Workers' Compensation Defense

1.    Supreme Court holds an employer or workers’ compensation carrier may assert a subrogation lien against an employee’s recovery of benefits under an employer-purchased UIM policy, overruling its own precedent, Simendinger v. National Union Fire Insurance.
Horizon Services v. Henry, --- A.3d ---, 2023 WL 5659812 (Del. Sep. 1, 2023)

In September 2015, Mr. Henry was injured in a compensable industrial accident and received over $584,000 in workers’ compensation benefits. He sought damages from the non-party tortfeasor and settled at the $50,000 liability insurance policy limits. The workers’ compensation carrier received reimbursement for its lien from those proceeds after an attorney fee was deducted. Mr. Henry then filed claims for UIM coverage with both his personal policy and the employer’s policy. When those claims were denied, he filed actions against the UIM insurers in Superior Court. The employer and its workers’ compensation carrier moved to intervene in those proceedings, but the motion was denied.

In response, the employer/workers’ compensation carrier filed a declaratory judgment action in Superior Court that asserted entitlement to a lien against any recovery of damages in the UIM action pursuant to 19 Del. C. § 2363(e). The court granted the UIM insurer’s motion for judgment on the pleadings. The judge reasoned that Section 2363(e) limited the right to reimbursement of workers’ compensation benefits for the employer/ workers’ compensation carrier to damages recovered from the non-party tortfeasor, according to the Supreme Court’s holding in Simendinger v. National Union Fire Insurance. The employer/workers’ compensation carrier appealed.

On appeal, the Supreme Court overruled Simendinger and held that Section 2363 permits an employer or workers’ compensation carrier to assert a subrogation lien against an employee’s recovery of benefits under an employer-purchased UIM policy. The court explained that the Simendinger court relied on dictum from an earlier Supreme Court opinion, Hurst v. Nationwide Mutual Insurance Co., to reach its conclusion. However, the Hurst court mistakenly construed the 1993 amendment to Section 2363(e) as eliminating an employer’s ability to obtain a lien against benefits paid under an employer-purchased UIM policy. The actual effect of the amendment was limited to PIP eligible benefits. An employer’s right to lien reimbursement from a UIM recovery was not changed by the amendment. The court explained that Section 2363 does not preclude the workers’ compensation lien against employer-funded UIM benefits. In fact, it expressly allows it. Accordingly, Simendinger was overruled, and the decision below was reversed. However, it could not be determined from the record whether the language of the UIM policy, itself, precluded assertion of the lien. Therefore, the case was remanded to develop the record and consider the contractual arguments of all parties.

2.    The Superior Court affirmed an Industrial Accident Board decision that concluded that a COVID-19 workplace exposure at a poultry processing plant did not qualify as a compensable occupational disease.
Fowler v. Perdue Farms, 2023 WL 6888918 (Del. Super. Oct. 18, 2023)

Mr. Fowler alleged that he suffered a compensable COVID-19 exposure while working as a “boxer” at a poultry processing plant. The Industrial Accident Board (IAB) determined that the claimant carried his burden to prove that he more likely than not contracted COVID-19 in the cafeteria at work. However, the claimant did not prove that his occupation attached a hazard of COVID-19 greater than that attendant to employment in general. The claimant appealed to the Superior Court.

The Supreme Court established the legal standard to determine whether there is a compensable occupational disease in Air Mod v. Newton and Anderson v. General Motors Corp. Air Mod defined a compensable occupational disease as “one resulting from the peculiar nature of the employment, i.e., from working conditions which produce the disease as a natural incident of the particular occupation, attaching to that occupation a hazard different from, and in excess of, the hazards attending employment in general.” The Anderson court opined that the disease cannot result from the “stimuli of the everyday world and that [t]here must be a recognizable link between the disease and some distinctive feature of the claimant’s job.”

