Exclusive Remedy: The “Great Bargain” (and the Exceptions)

Episode Notes

Transcript

Announcer:

Workers Comp Matters, the podcast dedicated to the laws, the landmark cases, and the people that make up the diverse world of workers compensation. Here are your hosts, Jud and Alan Pierce.

Judson Pierce:

Hello and welcome to another edition of Workers Comp Matters. My name is Jud Pierce. I’m joined by co-host and founder Alan Pierce.

Alan Pierce:

Hey, Jud, how are you?

Judson Pierce:

I’m well. Are you doing, Alan?

Alan Pierce:

We’re doing okay. We’ve got an interesting subject to discuss today. We may have touched upon it in other episodes or additions of Workers Comp Matters. So why don’t you let the audience know the scope of our discussion? This?

Judson Pierce:

Yeah, we are going to be talking about the exclusive remedy and and how it came to be and what the concept of it and what does it mean really? Does it still pertain? I mean, is it still active in all the jurisdictions in the country or are there carve outs to it and exceptions to it? And that’ll be the scope of our discussion today. So Alan, why don’t I ask you the concept of exclusive remedy of workers’ compensation. What does that mean?

Alan Pierce:

The very foundation of workers’ compensation in this country is based on the principle that in exchange for benefits for wage replacement, medical care, and sometimes other benefits such as vocational rehabilitation, that an injured worker, somebody who is hurt in the course and scope of their employment, is limited in terms of recovery of monetary damages or medical expense exclusively to be under a workers’ compensation statute. And what that basically means is if that worker had been injured due to the negligence or fault carelessness or whatever of his or her employer, a coworker, then any lawsuit against the employer for civil damages, which would include pain and suffering, would be precluded. That workers’ compensation is what’s known as the exclusive remedy for on the job injuries workers’ compensation was. And is compensation considered a classic no fault system of benefits?

You and I both know a client will come into us having been hurt at work, and sometimes the first comment out of their mouths when we talk to them is, I don’t want to sue my employer or am I going to have to sue my employer? And we invariably tell them that in a workers’ compensation claim, we never sue the employer. What we do instead is we on behalf of the injured worker, make a claim for benefits under the workers’ comp statute with that employer’s insurance company. And the cash benefits or the medical benefits that come from that claim are governed by the workers’ comp statute and that they are not suing their employer and they’re not getting damages that they otherwise would get in front of a judge or a jury for pain and suffering.

Judson Pierce:

And the basis of this legal quid pro quo is essentially so employers didn’t have to worry about lawsuits and about large verdicts that remedies could be quick and beneficial for both parties. The employee could get a quick reasonable set of benefits and the employer is immune from larger lawsuits. That might take a lot of time and a lot of cost and a lot of penalty. So there was a benefit to both sides.

Alan Pierce:

That’s exactly correct. In fact, if you look into the history of workers’ compensation used the term quid pro quo, which makes basically mean this for that in the translation from Latin. But the concept of workers’ comp has been defined as a quid pro quo. It’s been defined as the great bargain, the great trade-off. And all of that refers to the fact that workers’ compensation is the exclusive remedy and the employer’s liability, responsibility for money damages is limited to whatever the workers’ comp statute provides. However, we are now 112 or 113 years past the adoption of workers’ compensation laws and things have changed so that employers, even though workers’ comp benefits are in place, still may be subjected to financial costs associated with an injury on the job. And we have seen articles pop up now and again about the erosion of the exclusive remedy doctrine. Is the exclusive remedy doctrine still a valid concern? And that is a debate that has been going on for a couple or more decades from now and will likely continue.

Judson Pierce:

And so why don’t we take a couple of examples of where employers are open to additional causes of action.

Alan Pierce:

Well, first of all, there are what I would call and south other people have called the alphabet soup of other forms of statutory benefits. We have family medical leave FMLA in Massachusetts and some other states. We now have paid F-M-L-A-P-F-M-L-A. This is an obligation of the employer to pay some benefits for wage loss in the event of a paid family medical leave, including workers’ compensation. Of course, if workers’ comp benefits are paid, then FMLA paid FMLA might be reimbursed. But if an employer violates the provisions of family medical leave terminates an employee during protected leave, et cetera, there is obviously an avenue to pursue the employer financially. Keeping in mind the alphabet, we also have the A Americans with Disabilities Act, so somebody who may not have been injured but may be nevertheless suffering from a physical or other type of impairment that would come under the, A employer could be exposed for a failure to comply with the A DA or provide suitable reemployment as a result of work-related limitations.

