ISIA Fall Seminar

Indiana Self-Insurers Association (ISIA) Fall Seminar October 8, 2010

Case Law Update

Robert Fanning
DUE DOYLE FANNING & ALDERFER, LLP
rfanning@duedoyle.com

Federal Court

Brown v. Cassens Transport -

The plaintiffs, six employees of Cassens, alleged that Cassens, its TPA and a doctor engaged in an illegal scheme to deny them worker's compensation benefits. They relied upon the Federal Racketeer Influenced and Corrupt Organizations Act (RICO). Cassens moved to dismiss the RICO claim, which motion was denied. Cassens appealed to the US Court of Appeals (Six Circuit) which affirmed the denial of the Motion to Dismiss. Cassens appealed to the US Supreme Court, which refused to hear the appeal. Thus, the case was returned to the Federal District Court for further action and the court then ruled that the employee's claim was within the exclusive remedy provision of the Michigan Worker's Disability Compensation Act and also that the RICO statute was not applicable because the plaintiff failed to allege an "injury to business or property" as required by the Act.

Indiana Supreme Court

Travelers v. Jarrells -

Jarrells was injured at work and Travelers paid worker's compensation benefits in the amount of $66,000. Jarrells filed a third party suit and was awarded approximately $509,000. Travelers demanded payment of its lien, reduced for Jarrells'comparative fault and attorney's fees. Jarrells refused to pay the lien. Travelers intervened in the civil suit and the trial court held that the jury had already set off the lien from Jarrells' award and that to make Jarrells pay Travelers would impose a double set off. The Court of Appeals reversed and entered judgment for Travelers, but the Supreme Court held that the trial court was correct.

At trial, the Indiana pattern jury instruction with regard to collateral sources was used, but the Supreme Court found that instruction to be ambiguous as it relates to worker's compensation. The Supreme Court reasoned that the trial court was in the best position to determine what the jury intended and also that there was no way by which the jury could have determined the amount Jarrells would have to repay to Travelers when the comparative fault was taken into consideration.

Indiana Courts of Appeal

Eastern Alliance Insurance v. Howell -

Howell was injured at work in June, 2005 and Eastern Alliance was the worker's compensation insurance carrier. Howell claimed an aggravation of the same injury at work in February, 2007 and Chubb was the worker's compensation insurance carrier. Neither Eastern Alliance nor Chubb paid the second claim, each contending that the other was responsible for it. The Board awarded damages for a lack of due diligence against Eastern Alliance in the amount of $6,667 and against Chubb in the amount of $13,333. Eastern Alliance appealed; Chubb did not. The evidence showed that Eastern Alliance had received the medical records and had a good faith belief that those records established that the plaintiff's problem was due to the second accidental aggravation of her condition and was thus Chubb's responsibility. Even so, Eastern Alliance offered to split the claim with Chubb subject to a later determination as to which of the insurance carriers was responsible. Chubb refused and so neither carrier paid for the claim.

The Court of Appeals found that Eastern Alliance's actions and their proposal to resolve the dispute showed due diligence and therefore the penalty against Eastern Alliance was reversed with instructions to the Board to determine whether the $6,667 should be assessed against Chubb.

Abbott v. Mainsource Financial Group -

The employee had a compensable injury when she was confronted by a back robber. She suffered cardiac and psychological symptoms for which the employer provided treatment. The cardiac condition returned to normal and the psychological condition resulted in a 5% permanent partial impairment rating which the employer paid. The attending physician prescribed Lipitor and Coreq, both of which were intended to prevent a future heart attack. The attending physician also indicated that any future cardiac symptoms would likely be precipitated by another stressful event.

The Board found that the employer was not responsible to pay for the medications because they were not prescribed to limit or reduce the impairment, since she had no impairment with regard to the heart. The employee appealed and the Court of Appeals affirmed, stating also that since any future cardiac symptoms would be the result of a new stressful event, the medications prescribed to reduce the reaction to such an event were not required because of the compensable event.

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