Ohio Supreme Court Narrows Intentional Tort Liability

On November 20, 2012, the Ohio Supreme Court reigned in the circumstances under which Ohio employers can be held liable for intentional tort actions filed by employees.  Ohio's workers' compensation system is designed to limit employer's exposure to litigation in the court system. In exchange for an administratively-run, "no fault" workers' compensation program where employees can be compensated for on-the-job injuries, employers gain the assurance that they cannot be sued in the Ohio court system for negligence that may have caused the work injuries. 

Ohio statute carves out an exception to this protection that employers enjoy when an injured employee can prove that an injury sustained in the course of employment was caused by an act of the employer which intended to cause injury or was substantially certain to cause injury.  (O.R.C. 2745.01)

An intentional tort has traditionally been difficult for an injured worker to prove simply because intent is difficult to prove.  However, the Eighth District Court of Appeals made a significant dent in the otherwise restrictive intentional tort statute.  The appeals court loosely interpreted the meaning of "equipment safety guard" to include personal protective equipment, such as gloves, or perhaps goggles.  The state's high court righted the situation this week.
In Hewitt v. L.E. Myers Co., Slip Opinion No. 2012-Ohio-5317, the Supreme Court held that an employee's failure to use, or an employer's failure to require the use of protective rubber gloves and sleeves does not fall under the deliberate removal of "equipment safety guard" for purposes of the intentional tort statute.  In this case, Larry Hewitt was working as an apprentice lineman for his employer, the L.E. Myers Company.  Mr. Hewitt claimed that his supervisor told him he did not need to wear rubber gloves and sleeves because the power line with which he would be working was de-energized.  However, when a wire Mr. Hewitt was holding in his un-gloved hand came in contact with live wire, he sustained severe burns and electrical shock. 

Mr. Hewitt sued his employer under the intentional tort statute.  L.E. Myers had unfavorable rulings at trial court and appeals court.  At the two lower courts, the finding against the employer was that its failure to make Mr. Hewitt wear rubber gloves constituted a deliberate removal of equipment safety guard, which then created a rebuttable presumption that L.E. Myers had intended the injury, and L.E. Myers had not provided evidence to rebut the presumption of intent.

Fortunately, the Supreme Court reversed the lower rulings, finding in favor of L.E. Myers.  In an opinion written by Justice Evelyn Lundberg Stratton, the Court did not extend the definition of "equipment safety guard" to apply to personal protective items such as gloves, but rather found that the definition "equipment safety guard" in O.R.C. 2745.01(C) was meant by the legislature to apply to guards on machinery.  The legislative intent of the involved statute was to restrict liability, and the Court refrained "from expanding the scope of the rebuttable presumption of intent in R. C. 2745.01(C)."  Hewitt, paragraph 25. 

To sum it up for Ohio employers, the Supreme Court is keeping lower courts in check with the legislature's goal to keep the intentional tort statute very restrictive.

Ohio BWC Implements New Medicare Set-Aside Policy

As most Ohio self-insured employers know, one of the most difficult hurdles in settling a workers' compensation claim is the Medicare Set-Aside.  On November 5, 2012, BWC Administrator Stephen Buehrer announced a new BWC policy which addresses the MSA threshold for state funded settlements. 

BWC will issue a Medicare set-aside letter only if 1.) the settlement is $100,000 and over or 2.) if the settlement is over $10,000 and the injured worker is already on Medicare or has a reasonable expectation of receiving Medicare within 30 months.

While Buehrer's policy announcement appears to address settlement of state fund claims, self-insured employers can look to the BWC's MSA thresholds for guidance.  Of course, Dawson Disantis & Myers, LLC encourages SI employers to discuss MSA for Ohio workers' compensation settlements further with legal counsel.

Buehrer's MSA policy letter is below:

Interstate Jurisdiction

At the Ohio Chamber of Commerce Workers' Compensation Committee meeting on October 23, 2012, BWC Underwriting Consultant John Best discussed the important topic of interstate jurisdiction.  Of course, each state has its own laws for workers' compensation coverage with respect to out-of-state employers.  Some states have lenient jurisdiction policies, like Indiana, while others offer no grace period and no reciprocity if an Ohio employee suffers a work-related injury within its borders, like Michigan.

