Thursday, March 6, 2014

It All Depends

Workers' compensation is a social and cultural phenomenon, which is why states and other governments have different execution of the same basic concept.

Time changes things too.

In the 1950s, when I was born, the standard family was a husband, wife and 2.3 children. Families are different now.

The 2010 Census reflects that more than 300 million people live in some 116 million households, and for the first time since the Census Bureau began tracking such data, fewer than half of those households are headed by a husband and wife.

Likewise, about 7.7 million Americans are living with unmarried partners of either the same or opposite sex, and 4.2 million children are part of "blended families."

And this affects workers' compensation, particularly when talking about dependent's benefits.

Most state laws concerning dependency were drafted long ago when traditional families were the norm, and the concept of proving dependency wasn't all that difficult: husband, wife, children...

Now the concept of dependency, along with the notion of what constitutes a family in America, has changed. Some states recognize same sex relationships. In other cases there may be multiple marriages in a person's life, with children from one or all of those relationships, or children from no formal relationship.

A couple of decisions by the Arkansas Court of Appeals last month show how troubling this can become, particularly for insurance companies trying to settle cases - careful determination of just who are dependents is critical.

Jeremy Royal married his second wife, Crystal Royal, in 2005. The couple had no children together but each had minor children from other marriages.

After Jeremy was killed in a work-related traffic accident in August 2010, the Starnet Insurance Co. began paying weekly benefits of $246.08 to Crystal, and benefits of $105.46 to Austin Royal and Tiana Royal – the children of Jeremy's first wife, Rosana Royal.

Starnet later stopped paying benefits to Tiana after discovering that she was not Jeremy's biological child.

The carrier also stopped paying benefits to Crystal once it learned she had separated from Jeremy in May 2010 and filed for divorce a month later.

Crystal had not asked for spousal support in her divorce filing, and she had obtained a domestic violence restraining order against Jeremy based on allegations that he had beaten her. Crystal had also removed Jeremy from her phone plan and dropped him from her health and life insurance once she filed for divorce.

However, Crystal testified that Jeremy had continued to support her during their separation, giving her money to help pay her bills and allowing her to charge purchases to his credit account with a local store.

An Administrative Law Judge ruled that neither Crystal nor Tiana were entitled to survivor benefits from Starnet.

And Starnet was denied recovery of the money it had already paid to Crystal and Tiana.

The Arkansas Workers' Compensation Commission reversed the ALJ's ruling as to Starnet's entitlement to a credit, but otherwise upheld her decision.

The Court of Appeals affirmed the commission's ruling that Crystal was not eligible for survivor benefits and reversed the commission's ruling as to Starnet's claim for a credit.

The question of dependency is a question of fact, the court said, and substantial evidence supported the commission's finding that Crystal was not, in fact, dependent on Jeremy at the time he died.

Regarding Starnet's claim for reimbursement the court said there was no statutory mechanism to make this happen (remember that workers' compensation is a wholly statutory scheme).

In another case, Myers v. The Death and Permanent Total Disability Trust Fund, Zurich American Insurance Co. had accepted a worker's death as compensable but because it couldn't figure out to whom to pay benefits, it asked the Workers' Compensation Commission for a decision.

Andrew and Samantha Myers married in 2010. At the time, Samantha had three children – Makenna Lilly, Kennady Williams and Lastyn Tomlison – with three different biological fathers.

The children all lived with Andrew and Samantha. Samantha testified that she received sporadic payments from the children's fathers, and some government assistance, but Andrew was their main source of support.

Andrew was also paying support to Haely Morris – the mother of his biological children Taylor Myers and Caleb Myers.

When Andrew died in July 2012, Samantha asserted a claim for survivor benefits on behalf of Makenna, Kennady and Lastyn, on the grounds that they had been Andrew's dependents. Haely strongly supported Samantha's claim, and even attempted to waive Taylor and Caleb's entitlement to benefits in favor of Samantha and her children.

The ALJ ruled that Haely could not waive her children's benefits, but he did find that Samantha and her children were entitled to benefits on their own right and awarded Samantha a weekly benefit of $231, and said that Taylor, Caleb, Makenna, Kennady and Lastyn each were entitled to a weekly benefit of $41.80.

The Death and Permanent Total Disability Trust Fund appealed, but the Workers' Compensation Commission affirmed the ruling.

The Court of Appeals last month ruled that Samantha and her children were entitled to death benefits, but that Samantha should not have received a larger share than her children or Andrew's biological children.

These cases are reminders that workers' compensation is a unique blend of culture, social values, economic reality and legal enforcement.

We live in a complex society. Workers' compensation tends to reflect that.

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