Tuesday, August 9, 2011

Kansas Reform Proves Unintended Consequences Adage

I've written before that "reform" nearly always results in unintended consequences, and the Supreme Court in Kansas affirmed that observation when it ruled that the state's 2005 reform created a fuzzy line of demarcation for making repetitive trauma claims.

In Saylor vs. Westar Energy, Saylor was a 33 year employee of Westar, and had a history of medical treatment to his knees. He never filed a workers' compensation claim for these injuries because he didn't think that workers' compensation applied - after all his knees were wearing out, not an "injury" in the lay-person sense.

The company didn't help either - rather than providing guidance on the issue of compensability the company simply accepted that Saylor was going to get his knees fixed through the general medical plan.

Saylor worked up until Feb. 6, 2006, and underwent knee replacement surgery the next day. His personal health insurance paid the medical bills. But while Saylor was recovering from surgery, a coworker told him that his injury might be considered work related and compensable. Saylor sought the advice of an attorney and filed a written notice of his claim to Westar on March 28, 2006.

Prior to the Kansas reforms in 2005, the state's courts held that a claimant's last day of work is the date of injury for repetitive trauma claims.

The 2005 reforms changed the statutory language to define the date of accident as the date the authorized physician takes the employee off work or places restrictions on the employee's physical activities while at work. If a worker has not been taken off work or placed on work restrictions, then the date of accident is, (1) when the employee gives the employer written notice of his injury, or (2) the date the condition is first diagnosed as work related and reported in writing to the employer, whichever comes first.

In Saylor's case, the date the condition was first diagnosed as work related was 3/28/06 because that was the first time that there was any evidence that a physician tagged his repetitive trauma injury as industrial.

The employer argued that such an interpretation of the plain language of HB 2142 produced absurd results (such as in Saylor) but the Supreme Court said that the Legislature had ample notice and opportunity to change the law, noting that it was warned of such consequences when the bill was in hearing.

The court said that despite conflicting evidence, both the Workers' Compensation Board and the Court of Appeals had ruled that Saylor had shown that Westar was aware Saylor had a work-related injury and did nothing about it. Kansas statute 44-510j(h) requires an employer to pay for self-procured medical treatment if it was aware of a work injury and did not provide medical care.

The consequences for Westar's failure to err on the side of workers' compensation in the handling of Saylor's claim likely means that Westar is out of pocket for the medical expense since the general health carrier will seek reimbursement for the expenses of Saylor's treatment (outside of the work comp medical cost control system), the work comp carrier will claim failure to adhere to the law and policy requirements of promptly reporting a claim, and Westar will also be on the hook for indemnity.

The lesson learned for employers beyond the caveat of "be careful what you wish for" is to err on the side of reporting any potential claim of injury to the workers' compensation carrier. The subsequent premiums might go up, but that's cheaper than paying out of pocket.

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