Ohio employers who regularly send their employees out of state should already be familiar with workers' compensation coverage rules for other states, but for those employers who rarely send employees out of state, a careful review of interstate jurisdiction is highly advisable.  Even when an Ohio employer holds a training meeting across states lines, depending on the state, an employee injured while attending the meeting might have valid claims in both Ohio and in the other state, unless the proper paperwork is completed and coverage is secured ahead of time.

Establishing jurisdiction in Ohio for work related injuries requires in-depth analysis alone, before any consideration is given to the rules of the other state.  According to a BWC legal memorandum dated March 5, 2009 written by Tom Sico, Ohio will take jurisdiction over work related injuries only after,

"A totality-of-the-circumstances analysis is used to determine whether an employment relationship has sufficient Ohio contacts to be considered localized in this state." 

BWC has a brief overview of interstate jurisdiction here.

If your company plans on sending one or more employees out of Ohio for any work-related activity or training, contact Dawson Disantis & Myers for an individualized analysis of the possible out-of-state coverage you might need.  Or, if you would like us to e-mail you a copy of the BWC's internal legal memorandum on the topic of interstate jurisdiction, give us a call and we'd be happy to forward it to you.

Permanent Partial Disability: A Process that Defies Logic

         For a couple of years now, I have threatened to write a blog article about the laughable, illogical and completely arbitrary manner in which permanent partial disability awards are handled by the Industrial Commission for Ohio workers’ compensation claims.  It was a threat because everyone in my office knows I how feel about permanent partials and that there was a very good chance that a rational review and a reasoned argument could easily devolve into me ranting about how intellectually dishonest this process is and why employers are naturally repulsed by it.  So, after some research, some outlining, some editing and rewriting, I am prepared to offer my suggestions for reforming the Commission’s processing of permanent partials.  I will allow you, gentle reader, to be the judge of whether this is a well reasoned argument or simply my rant.

            Employers seem to get worked up about some PP awards for seemingly minor, “everyday” types of injuries as well as the way in which hearing officers create compromise awards out of vastly varying opinions regarding injured workers’ impairments.  I wanted to get a sense of what is causing the stir.  Let’s start out by looking at some statistics.  Over the past three fiscal years, the number of overall claims has dropped from 132, 549 in FY 2009 to 116,378 in FY 2011.[1]  The number of lost-time claims dropped from 15,428 to 13,404 over the same span.  Medical costs also dropped from $833,508,906 to $778,853,015 while total compensation was lowered from $1,130,764,997 to $1,053,770,995 in the same three year period.  Of the total compensation, 2009 saw $23,361,375 paid in PP awards.  This went down to $20,353,634 in 2010 and up slightly to $21,033,715 in 2011.  Thus, in a system that paid out nearly $2 billion in 2009 and over $1.8 billion in 2011, permanent partial awards accounted for only about 2% of the compensation paid. 

            When I looked at these numbers, I wondered whether my angst about permanent partials was deserved.  After all, why get so worked up about a form of compensation that amounts to only 2% of the total compensation paid out each year?  But the more I thought about it, I remembered the questions from clients over the years about how the hearing officer could award something (anything) for a four year old bruise, or how they could arrive at 11% when two physicians said 4% and 5% and one claimed 25% based upon range of motion findings.  I concluded that the process should be as fair and evidence-based as possible so that the system seems fair, even if it doesn’t change the total amount paid out by one dollar.[2]  Therefore, I am not looking at the entire permanent partial process.  Others can debate whether there should be PP awards at all or how the Bureau handles them.  The focus of this article is on the process only in those cases when an objection is filed to the BWC tentative order and the matter is referred to the Industrial Commission for resolution. 

            Let’s look then at the system we have today and how we got here.  The statutory language regarding typical PP awards under Revised Code 4123.57(A) is simple and straightforward enough. 

The district hearing officer…shall determine the percentage of the employee’s permanent disability…based upon the condition if the employee resulting from the injury…and causing impairment evidenced by medical of clinical findings reasonably demonstrable.(emphasis added.)

From this it certainly sounds like the Commission is committed to awarding PP based upon objective evidence, doesn’t it?