We also have employers have liability under osha, the Occupational Safety and Health Administration for violations of OSHA safety regulations. There are many forms of discrimination or harassment, sexual harassment, age, gender discrimination that occur or are alleged to occur in the workplace. So there are EEOC equal employment opportunity claims, and there are also state-based discrimination actions. In Massachusetts, we have the Massachusetts Commission against Discrimination MCAD, and there are also Title VII Civil Rights violations under both state and federal law. So all of those initial acronyms, F-M-L-A-A-D-A, osha, E-E-O-C-M-C-A-D, et cetera, are other areas where somebody who is injured or has a physical impairment that employer could have some financial liability. There are also obviously situations where an injury occurs at work due to the negligence of a party other than the employer. Another company, let’s say a cleaning company, washes and waxes the floors and doesn’t put out slippery floor signs.

And an injured worker comes around the corner, slips and breaks his ankle. That person would have a worker’s compensation claim, but also could have a civil claim against the third party, the cleaning company. Now sometimes, depending on the nature of the relationship between an employer and a third party, an employer can hire a third party to perform some work or do a joint venture together, and there could be some type of indemnity language in the contracts. So if one of our clients were to sue a third party, but they had an indemnity agreement with that client’s employer, while that employer cannot be sued directly by the employee, that employer might have an obligation to indemnify or pay back to the third party under a contract, the damages that it could be liable for. There are also a body of cases that deal with conditions, medical conditions that may not be compensable or covered under workers’ comp. Therefore, there is no quid pro quo, and that’s an unsettled area of the law that goes around. We can talk about it a bit later.

Judson Pierce:

When you bring workers’ compensation claim and for whatever reason it fails, the judge determines it not to be covered under the act. Does that just give the claimant the injured worker green light to go ahead and file that case in civil court because it didn’t work out in the worker’s comp?

Alan Pierce:

I’m going to give you a qualified maybe on that. First of all, it depends on your jurisdiction. It would seem as a matter of common sense that a quid pro quo this for that means that if it’s covered by workers’ comp, you therefore can’t get civil damages. However, that raises the issue. Interesting issue. Well, what if it isn’t covered by workers’ comp? How can you still prevail against the employer? So let me give you an example here in Massachusetts, and it may not be the case in other states, and I’m not even sure the Supreme Judicial Court in Massachusetts got this one right? But in the case of Green versus Wyman Gordon Company, and that’s a 1996 case in Massachusetts, the plaintiff Green was employed by the Wyman Gordon Company and Green sued Wyman Gordon for negligent infliction of emotional distress, which occurred as a result of what the employer said was a bonafide personnel action.

In Massachusetts, a worker who is legitimately harmed psychologically or psychologically even by the negligent infliction of emotional distress by the employer. So long as the employer does this under the guise of a bonafide personnel action, the workers’ compensation statute bars the payment of workers’ compensation. So having not been able to access workers’ comp because of the provisions of the limitations in the mass workers’ comp law, green’s lawyer, as any lawyer would do, said, well, if it isn’t covered by workers’ comp, there’s no double recovery here. There’s no quid pro quo. So they sued Wyman and Gordon Company in this case went all the way up to the Supreme Judicial Court, who I think kind of blurred the concept of exclusive remedy. They did not allow the suit, it was a motion to dismiss and quoting from the court, it would strain common sense to presume the legislature chose to limit the employer’s responsibility for this condition in the definition of compensable injury, requiring it to be the major contributing cause, and yet the legislature would allow the employer to be sued.

I think the Supreme Judicial Court made some assumptions here, and I think they didn’t get the whole rationale between exclusive remedy. Now contrast that with an Oregon case, Smothers versus Gresham transfer that held the Oregon Supreme Court held that the exclusive remedy provision protects an employer from liability only when the employer owes benefits under the act. A similar result occurred in 1998 in the state of Wisconsin where an employee was allowed to sue his employer for a disease not covered under the basic provisions of the act. So we have an audience around the country in Massachusetts right now, it would be very difficult for an employee to sue the employer if for whatever reason his medical condition for some reason was not recognized under the Workers’ Compact Act.

Judson Pierce:

Well, let’s take this moment to take a break and hear from a word from one of our sponsors and we’ll be right back to discuss more of the exclusive remedy. And we’re back. We were talking about some case law, not only in Massachusetts but around the country. That has to do with preventing employees who are hurt at the workplace from suing their employers because of the doctrine of exclusive remedy. The workers’ compensation is their exclusive remedy for benefits when they’re harmed. There are non-injury harms as well. We are talking about non-injury torts. You were talking Alan before the break about intentional infliction of emotional distress. Tell the audience a little bit about some other non-injury torts and maybe some cases that have come up around that.

