Client Bulletin #385

3.26.08

For PDF version of this Client Bulletin, click here.

They say that no man’s purse strings are safe when the legislature is in session. That is certainly the case for employers, and the Alabama Legislation is in session. Several amendments to the Workers’ Compensation Act have been proposed, all of which would be extremely costly and detrimental to employers. We believe these proposed legislative changes, if enacted, would debase the entire purpose of the Workers’ Compensation Act.

Senate Bill 139

Wrongful Discharge cases would be easier for employees to assert

Senator Roger Smitherman, Democrat from Birmingham, has introduced two bills. SB 139 would amend § 25-5-11.1 of the Workers Compensation Act. This is the provision which allows an employee to bring a case for wrongful discharge or termination, when the termination is “solely” because he/she has made a claim for workers’ compensation benefits. This bill, if passed, would lower the threshold for an employee to sue his employer, by changing the statute to read “substantially” terminated for making a claim, as opposed to “solely.”

Senate Bill 403

Benefits could be due for far longer and cost much more

Senator Smitherman also sponsored Senate Bill 403, supported by Senator Roger Bedford, Democrat from Russellville. This bill proposes the elimination of the three hundred week maximum for “body as a whole” benefits. An injured employee would receive benefits for three hundred (300) weeks, or until age sixty-seven (67), whichever was longer. If a twenty-two (22) year old was injured, he or she could receive benefits for forty-five (45) years, rather than three hundred (300) weeks, resulting in exposure for a single claim payout in excess of an additional $1,000,000, at present value nearly $500,000. This substantial cost would be borne entirely by employers and workers’ compensation carriers who of course would pass those costs back to employers in the form of substantial premium increases.

The current statute also provides that if the employee returns to work for the same or greater wage, the court will not consider vocational testimony. The proposed bill would change that standard from a prohibition, to provide it is only a rebuttable presumption, which would increase the cost of managing workers compensation claims and put vocational arguments back into every claim, effectively eliminating the 1992 Amendments.

The court would also be allowed to order payment in a lump sum for permanent total disability, if the employer was found to be in contempt of a previous order of court. Such an amendment would bring a flood of contempt motions against every employer who denies any kind of benefit.

The proposed changes further include eliminating the $220 per week cap on the permanent partial disability benefits, with payments instead made at the same rate as total disability, which is currently at $682 maximum. This change would add over $100,000 in exposure to serious claims by high wage earners.

The bill would also eliminate the language which provides that the benefits currently in effect at the time of any injury would be applicable during the entire period of the disability. Presumably, this would generate cost of living increases on a yearly basis, on existing claims. Finally, this bill would allow the employee to petition the court for a lump sum settlement of any future benefits, and the court power to grant the same.

This proposed amendment would also create a new cause of action for “first responders” who are defined as municipal, police, dispatchers, sheriffs and deputies, firefighters, correctional officers, and paramedics providing emergency services. This amendment would also allow claims for mental injuries or disorders that do not result from a physical injury. This would have a huge impact not only on governmental entities, but also any private company providing those services.

Senate Bill 405

Employers would be subject to more tort lawsuits

SB 405 has been sponsored by Senator Roger Bedford, and co-sponsored by Senator Smitherman. This bill would change §’s 25-5-11 and 25-5-11.1 which relate to third party claims and wrongful discharge. This would allow employees to collect their workers compensation benefits, and still sue their employers in tort – in other words contravening the entire “trade off” contemplated by the Act. This bill would also change the standard from “willful” to deliberate or intentional conduct, and allow claims, now, against the employer, and not just co-employees. “Willful” is defined as “a purpose or intent or design to injure another.” “Deliberate” is defined as “conduct which is reckless or in conscious disregard rights or safety of others.” This substantially lowers that standard. Further, if the employer or two or more managers cause the injury, the company would be liable in tort. This directly contradicts the entire theory and history of Workers’ Compensation, which is designed to prevent the employer from being sued for tort as a trade off for the requirement that employees be compensated regardless of whether the injury was caused by their own fault. Additionally, if a co-employee was liable for deliberate conduct, the employer would no longer be entitled to a set off for the recovery. It provides that if an employer fails to timely correct a hazard after notice, the employer could liable in tort for injury to an employee.

The bill also deals with written safety rules. If a policy maker or member of management violated a written safety rule or caused another employee to do so, and it as much as contributes to the injury, the employee could sue the company on the basis of respondeat superior (liability for subordinates/agents.) In the event the injured employee was able to collect from a third party, this bill would require the employer to contribute pro rata to the expenses of the third party case.