Hoover requires “some evidence”

            The case of State ex rel. Hoover Universal, Inc. v. Indus. Comm. (10^th Dist. 1985), 26 Ohio App.3d 175 seemed to advance the notion of objective evidence controlling PP awards.  Unfortunately, the holding and lessons from Hoover seemed to have been lost.  In Hoover, the Commission granted a 25% PP based upon findings that were subjective.  In fact, the examining physician noted that the injured worker was objectively normal.  The court granted the employer’s request for a writ reasoning that “reasonably demonstrable” requires objective evidence and a complete lack of objective evidence for the award can not satisfy the statute.  The court noted the normal deferral to the Commission to evaluate evidence but reminded the Commission of the “some evidence” rule and that its decision must be based upon “some evidence” in order to withstand scrutiny.

            The court noted that “…[w]here there is no evidence upon which the Commission could have based its factual conclusion an abuse of discretion in present and mandamus becomes appropriate.” State ex rel. Hutton v. Indus. Comm. (1972), 29 Ohio St.2d 9.  Remember this point and see how it was since cast aside by the same court.

Yellow Freight endorses compromise awards

            There are plenty of cases involving permanent partial disputes.  It appears that the first time the Ohio Supreme Court squarely addressed the issue of the Commission hearing officers making compromise awards was in State ex rel. Yellow Freight System, Inc. v. Indus. Comm., 97 Ohio St.3d 179, 202 Ohio 5811.  This case involved a C92A filed for an increase award in a 1992.  The claimant had previously received a 2% award for the same shoulder in the claim.[3] The state doctor opined a 9% impairment or a 7% increase.  The claimant’s medical evidence found a 15% impairment while the employer’s physician opined 1% impairment.  The Commission ultimately awarded 7% PP, a 5% increase.

            The Court’s entire treatment of the issue of compromise awards is contained in the final paragraph of the per curiam opinion. Although Yellow Freight challenged the compromise award, they did so only partially.  Yellow Freight asserted that a compromise award was improper where one physician found an increase but the other did not.  However, Yellow Freight generally accepted “the Commission’s right to employ compromise logic”.  Oh, I wish they didn’t.  After taking the employer to task for making its argument without citing authority in support, the Court defends the practice of the Commission making compromise awards based not upon a reasoned legal analysis but because the Commission “has used this approach for years” and to prohibit the Commission from making compromises “is nonsensical and certainly does not correct any perceived unfairness to employers”.  This is the rationale to support the Commission’s practice?  “Hey, they’ve been doing it that way for a long time and it’s just nonsense to suggest otherwise.”

            If you are like me, take a deep breath at this point.  Squeeze the stress ball you got at that seminar a few years back.  Do yoga or something that will calm you down and then come back. 

            Better? Okay.  So you see the complete lack of logic in the Court’s reasoning, right?  It’s not just me, is it?  Any argument primarily advanced by “But that’s how it’s been done for years” is probably lacking.  When the follow up argument is simply to call the opposing position “nonsense”, without any reasoning whatsoever, you know the Court simply didn’t want to upset the Commission’s system of processing permanent partial applications.  Perhaps that is why we got an opinion for which no individual justice wanted to take credit.

            The problem with the compromise award is that it is really based upon no evidence.  After all, there was not a single piece of evidence in the Yellow Freight case in which an expert, a physician, opined that the claimant’s impairment was 7%.  The only person who found 7% impairment was a hearing officer.  Even if all three of the opinions considered were based upon objective evidence, not subjective findings, and thus were based upon reasonably demonstrable evidence, where was there some evidence of a 7% impairment.  There was none.  There was evidence of a 15%, a 9% and a 1% impairment.  There was no evidence of a 7% impairment.

Tenth District supports compromise awards

            In the wake of Yellow Freight, the Tenth District Court of Appeals (where mandamus cases against the Commission are filed) is not going to change its position regarding the Commission’s practice of issuing compromise awards.  In State ex rel. Wrenn v. Kroger Company (10^th Dist.), 2003 Ohio 6470, the Magistrate noted that “[o]rdinarily, when the relied upon medical reports present a range of percentages, the commission does not abuse its discretion by choosing a percentage within the range of those percentages, and there is no requirement, in that situation, that the commission explain why it has selected the percentage chosen.” Id. at P34.  Of course, the only Ohio Supreme Court decision cited as support for this proposition is Yellow Freight which, as we’ve seen, cited no authority or rationale.  The Tenth District continues to hold to this position today as evidenced by its repeated citations to this self-conceived notion, most recently in State ex rel. Houston v. Mental Health Millcreek Children’s Psych. Hosp. (10^th Dist.), 2011 Ohio 3594.

