Joseph Grace v. Standard Furniture Manufacturing Company, Inc.:

On July 23, 2010, the Alabama Court of Civil Appeals released this opinion wherein it affirmed the trial court to the extent that evidence of earning loss capacity was held inadmissible. Specifically, it was proven at trial that the claimant was earning more than he was at the time of the injury. The claimant argued on appeal that the Return to Work Statute merely creates a rebuttable presumption that the plaintiff sustained no loss of earning capacity. The Court noted that the case law cited by the claimant all predated the 1992 Amendments and the Return to Work Statute now states in no uncertain terms that evidence of earning capacity loss shall not be considered. The Court also reversed the trial court’s decision to consider only the impairment rating allocated to the new injury. Evidence at trial revealed that the treating physician reduced the impairment rating so as not to include any impairment related to preexisting conditions. The trial judge adopted the doctor’s reduced impairment rating. The claimant argued that his preexisting conditions should not have been considered and the impairment rating should not have been reduced since he was able to work without restriction at the time of the accident. The Court agreed and reversed the trial court on that issue.

W.A. Kendall & Company, Inc. v. Ryan Madison:

On July 23, 2010, the Alabama Court of Civil Appeals reversed a verdict in favor of the plaintiff for permanent and total disability. At trial, the plaintiff presented evidence that he developed two boils under his left arm pit which were lanced. His employer was provided notice of the boils. The plaintiff later developed a right wrist injury, a staph infection, and endocarditis of the mitral valve in his heart which required surgery. The trial judge held that the notice requirement was satisfied because the employer was told about the boils. The overwhelming medical testimony, however, demonstrated that the staph infection, which caused the mitral vale problem, was caused by the wrist injury. As a result, the Court of Appeals reversed the trial court with instructions that it make a finding of fact as to whether notice was provided to the employer.

On April 17, 2009, the Court of Civil Appeals released its opinion in Lana Brown v. Patsy Patton d/b/a Korner Store. You can find a summary of the holding on our Blawg under the causation category (see categories listed in column on right). Since the release of this opinion, it has been routinely cited by attorneys as binding law that claimants no longer have to prove that their injuries arose out of their employment. However, it is an unpublished opinion and, therefore, not yet binding authority. the reason being that the employer filed a petition for a writ of certiorari with the Supreme Court which was granted. As a result, the Court of Civil Appeals did not enter a certificate of judgment pursuant to Rule 41 of the Alabama Rules of Appellate Procedure. Therefore, until the Supreme Court releases its opinion, the decision by the Court of Civil Appeals, which arguably does away with the "arising out of" portion of legal causation cannot be considered legal precedent.

Until the Supreme Court rules one way or the other the Lana Brown case is not the law in Alabama. As a result, claimants must continue to prove that their injuries occurred in the course of their employment and that their injuries arose out of their employment.

In cases where a worker is injured by a third party’s wrongdoing the workers’ compensation insurance carrier is entitled to recover a portion of the benefits it pays out from the responsible third party (or their insurance company).  For example, if a delivery worker injures themselves during the course of a delivery on a third party’s property because of a third party’s negligence, the worker will have a workers’ compensation claim and the workers’ compensation insurance carrier will have a claim against the third party.  The workers’ compensation carrier’s derivative claim is called a subrogation lien.

There are many occasions where the cost of litigation makes it inefficient for the WC carrier to pursue this lien, especially in cases involving small compensatory medical benefits and no lost time at work.  Arbitration Forums’ Special Arbitration Agreement, however, provides a cost effective avenue for subrogation on these smaller claims.  Arbitration Forums (AF) has hundreds of members nationally that are either self-insured businesses or insurance carriers.  If the WC carrier and the third party’s insurance company are both AF members, and both are signatories to AF’s Special Arbitration Agreement, then the WC carrier will be able to compel arbitration for their subrogation lien under Article First (c) of the Agreement.  The Agreement allows for compulsory arbitration for recovery of the benefits paid to the worker only, and does not include additional damage that could have been sought by the injured worker.  AF will not be able to handle any claims where an injured worker is pursuing his or her own claim.

This ability to compel arbitration greatly reduces the costs of pursuing payment from the third party insurance carrier.  These lower costs vastly increase the number of claims where it is worth pursuing subrogation and could potentially result in millions of dollars saved over the long run.

According to AF’s website, “Recovery in Special Arbitration is ideal when: [a] third party tortfeasor is denying your lien; claimant will not be pursuing the bodily injury claim and recovery is allowed by state law; workers’ compensation benefit that were paid are relatively low and it isn’t costeffective to pursue through third party litigation; the foreign state provides for an independent right of recovery; claimant acknowledges that he is not represented and will not be pursuing a third party action.  Recovery in Special Arbitration for workers’ compensation may be problematic when: claimant is represented by counsel and either pursuing or planning to pursue a third party action, depending on the state you are in; claimant is pursuing an injury claim and by state law your lien is subject to that recovery; the foreign state does not provide for an independent right of recovery for the workers’ compensation carrier; the time period in which a carrier has to initiate a third party action has expired and the right to file now belongs to the claimant; future credit concerns overshadow the carrier’s interest in recovery of its lien.”