Alan Pierce:

Sure. Over probably the second half of the 20th century, probably the latter part of the 20th century when the law was starting to catch up with the realities of everyday life as well as life in the workplace, other causes of action have evolved. There have been cases of, first of all, negligent or intentional infliction of emotional distress. We covered that a little bit in the other case we talked about. But for example, there is defamation or slander so that if there are damages that result from defamation or slander, the use of untrue words with a degree of either malicious intent or negligent and harm, even though it may cause a personal injury that could be depression or anxiety. Now there could very well be a comp case, but there also is a body of law that says there are non-injury related damages that flow through defamation or slander, a liable, such as damage to one’s reputation.

That is not an injury yet, if an employer defames an employee, even though it may produce a psychological injury, well, let’s say a physical injury, that the employee is so distraught that he or she harms herself or kills herself. There’s a physical injury or a death there that may be covered under workers’ comp, but the damage to the reputation is not the type of injury contemplated by workers’ comp and therefore a defamation damages could accrue to the employer. There could be a tort suit for malicious prosecution. There could be a violation of civil rights. There could be a false imprisonment, not necessarily what you would think of as a jail or whatever, but let’s say their employee claims that as a result of some either disciplinary actions or some other actions, he or she was held in the employer’s offices, maybe against their will for some disciplinary or investigatory meaning and suffered damages as a result, could bring a common law claim for false imprisonment.

There could be violations of civil rights, it could be violations of Massachusetts Equal Rights Act, consumer Protection Act. In other words, there’s a whole variety of torts or wrongs may produce harm. There was a seminal case in Massachusetts of which pretty much synchronizes all of this and the cases Foley versus the Polaroid corporations, the 1980 case in which the plaintiffs were Edward and Mary, Foley husband and wife. Ed was employed by Polaroid as a computer operator and a female coworker accused him of assaulting and raping her during her work hours. He was tried and acquitted. He alleged that Polaroid withheld exculpatory evidence and did some other things that exposed him and his wife to file a claim for negligence, assault and battery, false imprisonment, negligent intentional infliction, emotional distress and loss of consortium. Loss of consortium is the rights of a spouse to recover money, damages for the harm suffered by the spouse and the interference in the marital relationship, whatever that may be.

They also, the Foleys also brought statutory claims into the Massachusetts Civil Rights Act, the Equal Rights Act and the Consumer Protection Act. Basically, the court looked at each and every count and the court held that the plaintiff’s claims for negligence, assault and battery, intentional infliction and negligent infliction of emotional stress. Those are out, those are barred by the exclusive remedy provision. However, the plaintiff successfully argued that the sexual assault from a public policy standpoint should require and did require an exception to the exclusive remedy rule. The court cited other jurisdictions that concluded workers’ comp statutes may not bar tort recovery for sex, assault and rape. And they cited Maine in Colorado. They also held the civil rights claim was barred as to the false imprisonment. They again looked at the type of harm that resulted, et cetera. So that case is quite instructive as to, I guess, what’s in and what’s out in the whole scheme of damage done as a result of alleged misconduct by an employer. It’s not just workers’ comp, it’s workers’ comp and possible additional causes of action

Judson Pierce:

Discussing different blurring of the line between what is a workers’ compensation claim as opposed to another type of action, which has to do with a third party. One such incident like that is leased employees. Could you go over what the general rule is with respect to an employer’s potential responsibility and how does leased employees sort of confuses that?

Alan Pierce:

That is actually, that’s an excellent question and an evolving area of the law. The last 20 or 30 years have seen the proliferation of what I would call or what the industry calls employee leasing companies. In other words, you’d go to work, your actual employer would be the A BC staffing company. They would then provide the workforce to the factory, the XY, Z widget factory so that the injured worker might get injured at the widget factory, presumably as a result of the negligence of the XY, Z widget factory. But because she is not an employee of the widget factory, she’s an employee of A BC staffing, her workers’ comp benefits come from a b, C staffing. Therefore, the question remains, can she sue the widget factory for causing her injuries? And sometimes that’s a yes, or sometimes that’s a no. When leasing companies first started to generate this sort of new concept of employment, the answer generally was yes, you could collect workers’ comp from A B, C and you would sue X, Y, Z for negligently causing the injury

Judson Pierce:

Almost like a subcontractor and a general contractor.

