution, he states: Obviously, however, this isn't a perfect world and apportioning liability is complicated by such problems as out-of-state employers, statutes of limitations, and the difficulty of determining the proportion of liability attributable to each insurer. This latter problem is further complicated by the necessity of determining whothe insurers or the employeeis to bear the burden of establishing the basis for apportionment. Nonetheless, apportionment is a frequently used solution. See also, Osteen v. A.C. & S., Inc., 209 Neb. 282, 307 N.W.2d 514, 519 (1981); Tennessee Tufting Company v. Potter, [206 Tenn. 620] 337 S.W.2d 601, 602 (Tenn. 1960); Employers' Mutual Liability Insurance Company v. McCormick, 195 Wis. 410, 217 N.W.738, 742 (1928); and Mathis v. State Accident Insurance Fund, 10 Or. App. 139, 499 P.2d 1331 (1972). The last injurious exposure rule avoids most of the problems of the apportionment solution and because of this promotes efficient administration, speedy payment of claims, and, in most instances, provides the highest level of benefits for the claimant. Gales, 493 So.2d at 616-17 (emphases added). The Louisiana Supreme Court's reasoning is persuasive. We note that, in amending HRS § 386-33 in 1982, [10] our legislature adopted a simplified scheme of apportionment in special compensation fund proceedings reflecting the goal of reducing litigation and its accompanying costs. [T]he legislature stated: The purpose of this bill is to reduce the cost of administering workers compensation claims in those cases where the employee before his work injury suffers from a previous disability. While the bill will reduce administrative and legal costs connected with workers' compensation claims, it will not reduce benefits paid to injured employees. .... Your Committee finds that Section 33 in its existing form contributes to the cost of workers' compensation by introducing uncertainty as to whom should bear liability for work injuries, by encouraging litigation and by encouraging appeals to the Labor and Industrial Relations Appeals Board. The section in its present form requires the director or the Appeals Board as the case may be to make a hypothetical and inherently difficult decision whenever a work injury combines with a previous disability to result in greater permanent partial or in permanent and total disability. In such cases the director or the board must quantify that disability which would have resulted from the injury without the previous disability. Often this determination is extremely difficult. Physicians frequently are unable to quantify the impairment before an injury and often disagree among themselves. Thus a good deal of uncertainty is injected into workers' compensation cases making settlements less likely and promoting costly litigation. The existing provisions of Section 33 also contribute to the cost of administering workers' compensation claims by providing a strong incentive to employers to conduct an exhaustive search of the employee's entire medical history in the hope of finding a previous disability. If earlier injuries or health problems are turned up, litigation with the Special Compensation Fund ensues. Bumanglag, 78 Hawai`i at 281, 892 P.2d at 474 (quoting Sen. Stand. Comm. Rep. No. 215-82, 1982 Senate Journal, at 1040-41) (ellipsis points in original) (emphasis omitted). The legislature's preference for low-cost, simplified procedures in adjudicating workers' compensation claims militates, as a general rule, against apportioning liability among responsible employers and/or insurers when employment with multiple successive employers has contributed to the progression of an employee's occupational disease. The virtue, such as it is, of the last injurious exposure rule lies not in achieving individualized justice, but, rather, in the utility of spreading liability fairly among employers by the law of averages and in reducing the risk and cost of litigation. Bracke v. Baza'r, 293 Or. 239, 646 P.2d 1330, 1336 (1982). The rule serves to designate an identifiable event for the assignment of liability for the sake of reducing uncertainty in a way which is somewhat arbitrary. Id. at 1337. However, [t]here is no reason to apply the rule with any greater arbitrariness than is required to achieve its purposes. Id. at 1337 n. 5. In the absence of difficulty in identifying a definite and certain moment for liability to attach, the rule has no useful application. Singer Co. v. Smith, 362 So.2d 590, 593 (Miss.1978); see also Port of Portland v. Director, Office of Workers Compensation Programs, 932 F.2d 836, 840-41 (9th Cir. 1991) (holding that under last injurious exposure rule, followed by federal courts interpreting LHWCA, no liability can be imposed on employer who could not, even theoretically, have contributed to causation of disability); Parks v. Flint Steel Corp., 755 P.2d 680, 683 (Okla.1988) ([t]he rule cannot be used to hold claimant's subsequent employer responsible for compensation for claimant's disability, which, according to the unrefuted medical evidence, was caused by and arose during claimant's [prior employment]). In Bond[ v. Rose Ribbon & Carbon Mfg. Co., 42 N.J. 308, 200 A.2d 322 (1964) ], the [New Jersey Supreme] Court considered the problem of assessing liability for an employee's occupational disease where the inception of that disease cannot be accurately pin-pointed and the employee worked for successive employers or was covered by successive insurance carriers. In doing so, the Court said: Where, as here, an employee is exposed to work conditions which activate or cause a progressive occupational disease, and the existence of such disease remains undisclosed and unknown over a period of time, it is impossible upon ultimate revelation of its existence by medical examination, work incapacity, or manifest loss of physical function, to pinpoint in retrospect, the triggering date of such