In Mr. Fowler’s case, the court agreed with the IAB that the evidence showed that the cafeteria at Perdue presented a greater hazard than that attending employment in general. However, the hazard was not distinct from that attending employment in general. The court cited reasoning decisions from the Ohio Court of Appeals to emphasize that COVID-19 is a disease of everyday life to which the public is exposed. The Workers’ Compensation Act should not be transformed into a health insurance statute. Large cafeterias or gatherings at work are a hazard attending employment in general. Mr. Fowler’s job as a boxer in a chicken plant did not predispose him to COVID-19 more than any other occupation. Lastly, the court opined that there was substantial evidence in the record to support the IAB’s decision. The decision of the IAB was affirmed.

3.    The Superior Court affirmed a decision of the Industrial Accident Board that set aside a workers’ compensation agreement pursuant to Superior Court Civil Rule 60(b) due to fraud on the part of the claimant.
Mendoza v. Talarico Building Servs., 2023 WL 2726923 (Del. Super. Ct. Mar. 30, 2023)

Mr. Mendoza, a non-English speaker, fell at work while cleaning and buffing floors on July 16, 2018. The event was witnessed by a supervisor. The employer acknowledged soft tissue injuries to the neck and back and paid workers’ compensation benefits, including medical expenses. Mr. Mendoza was involved in a subsequent motor vehicle accident in August 2018 and taken by ambulance to the hospital for neck pain. The claimant later underwent a three-level cervical fusion surgery performed by Dr. Zaslavsky, which the employer denied was reasonable, necessary or causally related to the work accident. In response, Mr. Mendoza filed a Petition to Determine Additional Compensation Due, sought compensability of the surgery and total disability benefits. The employer filed a Petition for Review that sought to set aside the original agreement on the basis of fraud and to bar the claimant from future filings against the employer. The petitions were consolidated and heard together.

At the hearing, evidence was provided that showed Mr. Mendoza had a 20-year history of medical treatment for the cervical spine and that he failed to disclose that history to his employer at the time of hire, to the employer/carrier at the time of his accident, to the DME doctor and to Dr. Zaslavsky. The Industrial Accident Board (IAB) concluded that the claimant failed to meet his burden to establish compensability of the cervical spine surgery and found the testimony of Dr. Gelman, the employer’s expert, more persuasive than Dr. Zaslavsky’s. Further, the IAB determined that the claimant had committed fraud due to his failure to disclose the extensive medical history. The underlying agreement was struck, but because there was a witnessed event and little evidence was before the IAB regarding the accepted lumbar spine injury, the claimant was permitted 60 days to file a new petition to attempt to establish compensability of the work accident as pertained to other issues.

The claimant appealed and contended that there was not substantial evidence to support the IAB’s conclusions, and that the IAB erred in its application of Superior Court Civil Rule 60(b) because it did not establish the reliance or damages prongs necessary to find fraud. The court found there was substantial evidence to deny the petition based on Dr. Gelman’s testimony.

For the fraud finding, the court determined that the IAB properly applied Rule 60(b) in this scenario. There was detrimental reliance established because the employer presented evidence that it would not have hired him or accepted the claim if he had been truthful about his prior medical history. Moreover, the IAB did consider damages when it specifically referenced a credit attributable to all the past benefits paid. The court went a step further and advised that this set of facts also qualified to re-open the agreement and set it aside on the basis of Rule 60(b)(3) due to Mr. Mendoza’s “misrepresentation and misconduct.” He had admitted to dishonesty at the hearing and the misrepresentations were not the result of the language barrier, as they were made in response to both English and Spanish inquiries. The decision of the IAB was affirmed.

4.    Superior Court affirms decision denying claimant’s petition for increased medical bill payments for ketamine infusions under the theory that the Delaware Fee Schedule did not apply and the Industrial Accident Board should order payment of the “reasonable cost” of the treatment.”
Taylor v. State of Delaware, N22A-09-007 CLS (Del. Super. Ct. Aug. 14, 2023)

Ms. Taylor was injured in a compensable work accident on September 16, 2016. The injury later developed into Complex Regional Pain Syndrome (CRPS) involving her right arm and right leg. She received ketamine infusion treatments for the CRPS condition that were performed at a surgery center in Pennsylvania. The employer did not contest that the treatment was reasonable, necessary, and causally related and made payments to the surgery center. Ms. Taylor filed a petition, alleging the payments were not sufficient to reimburse such a complicated procedure and not consistent with the Workers’ Compensation Act. The Industrial Accident Board (IAB) determined that the employer correctly reimbursed the surgery center in accordance with the Delaware Workers’ Compensation Fee Schedule (summarized in October 2022 What’s Hot newsletter).

