Workers Compensation Law Update March 2012

Transcription

1 Workers Compensation Law Update March 2012 Sean C. Pierce Carr Allison Court of Civil Appeals of Alabama Ex parte Liberty Mutual Insurance Co., 2012 Ala. Civ. App. LEXIS 67 (Ala. Civ. App. March 16, 2012) The Alabama Court of Civil Appeals granted in part and denied in part a workers compensation insurance carrier s petition for writ of mandamus, directing the Mobile Circuit Court to vacate its order denying the carrier s motion for a protective order, and directing the carrier to produce personnel files, policy and procedure manuals relating to peer review, and information regarding other lawsuits filed against the carrier for the tort of outrage. In September 2010, Kenneth Brunson sued his employer, Big Ten Tires, Inc., and its workers compensation carrier, Liberty Mutual. Brunson alleged Liberty Mutual and Big Ten Tires refused to provide all the benefits he was entitled to under the Alabama Workers Compensation Act ( Act ), and failed to pay for all reasonable and necessary medical treatment recommended by his authorized treating physician. Specifically, Brunson claimed Liberty Mutual and Big Ten Tires failed to approve a recommended back surgery. In his Complaint, Brunson alleged Big Ten Tires and Liberty Mutual were liable for the tort of outrage because of their refusal to authorize the recommended surgery. Brunson also served discovery requests which included requests for production of personnel files, policy and procedure manuals relating to peer review, and information regarding other lawsuits filed against Liberty Mutual in Alabama and other specified states that alleged the tort of outrage, or similar claims arising from Liberty Mutual s handling of workers compensation claims. Liberty Mutual responded to the discovery requests. However, Brunson later moved the trial court to compel Liberty Mutual to supplement its responses, and the motion was granted. Liberty Mutual responded to the motion to compel and moved the trial court to set aside its order granting the motion. After a hearing, the trial court granted Liberty Mutual s motion to set aside the order, however the trial court did not grant the motion to set aside as to the requests for information regarding other lawsuits. 1

2 Later, Liberty Mutual moved the trial court to issue a protective order regarding its employee personnel files, policy and procedure manuals regarding peer review, employee-incentive program, and information regarding other lawsuits filed against it. The trial court denied the motion and ordered Liberty Mutual to produce the documents, subject to certain conditions and restraints, including that other litigation documents be produced for suits in Alabama, Georgia, Mississippi, Florida, Texas, and Tennessee only. The trial court stated the requested information [was] reasonably calculated to lead to the discovery of documents evidence that Liberty Mutual improperly exercised medical judgment in place of the authorized treating physician In response, Liberty Mutual filed a petition for a writ of mandamus from the Alabama Court of Civil Appeals directing the trial court to partially vacate its order denying the protective order, and to enter a protective order regarding the disclosure of non-discoverable information. In reaching its decision, the appellate court addressed each category of documents to determine if the trial court exceeded its discretion in ordering Liberty Mutual to produce them. First, as to the documents regarding other litigation, Brunson claimed Liberty Mutual committed the tort of outrage by developing a scheme to deny medical treatment, wherein it systematically instituted policies dictating to doctors the treatment to be received by patients. To prevail on a tort of outrage claim, Brunson had to prove Liberty Mutual s conduct: 1) was intentional or reckless, 2) was extreme and outrageous, and 3) caused severe emotional distress such that no reasonable person could be expected to endure it. To meet these elements, Brunson had to show Liberty Mutual unlawfully denied recommended medical treatment that was reasonably medically necessary. Under Alabama law, a workers compensation insurance carrier denies such treatment without good and valid reasons when it: 1) fails to submit the treatment plan to utilization review; or 2) rejects the treatment plan as medically unnecessary for reasons outside those established in the Alabama administrative regulations. The appellate court found Brunson s outrage claim fell uniquely within the confines of Alabama law, such that lawsuits alleging the same claim under the law of other states would not be relevant without a preliminary showing that the other law was substantially identical to Alabama law. The appellate court s research revealed the utilization review for medical necessity used in the other 5 states listed in the trial court s order, was different than the medical necessity standard used in Alabama. Therefore, any requests for documents regarding other litigation against Liberty Mutual for claims of tortious denial of medical benefits, was not reasonably calculated to lead to the discovery of admissible evidence supporting Brunson s outrage claim under Alabama law. The appellate court also found litigation in other states was not relevant to the issue of punitive damages. The Supreme Court of Alabama has held a plaintiff cannot discover out-of-state lawsuits, asserting only similar causes of action, to support a punitive damages award. However, the appellate court found the trial court did not exceed its discretion in ordering Liberty Mutual to produce information regarding other litigation filed against it in Alabama. Consequently, the appellate court held the discovery order should have been limited to lawsuits filed in Alabama, which alleged substantially similar claims, i.e., tortious denial of medical benefits owed under the Act, by unlawfully directing the course of medical treatment. Although the appellate court agreed with Liberty Mutual that the order should be limited temporally, it found no error in the trial court s 10 year temporal limitation. With regard to Liberty Mutual s employee personnel files, the appellate court agreed such information is generally deemed private and protected from disclosure. However, the appellate court held that even documents maintained for privately employed persons can be discoverable, subject to the required application of the rule-of-reason test. Under this test, Brunson must establish the requested personnel files were clearly relevant and that he had a compelling need for the requested files because the information he sought was not otherwise readily obtainable. Using this test, the appellate court found the trial court exceeded its discretion in ordering the production of the entire contents of the personnel files. As Brunson had not named any Liberty Mutual employee as a defendant, nor had he alleged Liberty Mutual negligently hired, retained, or supervised any of the employees who handled his claim, there was no relevance between Brunson s outrage claim and the employee s resumes, credentials, training, and education. However, any information regarding employee training to assess medical necessity, to deny workers compensation medical claims on 2