activation or inception. It is also impossible to reconstruct the daily rate of progress of the disease from its genesis to discovery through one of the afore-mentioned means, where such employee continues to be exposed to work conditions which aggravate the existing disease in unascertainable stages. It follows that where the employment under such work conditions was under the aegis of successive employers or insurance carriers, from initial infection or activation to discovery or manifestation, it is impossible to accurately determine the inception and the rate of progress of the disease during such respective periods of employment or insurance coverage. Therefore, any apportionment of compensation liability between the successive employments or insurance coverages, must of necessity be speculative and arbitrary. To avoid the morass into which litigation would be pitched were apportionment required, and to eliminate the recognized unsatisfactory nature of any such attempted ascertainment, we conceive that the most workable rule and the most consistent with the philosophy and public policy of the Worker's Compensation Act is to hold liable that employer or carrier during whose employment or coverage the disease was disclosed as above noted, i.e., by medical examination, work incapacity, or manifest loss of physical function. Although this test is admittedly arbitrary and may on occasion cause some apparently unfair results, over the years it should result in an equitable balancing of liability. Under the circumstances we conceive it to be the fairest and most workable thesis. [42 N.J. at 311, 200 A.2d 322].... The Supreme Court clarified Bond in Giagnacovo v. Beggs Bros., [64 N.J. 32, 311 A.2d 745 (1973) ]. There the Court held that two of the stated criteria for manifestation of an occupational disease under Bond, i.e., medical examination and manifest loss of physical function, represent in substance two methods of revelation of a specific degree of physiological pathologyone which is fixed, arrested and definitely measurable. Id. at 38, 311 A.2d 745. And see Akef v. BASF Corp., [140 N.J. 408, 658 A.2d 1252 (1995) ] ([w]hen there is evidence that a condition underlying a disability was obvious, diagnosable and capable of measurement, compensation for the resultant disability should be apportioned to or among those employers ... to cover the periods of prior employments during which the underlying condition was discoverable and measurable. ... ). Levas v. Midway Sheet Metal, 317 N.J.Super. 160, 721 A.2d 724, 729-30 (Ct.App.Div. 1998) (holding (1) that final employer was not completely liable for total disability caused by pulmonary occupational disease that manifested itself during previous employment as partial disability and (2) that allocation of liability among employers who contributed to condition was required) (some brackets added and some in original). In our view the legislature is in a better position to determine what circumstances require [equitable] apportionment than we are. In the absence of a specific statute on the subject, however, it would appear to us to be applicable only in those rare cases in which substantial and almost uncontroverted medical testimony will permit a precise allocation of responsibility between or among different employers or insurers for the employee's disability. In any event, in any case in which the employment immediately preceding the employee's temporary total disability is conceded to have been a contributing cause of such disability, the employee is entitled to receive full benefits promptly from the insurer then furnishing compensation coverage, whether or not the right to equitable apportionment against a former insurer or employer may exist. Michels v. American Hoist & Derrick, 269 N.W.2d 57, 59 (Minn.1978). See also Atlas Elec. Indus. v. Workmen's Compensation Appeal Bd., 72 Pa.Cmwlth. 476, 457 A.2d 158 (1983) (holding that where ... the current state of medical science cannot apportion an insidious disease among its several causative factors, the more recent employer will be held solely liable for an employee's total disability `because it subjected him to a hazard which contributed to the disability'); Pacher v. Fairdale Farms, 166 Vt. 626, 699 A.2d 43 (1997) (holding that last injurious exposure rule is appropriate only where separate injuries all causally contribute to the total disability so that it becomes difficult or impossible to allocate liability among several potentially liable employers and affirming apportionment where liability of each employer could be fairly defined without confusion either to employers or to employees). We hold that if an employee's occupational disease is medically diagnosed and ultimately causes the employee's work disability, then the employer and/or its insurer at the time of such diagnosis are liable for the payment of the employee's workers' compensation benefits. [11] We further hold that subsequent employer and/or its insurer at the time of the employee's diagnosis, are solely liable only if the contribution of the subsequent employment to the development of the disability is established by medical evidence and there is no rational basis for apportionment. Finally, we hold that if the medical evidence establishes a rational basis upon which to apportion liability among successor and/or predecessor employers and/or their insurance carriers and the apportionment will serve the interests of fairness to both the employers and the employee entitled promptly to receive the compensation, then the Director is authorized to order such an apportionment. In the present matter, Flor's hepatitis C was actually and conclusively diagnosed on January 12, 1994. Thus, her employers on that date are liable for the payment of the benefits relating to the claim that had accrued by the time the condition caused her to cease employment on May 4, 1996. However, the record reflects