Thursday, September 18, 2014

Perils of Non-Subscription

Though a lot of us have been crowing about the benefits of good non-subscriber plans, they are not without risk to the employer, some of the same issues with fair treatment and delivery of benefits still apply as in standard workers' compensation cases.

A Texas employer discovered that tough reality when the 5th District Court of Appeals at Dallas determined that the employer's alternative benefit plan wrongfully terminated its payments to a seriously injured worker less than three months after his near-fatal fall.

In B & S Welding Work Related Injury Plan v. Oliva-Barron, No. 05-13-00394-CV, Juan Pedro Oliva-Barron began working as welder for B & S in 2007, sustaining an injury in June 2009.

B&S is a Texas non-subscriber that provides its employees with a welfare benefit plan governed by and construed in accordance with the provisions of the Employee Retirement Income Security Act.

This plan paid benefits to Oliva-Barron after he had fallen from a height of more than 15 feet while working at a job site in Oklahoma City, landing in a sitting position on hardened concrete.

Oliva-Barron suffered compression fractures in his thoracic spine, as well as injuries to his wrists and right arm.

The B & S Injury Plan paid for Oliva-Barron's emergency care in Oklahoma, and for his housing and food. It also covered the cost of transportation to his home in Dallas, and for his surgery and rehabilitation.

The plan also began conducting video surveillance on Oliva-Barron.

Video showed Oliva-Barron driving a car, climbing stairs without apparent difficulty, carrying his walker and his wheelchair, pushing a child's stroller and maneuvering a shopping cart laden with groceries one-handed, while using his cell phone.

Meanwhile, Oliva-Barron had grown dissatisfied with his treating physician, complaining that he had to wait four to five hours before seeing the doctor at every appointment.

Oliva-Barron consulted an attorney in July 2009 to see about getting a new authorized treating doctor.

Just one week later, an attorney for the plan met with Oliva-Barron at the Belmont Hotel in Dallas. Oliva-Barron brought his wife to the meeting, but did not have an attorney with him.

The plan's attorney had made arrangements for Burl and Jo Anne Malicoat, the owners of B & S Welding, to be present, and a translator, since neither Oliva-Barron nor his wife could speak English.

The attorney for the plan presented Oliva-Barron with a document, written in English, that promised payment of $5,000 in exchange for a release of all of his claims against the plan and B & S. Oliva-Barron claimed he was told "things would change" if he didn't sign the form.

Oliva-Barron refused to sign the document, so the plan allegedly decreased his salary continuation benefits by 30%, without explanation and terminated his transportation services for doctor appointments.

On Sept. 18, 2009, attorney Jason January sent a letter to the plan informing it that Oliva-Barron had retained his services. That same day (11 weeks after Oliva-Barron's fall) the plan filed a lawsuit against both Oliva-Barron and his wife, accusing them of fraud, conspiracy to commit fraud and unjust enrichment.

The plan averred that Oliva-Barron had "grossly exaggerate(d)" his "purported need for medical benefits" and had "attempted to continue and increase those benefits" even though they were "no longer justified or necessary."

Even though the plan had paid no benefits to Oliva-Barron's wife, the plan contended that she had been "complicit" in assisting him "in exaggerating and creating alleged maladies and in obtaining benefits from the plan to which he is not entitled given his actual medical condition."

Nearly two weeks after the suit was filed, the plan served a notice of adverse benefit determination on Oliva-Barron and his attorney.

Oliva-Barron counterclaimed against the plan, seeking unpaid medical and indemnity benefits.

The plan sought dismissal of the counterclaims, asserting that it provided an administrative means for Oliva-Barron to appeal an adverse benefit decision and he had not exhausted this process.

Judge Ken Molberg of the 95th Judicial District Court in Dallas ruled that there was no need for Oliva-Barron to exhaust his administrative remedies.

In light of the "baseless hostility" exhibited by the plan towards Oliva-Barron, Molberg reasoned that any administrative appeal for the denial of benefits would have been futile.

Molberg then dismissed the plan's fraud claims and awarded Oliva-Barron $52,247 for unpaid medical care, $82,880 in unpaid indemnity and $177,784 in attorney fees.

The plan appealed, arguing that a trial judge shouldn't be able to "second-guess a plan administrator’s discretion when objectively verifiable facts support a reasonable basis for terminating plan benefits."

Based on a 2013 decision from the U.S. 5th Circuit Court of Appeals titled Truitt v. Unum Life Insurance Co. of America, the plan argued that ERISA plan administrators can make a benefits decision based on any "relevant information," which includes video surveillance, even in the face of conflicting evidence.