§ 25-5-11.1 would also be changed drastically under the proposed amendments. This is the provision that allows an employee to sue for wrongful discharge. The proposed amendment would change that from “discharge,” to “any adverse employment action.” This would also extend and broaden the coverage such that it would be actionable for not only employees, but applicants as well, who have any adverse “employment” action taken based on the fact that they participated in any manner in an investigation, hearing, or trial of a workers’ compensation claim of another employee. At least in theory, if the employer successfully defended a frivolous or non-meritorious comp claim, and one of the adverse witnesses applied for a job, the employer could be prohibited from refusing to hire this applicant, even if the employer felt the witness gave false testimony at trial. It would also prevent “adverse action” if the injury was with a different employer.

Senate Bill 389

Employers would be forced to pay for “living” expenses in addition to “medical expenses”

SB 389 is sponsored by Senator Zeb Little, a Democrat from Cullman. This bill proposes to modify § 25-5-77 of the Act, which is the section that provides for medical treatment. The proposal would increase the employer’s obligations to pay benefits by including “living” assistance expenses, even those which do not relate to working and generating income, to improve the employees “quality of life.” As written, these additional benefits are virtually unlimited, and could be extended to houses, cars, televisions, magazines, or anything else a judge might find to be an “assistance.” The Act currently provides for medical benefits and income replacement. It has never addressed lifestyle.

The current statute provides that if the employee is dissatisfied with his physician, and if “further treatment is required, he may select from a panel.” This amendment would delete the requirement that further treatment be needed. When the treating physician said the employee was back at base-line, and there was nothing else to be offered, the employee could simply go “doctor shopping” to find a doctor who might “treat” or “test” even when the basic prerequisite is not met that any treatment be “needed.”

There is also language which would eliminate an employer's ability to get a second opinion, and would require all panels to be “local” and the same specialty. It does not address what the employer is to do if there are not enough “local” doctors to put on a panel. The employer could be in contempt for not providing a proper panel, and subject to substantial penalties and attorneys’ fees even when it is not possible to supply such a Panel.

The bill provides that the court may appoint a neutral physician when a dispute arises, and rather than splitting the cost as is now done, this cost would be borne entirely by the employer. It would also allow the employee to ask, and gives the court the authority, to change the authorized treating physician to the “neutral” physician.

One of the most egregious aspects of this bill, is that it provides that in the event an employer failed or refused to provide medical or surgical benefits (perhaps because the employer denies the validity of the claim of an alleged injury), the employer would be obligated to pay the employee double his temporary total disability benefit, which would not count as any credit toward permanent partial disability benefits due later. This would, needless to say, double the cost of those claims.

Verbal communications between the doctor and the employer (case manager) would also be prohibited, and there would be no limitation on the employee’s ability to get treatment from the authorized physician, effectively eliminating peer-review or any other recourse for the employer. It would allow for any attorney representing an employee who had to petition a court to secure benefits after entry of an order, to be awarded attorney’s fee payable by the employer, along with expenses. It makes no provision for a good faith dispute of treatment, or other.

House Bill 502

Employers would lose control of medical through a Panel

HB 502 has been introduced by Representative James Gordon, a Democrat from Mobile. This bill would amend § 25-5-77 to allow an injured employee select their own physician, and cause the employer to pay the same fees as it would a company physician, for treatment. It provides that the employer would responsible for “no more than four (4) weeks, or up to sixteen (16) treatments on non-surgery required strains/sprains without broken bones.” Since there is no limitation for surgery or broken bones, it would appear to open the door for the employee to chose their own physician and make the employer pay if there were broken bones or surgery was involved. The employer would lose all control of the medical aspect of the case.

Conclusion

The proposed legislative changes include some of the most potentially damaging amendments for employers in Alabama history. However, they are proposed; they have not been passed. Also, they are totally one-sided. That is usually cause for the Appellate Courts to weigh in on the constitutionality of the changes to the Workers’ Compensation Act. Constangy will work with employers to oppose these lopsided and costly proposals. We believe that the proposed changes would be detrimental to employers and could jeopardize the entire workers’ compensation system in Alabama. We will let you know as it becomes more clear whether and to what extent any of these proposals may become law, in the coming months.

In the event that you have any questions about this, or need some further clarifications, please feel free to contact any Constangy attorney. Herb Sparks heads the Birmingham workers’ compensation group and may be reached at hsparks@constangy.com or 205/226-5465.

Constangy, Brooks & Smith, LLC has counseled employers, exclusively, on labor and employment law matters since 1946. The firm represents Fortune 500 corporations and small companies across the country. More than 100 lawyers work with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship. Offices are located in Georgia, South Carolina, North Carolina, Tennessee, Florida, Alabama, Virginia, Missouri, and Texas. For more information about the firm's labor and employment services, visit www.constangy.com, or call toll free at 866-843-9555.

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