On appeal, the claimant argued that the IAB committed legal error when it failed to exercise its jurisdiction over the amount to be paid and determined that the “reasonable cost” provision of 19 Del. C. § 2322(b) did not apply and control reimbursement in this case. The Superior Court first determined that the IAB properly exercised its jurisdiction and correctly noted that a change to fee schedule reimbursement amounts could not be achieved by the IAB decision. The court distinguished the Quaile v. National Tire and Battery opinion because, unlike in Quaile, there was no “refusal/denial” of treatment to trigger Section 2322(b) in this case. Rather, the employer had accepted the treatment and paid for it correctly as required by Section 2322B(7)b’s provision directed towards reimbursement of out-of-state providers. Accordingly, Ms. Taylor was not forced to seek and pay for medical treatment herself. The Workers’ Compensation Act prohibited the medical provider from seeking payment from Ms. Taylor for charges above those authorized by the health care payment system.

The court held that the “reasonable cost” of the treatment did not apply and there was no legal error by the IAB. The IAB decision was affirmed. The Superior Court order is currently on appeal to the Delaware Supreme Court.

5.    Supreme Court affirmed decision that medical expert causation opinion was substantial evidence and five-year statute of limitations applied to Petition for Additional Compensation Due for new injury/body part related to accepted work accident. 
Elzufon, Austin, Tarlov & Mondell, P.A. v. Lewis, --- A.3d ---, 2023 WL 8382873 (Del. Dec. 5, 2023)

Ms. Lewis injured her right shoulder injury due to the repetitive use of the right arm. The manifestation date of the condition was August 29, 2016. The shoulder ultimately required surgery in 2018. After the surgery, the claimant returned to work in late 2018, but began to experience neck problems. She treated for the new neck issues in 2019. On April 1, 2021, Ms. Lewis filed a petition, alleging that she had injured her neck due to the right shoulder surgery and her post-op rehabilitation efforts. The employer argued that the petition should be dismissed because the allegation was for a “new injury” and more than two years had passed since the 2016 work injury. The Industrial Accident Board (IAB) denied the motion and explained that the applicable statute of limitations for an accepted accident is five years. The IAB also said that, alternatively, the petition was filed within two years of the date the claimant reasonably should have known the condition was related to her work injury, so it also complied with the cumulative detrimental effect statute of limitations. 

At the hearing, the claimant’s expert, Dr. Newell, testified that he believed the circumstances showed that the shoulder surgery had caused a cervical radiculopathy. However, he conceded on cross-examination that he did not have any medical records or documents to support that contention. The employer’s expert testified there was no objective evidence of a cervical radiculopathy and nothing linking a cervical spine injury to the 2016 event. The IAB agreed with Dr. Newell and found the neck injury was causally related to the 2016 accident. The Superior Court affirmed the decision of the IAB, finding substantial evidence, and that the petition was filed within the applicable statute of limitations.

On appeal to the Supreme Court, the employer made two main arguments. First, that the claimant’s medical expert offered a purely speculative opinion that could not constitute substantial evidence and, secondly, again, that the two-year statute of limitations applied and the April 2021 petition was not timely.

The Supreme Court held that Dr. Newell’s opinions were supported by substantial evidence because he was the treating physician; he explained how shoulder surgeries can cause neck problems; the cervical injections helped—which was evidence there was a radiculopathy; and the timing of the neck complaints following the surgery lined up with his opinions. The decision was supported by substantial evidence. Further, the court explained that the five-year statute of limitations applied as this was an accepted claim. For that reason, there was no need to address the IAB’s alternative ruling that the claim was also within the two-year cumulative detrimental effect statute of limitations. The Superior Court opinion was affirmed.