My Two Cents:

Ala. Stat. 25-5-11 doesn’t give an employer the pursue a subrogation lien independently until the statute of limitations has passed for the worker to pursue his own claim against the third party tortfeasor.  Once the statute of limitations has lapsed, the workers’ compensation insurer will have a six month window to file suit.  It is during this period that the Special Arbitration Agreement member workers’ compensation insurance carrier should determine if the opposing insurance company is also a signatory to the agreement.  If both companies are, then the workers’ comp carrier should submit their claim to AF and compel arbitration.

Ala. Stat. 8-1-41 (3) says that pre-dispute arbitration agreements are unenforceable under Alabama law.  However, this statute is preempted by the Federal Arbitration Act, 9 U.S.C. 1-14, in contracts affecting interstate commerce.  The United States Supreme Court has rejected the Alabama Supreme court’s stringent test that a contract must have a “substantial effect on interstate commerce” and instead has held that a contract must only “affect commerce” (which gives the broadest permissible exercise of Congress’ Commerce Clause Power) in order for the Federal Arbitration Act to apply.  Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (2003).  Arbitration Forums’ Special Arbitration Agreement has signatories from insurance companies and self-insured employers all over the country.  It would almost definitely fall within the “broadest permissible exercise” of the Commerce Clause.  Therefore, the Federal Arbitration Act should govern any subrogation dispute that would arise from the Agreement, and 9 U.S.C.   2 specifically states that pre-dispute arbitration agreements are valid.

There are two of Arbitration Forums’ Rules that must be followed if the Special Agreement is being used to compel arbitration.  Rule 2-1 has a clause stating, “Special Arbitration should be filed within 180 days of payment to the claimant or the delay may be asserted as an affirmative defense if it can be shown to have caused prejudice to the party raising the defense.”  Since Alabama law only allows the workers’ comp carrier 6 months (180 days) to file a claim all legitimate Alabama claims should meet this rule.

Rule 1-2 states, “When a matter that should have been filed in arbitration under one of the Agreements is placed in litigation, the party filing in litigation must dismiss/discontinue the suit within 60 days of notification of the adverse party’s signatory status . . . if suit is not dismissed/discontinued, the party seeking removal may be entitled to statutory interests and all costs and expenses the court may deem appropriate.”  This basically places an affirmative duty on the party seeking subrogation to find out if the opposing party is also a signatory to the Special Arbitration Agreement.  If both parties are signatories, then Arbitration Forums is the only appropriate forum where subrogation can be sought.

One area that is unclear under Alabama law is whether or not filing for arbitration will toll a statute of limitations.  It is suggested that the comp carrier file arbitration as soon as they verify that the defendant company is a signatory to the Agreement, but if there are any unforeseen circumstances that make the possibility of arbitrating seem uncertain between filing and the end of the six month window, that the company go ahead and file the claim in state court in order to preserve the subrogation lien.

 For more information be sure to check out Arbitration Forums website and Gary L. Wickert’s article, “Sweating the Small Stuff: Arbitrating Workers’ Compensation Subrogation Files.”

www.alabamaworkerscompblawg.com

Although workers' compensation matters are exempted from HIPAA, it is a regular practice to have the claimant sign HIPAA releases so that the employer's attorney can review all of the claimant's medical records.  Does this release give the defense attorney the right to re-disclose the records to an expert witness?

Probably so. 45 C.F.R.164.508 (c)(2)(iii) of the Health Insurance Portability and Accountability Act (HIPAA) states that in every HIPAA release, language must be included that puts the patient on notice of, “The potential for information disclosed pursuant to the authorization to be subject to re-disclosure by the recipient and no longer protected by this subpart.”                                                                             

While any HIPAA compliant release should put the claimant on notice that the records may be re-disclosed, there is no harm in clarifying that this means the records will likely be shown to an expert witness.  Including language like, “I understand that once the above information is disclosed, it may be re-disclosed by the recipient and the information may not be protected by federal privacy laws or regulations, including disclosure to expert witnesses who may review the records for litigation purposes,” is probably a good practice.  It will put the claimant on notice that an expert witness will possibly review his records and will help the defense to avoid any allegations that they released records without permission.  The defense should also have the expert witness sign a non-disclosure/confidentiality agreement in regards to the records in order to further protect the plaintiff’s Personal Health Information.

If the client is a covered entity then it is necessary for there to be a Business Associate Agreement in place between the attorney and the client before any records can be released to the attorney.  Covered entities include health care providers, health care clearinghouses, and health insurance plans (but not workers’ compensation insurance carriers).  Once the Business Associate Agreement is in place, the attorney must then have the expert witness enter into a written agreement where he agrees to be bound by all the restrictions of the attorney-client Business Associate Agreement.

An often overlooked section of the Alabama Workers’ Compensation Act is the right to a jury trial. Factual and legal issues for workers’ compensation cases are typically resolved by a judge following a bench trial. When asserting a defense of willful misconduct however, the Act allows for the employer to demand a jury trial. If an employer does not demand jury trial; a plaintiff may do so by filling demand within five days after the appearance of the employer. The jury makes a determination only on as to willful misconduct; with the judge adjudicating the rest of the trial issues. Such a determination is "subject to the usual powers of the court over verdicts rendered contrary to the evidence or the law." In other words the judge can replace the jury’s findings if they are wholly unjustified by the law or facts.

My Two Cents:

It is the duty of a trial judge to liberally construe the Act and resolve all reasonable doubts in favor of the employee. A jury, on the other hand, may be less likely to lean towards the employee’s side. As such, making a jury demand may be a way to help level the playing field.