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Workers’ Comp Policymakers Watching Two Federal Court Cases Closely

Two cases currently being heard in federal court are being watched very closely by workers’ comp administrators and other stakeholders.

During a recent forum for the International Association of Industrial Accident Boards and Commissions (IAIABC), a “lively discussion” took place on the implications each case will have on the administration of workers’ compensation in every state in the U.S.

The first case involves damages for workplace injuries while the other could have far reaching implications for self-insurance for workers’ comp purposes.

Let’s first examine the case in which the plaintiffs (Paul Brown, et. al.) allege a claim was improperly denied. Hearing the case, the 6th Circuit Court of Appeals released an opinion allowing Brown, et al to pursue a Federal RICO case against Cassens Transport Co., Crawford & Co. and Saul Margules. The plaintiffs claim that their employer, who’s self-insured, conspired with its “TPA” and examining physician to deny workers’ comp benefits.

The workers originally filed suit in 2004 but RICO violations can require larger awards since damages and interest are tripled.

The case is still under way but its outcome could have big impacts on employers who self-insure their workers.

The second case involves another self-insured employer who filed for bankruptcy in November 2010 in Maine. A national leather tanning company, the firm’s reorganization plan included mechanisms guaranteeing injured workers would receive their due compensation. The court hearing instructed all workers to file a claim with the Bankruptcy court by a certain deadline or never.

This date though was set despite the fact the statute of limitation for the injuries in question had not been reached.

Additionally, the bankrupt tanning company is seeking discharge of its third party non-debtors (one in Maine, the other Missouri) from obligations to pay any outstanding workers’ comp claims. State workers’ comp agencies in both states have filed objections to the reorganization plan.

A guaranty, which is a security mechanism of sorts to ensure injured workers can be paid in the event a company goes bankrupt, is a critical component of workers’ comp self-insurance. If the debts are allowed to be discharged, it could have far-reaching implications for self-insurance in the U.S.

We’ll keep an eye on these cases and how their outcome will affect injured workers (…especially ones covered under a self-insurance plan) not only in Colorado, but in the U.S. in general.

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Categories: Workers' Compensation
Tags: Colorado job injuryColorado workers' compensation lawsColorado workers' compensation newsinsurance disputework injury benefitsworkers' comp insuranceworkplace accidents
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