Tuesday, March 7, 2017

Proportions, Pockets, and Paybacks

Conant v. Entergy Corp., 2016 VT 74

By Thomas M. Kester

While in her employer’s parking lot, the claimant injured her ankle. The injury was reported to her employer, who reported the injury to its worker’s compensation insurer. Employer’s policy with the insurer required employer to reimburse all workers’ compensation benefits paid by insurer up to a capped amount. Essentially, the employer is the insurer.

There are two payment avenues for claimant’s injury in this matter: Vermont’s Workers’ Compensation Act (“Act”) and a Collective Bargaining Agreement (“CBA”). How the injury is classified also affects the type/amount of disability benefits an injured worker can receive. The classifications are broadly “occupational injury” (worked-related injury and unable to work) and “non-occupational injury” (non-work-related injury and unable to work). The CBA contains an offset for workers’ compensation benefits for occupational disabilities, meaning “a worker injured on the job will receive, subject to the terms of the Act and the CBA, 100% of his or her wages through a combination of benefits from both sources.” This table broadly summarizes the CBA’s and Act’s benefits for occupational and non-occupational injuries for this matter:

Occupational Injury
Non-Occupational Injury
Workers’ Compensation Act (“Act”)
Insurer pays
66.66% wage replacement of full normal weekly wage

No wage replacement
Collective Bargaining Agreement (“CBA”)
Employer pays
First week: full normal weekly wage (100%)

After first week: full normal weekly wage less Workers’ Compensation benefits (in this case, 33.33% wage replacement)
First five days or until accrued “continuance of full salary days” are exhausted, whichever is longer: full normal wage (100%)

Thereafter, short-term disability benefit: 60% of normal weekly wage up for 12 months 

The insurer denied claimant’s request for workers’ compensation benefits (so the Act doesn’t pay) and “employer began paying claimant salary continuance and short-term disability benefits pursuant to the nonoccupational disability provision in the CBA.” Claimant requested a hearing with the Department of Labor (“DOL”) on the insurer’s denial of her claim.

A DOL workers’ compensation specialist determined that the insurer’s denial was not “reasonably supported” and issued an interim order that the insurer was to pay temporary total disability benefits (“TTD” – term for the benefits paid out by the Act) retroactively and “failure to pay as directed within twenty-one days could result in additional amounts and/or interest owed to claimant, as well as administrative penalties.” TTD benefits are “awarded during the worker’s recuperation period until the worker is restored as much as possible to functionality,” and “are provided as a partial substitute for wages lost during the recuperation period.” Employer tried to stay the order pending determination of whether employer actually owed TTD because the employer argues it had paid short-term disability benefits “to replace lost earnings during the period in question.”

Here is where the twist begins: while the employer’s stay request is pending, the twenty-one-day period was also going to expire. Insurer paid a sum to Claimant representing 30 weeks of retroactive TTD benefits. Thereafter, the DOL specialist denied the employer’s stay request as moot.

Employer moved for summary judgment on the overpayment issue. The DOL Commissioner noted that you cannot get paid twice for the same benefit (once from employer and once from insurer). The Commissioner ultimately stated that while the Act “clearly allowed for an offset in situations where a claimant receives payments that ultimately are deemed not to have been owed, the statute made no provision for reimbursement,” so instead, allowed the insurer to “offset any TTD benefits that it paid for weeks during which claimant also received payment from employer for her accrued continuance of full salary days” (the offset going against future workers’ compensation indemnity payments).

Here is the next wrinkle: the Commissioner did not extend this offset to the short-term disability benefits paid by the employer. The reasoning being that certain “foreign contingencies” in the CBA raised issues that are better dealt with through the CBA’s dispute process rather than a worker’s compensation proceeding. The SCOV states that the Commissioner didn’t really explain how this has “any bearing on the issues between the employer and employee concerning the claim” or why short-term (as opposed to other employer-paid benefits) was singled out.

The issue on appeal for the majority is whether the claimant got more money than was owed to her from the employer. A public policy in worker’s compensation is to prevent double recovery by a claimant and permitting the employer to off-set or recover the overpaid amount. The titles of “employer” or “insurer” do not matter as much here because the “the workers’ compensation statute bothers not over what account the money comes from, so long as it comes from the employer.” With all that in mind, the SCOV views the Commissioner’s decision (as to the occupational determination) as resulting in that “the amount actually due under the CBA was the difference between the 60% received under the CBA and the 33.33% actually due (with a tax adjustment).”

The majority pounds on this issue for many pages, looking at case law and public policy, and even how other courts have handled similar situations to support their view. You might be thinking to yourself “What if these are over-payments under the CBA rather than over-payments under the Act? Does that matter?” To the majority, that is “no defense” as “both payments came from employer” and some of the CBA payments “were not due and payable when received,” thus entitled to off-setting by employer. Finally, the employer “did everything it could to bring the issue of the potential overpayment to the Commissioner’s attention before it made its TTD payments,” and shouldn’t be punished for its concerted effort. In the end, the Commissioner’s decision is reversed and remanded for determination as to the offset owed.

Justice Robinson writes the dissenting opinion (joined by Justice Dooley). First, the dissent gives deference to the Commissioner’s interpretation of the statute and reasons it is “wholly reasonable.” A major sticking point is “the workers’ compensation statute does not provide an express provision allowing an offset or reimbursement of sick leave or disability benefits paid during a period of denial” and, applying Uncle Ben’s logic from Spiderman, if you don’t have the power do you have the responsibility? Also, the Legislature has carved stuff in and out as being a permissible offsetting and reimbursement activity. This “suggests an intent that, at least in the absence of any contractual provision authorizing an offset, the Commissioner not be so empowered.”

Next, the majority’s opinion rests on an assumption: “that employer has no contractual or equitable right to recover the nonoccupational disability benefits it paid to claimant.” The logical extension of the majority’s opinion would require the Commissioner “to evaluate the merits of any contractual and equitable claims” by employers and insurers.

The third section examines public policy arguments and, to Justice Robinson, public policy is undermined because: (1) negotiated and agreed to contractual terms, which are outside workers’ compensation, are being overridden and (2) this new arrangement requires calculations that have “unreasonable complexity.” The fourth section analyzes a former SCOV case that Justice Robinson thinks is “problematic” and disagrees with extending that case’s holding to the instant matter.

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