6.    Superior Court affirmed decision terminating total disability benefits and rejected argument that the Industrial Accident Board “precedent” requires DME doctor to examine claimant following a subsequent, intervening event in order to offer an opinion on work capabilities.
Hooten v. Blue Hen Disposal, 2023 WL 1433129 (Del. Super. Ct. Feb. 1, 2023)

Mr. Hooten injured his neck in a compensable work accident in December 2020. In late 2021, the employer filed a Petition to Terminate ongoing total disability benefits based on the opinions of Dr. Gelman. While the petition was pending, the claimant was involved in a non-work-related motor vehicle accident in February 2022. After a hearing in March 2022, the Industrial Accident Board (IAB) concluded that Mr. Hooten was able to work in a full-time, sedentary capacity and terminated total disability benefits. Mr. Hooten was placed on temporary partial disability. The claimant appealed, contending that the IAB committed legal error when it terminated benefits based upon the opinions of a medical expert who did not examine him after the subsequent accident.

The Superior Court confirmed that Delaware law permits medical expert opinions offered about a patient’s condition without a physical examination of that patient. Moreover, Dr. Gelman had reviewed all of Mr. Hooten’s medical records from both before and after the intervening accident. The court further reasoned that the claimant failed to timely notify the employer of the intervening accident or of the allegation of injuries to body parts in addition to the neck, in violation of IAB Rule 9(C)’s “thirty-day notice requirement.”

The court held that the two IAB decisions cited by the claimant were not controlling law. It explained that, while the IAB generally must follow its own case-decision precedent to avoid violations of due process, it is only bound to follow those decisions when they provide clear statements of law or policy. The court reasoned that the IAB decisions relied upon by the claimant were distinguishable from the facts/evidence of Mr. Hooten’s case because the physicians in those cases had not reviewed post-surgery records and there was no notice issue.

Lastly, the court determined that the record contained substantial evidence to support the IAB’s decision. The claimant’s condition did not appear to change at all initially following the February 2022 accident, according to his own testimony. Mr. Hooten, himself, was not credible because he claimed to be unable to drive in any capacity and then later admitted that he drives himself to medical appointments every day. The claimant’s testifying expert, Dr. Mann, was not credible because he did not testify clearly as to whether Mr. Hooten should be restricted from all work or only commercial driving. Mr. Hooten made no effort to find suitable employment and was not a displaced worker. The decision of the IAB was affirmed.

7.    The Superior Court affirmed a decision of the Industrial Accident Board that concluded Superior Court Civil Rule 41(a)(1)’s “Two Dismissal” rule did not apply to an IAB proceeding.
Hawkins v. United Parcel Service, 2023 WL 3749355 (Del. Super. Ct. May 30, 2023)

Mr. Hawkins was injured in a work accident on October 28, 2018. On December 9, 2019, the claimant filed a Petition to Determine Additional Compensation Due that sought total disability benefits and two surgeries, including a spine surgery. That petition was resolved (in conjunction with another) via a settlement of the parties in October 2020. On April 20, 2021, the claimant filed a Petition to Determine Additional Compensation Due that sought acknowledgment of two spine surgeries and a corresponding period of total disability. Before the hearing, the claimant voluntarily withdrew the petition. The claimant re-filed an identical petition on December 10, 2021. The employer moved to dismiss the petition on multiple bases, including that it was barred by (1) the doctrine of collateral estoppel, (2) the doctrine of res judicata, and (3) Superior Court Civil Rule 41(a)(1)’s “Two Dismissal” rule. If applied, the Two Dismissal rule would consider the voluntary dismissal of the April 20, 2021, petition to be an adjudication upon the merits as pertained to the spine surgery/temporary total disability issue.

The Industrial Accident Board (IAB) rejected the claimant’s arguments regarding collateral estoppel and res judicata because the issues and claims presented by the DACD were new and different from prior agreements between the parties. Additionally, the IAB explained that it is not bound by the Superior Court Rules of Civil Procedure. Its own rules and the rules of the Administrative Procedures Act did not include a similar provision and, accordingly, it did not regard the petition as dismissed with prejudice. The employer’s motion was denied. 

