Tuesday, June 28, 2011

TX Case Demonstrates Risk of AOE/COE Denial

Because workers' compensation is a product of legislative enactment, as opposed to being tied to common law, its provisions tend to be very specific, and when the work comp statutes don't apply then the theories of common law negligence may be applicable to the detriment of the employer.

So it is in Texas, as reported this morning in WorkCompCentral News (Comp Denial Did Not Preclude Widow from Filing Negligence Suit: Top [2011-06-28]).

In Barnes v. UPS, the 1st District Court of Appeals ruled that a workers' compensation hearing officer's denial of Barnes' workers' compensation claim did not preclude Barnes' widow from filing a wrongful death suit for gross negligence.

Barnes had a heart condition that his employer was aware of. After a coronary event Barnes was placed on light duty in a warehouse that, Barnes' widow alleged, was inadequately ventilated or cooled, thereby causing or contributing to Barnes' heart attack.

The workers' compensation death claim filed by Barnes' widow was denied because Barnes' death did not meet the statutory heart attack requirements for AOE/COE.

In upholding the wrongful death civil case against the employer's summary judgment on res judicata and collateral estoppel grounds, the 1st DCA noted that there are different legal and factual standards in the workers' compensation forum versus the civil forum.

While the facts of this case are unique, the important lesson to learn is that, in business as in life, there is balance. 

Many current attacks on state workers' compensation systems seek to limit liability or restrict access to benefits by narrowly defining the grounds for compensability.

The risk in doing so is to create civil liability.

Workers' compensation is nothing more than a risk management tool - the employer's risk of civil liability is managed by providing coverage regardless of fault, and the employee's risk of financial destitution is managed by receipt of some financial assistance and medical coverage.

Risk management fails when neither goal is achieved.

So I ask those who pay the premium and seek "reform" to trim their bills, is it better to deny and risk civil liability, or provide coverage and spread the risk of civil expense and judgment to a defined benefit plan (i.e. workers' compensation)?

In the ongoing debate of state workers' compensation reforms, these questions should always be in the foreground through out the legislative debate process.

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