uncertainty as to the time and source of Flor's initial infection and the possible contribution of Flor's various employers to the disease's development. Consequently, we do not believe that there is a basis for an apportionment of liability that would be less arbitrary than holding liable the employers at risk at the time of the diagnosis of Flor's hepatitis C. The foregoing analysis has been focused on determining the relevant date for purposes of assigning liability to Flor's employers. We have applied a modified version of the last injurious exposure rule in holding that Flor's employers and/or their insurers as of January 12, 1994 are liable for the payment of the benefits to which her claim entitles her. Inasmuch as, on that date, Flor was concurrently employed by three dentists, who were insured by two carriers, the Director will be required to determine the liability of each of those employers for her workers' compensation benefits. The last injurious exposure rule is not helpful in resolving the additional and distinct matter of apportioning the liability of multiple and concurrent (as opposed to successive ) employers. Riverboat Hotel Casino v. Harold's Club, 113 Nev. 1025, 944 P.2d 819, 823 (1997). [T]he [last injurious exposure] rule makes complete sense in the context of successive employments which contribute to an occupational disease; it makes little sense in the present context, where the worker was exposed to conditions which contributed to her occupational disease in two separate but simultaneous employments. Id. (quoting Colwell v. Trotman, 47 Or.App. 855, 615 P.2d 1094, 1096 (1980) (noting that distinction between successive employments and concurrent ones can become blurred but reversing agency decision to place full liability for dental hygienist's elbow condition, which was developed while working for two dentistsone on Tuesdays and another on Wednesdays, Thursdays, and Fridayson the Wednesday through Friday employer when the employee's last day of work was Friday and the agency applied last injurious exposure rule)). The apportionment of liability among concurrent employers involves an exercise in fact-finding. Id. at 824 (citing Larson, § 48.50 (1996)). The Nevada Supreme Court, in Riverboat Hotel Casino, supra, held that, in concurrent employment situations, apportionment on the basis of each employer's responsibility for wages was appropriate and that the employers were responsible for the injured employee's claim in the same proportion as they contributed to her overall wages. Id. Similar results have been reached by several other courts. In Timmons, supra, the claimant was a dental hygienist, who worked part-time for two dentists from September 1991 until she was diagnosed with hepatitis B in February 1992. It was uncontested that hepatitis B was an occupational disease for health care workers, but both employers asserted that Timmons could not meet her burden of proving the particular dental office at which she had contracted the virus. The medical expert testimony established that Timmons, who tested negative for hepatitis B in January 1991 and did not present any risk factors other than her employment as a dental hygienist, had acquired the virus while in the employ of one of the dentists for whom she had worked since September 1991, but that it was impossible to determine which of the dentists it was or from which precise patient the disease had been contracted. The Timmons court held that when an employee contracts an occupational disease while doing similar work for two concurrent employers, one employer can be held liable for the employee's workers' compensation benefits only if it can be shown that the occupational disease was contracted as a result of the employee's work for that one specific employer. However, if it cannot be determined whether the employee contracted the occupational disease from a specific employer, then both concurrent employers are liable. Any other result would violate the public policy of compensating employees for injuries sustained while working in the course of his or her employment. Apportionment of liability between two concurrent employers is a factual determination appropriately made by the Board. 652 A.2d at 1083. The Timmons court therefore affirmed the apportionment of liability between the two employers in accordance with their wage liability. See also Clemmer v. Carpenter, 98 N.M. 302, 648 P.2d 341 (Ct.App.1982); Holdren v. Lease Management, Inc., 61 Mich.App. 508, 233 N.W.2d 59 (1975) (holding that joint employers of worker injured in accident were liable for compensation award in proportion to employee's earnings); but see Oilfield Safety and Machine Specialties, Inc. v. Harman Unlimited, Inc., 625 F.2d 1248 (5th Cir.1980) (dual employers are jointly and severally liable for compensable injuries under LHWCA). We note that the Workers' Compensation Law provides for apportionment of liability for an injured employee's benefits between the employer and the special compensation fund when the employee is concurrently employed in more than one employment and sustains an injury while working for one of the employers. See HRS § 386-51.5 (Supp. 1999). [12] However, the statute does not address the circumstance of multiple concurrent employers being simultaneously liable for the employee's benefits. We hold that in those circumstances, the Director may apportion liability among the liable employers. Furthermore, we agree with the courts that have approved the apportionment of liability in proportion to the wages earned by the employee in the employ of each of those employers. Such a rule is consistent with the general principle that workers' compensation disability benefits are determined on the basis of the employee's weekly earnings, see HRS § 386-31, and it is simple to apply, thereby reducing the risk and cost of the litigation respecting the liability of each of the concurrent employers.