What can be done?

            Any employer or group looking to make a change in this process through the courts must know going in that it is an uphill battle.  It is pretty clear that challenging the Commission’s right to make a compromise between two or more medical opinions before the Tenth District is a losing argument.  The employer will need to be prepared to appeal to the Ohio Supreme Court.  While the make up of the Court is different now than in 2002 (five of the seven justices are different), the argument will require an assault on the Court’s faulty logic, or lack thereof, in Yellow Freight.  Would such an argument be successful or would the Court simply shrug its collective shoulders and keep the status quo?  Who knows?  Any employer willing to try, please give me a call.

            A better course of action may be to seek legislative reform through the General Assembly.  A simple change to the statute and accompanying administrative rules could instruct that hearing officers be required to choose from among the valid medical opinions before them.  This would effectively outlaw the practice of creating compromises.  Yet, such a piece of legislation probably will require a larger, more comprehensive piece of workers’ compensation reform legislation with which it would be included.  It’s hard to imagine a reform like this existing as a stand-alone bill.

If changes are made, then what?

            It is all well and good to change a flawed process just because it is intellectually dishonest and to challenge bad case law because it is constructed on a baseless foundation.  But ultimately, employers are going to want to know how making this change will affect the bottom line.  Is this change going to decrease or increase the average permanent partial award?  The honest answer is – I don’t know.  My suspicion is that eventually, it may decrease awards by a small amount.  However, when coupled with the potential to more significantly limit defenses costs on PP matters the advantages of these changes are amplified.

            If hearings officers were required to pick from among two or three opinions rather than adding the numbers and dividing by the number of reports, I predict that we would see the range of percentages in each case shrink considerably.  Instead of the Bureau doctor opining 0% and the claimant’s doctor opining 14% on some claim, we would likely see Bureau doctors finding 5% and claimant’s doctors finding 7%.  This would happen because hearing officers often award something, so they may be reluctant to choose the report that says 0%.  In that case, their only choice may be to choose the inflated 14%.  However, if the Bureau doc comes in with a low, but supportable 5% and the claimant’s examiner still says 14%, then the claimant’s report is very likely to be rejected.  In that case, the claimant has spent money on a report and has no additional money to show for it.  Naturally, claimant’s docs will begin to adjust their findings to a reasonable percentage that has a chance of being accepted.

            So, in the first scenario with a 0% and a 14% opinion, we know that many hearing officers would arrive at an award around 7%.  After all, (0+14) ÷ 2 = 7.  Of course, the employer would likely need to go to hearing before a DHO and possibly before an SHO on recon to get final award.  Without compromise awards, the opinions before the hearing officer are 5% and 7%.  If the hearing officer chooses the 7% award, the employer is no worse off.  But where the parties really win will be when the Bureau issues the tentative order for 5% and no objection is taken. 

The current system encourages claimant’s to object to the tentative order, especially when it is 0%, because they know they can get a ridiculously high opinion and usually get a compromise award that will more than pay for the doctor’s report.  If claimants know they have a small, but reasonable award in hand, they may be less inclined to spend money when the prospect for an increased award is less certain.  No objection by the claimant means no need for hearings or defense IMEs and lower costs associated with litigation for PP awards.  This will be where employers may find savings to improve the bottom line.

Conclusion

            It’s clear that fixing Ohio’s permanent partial process is not a magic bullet that will suddenly make Ohio’s workers’ compensation system more attractive to businesses.  I think it is equally clear that it is flawed both in the process of creating compromise awards and the tenuous legal authority that permits the process to continue.  Whether change comes through the courts or through legislation does not matter.  Simply by eliminating the compromise award, we could reduce litigation costs and the waste of conducting thousands of PP hearings every year.  So there you have it.  Anybody with me?