The plan also relied heavily on Truitt for the principle that it had no duty to undertake any investigation before making a benefits decision.

On appeal, the 5th District said there was no reasonable basis for the plan's benefit decision with regard to Oliva-Barron.

In Truitt, the court pointed out, there was no dispute that there was substantial evidence to support the plan administrator's decision to deny benefits. This decision also came after four years of investigation and administrative review.

By contrast, the court said, the B&S plan terminated benefits and filed suit for fraud less than three months after Oliva-Barron was injured and provided him no opportunity for administrative review.

While there may be no duty to reasonably investigate on the part of the plan, the court said, there still must be some "rational connection between the known facts and the decision or between the found facts and the evidence" to support the termination of benefits.

The 5th District said that in this case it was undisputed that Oliva-Barron had gotten hurt, and that his accident easily could have been fatal. It was also undisputed that he needed medical treatment and rehabilitation, including a back brace and a walker.

The record also indicated that all of Oliva-Barron's doctors – including his authorized treating physician – didn't expect him to be able to return to work for four to six months after his accident, and that he was progressing as expected after his injury and surgery.

None of the medical records reflect any misrepresentation by Oliva-Barron as to his physical condition, the court added.

As Oliva-Barron also was still undergoing treatment, and the estimated time for his recovery had not yet elapsed by the time the plan cut off his benefits, the court said the plan's actions were "arbitrary and capricious."

The court also said it felt there was sufficient evidence to uphold the trial judge's finding that an administrative appeal of the plan's decision would have been futile under the circumstances.

The 5th District reduced the damages award because Oliva-Barron failed to show evidence in the record as to the amounts expended for Oliva-Barron's treatment after the plan terminated his benefits, so the judgment in favor of Oliva-Barron had to be reduced to $14,102.02, to cover only his unpaid indemnity benefits and attorney fees.

The lesson? A) don't believe everything you see on video; B) ensure that mono-lingual claimants are presented documents in their native language; C) when an employer's attorney meets with a claimant, ensure that the claimant is also represented...

Oh, and when a claimant, make sure you have all of your evidence in the record to support your damages claim.


  1. Molberg then dismissed the plan's fraud claims and awarded Oliva-Barron $52,247 for unpaid medical care, $82,880 in unpaid indemnity and $177,784 in attorney fees.
    so the judgment in favor of Oliva-Barron had to be reduced to $14,102.02, to cover only his unpaid indemnity benefits and attorney fees.

    So are we saying after 4 years the IW got 14 thou. And the lawyers made 177 thou? And how about the lawyers fees on the other side as well?
    I think there is a lots more to learn from this case than just the video. It shows me as an injured workers. That I would be better of not filling in wc system at all, it ruins folks lives for years on end. Only for all the educated folks to make money off us injured folks. Look at even the Dr.s that made money off all this.... When we could have just treated the guy and his GRAND Bargain with respect to start with, none of this would of happen. It would have been cheeper.

    But many folks in professional positions today never ever had to LABOR in their lives...... So they do not VALUE LABOR NOR OUR GRAND BARGAIN. THat is why it so easy to be ok with profitising off it being thrown away.... The worker may have won the battle, but he lost the war, and all the elite players in the arena made out rather nicely, I would say. Compared to what the injured workers end up with. And yes why can the video tape us, but we can not video tape them during the IME's here in WA State? WE NEED NATIONAL HEALTH CARE now. and we need to take down these one sided med tort laws that are allow one class to wage class war fare on another through our health care and employment needs. Just saying as always. No one listens any ways. Peace to all at the table one day. EVEN LABOR.

    1. Of course not reporting our on the job injuries to WC and having your own private ins. cover your oji, is actually really FRAUD also. SO where does that leave the injured workers today?

    2. We have a whole industry built around the around the system of wrongful denial and delay. All For an elite class to prosper, off the misery that is all creates for those laborers harmed by it. In a system that were not supposed to be denied at all in if injured on or by our jobs. wow It would be cheaper to just HONOR the Labor's Grand Bargain to start with. I would think?

