As we have watched the crippling U.S. debt issue devastate the stock market and shock our economy, we want our readers to note one major problem keeps coming up. We are giving away too much stuff to too many people, folks. We are spending literally trillions on entitlements and we aren’t taxing to keep up with them. Many spending programs in the federal budget were set up in such a way that outlays for them occur automatically. They're difficult to trim. Programs like Medicare, Medicaid, Social Security, unemployment compensation, food stamps and other entitlement programs must cover as many people as qualify for them, regardless of how much it costs. Many of these programs offer lifetime benefits and we are all living lots longer than when the programs were initially devised. Of course, savings could be achieved by restricting eligibility for entitlements or the amount being given away but steps like that are bound to be wildly unpopular among people who are affected.

Another wacky entitlement program we feel is running amok and costing billions are state and federal workers’ compensation programs. The problem is you start out with a good idea—taking care of injured workers is a very solid idea but now it is going haywire with claimant attorneys and claimant-friendly administrators expanding the concept way outside of any reasonable parameter. While looking up other things, we learned about full death benefits being paid to the spouse of a worker in New Jersey with an accident that consisted of—not kidding--sitting at a desk.

The best thing about this WC ruling is that it isn’t from Illinois. We are advised one of the fearless leaders of Illinois business, State Rep. Dwight Kay is fighting to get a “primary cause” amendment into IL WC law in a “trailer bill.” We salute his hard work on behalf of the businesses of this state. As we have advised all of our readers, the basic issue of causation has to make sense from a legal perspective but also from a common sense focus. Please also note whatever laws may be passed, they still require hearing officers to follow their plain meaning. Rulings such as this point to a strong trend among radical or hyper-liberal WC administrators and reviewing courts who want anything and everything that happens at work to be the responsibility of the employer. Trust us, if we move to that standard, thousands of U.S. jobs are going to move outside our borders because WC costs and more specifically death benefits are going to skyrocket into the stratosphere.

And God rest her soul and comfort her family, this woman passed because it was her time and not due to anything that she “wasn’t doing” at work for AT&T. This is one of those decisions where a common sense review indicates the New Jersey Department of Labor and Workforce Development and their reviewing courts will dump liability on the employer whatever the employee does—if the employee is active at work and passes away, it is due to the activity. If the employee is inactive and passes away, it is due to the employment because they are arguably less active than the general public.

In an exercise of apparent doublespeak which would make George Orwell blush a New Jersey Appellate Court found an employee’s “inactivity” was somehow in excess of the wear and tear of her daily living and thereby awarded her widower death benefits under their Workers’ Compensation law.

In Renner v. AT&T, N.J. App.Sup.Ct., June 27, 2011, Docket No. A-2393-10T3, a New Jersey Appellate Court awarded workers’ compensation benefits to a widower whose wife died after purportedly sitting while working at home for 10 hours. In her capacity as a manager the employee had been working on a project for AT&T at her home office. The ruling indicates after supposedly sitting in her chair for approximately 10 hours, the employee called 911 because she was unable to breathe. When she arrived at the hospital, the employee was pronounced dead from a pulmonary embolism.

Looking at that set of facts, we assure everyone it isn’t possible for anyone to sit in a chair without standing up and attending to one’s needs for ten consecutive hours. We point out someone who works at home controls their activity levels—at-home workers can take virtually unlimited breaks and/or exercise part or all of the work day. In our view, there is also significant irony present with the court’s implication an AT&T employee would somehow be “forced” or compelled to sit at a home desk. If you do the quickest of web searches, you may note AT&T’s website has a whole section devoted to “wireless” accessories designed to allow one to move around freely and not sit while working. http://www.wireless.att.com/learn/articles-resources/disability-resources/disability-resources.jsp?wtSlotClick=1-005PNZ-0-1?wtSlotClick=1-005PNZ-0-1 Their website says:

The AT&T Commitment

At AT&T, accessibility is more than a word - it's a pledge to provide wireless products and services our customers need. From working with vendors and the AT&T Advisory Panel on Access & Aging to providing alternate billing formats, we're committed to creating accessible solutions for everyone.