---

[1] Statistics taken from BWC Fiscal Year 2011 Report, available online at www.ohiobwc.com.

[2] As explained later, I believe a reformed system would reduce the amount of litigation associated with PP awards.  This would certainly reduce employers’ costs in terms of medical exams and the cost of having counsel at hearings.

[3] Facts were complicated by a 7% award in a 1988 claim that included the same shoulder but other conditions as well.  The 7% award was not apportioned among the allowed body parts.

Workers' Comp Reform "Wish List"

In the Winter 2011 newsletter of the Ohio Self Insurers Association, an article titled “Election Results May Bring Legislative Changes” raises some legitimate beefs with our current workers’ compensation system.  The article provides a wish list of legislative changes that would benefit SI employers in Ohio now that Republicans dominate the Governor’s office, the Senate and the House of Representatives. 

Some of OSIA’s ideas regarding workers’ compensation reform would benefit state funded employers as well as self-insured companies.  For example, requiring hearing officers to award permanent partial disability based on the medical opinion of one doctor rather than averaging the disability ratings of multiple doctors would help reduce the artificial inflation or deflation of percentage ratings.  We all know that if a state doctor opines 5% permanent partial impairment for a lumbosacral sprain/strain, and the injured worker submits a 20% report from one of the handful of doctors that the claimants’ bar uses for disability ratings, the hearing officer might compromise at a 12%.  OSIA’s proposed reform would require the hearing officer to rely upon one or the other report, so that the award will be either 5% or 20%.  If the injured worker only missed a week of work and has had limited medical care, most hearing officers would opt for the 5%.  Eventually, this would likely result in claimants’ doctors reducing their opined percentage of impairment to something more realistic, which a hearing officer might actually adopt.  We will delve into this issue in more detail in a future blog.

Another OSIA suggestion harkens back to the good old days when the effective date of an MMI finding was the date that an independent doctor offered an MMI opinion, not the date of the hearing.  As we all know, the hearing could be as long as six months after the date of the doctor’s report, once you wait for the BWC to refer the matter to the IC, wait for the IC to schedule the hearing, and wait for several continuances requested by an injured worker who wants to delay the inevitable.  The date of hearing bears no relationship to the medical finding of MMI.  It is completely artificial and only serves to eliminate overpayments for claimants by taking money from the pockets of employers.

Dawson Disantis & Myers, LLC has a workers’ compensation reform wish list of its own, should any of our legislators come knocking.

Wish No. 1:  Mandatory Treatment Guidelines

Many states have mandatory treatment guidelines that require medical providers to meet a standard of medical care, speed up return to work, and reduce disputes over treatment issues.  In fact, as of December 1, 2010, the state of New York rolled out its mandatory guidelines.  New York’s workers’ compensation board now limits the number of physical therapy and chiropractic visits that an injured worker can submit to his or her claim.  Under New York’s plan without objective evidence of functional improvement, manipulation, chiropractic care is cut off after just three weeks.  In other words, chiropractic care that simply maintains symptoms at a level that an injured worker claims is required for him to continue working won’t cut it in New York. 

Many other states also use mandatory treatment guidelines.  Some states adopt treatment protocols directly from groups such as the Work Loss Data Institute (Official Disability Guidelines – ODG) or the American College of Occupational and Environmental Medicine (ACOEM).  Others create their own with input from a number of sources.  For example, Massachusetts has 28 separate treatment guidelines, while Colorado has 9. 

The common factor among all of these states is the adoption of an evidence-based treatment model based on scientific evidence and best medical practices.  Oh, by the way, it turns out it saves money and actually benefits many, if not most, injured workers.

How could statutory regulation of treatment in workers’ compensation claims help in Ohio?  Let’s take, for example, an expensive surgical procedure we see prescribed more and more often in low back claims called spinal fusion.  Unfortunately, there are a number of “claimant-friendly” surgeons out there who never met an injured worker they didn’t cut open and fuse, regardless of the allowed conditions in the claim or indications for surgery.  The Official Disability Guidelines (ODG), a nationally recognized set of treatment rules, suggests that lumbar fusion in workers’ compensation patients is not recommended for chronic low back pain in the absence of conditions called stenosis and spondylolisthesis.  Yet, time and again Ohio claimants have lumbar fusions when the only condition involved is a disc herniation.  And, time and again we see claimants with poor results from fusion surgery.