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  3. 1st of 2 comments:
    Hello David, as well as your blog, I do read other blogs and have come across this writer for an organization in Florida.
    The writer in this article writes as follows: "The abuse faced by injured and ill workers needs to come out of the shadows and receive the attention it deserves. Ten years ago, I sat down for my first interview with an injured worker. That worker told me a story so outrageous and convoluted that I worried about his mental health. But, as I continued to interview workers, more than 100 injured workers that year alone, we heard similar stories of abuse over and over again. It became clear that the system is inflicting tremendous harm on the very people it is supposed to help. Regardless of the impact of this particular decision, the reality is that this court is right. All people have basic human rights to economic security and health care. Workers’ compensation systems are violating these rights throughout the Country."
    I have shared with you just some of the crimes that have been committed against me in my workers comp case. Not only crimes, but MANY bizarre occurrences that began at work within days after filing my WC claim, including coming to work and finding out that someone has unplugged my computer. I or the other employee that I worked with, would then have to crawl under my desk and plug it in. This happened several times. I thought, they must be videotaping this. Another bizarre occurrence was that someone was shadowing me on my computer at work, changing figures as I placed them into the computer for Buyer and Seller's estimated closing statements (I was the Escrow Mgr. / Officer). I knew that my boss had placed an ad on Craigslist to replace me the day that I filed the WC claim, but I didn't catch on to the fact that this shadowing / hacking into the computer might be his attempt to fire me for cause, as I would have to present these figures in an estimated closing statement to a Buyer or Seller. Due to the erroneous changes, the estimated closing statements would have been far from correct. Had I not noticed that I was being shadowed and the figures were changing right before my eyes, my employer could fire me for incompetence. As I would input, I could see that someone came in behind me and changed the figures. I reported this "hacking into my computer” several times to upper management. But upper management did nothing and it didn't seem to stop until I complained about the hacker / showing in writing to upper management. Since my filing my WC case 12/12/11, I have experienced many bizarre situations, too many to spell out here. I hope that one day, I will be able to spell them out for other injured workers as a warning of how corrupt that employers, insurance carriers and their attorneys are and how far they are willing to go once a claim is filed.

  4. I am sorry for each and every injured worker who is dealing with the corruption, lies, bizarre circumstances and so much more. We are human beings. Why would our government support such criminal behavior?
    In my case, it would seem that the government is backing the insurance carrier. Why would they participate in harming an injured worker? The CEO of the insurance carrier on my WC case, was once an advisor to the Governor of Nevada. He was also part of "The Fund" for the State of Nevada. His background in insurance is phenomenal. It would seem that he and/or his company or other defense members have friends in the government. Additionally, the defense attorney in my case, once worked for the California State Fund.. or so I have read.
    Five times, I have tried to file formal complaints with law enforcement, against the medical providers, surgery centers who have maimed my person. Five times, I was turned away! Twice, I’ve contacted the FBI – Not knowing if they could help me, they say they can’t. An attorney that I spoke to this week told me to file a written complaint via mail if they refuse to take a complaint , after I described to him only a little of what has happened to me. I’ve spoken to the Orange County District Attorney’s office twice. Once, a while back – I was told, “Unfortunately, your case if NOT unique.” Recently, I spoke to the lead investigator in an attempt to file a complaint with the District Attorney’s office again. In short, she said that I should contact the police department and file a complaint and the CA medical board, but that I couldn’t file a complaint directly with the DA’s office.
    I hope that this criminal activity / behavior would come to an end. But, as long as money is involved, there will always be people willing to harm injured workers, twist their actions, and insinuate that a video contains evidence of an injured worker having lied.
    I recently watched another video of an injured worker who worked at a police station as a dispatcher, fell twice and finally filed a claim. The insurance carrier pushed to prosecute her several times but the DA's office kept refusing. They kept at it and finally got one of the members in the DA's office to prosecute her and despite the fact that she had several police officer's confirming that she was hurt at work, the San Mateo DA's successfully got a conviction. She spent 90 days in jail, had to refinance her home and now, because she is classified as a felon, she cannot get a job or pay the monthly payments for her refinance. Here is a URL to the 2nd 1/2 of the video interview. IT IS A MUST WATCH.
    Another injured worker now an activist for injured workers, said to me on the phone this morning, that the folks in the WC business ie: insurance carriers are like the mafia. Not only are they lying about injured workers, but they are causing physical harm to come to them, falsifying documents and making efforts to prosecute innocent injured workers.
    I have always believed in capitalism. However, I absolutely know that corporate greed in the workers comp system is INFECTED with fraud & corruption due to the “capitalist philosophy of making as much money as you can”. Unfortunately, making money in the workers comp business has turned many people into barracuda’s and hyenas, feeding off the suffering of injured workers.