Alan Pierce:

Very, very similar. However, because of the risks, one of the benefits that the leasing companies sell their product to the company that leases the employees is we are relieving you from all of that burden of comp, unemployment insurance, health insurance, et cetera. However, the employers we’re still getting sued in those cases where there were allegations of negligence. So now we’ve started to see courts and insurers writing into these leasing agreements provisions that the client company, the XY, Z widget company would be an additional named insured on the A BC policy. In other words, try to bring the company to whom the worker is leased under the general umbrella of the leasing company. I look at it as there’s sort of a, I dunno if it’s a biblical, but there’s certainly an old adage that you cannot serve two masters. And it would seem to me they really could and should be only one employer.

And if it’s a leasing company, then anybody who is not the leasing company should be the non employer subject to liability. But the realities of the economics of the marketplace is such that employers, insurers and even legislatures are getting very creative to try to find ways to protect the employer who receives the leased employee from being exposed to tort liability. But when we get a case of a leased employee here and we have a workers’ comp claim against this staffing or leasing company, we also look into whether we can bring a third party claim and if there’s anything in the insurance policy that would prevent that.

Judson Pierce:

Yeah, it’s interesting because the leasing company might say, well, we wouldn’t have known that the employer would have such an unsafe premises. We worked with this employer and they said that everything was to code, and then all of a sudden someone gets hurt, one of our least employees gets hurt because the employer’s place isn’t to code. And why should we indemnify the employer for that? They should be held responsible, right?

Alan Pierce:

Yeah, I mean the thing, it becomes very circular and there’s a lot of finger pointing. And don’t forget, the leasing company is almost never negligent in these situations. They just send you to work. Now, if we had a set of facts that they knew they were sending you into a death pit, that would be something else. But generally they’re in office, they’re a leasing office, they send you to a factory or a workplace. They’re not negligent when you get hurt, if you’re going to get hurt in a negligent, you’re getting hurt where you’re working. So the question is, is that entity for whom you are working covered by the umbrella of exclusive remedy or not? And if they are under that umbrella, it’s usually through some type of writing in the insurance policy or maybe some codification, either in case law or in statutes that would protect the client company in those circumstances.

Judson Pierce:

Alright, why don’t we take this opportunity to hear another word from one of our sponsors and we’ll be right back for our final section of this interesting discussion on the exclusive Remedy doctrine. And we’re back. There’s another interesting doctrine that I was looking over before the show was it’s called Dual Capacity or Dual Persona, which involves situations where the employer also coincidentally is an independent agent that causes the negligence that causes the injury. Could you give us an example of what a dual persona type of situation would be?

Alan Pierce:

Yeah. An employer can wear many hats. You have a large conglomerates that have a lot of subsidiary companies, and the question is, who is the client working for? And there are so many permutations of facts. Lemme give you an example. Let’s say you are a nurse working in a hospital. You work for the hospital and you suffer an injury on the job and you are treated in the emergency room of the hospital where you work and the doctor in the hospital commits medical malpractice. Can you bring a tort suit for malpractice or might it be barred by the exclusive remedy provision that you can’t sue your employer? Now you’re not suing your employer in the capacity or persona of medical facility, even though they are. Your workers’ comp benefits are coming as an employee of the medical center,

Judson Pierce:

But you’re suing as in terms of patient, doctor,

Alan Pierce:

Patient doctor. But if it’s the same entity, we know in many large cities, especially such as Boston, a hospital may have several hospitals under its umbrella. So somebody could be working for Massachusetts General Hospital in Boston and may get injured at the Massachusetts Eye and Ear Infirmary, which is a separate hospital and separate entity, but they’re part of the same system, the same corporate entity. Could they sue for malpractice? Probably not. We had an interesting case in the office not too long ago where one of our clients worked for the Department of Transportation in Massachusetts and she was on a walking business errand in downtown Boston, was crossing a street and a truck ran a red light or a stop sign and struck her as a pedestrian causing serious serious injuries. That truck was operated by the Commonwealth of Massachusetts Department of Public Works. She worked for the Commonwealth of Massachusetts Department of Transportation, a separate entity, but still they were both employed by the Commonwealth of Massachusetts.