On appeal, the court agreed with the IAB’s conclusions. It reasoned that the IAB promulgates its own rules and cannot be forced to apply the Superior Court’s Rules of Procedure, even when there is no specific rule on point. The IAB is explicitly permitted to disregard customary rules of evidence and legal procedure so long as the disregard does not amount to an abuse of discretion. There was no abuse of discretion here, and the decision was affirmed.

8.    Industrial Accident Board concludes that regenerative medicine procedures, including orthobiologic injections, do not constitute “reasonable” or “necessary” treatment for a compensable lumbar spine condition.
Delfi v. State of Delaware, IAB No. 1481481 (Feb. 27, 2023)

Ms. Delfi injured her lumbar spine in a compensable work accident on January 7, 2019, while working as a bus driver for the State of Delaware. She came under the care of Dr. Bruce Rudin, an orthopaedic spine surgeon, shortly thereafter. After she did not improve from therapy, medications or steroid injections, Dr. Rudin believed her only options for improvement were an expensive, two-level fusion surgery or the less costly/invasive options afforded by regenerative medicine. The claimant proceeded with orthobiologic treatment procedures beginning in early 2020. The employer denied the treatment as not reasonable, necessary or causally related to the work accident based on the opinions of Dr. Scott Rushton. The claimant filed a Petition for Payment with the Industrial Accident Board (IAB).

The IAB concluded that the work accident aggravated pre-existing, asymptomatic low back issues, that the condition remained causally related to the work accident and felt that ongoing treatment of some kind was necessary. However, the option chosen did not satisfy either of the required “reasonableness” or “necessity” prongs for compensability. Dr. Rudin’s opinions were rejected for several reasons, including that he testified in 2020 that orthobiologic/regenerative medicine/stem cell treatment for the spine was approved and waiting finalization to be included in the Delaware Practice Guidelines, but now conceded it was not approved or even under consideration at this time; that the “study” relied upon by Dr. Rudin to support his methodology were his own, involved 100 patients and were not subject to peer review; that he provided no information about the methodology of his “study”; that he was an owner of Spine Care DE, where the orthobiologics procedures took place; that he does not perform surgeries anymore, which was the other option for the claimant; and that it was just as likely that the claimant’s sudden and significant weight loss improved her symptomatology as her treatment.

The IAB accepted Dr. Rushton’s opinions that there was a lack of scientific support for the methodology used by Dr. Rudin. Moreover, the IAB emphasized that there were strong indications of bias from the claimant’s expert, commenting that “Dr. Rudin’s experience and the close nature of his relationship, financially and otherwise, to acceptance of this methodology cannot be ignored.” The treatment was not reasonable in the context of the claimant’s injuries and the petition was denied.

9.    New workers’ compensation rates.

The Department of Labor announced that the new workers’ compensation rates effective July 1, 2023, establish an average weekly wage of $1,301.27. Accordingly, the maximum weekly compensation rate is $867.52 and the minimum weekly compensation rate is $289.18.

10.    Statistics from the Department of Labor.

The 25th Annual Report from the Department of Labor is available on the State’s website and provides updates, data and information that cover the year 2022.

Of note, Utilization Review requests decreased 29.32% in 2022, compared to 2021, and approximately 40.91% of those requests resulted in an appeal to the IAB, which was significantly lower than 2021. Chronic pain treatment continues to represent the most challenged treatment modality. In 2022, there were 2,124 active certified providers in Delaware, which represented a 36.86% decrease from 2021. Fewer petitions were filed and heard for the fifth consecutive year. However, there was an 18% increase in commutation settlements. Five-year cumulative statistics on appeals indicates the IAB has rendered 1,494 decisions, 208 of which were appealed. Sixty-nine decisions were affirmed, 30 were reversed or remanded, 81 were dismissed or withdrawn, and 26 were pending decision at the time of the report.

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_{What’s Hot in Workers’ Comp, Vol. 27, No. 12, December 2023 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2023 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}