3 grounds other than those set forth under Alabama law, and any information that the employees received incentives for furthering the alleged unlawful scheme to deny medical benefits, would be relevant to proving Brunson s claim for outrage. With regard to Liberty s Mutual s policy and procedure manuals for peer review, the appellate court found Liberty Mutual failed to cite any authority supporting its argument that the manuals were confidential, proprietary, and privileged. The appellate court further found the manuals would be highly relevant to Brunson s claim for outrage because they could contain information showing Liberty Mutual retained unqualified peer reviewers or apprised the peer reviewers of standards of utilization review that did not conform to Alabama law. Consequently, the appellate court found the trial court did not exceed its discretion in ordering these manuals be produced. Petition for writ of mandamus granted in part and denied in part. Nuss Lumber Co., Inc. v. Estate of Monghan, 2012 Ala. Civ. App. LEXIS 60 (Ala. Civ. App. March 9, 2012) The Alabama Court of Civil Appeals reversed the trial court s judgment, holding (a) of the Alabama Workers Compensation Act establishes an employer s right to recover from third-party funds has priority over the employee s right to those funds, and that (a) does not require assets to be liquidated to allow an employer to immediately recoup funds paid to an employee. In January 2002, Andy Monghan was injured in an automobile accident while working for Nuss Lumber, a trucking company located in Pine Hill, Alabama. Nuss Lumber ultimately paid Monghan all the workers compensation benefits due to him under the Alabama Workers Compensation Act. However, Monghan also sued several third parties. Nuss Lumber filed a counterclaim asserting its right under (a) of the Alabama Workers Compensation Act, to a credit or repayment for benefits paid, if Monghan recovered damages from the third parties. In October 2005, Monghan entered into a confidential agreement with the third parties in which funds were distributed to the Andy J. Monghan Trust ( the trust ), and an annuity held by New York Life Insurance and Annuity Corporation. Nuss Lumber moved for summary judgment under (a), seeking to recover the workers compensation benefits it paid from the third-party settlement funds. Monghan died after Nuss Lumber s motion was filed, so Nuss Lumber added the estate of Andy Monghan ( the estate ) as a party, with Monghan s widow as the estate s personal representative. At a hearing on the motion, the parties stipulated Nuss Lumber was entitled to recover $1,380, from the third-party settlement funds, and the trial court entered summary judgment resolving how the funds would be distributed from the trust and the annuity. The judgment ordered Nuss Lumber be paid a lump sum of $351, from the available funds (presumably the trust, which contained almost $500,000), and the remaining balance of $1,028, be satisfied by paying monthly payments of $14, from the annuity until January 1, However, the judgment also ordered the estate s representative be paid monthly payments of approximately $6,000, until the matter and/or Estate is resolved. Nuss Lumber appealed the trial court s decision, arguing it was entitled to receive the full value of its recovery before the estate collected any funds from the third-party settlement. The Alabama Court of Civil Appeals agreed, holding (a) establishes an employer s right to recover from third-party funds has priority over the employee s right to those funds. Therefore, Nuss Lumber was entitled to recover all the currently available funds from the settlement agreement and had priority as to funds that become available in the future, until its right to recovery under (a) has been satisfied. The appellate court justified its conclusion based on the purpose of (a), i.e., relieving an employer of the financial burden of a work-related injury by shifting the burden to the culpable party and preventing double recovery for the same injury by the employee. The appellate court reasoned the trial 3