In Ohio, managed care organizations utilize ODG along with Mercy Guidelines.  However, if a disputed medical treatment makes it to the Industrial Commission for hearing, treatment guidelines are generally out the window.  Hearing officers listen to the injured worker complain about their chronic symptoms and why they need the disputed care, and employer’s arguments about how the requested treatment doesn’t meet ODG are often disregarded by hearing officers.  The prevailing sentiment seems to be that the Commission is reluctant to stand between a surgeon and a willing patient.

Contrarily, in New York, for a lumbar fusion to be authorized, the doctor must first prove the claimant has spinal stenosis with instability or spondylolisthesis.  Even when there is spinal stenosis with instability, New York requires that there be neurogenic pain, diagnostic proof of a compressed nerve root, and lack of response to conservative care.  Absolutely none of this is required in Ohio’s system.

Wish No. 2:  Reigning in Narcotics Abuse

On February 21, 2011, Governor Kasich named former Attorney General Betty Montgomery as the head of a task force to fight prescription drug abuse that is a pervasive problem in southeastern Ohio.  It would certainly be interesting to find out how many of the 9.7 million doses of prescription painkillers dispensed by Scioto County’s doctors and pharmacies last year were paid for under workers’ compensation claims.  BWC rather than managed care organizations manage and pay for prescription medications in Ohio workers’ compensation claims.  Frankly, BWC does a woefully inadequate job of monitoring medications.  Injured workers’ submit their pharmacy bills, and BWC pays them with no questions asked.  Unless an employer or TPA asks the BWC to scrutinize the medications being paid for in a claim, the BWC rarely limits prescription medication.

This reform wish can really be considered a sub-wish of wish number 1.  Other states that have mandatory treatment guidelines often regulate the drugs permitted to treat specific conditions along with the allowable duration of those drugs.  It would not be unreasonable to have prescription medication guidelines rolled into mandatory treatment guidelines.   As it stands now, unlimited payment of prescription narcotics under workers’ compensation ends up subsidizing welfare and unemployment compensation with street values of up to $10 per pill with plenty of customers for claimants to sell to.  We’re not saying that all claimants sell their endless workers’ compensation narcotics supply, but isn’t just one who does this too many?

Wish No. 3:  Decertification of Sub-Par Medical Providers

The Bureau of Workers’ Compensation already has the authority to decertify a physician who does not provide quality care to injured workers.  The problem is that BWC does not use this tool except for extreme circumstances when a medical provider is convicted of criminal activity and/or fraud. 

To become a BWC certified medical provider, one must only have a current license to practice, have malpractice insurance, a DEA registration when applicable, and submit an IRS form W9. (The complete list of requirements can be found here.) The provider must then complete an application for provider enrollment and certification, agreeing to abide by BWC and MCO billing practices.  The provider agreement focuses mainly on billing rather than quality or standard of care for injured workers.  The only mention in the provider agreement of quality of care is, “Provider agrees to acknowledge and treat injured workers in accordance with BWC recognized treatment guidelines and the vocational rehabilitation hierarchy.”  The BWC does not specify what treatment guidelines it has adopted, because BWC has not officially adopted any treatment guidelines.

The Ohio Administrative Code gives BWC the authority, albeit toothless authority, to decertify a provider.  BWC may investigate a provider and if it finds “sufficient evidence” to decertify, it can begin the adjudication procedure to cut the provider loose.  With such vague criteria in the Code, it’s no wonder the bureaucracy can’t seem to organize or motivate itself to pursue those terrible doctors who 1.) never seem to be of the opinion that an injured worker can ever recover from even the most benign of injuries; 2.) use claimants as their own seemingly limitless gravy train with little regard for actually treating them, and 3.) prescribe narcotics and other drugs that no other insurance company would ever continue to pay for in such quantities and durations.

Wish No. 3 again leads us back to Wish No. 1.  It’s quite simple.  If Ohio has mandatory workers’ compensation treatment guidelines, medical providers who consistently seek to treat outside those guidelines can be easily booted from the system.

It’s not too much to ask, is it?  But is anybody listening?

