An employee had an injury while working for Tyson Poultry in Arkansas. He was placed under light-duty restrictions by his physician, and Tyson accommodated those restrictions. While on light duty assignment, he got into an argument with his female supervisor and called her a pretty harsh explicative (in cartoon language: f@#* you b&!%#) . The employee was suspended for a few days and, when he returned, he was fired for insubordination and gross misconduct. Tyson cut off the employee’s TTD benefits when he was fired citing Arkansas law which allows an employer to suspend benefits if the worker refuses suitable work that accommodates his injuries. An administrative law judge denied the employee’s claim for further benefits. The Workers’ Compensation Commission reversed the ALJ’s decision, ruling that the employee was entitled to benefits. An appellate court then reversed the Commission, again, denying benefits. The case eventually went to the Arkansas Supreme Court, which held that the employee’s misconduct was just that, and did not constitute a refusal of suitable work. The Court found that after committing the misconduct, the employee returned to work, and it was Tyson’s option to fire him or allow him to continue the light duty assignment, so the employee was entitled to continue receiving TTD benefits for the remainder of the period of disability.

MY TWO CENTS

Although this is an Arkansas case, the applicable law is similar to the law that would be applied in Alabama. As was demonstrated in this case, a good faith argument can certainly be made that TTD should be cut off when an employee is basically trying to get fired. Of course you will need a good set of facts in order to be able to satisfy an Alabama Circuit Court Judge that the employee’s misconduct/insubordination was intentional.

On May 4, 2012, the Alabama Court of Civil Appeals released its decision in the case of Denmark v. Industrial Manufacturing Specialists, Inc. In that case, the Court addressed whether a 16 year old boy who suffered an ankle injury was entitled to double compensation, and whether he was entitled to be compensated according to the schedule for his leg or only for his foot. Lucas Denmark worked part time for IMS, cutting metal-bar stock using a band saw. In March 2006, he and another employee were loading bar stock onto a table, when some of it fell on his left ankle. Denmark had surgery and a metal plate was inserted in his ankle. Although he was eventually released to return to work without any restrictions, Denmark continued to complain of pain that radiated both down to his foot and up his leg. A Circuit Court Judge in Morgan County found that Denmark suffered a 10% partial loss of use of his left foot, and that since IMS had already paid TTD benefits in excess of the value of the 10% PPD, Denmark was not entitled to any additional compensation for his injuries. The trial Court also found that IMS had violated child labor laws by employing Denmark to operate a band saw, but found that he has not entitled to double compensation because there was no nexus between operating the saw and the injury.

Denmark appealed, asserting that the trial Court erred in failing to award him compensation for the partial loss of use of his leg as opposed to just his foot, and that it further erred in failing to award double compensation pursuant to § 25-5-34 after finding that IMS employed him in violation of child labor laws. Denmark argued that since his ankle is above his foot and the pain extended to his leg, he should be compensated for the partial loss of use of his leg. Denmark argued that the Court’s holdings in Boise Cascade Corp. v. Jackson, 997 So.2d 1026, 1032 n. 8 (Ala.Civ.App. 2000), Wolfe v. Dunlop Tire Corp., 660 So.2d 1345 (Ala.Civ.App. 2005), and Simpson v. Dallas Selma Cmty. Action Agency, 637 So.2d 1360 (1994) dictated that an injury extending from a larger scheduled member into a smaller scheduled member must be compensated as an injury to the larger member. However, the Court noted that according to § 25-5-57(a)(3)a.15 of the Act, the amputation of a leg between then knee and ankle shall be considered the equivalent of the loss of the foot. Since there was no evidence that Denmark’s pain extended up his leg beyond his knee, and based on the logic of § 25-5-57(a)(3)a.15, the trial Court properly found that Denmark’s injury was one limited to the foot, and not the leg.

However, the appellate Court reversed the trial Court’s decision regarding double compensation. There was no dispute that minors are prohibited from operating saws, and there was no dispute that moving large pieces of bar stock to put them into the saw was part of Denmark’s job. As such, the Court found that although Denmark was not actually operating the band saw at the time of the accident, Denmark was entitled to double compensation because he was working at a job that he was prohibited from doing due to his age.

As previously reported on August 5, 2011, the Alabama Court of Civil Appeals held in the case of Cascaden v. Winn-Dixie Montgomery, LLC that an employer need not rely upon an employee’s misrepresentation of his physical or mental condition in order to prevail on the misrepresentation defense contained in § 25-5-51 of The Alabama Workers’ Compensation Act. In Cascaden, the Court recognized that Alabama law actually provides for two separate defenses that involve an employee’s misrepresentation of his or her physical or mental condition: (1) a judicially created defense arising out of the Alabama Supreme Court’s decision in Ex parte Southern Energy Homes, Inc., 603 So.2d 1036 (Ala.1992), and (2) the defense created by § 25-5-51. According to the Court in Cascaden, the judicial misrepresentation defense applies only if the employer has relied on the false representation when making the decision to hire the employee, while the statutory misrepresentation defense, on the other hand, does not expressly require reliance on the part of the employer.

While the § 25-5-51 statutory defense relieves the employer of its obligation to pay compensation benefits (indemnity and vocational benefits), the Alabama Courts have not directly addressed whether medical benefits must still be paid when the employer successfully asserts the judicially created misrepresentation defense. However, based on the judicial history of that defense, it only stands to reason that medical benefits would not be owed. To arrive at this conclusion, we need to look no further than the Court’s opinion in Ex parte Southern Energy Homes. In that case, the employer’s core argument was that the Court should extend to cases involving accidental injuries the application of the workers’ compensation statute providing that an employee who misrepresents his physical condition regarding an occupational disease is barred from recovering all benefits. That statute, which is currently codified at § 25-5-115, is clear that an employee who falsely represents to his employer that he has never been compensated for an occupational disease will be barred from recovering compensation or other benefits under the Act or at common law. The Court in Ex parte Southern Energy Homes reasoned that it would not be a usurpation of the legislature to extend this defense to accidental injury cases, since it has long been a part of the common law that fraud in the inducement is a good defense to an action on a contract by one of the contracting parties, and that workers’ compensation is founded on the contractual relationship of the employer and employee. From this, one can infer that the Court found that when the employee is guilty of fraud in the inducement to the employment relationship (i.e., misrepresents his physical condition and he would not have been hired but for the misrepresentation), the employment contract between the employer and employee is voidable by the employer. Since The Alabama Workers’ Compensation Act only applies to employers and their employees, as those terms are defined in § 25-5-1, no benefits of any kind would be owed if there is no employer-employee relationship.

This of course leads to other interesting scenarios. Notwithstanding an employee’s misrepresentation providing a defense for the employer, an employer could also assert the employee’s fraud as a counterclaim to a lawsuit against the employer or even pursue that claim as a stand-alone action. While The Alabama Workers’ Compensation Act provides that an action for benefits is to be decided by a judge, an employer can demand a jury trial on its fraud claim. Additionally, in an action for fraud, punitive damages may even be available if a jury finds that the employee acted in a willful manner with the intent to defraud the employer.

MY TWO CENTS:

When facts are discovered that support a misrepresentation defense, it is important to determine, early on, whether or not the employer relied on the fraudulent representation. Although the § 25-5-51 affirmative defense, with no reliance element, is easier to prove, the common law defense offers more potential reward.