Is there a good time to accept a questionable Workers' Compensation claim?

What we can learn from a case study of a Texas claim.

As an employer, our instinct is to deny cases of dubious facts and circumstance. There are also legal theories which provide a basis for denial of these types of cases.

An interesting decision came down recently from the State of Texas. The case involves an injury to two employees, a father and son, which resulted in serious injuries to the father and the death of the son. The father and son together with their crew foreman worked for a construction company specialized in building bridges and highways. This crew was contracted to work on a project in Austin.  The crew was in San Antonio and traveled to the work site in Austin.  They were required to start work Monday morning at 7 A.M. and would return to San Antonio Friday or Saturday.  The employer provided crew members with hotel rooms and per diem.  The employer provided transportation for the crew members, but crew members could choose to ride with the foreman in his company truck or in their personal vehicles. Crew members were paid hourly based on hours worked at the job site but not for travel time or personal travel costs.

On the day of the accident, the father and son elected to drive their vehicle to the job site in Austin.  They were not required to meet with the foreman but elected to meet with him at the Company yard and follow him to Austin. The crew foreman was driving a company vehicle which carried a wooden toolbox used to store handheld tools for the work crew such as shovels, pickaxes and other equipment.

While driving on the highway, the toolbox came loose and fell on the road. The father and son were trailing the crew foreman and saw the toolbox fall. They stopped and tried to retrieve the toolbox. A chain reaction of vehicles swerving and trying to avoid hitting the toolbox ended with the father and son being struck by vehicles resulting in the death of the son at the scene and serious injuries to the father.   Police officers interviewed witnesses, took photographs and measurements and concluded the unsecured toolbox contributed to the cause of the accident. The employer’s Safety team also completed their investigation at the scene and concluded the accident was not work related; therefore, did not report the accident to OSHA.

The employer’s Risk Management team was notified by the Safety team of their conclusion; but, nevertheless, reported the accident to their WC carrier.   The WC carrier denied the claim based on the “traveling to and from work” rule, which is non-compensable under the Workers’ Compensation Act.  The plaintiff did not appeal the WC denial.

Instead, the plaintiff pursued a personal injury and wrongful death case against the employer. The plaintiff's theory was that the employer's negligence was the proximate cause of the accident. The investigation by the Texas authorities was the basis for the complaint. The plaintiff prevailed and were awarded more than $12 million in damages.

The defense filed an appeal asserting this was a work injury and that Workers’ Comp was their exclusive remedy. The defense seemed to have forgotten that they denied the Workers Compensation claim in the first place. The appeal was denied, and the court's $12 Million verdict was affirmed.

So, do you think the defense now regrets denying the Workers’ Comp case? Circumstances such as this one, do not happen very often. However, the greater lesson here is that the defense should have completed a comprehensive analysis of all the potential exposure in this case.

One significant aspect of Workers’ Compensation is that the benefits are defined by statute. There is also no provision for general damages such as pain and suffering, loss of consortium and other damages that are found in the civil arena. Hindsight is always 20/20. A good exercise would be to imagine how things would be different if the employer had accepted the Workers’ Comp claims filed by the plaintiff. If plaintiff still pursued the civil case, would they have been barred under the theory of exclusive remedy as later asserted by the defense? We will never know the answer.  

Takeaway: When the evidence is unclear if an injury is AOE/COE (Arising Out of Employment and in the Course of Employment) and can go either way, consider all possible exposures. Would it be better to accept and keep the claim under Workers’ Comp’s exclusive remedy theory to control and manage the outcome of the WC claim?  Civil suits are costly whether defendants win or lose. 

When in doubt, consult with your broker or subject matter experts to help you make an educated decision.