AT&T has lots and lots of state-of-the-art speakerphones, wireless headsets and other devices that would have allowed this employee to roam around her home and continue to work sitting, standing and walking. We are certain decedent would have to ask for them, install them and use them. You can also buy a ‘treadmill-desk’ to allow you to burn thousands of calories while working. http://www.treadmill-desk.com/; AT&T certainly could have provided support for her if she wanted to use it. Our point is she dictated how she worked at home; her employer didn’t.

The widower’s medical “expert” opined “sitting for an extended period of time precipitates stasis of blood flow that leads to the formation of blood clots.” He further opined sitting at her desk for long periods of time “contributed to a material degree in causing her death.” Other risk factors were acknowledged, including obesity and use of birth control pills.

The New Jersey statute seems to require a “work effort or strain in excess of…daily living.” In our humble view as veteran workers’ compensation lawyers, we read that to demonstrate an intent by the legislature to limit death claims and avoid employers having to pay death benefits to folks simply passing while sitting in chairs at work. The statute says:

34:15-7.2. Claim based on cardiovascular or cerebral vascular causes; preponderance of credible evidence of proof of cause by work effort. In any claim for compensation for injury or death from cardiovascular or cerebral vascular causes, the claimant shall prove by a preponderance of the credible evidence that the injury or death was produced by the work effort or strain involving a substantial condition, event or happening in excess of the wear and tear of the claimant’s daily living and in reasonable medical probability caused in a material degree the cardiovascular or cerebral vascular injury or death resulting therefrom.

The N.J. compensation judge comically found the employee’s “work inactivity was greater than her non-work inactivity.” Thus, the judge ruled the employee’s inactivity at her home office contributed to her death. We find it farcical for a hearing officer to be comparing levels of inactivity. Is it now incumbent on employers to demonstrate decedent was even more of a couch-potato while not working than while at work?

The Appellate Court noted the question “is whether [the employee’s] lack of movement at work was more severe than her lack of movement in her daily living, and whether the inactivity at work caused her pulmonary embolism in a material way.” The Court found “credible evidence exists in the record to support the judge’s finding that her work inactivity was greater than her non-work activity.” Thus, the Court held sufficient credible evidence existed to support the finding that the employee’s “prolonged inactivity while working caused her pulmonary embolism by a material degree.”

We want to be sure everyone who will listen understands such rulings are good for the claimant and his/her attorney. In our view, such rulings are wildly damaging to U.S. business. In Illinois, death claims have a minimum value of about $600,000 and a maximum value of $1.6 million. The values make some sense when you are talking about taking care of a family whose parent or guardian has tragically died due to an unforeseen event at work. In contrast, when someone spontaneously dies sitting at a desk, there are other systems that should provide protections for the families but it shouldn’t be workers’ compensation which always requires an accidental injury or occupational exposure. We truly feel the State of New Jersey will now have global coverage of any passing that occurs in the workplace. As their WC costs skyrocket, we hope their businesses move west to our state.

We appreciate your thoughts and comments. Please do not hesitate to post them on our award-winning blog—for details on the blog address, see below.

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Synopsis: Workers’ Comp 102—a quick primer on Kotecki v. Cyclops Welding in WC subrogation settings.

Editor’s comment: We were recently asked about the interchange between work accidents which resulted in an injured worker being entitled to benefits while also being able to sue a third-party, not a co-employee, for his injuries. Here are some rapid thoughts for risk managers, adjusters and other industry folks. The main trade-off in workers’ compensation was certain and rapid benefits in exchange for an end to the right to go to the courts for damages against the employer. Following that model, the Illinois Workers' Compensation Act 820 ILCS 305/5(a), generally provides the exclusive remedy against an employer for work-related injuries.

The Act does not provide an exclusive remedy as to third parties. Section 5(a) of the Act states, in pertinent part, as follows:

No common law or statutory right to recover damages from the employer, his insurer, his broker, any service organization retained by the employer, his insurer or his broker to provide safety service, advice or recommendations for the employer or the agents or employees of any of them for injury or death sustained by any employee while engaged in the line of his duty as such employee, other than the compensation herein provided, is available to any employee who is covered by the provisions of this Act, to any one wholly or partially dependent upon him, the legal representatives of his estate, or any one otherwise entitled to recover damages for such injury.

The Act further provides in pertinent part:

The compensation herein provided, together with the provisions of this Act, shall be the measure of the responsibility of any employer engaged in any of the enterprises or businesses enumerated in Section 3 of this Act, or of any employer who is not engaged in any such enterprises or businesses, but who has elected to provide and pay compensation for accidental injuries sustained by any employee arising out of and in the course of the employment according to the provisions of this Act.