She could not bring a claim against the operator or owner of the truck because of the dual persona doctrine. Now, some states adhere to the dual capacity doctrine, some don’t. We had an interesting case long ever versus Revere copper and brass, where long ever worked for a division of revere copper and grass and was injured by an allegedly defected piece of machinery that was manufactured by another arm of that company. And the court in Massachusetts upheld the dual capacity doctrine when the plaintiff employee could recover only when the injury was caused by the employer acting in a different role and not the employer. So you can go case by case, state by state and see if the dual persona doctor, there are subtle differences between dual persona and dual capacity. We don’t have time in this show to go through all those differences. But once the third party who caused the injury is identified, the closer the relationship of that third party to the employer may make access to a lawsuit against that third party difficult because it is in effect an extension of the employer who is otherwise precluded from being sued.

Judson Pierce:

And lastly, before we end today, I’d like to just discuss briefly in the workers’ comp context, the handling claims in bad faith exception, where in those instances the insurance company or employer deals with the workers’ comp claim in an unjust or dishonest way. Have you seen situations like this arise? How common is this?

Alan Pierce:

Yeah. Well, first of all, in terms of bad faith claims handling, fortunately that doesn’t occur that often to rise to the level of an actionable claim. Certainly we have issues every day with what we consider, not necessarily bad faith, but we oftentimes have issues accessing benefits for

Judson Pierce:

Tardy checks.

Alan Pierce:

But when it gets egregious, that can innu to the detriment obviously, of the insurance company. Now, as far as the employer is concerned, there are situations where an employer could also engage in type of bad faith to interfere with the collection of workers’ comp. There are provisions that are active. Any employer, any party knowingly does anything for the purpose of either wrongfully obtaining workers’ comp benefits or wrongfully precluding somebody from obtaining benefits. They can be reached civilly, not necessarily for the injury, but for the damages from the bad faith or retaliating for filing or retaliating or things like that. Now, all of these retaliatory claims, the alphabet soup of claims, none of those things existed in the twenties, thirties, forties, fifties, sixties of the 19 hundreds. But as we’re getting now into the 21st century, and we have a much more complicated economy society, there’s a general precept, there is no harm that should not be compensated. The question here is how do we find an available source of recovery when there has been harm done that can fit into the model that we have

Judson Pierce:

That isn’t duplicative?

Alan Pierce:

Yeah. There’s also one other thing we want to talk about is intentional misconduct of the employer. And in Massachusetts in many states within the workers’ comp statute, there’s an exception to the general rule that an employer itself cannot be financially liable. That for injuries, Massachusetts, we have what’s called double compensation. It’s punitive in nature. It’s not considered necessarily punitive, but it’s a section of our statute that says if the actions of the employer are deemed to be serious and willful actions of misconduct, all compensation payable under this chapter shall be doubled. That doubling is paid for by the employer that is not covered by their workers’ comp insurance. Many states have either double compensation or other forms of enhanced compensation when the misconduct, the negligence is more than just simple negligence or carelessness more than gross negligence, but short of criminal negligence, something that has been described as wanton and reckless misconduct, quasi-criminal misconduct, things like that.

These are very highly fact-based and difficult to prosecute, somewhat easy to defend, except if the case really screams out employer serious misconduct, intentional acts designed with the knowledge that it likely would produce a serious harm. Other states allow an injured worker to sue the employer for what’s known as an intentional tort. Actually, one of the reasons that we’re doing this show today is Judd was looking online and he came across a Louisiana case that just came down recent case from last month. Yeah. Where Louisiana Supreme Court threw out a suit against the employer for an intentional tort finding that the facts of the case did not rise to the level or the behavior of the employer did not sink to the level that the court felt the employer intended the injury to occur. But had the plaintiff in that Louisiana case been able to show that that employer knew or should have known of a highly dangerous condition and failed to take appropriate action, that in addition to workers’ comp, the employee could have also sought tort damages for the intentional tort of negligence. Enhanced negligence. So these are all the areas that keep us interested in the area. Every time we have a case, we look at workers’ comp, we look at double comp, and we look at third party liability. We look at other sources of collateral benefits that would either supplement or enhance the workers’ comp benefits that flow from an injury in the workplace

Judson Pierce:

To make an injured person whole as whole as they can be financially. I mean, speaking mean, they could have a lifelong injury certainly. But whatever we can do to find a benefit to remedy that, whether in or outside the Workers’ Comp Act, we certainly try to find. So I really appreciate this conversation, Alan. I hope you our listeners did as well. We will be back with you soon with another episode of Workers Comp Matters, and why don’t you all go out and make it a day that matters. We’ll be back soon. Take care.

Alan Pierce:

Bye-bye.

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