Synopsis: Subrogation--Difficulty Increases When Claimant Doesn’t Take the Initiative!! Research and Analysis From Shawn Biery, J.D., M.S.C.C.
Editor’s comment: We advise our clients, law students and seminar attendees to always pay attention to subrogation issues and to insure close awareness, sometimes even intervening after Petitioner files a third party claim. It is even less common when a Petitioner in a WC claim has a potentially viable third party claim which isn’t pursued until the employer files the third party action. In a recent case, the Illinois 1st District Appellate Court has sent the question back to the Cook County trial court to determine whether an injured worker would be adequately represented in a subrogation case if she were not allowed to directly intervene.
In A&R Janitorial v. Pepper Construction Co., 2017 IL App (1st) 170385 (December 27, 2017) (HOWSE) the appellate court reversed and remanded a matter finding the hearing court erred in denying employee's petition to intervene in action filed by her employer against Defendants as employee's subrogee pursuant to Section 5(b) of Workers' Compensation Act.
Factually, Teresa Mroczko was working for A&R Janitorial at a Blue Cross Blue Shield building in Chicago when a desk fell on her. Pepper Construction Co. was hired to replace carpeting as part of a renovation project, and it is alleged an employee of its subcontractor, Perez & Associates, moved the desk that fell on Mroczko.
Mroczko filed a WC claim against her employer for which she has received more than $342,000 in benefits to date of the initial decision, according to the appellate court’s decision. In June 2015, Mroczko filed a personal injury claim against Pepper Construction, Perez & Associates, Interface America Inc., and the Blue Cross and Blue Shield Association. The claim was dismissed as untimely in December 2015 as she had not filed within the applicable WC two year statute of limitations. Her argument was the injury was the direct result of construction work, and said the four-year statute of limitations for bringing such a claim was applicable. However the circuit court said the two-year statute of limitations under the Workers’ Compensation Act applied to her third-party claim for liability.
Her employer however timely filed a complaint to protect its subro rights against Pepper Construction Co. and Perez & Associates in August 2014. So Mroczko, in November 2016, petitioned the court to intervene in her employer’s claim, saying she would not be adequately represented by attorneys for A&R Janitorial—arguing they would only seek their recovery for amounts paid in workers’ compensation benefits. She argued she should still be entitled to additional damages for pain and suffering.
The trial court in December 2016 denied the petition to intervene under the doctrine of res judicata (or claim preclusion to some) which prevents a party from filing the same claim against the same party after a court has already ruled on the merits in an identical case.
Mroczko filed an appeal, and while the case was pending, her employer filed an amended complaint seeking damages to cover pain and suffering, which the circuit court allowed. The underlying case settled for $850,000 while the appeal was pending.
The appellate court said whether Mroczko’s interests would be adequately protected if she were not allowed to intervene is a threshold issue the trial court neglected to answer. As such, the trial court abused its discretion by applying an improper legal standard in denying the petition, the appellate court said. The appellate court said Mroczko clearly has an interest in her employer’s case, because the employer was seeking to recover damages for her pain and suffering.
The court in part noted “Appellant contends plaintiffs cannot adequately represent her interests based on her argument that plaintiff has an incentive to settle for an amount less than, or equal to, what plaintiff paid in the workers’ compensation claim”. “On appeal, plaintiff contends it will adequately represent appellant’s interests because plaintiff may not be fully indemnified if it does not pursue maximum damages.”
Mroczko also argued her employer’s attorney had a conflict of interest—and the employer argued to refute the allegations of a conflict by arguing it never represented Mroczko, a statement the appellate court said was “incongruent” with its argument that it has every incentive to pursue maximum damages in the third-party liability case. In short, the appellate court said the statement called into question whether Mroczko’s employer was adequately representing her interest in the subrogation case.
The appellate court remanded the case for the trial court to reach a decision on whether Mroczko’s rights will be adequately represented if she is not allowed to directly intervene in the case.
We will report on any follow up decision as it becomes available. The takeaway for interested observers regardless of the final decision in this particular case, is how important it is to ensure timely filing of any third party claim when subrogation is potentially viable. We track the subrogation deadlines in claims with any potential viability and report same to our clients on all claims we defend to ensure any potential recovery is not lost due to a lack of filing.
This article was researched and written by Shawn R. Biery, JD, MSCC, who also testified as an expert witness in the underlying claim. You can reach Shawn with any questions about subrogation issues or any other employment or workers’ compensation related questions at email@example.com.
Synopsis: A Recent Federal District Court Decision Echoes Our Recommendation – Document, Document, Document. Thoughts and Analysis by Lindsay R. Vanderford, JD.
Editor’s comment: On October 31, 2017, the USDC for the Middle District of Pennsylvania granted summary judgment against an employee claiming age-based harassment and a hostile work environment after being terminated for an overabundance of non-FMLA related absences.
Mary Beth Bertig was a nurse’s aide working for a hospital named Julia Ribaudo Healthcare Group. She suffered from cancer and asthma. In a one year period from 2013 – 2014, while she was certified for Family and Medical Leave Act (FMLA) leave for her cancer and asthma, she incurred thirteen intermittent absences. Though some of these absences were related to her cancer and asthma, several others were unrelated. Due to the employer’s diligent documentation of these absences, litigation ended at the summary judgment level, well before major ongoing litigation and its related costs would be realized.
Under the hospital's policies, employees were subject to termination when they accrue seven absences in a rolling twelve month time frame. When Claimant Bertig reached and exceeded this allowance, the hospital terminated her employment.
The question before the court, and a consistent issue for employers, is whether an employee can lawfully be terminated for non-FMLA absences while others are authorized under the FMLA. Employer concerns include whether an employee will later claim they reported leave under an FMLA basis, so termination should not have been a consideration.
The USDC for the Middle District of Pennsylvania (Judge James Munley) summarized its reasoning as follows:
Bertig was entitled to take leave under the FMLA; however, by her own admission, most of her absences between April 2013 and April 2014 were unrelated to her cancer and asthma. Setting FMLA approved absences aside, Bertig still missed ten days of work for unrelated reasons, three absences more than allowed by employees prior to consideration of termination. (Bertig v. Julia Ribaudo Healthcare Group, 3:15-cv-2224-JJM).
Thoughts for Employers – Document, Document, Document
Judge Munley’s decision to dismiss Bertig’s claims was largely facilitated by her employer’s diligent policy for documenting absences and discipline. Therefore, three critical strategies are:
Document Absences In Detail
Bertig’s supervisor documented each absence and the reasons for the absence on an endorsed one-page report. These reports became the key to later consideration of termination and central to the court’s grant of summary judgment, as the employer had an actual document explaining why the employee was absent on any of the thirteen occasions discussed supra.
We at KCBA would be happy to provide thoughts and documentation to help you document absences in detail and gain success should a similar situation ever arise for your business. Just send a reply to Lindsay at her email below.
Audit Absences Prior to Making a Decision on Termination
While termination is being considered, be sure its basis is supported by those detailed reports. Confirm the pertinent absences serve as the basis for the termination decision, and verify neither approval under the FMLA or the Americans with Disabilities Act (ADA) could have been involved.
Conduct Ongoing and Interactive Discipline Processes
Unfortunately, some employers have not had sufficient dialogue with an employee to advise of expectations and whether or not they are being met. Engaging in “progressive discipline” and supporting an argument the employer did all it could to help the employee succeed leading up to termination adds a strong defense against an FMLA or ADA claim.
This article was researched and written by Lindsay R. Vanderford, JD. Lindsay can be reached with any questions related to workers’ compensation defense and employment law defense at firstname.lastname@example.org.