4 court s judgment permitted the estate to receive the benefit of double payments from both Nuss Lumber and the settlement before Nuss Lumber was allowed to fully recoup the funds it was entitled to under (a). Nuss Lumber also argued the annuity should have been liquidated so it would be able to immediately recover the full amount it was owed. However, the appellate court concluded (a) did not require liquidation of the annuity, which would have effectively reduced the recovery from the third parties, explaining (a) does not require assets to be liquidated to allow an employer to immediately recoup funds paid to an employee. McDaniel v. Helmerich & Payne Int l Drilling Co., 2012 Ala. Civ. App. LEXIS 80 (Ala. Civ. App. March 30, 2012) The Alabama Court of Civil Appeals reversed the trial court s judgment, and held an employee who was injured in a motor vehicle accident, while traveling from one job site to another, fell within an exception to the going and coming rule, as he was within the employer s prescribed territory at the time of the accident, and was, therefore, injured during the course and within the scope of his employment. Michael McDaniel started working for Helmerich & Payne International Drilling Company ( Helmerich ), in May Helmerich is a drilling contractor that is hired by oil companies to drill holes or wells or to place pipes to open wells that have already been drilled. McDaniel worked on location, meaning when he was at work, he stepped out of an on-site trailer and went straight to work. Helmerich provided employees such as McDaniel with crew trailers, which had bunks the employees could stay in on location, because Helmerich wanted its crew on the worksite. McDaniel always stayed in the crew trailers when he was working. On January 9, 2008, McDaniel was assigned to work a rig in Mobile County, Alabama. However, at the time, the rig, crew, and trailers were located at a different site in Creola. On January 9, McDaniel drove from his home in Louisiana to the Creola site, where he helped the rest of the crew disassemble the rig and prepare to move it to another site in Chunchula, where the rig would be reassembled for drilling in Mobile. Later that night, McDaniel traveled to the Chunchula site where the crew s trailers had been relocated, so he could go to sleep. The next morning, January 10, 2008, McDaniel left the Chunchula site to head back to the Creola site. During the trip, it was extremely foggy, McDaniel was traveling on a muddy road in the woods, and the conditions were extremely hazardous. McDaniel traveled down a clay road for about a mile, then about three miles on a gravel road, before making it to a blacktop road. At the end of the gravel road, McDaniel s vehicle slid through a stop sign, where it was hit on the passenger side by a three-quarter ton Ford F-350 truck, causing McDaniel to be injured. McDaniel admitted that no one working on the rig had told him to stay in the crew trailer at Chunchula. It was undisputed that Helmerich did not provide McDaniel with a vehicle, per diem for food or anything else, mileage or gas reimbursement, a cellular telephone, a pager, or a radio. According to another Helmerich employee, the crew does not always stay in the trailers. Some crew members stay in a motel, or at a girlfriend s house, or they may go home to sleep. The other employee also testified that during a previous rig move, when a crew trailer was not available, Helmerich paid for the crew to stay in a hotel. At trial, the trial court entered judgment in favor of Helmerich, based on the going and coming rule. This rule provides that accidents occurring while a worker is traveling on a public road while going to or coming from work generally fall outside the course of the employment. The trial court found the exceptions to this rule did not apply in this case. McDaniel appealed the trial court s judgment. On appeal, McDaniel argued the trial court erred in concluding his accident did not arise out of and in the course of his employment with Helmerich. He further argued he was a traveling employee within the meaning of 4