Cuyahoga County Jury Bucks Ohio's Employer Intentional Tort Statute

On December 7, 2010, The L.E. Myers Company, an Illinois-based employer specializing in installation of transmission lines, appealed the decision of a Cuyahoga County jury who awarded almost $600,000.00 in damages to a company employee who was electrocuted while on the job.  The award represents the jury's disregard of a statute the Ohio Legislature enacted in 2005 and the Supreme Court of Ohio's upholding of that statute as constitutional in 2010. 

Article II, Section 35 of the Ohio Constitution provides for a state-run workers' compensation program mandatory for Ohio employers in order to compensate employees for injuries, occupational diseases, or death resulting from certain workplace accidents or hazards.  In return for participation in this mandatory program, Ohio employers yield the benefit of protection from certain lawsuits.  The Constitution states, "Such compensation shall be in lieu of all other rights to compensation, or damages, for such death, injuries, or occupational disease, and any employer who pays the premium or compensation provided by law, passed in accordance herewith, shall not be liable to respond in damages at common law or by statute for such death, injuries or occupational disease."  The workers’ compensation program is a trade-off, so to speak, of speedy relief for injured workers in return for limited liability for employers in the court system.

Ohio courts and the legislature have been doing a clumsy dance for the few decades trying to nail down the circumstances under which an employer would be exposed to civil litigation for damages above and beyond the compensation and benefits awarded within the workers' compensation system.  The Legislature has enacted several different "intentional tort" statutes which reflect the spirit of the Constitutional limitations on employers' civil liabilities only to be shot down by the Supreme Court, who in turn finds some fatal flaw in each version of the intentional tort statute.  Until 2010, that is. 

On March 23, 2010, the Ohio Supreme Court, in "sister" decisions regarding the constitutionality of the Legislature's latest version of the employers intentional tort statute O.R.C. 2745.01, finally found a statute they could live with.  In a final bow ending the awkward dance, the Court nodded satisfaction that the 2005 statute, trimmed of its earlier cancerous appendages, had passed the test.  You can view the two decisions here and here. 

Key portions of this brief statute require that an injured employee prove that the employer caused the injury or hazard with the intent to injure or with the belief that injury was substantially certain to occur.  Further, the statute clarifies "substantially certain" to mean that the employer deliberately intended to cause an employee to suffer an injury, disease, or death.  It does not take a law degree to glean from reading 2745.01 that it would be the very rare occasion indeed that would give rise to successful litigation that meets this standard.  An employer who acts in a negligent fashion would not suffer the consequences of 2745.01.  An employer would have to mean for an employee to get injured or die in order for there to be liability for damages outside of the workers' compensation framework. 

Yet, even after years of back and forth between the Legislature and the Court, an eight person jury of lay people, in deciding the matter of Larry Hewitt v. L.E. Myers Co., took that painfully crafted statute and chucked it out the window. 

Mr. Hewitt was working as an apprentice lineman when he hit a wire, causing electrical burns and nerve damage.  The injured worker's attorneys alleged that his safety was ignored by allowing him to be in a lift bucket without a supervisor and to work near lines that carried in excess of 500 volts. More important, it was the employer's instruction to apprentices to wear leather gloves rather than rubber gloves that the jury believed was the required  "deliberate intent" to injure Mr. Hewitt.  (See source here.)

Was it stupid for L.E. Myers Co. to instruct apprentices to wear leather rather than rubber gloves?  Certainly.  Was it negligent?  Probably was.  But for a jury to contend that the company deliberately intended for this to happen is stretching what is a reasonable conclusion way too far. 

Mr. Hewitt, pending the outcome of the appeals process, gets double recovery from his employer:  once through his workers' compensation claim and once through his lawsuit.  Isn't that just what the Article II, Section 35 seeks to prevent?

This verdict puts employers and insurance companies in a panic, for the protection they’ve enjoyed in return for paying into an expensive workers’ compensation system seems for naught.  To be certain, L.E. Myers Co.’s appeal will be closely followed with amici curiae briefs abound.

Check back with Dawson Disantis & Myers LLC as we follow this case through the Eighth Circuit Court of Appeals.

Is Privitization of Workers' Compensation What's Best for Ohio?