To escape the exclusivity of remedy rule outlined above, and injured worker/plaintiff must prove the injury

(1) was not accidental,

(2) did not arise from his or her employment,

(3) was not received during the course of employment, or

(4) was noncompensable under the Act.

Meerbrey v. Marshall Field & Co., 139 Iii. 2d 455, 564 N.E.2d 1222 (Ill. 1990). In addition, the immunity granted by the exclusive remedy rule may be overcome in actions involving intentional torts by the employer or claims for retaliatory discharge Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 384 N.E.2d 353 (Ill. 1978).

The Kotecki model arises when the employee is injured by a third party who is not a co-employee. In such a setting, the injured worker would have two claims

A workers’ compensation claim against the employer;
What is called a ‘third-party action’ against the tortfeasor.

If the employer pays WC benefits to an employee, they have a workers’ compensation lien against any third-party action to recover the WC benefits paid. The goal of the legislation creating that lien is to avoid ‘double-recovery’ by the injured worker for medical bills and lost time paid by the employer in the workers’ comp claim. The workers’ compensation lien is outlined in Section 5(b) of the IL WC Act—the citation is 820 ILCS 305/5(b).

A concern raised in relation to the WC lien is the employer may have contributed to the circumstances of injury—in such a situation, the employer can be joined as a third-party defendant in a contribution action. Prior to Kotecki being issued by the Illinois Supreme Court, there were several years where the employer was liable for unlimited contribution. For example, if the employee received $500K in workers’ compensation benefits and sued a third-party and received $5 million dollars and the third-party could attribute 90% of the fault on the employer, the employer would owe the worker $4.5 million while recovering their workers’ compensation lien of $500K. In such a situation, the worker would get $4 million from their employer in a round-about fashion and the workers’ comp exclusive remedy concept was ended.

After the 1991 decision in Kotecki v. Cyclops Welding Corporation, 146 Ill. 2d 155, 585 N.E.2d 1023 (Ill. 1991) Illinois employers sued as third-party defendants were again only liable in contribution for the amount of their statutory liability under the Workers' Compensation Act. This limits the employers liability to both the employee and third-party defendants to the statutory amount under the Workers' Compensation Act. In the example outlined above, where the worker received $500K in workers’ compensation benefits and received $5 million in the third-party action, the employer would only owe $500K even if they were 90% liable—this situation had the net effect of ‘stripping out’ any recovery of the workers’ compensation lien but did not require the employer to pay what became known as ‘fresh money’ over and above what was paid in WC benefits.

One facet of the Kotecki limit is the limitations can be waived by contract. When one enters a contract to assume unlimited contribution liability, one waives the contribution cap as set forth by the Supreme Court in Kotecki. A party enters into such a contract with the presumed knowledge of the Kotecki limitation. Therefore, the Supreme Court will honor the contract and forego the Kotecki limitation. In finding a waiver, the contract does not have to mention the Kotecki rule. See Braye v. The Archer Daniels Midland Company, 175 Ill. 2d 201, 676 N.E.2d 1295 (Ill. 1997).

The technical and practical implications of the Kotecki rule in day-to-day claims practice is most adjusters in your situation move the WC claim along to pay medical bills and lost time. If a third party claim is filed, it is problematic to settle the permanency aspect of the claim unless and until you have a simultaneous resolution of the third-party claim.

The reason for this is most circuit court judges will cajole and pressure WC lienholders to try to force you to waive your lien and settle the civil litigation. For example, if you have paid $300K in WC benefits and know the matter will settle for an additional $200K, if you wait until resolution of the third-party claim, you may get some of the $300K already paid back to you, let’s say $50K and Plaintiff may agree to what are known as $1 contracts to end the WC claim at the Workers’ Compensation Commission. If you pay the full $500K and settle the WC lien early, you may also get $50K back in resolution of your lien but you have basically lost several hundred thousand to move faster in closing the WC claim.

We have any number of current claims pending and we are happy to consult on any claims involving Kotecki situations. Almost all of such litigation is unique

KCBA Blog

8-9-2011; Do you like irony, sardonicism and farce? The world’s top “move-while-you-work” company gets hit with death benefits for a supposedly immobile worker. The New Jersey Appellate Court...