5 Young v. Mutual Savings Life Insurance Co., 541 So.2d 24 (Ala. Civ. App. 1989), such that his accident did arise out of and in the course of his employment with Helmerich. In Young, a traveling salesman sustained an injury while on his lunch break. The Young court noted it had previously held that accidents occurring on the employer s premises during an employee s regular lunch break, occur in the course of employment. However, the Young court further noted there were no Alabama cases dealing with the term premises as it related to traveling employees. In holding the salesman was within the course of his employment at the time of his accident, the Young court cited the decisions of Minnesota courts, which had adopted the view that a traveling employee is considered to be conducting his employer s business anytime he is in his prescribed territory. As the injured salesman was within his prescribed territory at the time of his accident, the Young court held he was injured within the course of his employment. Helmerich argued McDaniel was not a traveling employee, as was the traveling salesman in Young, nor was McDaniel similar to the truck driver in Cummings Trucking Co. v. Dean, 628 So. 2d 902 (Ala. Civ. App. 1993), the only other Alabama case directly discussing traveling employees. As neither of these cases, nor Alabama law, defined the term traveling employee, the appellate court looked to other jurisdictions to determine whether McDaniel fit the definition. The appellate court agreed with the Washington Supreme Court that a traveling employee is not limited to those who work as a traveling salesperson or a long-haul truck driver, but instead, can include those employees who are on a temporary assignment at a fixed location. Ball-Foster Glass Container Co. v. Giovanelli, 163 Wash. 2d 133, 177 P.3d 692 (2008). The appellate court also cited a decision by the Supreme Court of New Mexico, in which the court treated oil rig workers as traveling employees, meaning employees for whom travel is an integral part of their jobs, such as those who travel to different locations to perform their duties, as differentiated from employees who commute daily from home to a single workplace. Rodriguez v. Permian Drilling Corp., 150 N.M. 164, _, 258 P.3d 443, 448, 2011 NMSC 323 (2011). Finally, the appellate court cited a decision by the Georgia Court of Appeals, wherein the court noted the workers in that case were required by their employment to lodge and work within an area geographically limited by the necessity of being available for work on the employer s job site, and hence were, in effect, in continuous employment, day and night, for the purposes of the Georgia Workers Compensation Act. Wilson v. Georgia Power Co., 128 Ga. App. 352, , 196 S.E.2d 693, 694 (1973). In this case, the appellate court noted that in order to keep his job, McDaniel was required to drive from his home in Louisiana to the rig in Mobile County. McDaniel also testified he worked a 7-day hitch, which consisted of working 12 hours a day for 7 consecutive days. Thus, the appellate court found that as in Wilson, McDaniel was geographically limited by the necessity of being available for work on the employer s job site. The appellate court further noted that regardless of whether McDaniel was required to stay in the crew trailer, one was rented and provided by Helmerich at the site of the rig, and McDaniel was invited by Helmerich to stay in the crew trailer, with an assigned bunk, free of charge. As a result, McDaniel was a traveling employee, in accordance with the definitions discussed in Wilson and Rodriguez, and arguably all three definitions discussed in Ball-Foster. Consequently, the appellate court found McDaniel, like the salesman in Young, was within the course of his employment at the time of the accident, because he was within Helmerich s prescribed territory, specifically, between the two locations at which the rig was being used. The appellate court also distinguished the present case from the Minnesota case, Gumbrill v. General Motors Corp., 216 Minn. 351, 13 N.W.2d 16 (1944), cited in Young. In that case, the Supreme Court of Minnesota observed a traveling employee is not covered by the workers compensation act once a special errand or mission begins, until that errand is completed. Relying on this observation, the Young court concluded the traveling salesman s injury was not casually connected with his employment, because he had departed on his own personal enterprise at the time of his injury. Specifically, although the salesman had stopped for lunch, after eating lunch, he noticed some blueberries across the road and fell into a ditch while trying to look at them. The Young court held that although the salesman was primarily carrying on his employer s business, in that he continued on his route after his fall, he had departed on his own personal enterprise at the time of the injury, because the possibility of slipping and falling into a roadside ditch was not a hazard peculiar to a traveling salesman. 5

6 In this case, the appellate court found McDaniel had not departed from his own personal enterprise at the time of his injury. Specifically, the appellate court noted McDaniel awoke in the crew trailer provided by Helmerich at the Chunchula site, where the rig would shortly be in operation, and then began his drive to the Creola site where the rig was being disassembled. Furthermore, McDaniel s presence in Alabama was beneficial to Helmerich, and the hazards of the route had become the hazards of the employment. In sum, the appellate court held the traveling employee exception applies to this case, and the trial court erred in concluding otherwise. Supreme Court of Alabama Workers Compensation Cases No Supreme Court cases at this time. 6