With the election of John Kasich to the Ohio Governorship, there has been a lot of chatter about the potential for privatization of Ohio’s workers’ compensation system.  Even Ted Strickland’s administration has at least feigned interest in exploring privatization.  In November 2009, the Ohio Senate resolved to create a task force aimed at reviewing the “feasibility of allowing employers the option to obtain private insurance in insure their obligations under the workers’ compensation system of this state.”  

The Competitive Workers’ Compensation Task Force, co-chaired by Sen. Tim Grendell (R-Chesterland) and Mary Jo Hudson (Dir. of Ohio Dept. of Insurance), has held several hearings to solicit testimony of businesses, labor unions, medical providers, and insurance representatives to determine whether allowing private insurance companies to compete with the BWC for workers’ compensation coverage makes sense in Ohio.  Some proponents of privatization believe that the Ohio Constitution, which spells out a state funded workers’ compensation system, could remain untouched if private insurance companies are permitted to compete with the Ohio Bureau of Worker’s Compensation for premiums.  Such a scheme would serve as a simpler legislative route to privatization.

Ohio remains one out of only four states that have a monopolistic or state-run workers’ compensation system.    Most recently, West Virginia’s workers’ compensation monopolistic system, which had been cash strapped, began phasing in the complete privatization of its system.  Washington had a privatization issue on its November 2010 ballot, but the initiative failed miserably. 

Though the Ohio BWC has improved rates in the last two years, supporters of privatization maintain that rates could move even lower if competition were permitted.  According to the Oregon Department of Consumer and Business Services, Ohio had the nation’s third highest workers’ compensation rates in 2008, but Ohio has improved its standings to 17^th highest for 2010.  A link to the study can be found here. Still, Ohio finds itself in better position than 16 states which allow private workers’ compensation insurance.  Privatization is not a guarantee to low rates. 

In comparing apples-to-apples, Ohio does have the highest rates of any of the monopolistic states and its rates are higher than those of West Virginia in the middle of its transition to private insurance.  The average rate per $100 of payroll for the monopolistic states are:  Ohio at $2.24; Washington at $2.04; Wyoming at $1.79; and North Dakota at $1.02.  In fact, North Dakota employers have the lowest rates in the nation.  West Virginia’s average rate is $1.84.

This begs the question:  Are private insurers the answer, or should Ohio re-evaluate its benefit structure for injured workers?  Let’s face it; we’ve all heard the horror stories of an injured worker with a simple sprain being allowed to have lost time benefits for a year or more.  Under private insurance, the claims adjusters would have more motivation than the monopolistic BWC to bring the period of disability to an end.  The insurance companies would need to stay on top of claims management in order to stay competitive and maintain a profit margin.  On the other hand, if Ohio keeps its monopolistic system but reforms benefit schedules, the results might be similar. 

For example, some states like Minnesota have a limit on the duration of weeks that an injured worker can collect temporary total compensation. Ohio is one of a very few states that pay permanent total compensation for the remainder of the injured worker’s life.  Instead, many states discontinue PTD payments after the worker reaches age 65.  What seems to be missing in many of the studies and comparisons of states’ workers’ compensation premium rates is a comprehensive analysis of the many factors that may influence rates.  Private versus state-run systems is only one factor.  Benefit schedules, provider reimbursement rates and the risk associated with prevalent industries are likely stronger factors than whether coverage is provided by a private insurer or BWC.

Governor-Elect Kasich will certainly have a full agenda, and we have to wonder where workers’ compensation reform falls on his lengthy list of priorities.  If not for the economy, worker’s compensation might move up on his list.  It seems as though we are often reminded that Ohio has a climate that is not particularly business friendly, and Ohio workers’ compensation is one reason why.  Workers’ compensation reform, whether in the form of partial privatization or benefit restructuring, is just one link in the long chain that may help pull Ohio’s economy out of the gutter.

Related Links:

http://www.legislature.state.oh.us/res.cfm?ID=128_SR_118 

http://www.property-casualty.com/News/2010/8/Pages/Hartwig-Makes-Case-For-Private-Ohio-WC-Market.aspx?page=1

https://www.ncci.com/nccimain/IndustryInformation/ResearchOutlook/Pages/default.aspx

http://www.wcrinet.org/about.html