Workers Comp Case Where the Special Disability Fund is Denying Payment*



Case Summary:

This is a review of a workers comp case with a dispute between a State's Disability Fund and an employer's workers compensation carrier. The dispute was addressed before the commissioner of the State's workers compensations board.

The genesis of the dispute was a workers compensation claim filed by an employee of a local newspaper. The employee had injured her knee on the job and required surgery to correct the condition. A short time after she returned to the job, she re-injured her knee and needed more time to convalesce. When the worker filed for compensation for the second time, the workers compensation carrier requested reimbursement from the State Disability Fund.

The Disability Fund, in turn, claimed the request had come too late and it denied the carrier's claim. The insurance carrier requested an exemption from the commissioner of the fund claiming a "good faith error" in what was otherwise a straightforward workers comp case.

Statement of Facts...

On January, 3rd, 2010, Kathy Snow was hired as a sales representative by a local newspaper, The Evening Post. Her duties included selling advertising space for the Post's new online news division. To accomplish those sales, it was necessary for Snow to drive to 5 to 7 appointments each day.

Those appointments would normally be with various business owners who were located within a 300 mile radius of the Post. To get to those appointments Snow had to drive a company car, and upon arriving do a good deal of walking.

On February 6th, 2010, Snow finished an appointment with one business client. Her next appointment was with another business client an hour later. While driving to the appointment down the interstate, Snow was hit by an out-of-control car. Snow was seriously injured and required hospitalization. A subsequent investigation cleared Snow of any culpability and assessed full blame upon the other driver.

Snow's injuries included the tearing of the meniscus muscles in her right knee. Arthroscopic surgery concluded much of the meniscus in the knee was either torn or seriously sprained. The doctors removed the meniscus which could not heal, and left the remaining sprained meniscus which they knew would heal.

Snow's diagnosis and prognosis effectively prohibited her from driving a vehicle and from walking for at least 90 days. After 90 days she would be permitted to walk, but would continue to be prohibited from driving.

Snow filed a workers compensation claim. Her medical bills were paid and, during the time of her recovery, her salary was also paid at the rate of 66% of her weekly wage.

Approximately 90 days after the collision, Snow returned to work. She resumed her sales appointments and the necessary driving to them.

Regrettably, 30 days later, while walking up the steps outside a business client's building, she fell and re-injured her right knee. The knee injury was soon diagnosed as having additional tears to the remaining meniscus. Apparently the remaining meniscus was not strong enough to support Snow's knee sufficiently, and as a result her knee collapsed under her.

Snow had no alternative but to file a new workers compensation case with her employer. The new injury was diagnosed as "an exacerbation of the prior injury to the patient's right knee". Her medical prognosis was rest and physical therapy for an additional 90 days. The workers compensation carrier paid all of Snow's new medical bills and again compensated her at a rate of 66% of her weekly salary.

Pursuant to state law, the carrier, Cross National Insurance Company, filed a claim for reimbursement with the State Disability Fund for the monies paid on behalf of Snow for her new and exacerbated injuries.

State law required the Disability Fund to reimburse insurance carriers for monies they paid to medical providers and in salary to employees re-injured on the job.

The problem in this workers comp case though was the State's Insurance Statute required a carrier to file a "Notice of Claim for Reimbursement" with the Commissioner prior to their paying out any monies on behalf of a re-injured employee.

Because of a clerical error in the carrier's legal department the Notice was filed 5 days late, after the Carrier made its first payment of medical bills on behalf of Snow. The failure to file the claim timely resulted in the Fund's denial of the Carrier's request for reimbursement.

Request for Exception...

The Carrier filed a "Request for Exception" by the Commissioner. The Carrier argued before the Commissioner their failure to file the Notice timely was a "good faith" error and was not "substantive" enough for the claim to be denied.

The Fund disagreed stating the law was enacted to be followed as it was written and as such left no room for "interpretation or exception" by the Commissioner. The Fund quoted the statute as:

"The carrier will be initially responsible for paying additional benefits attributable to the claimant's concurrent employment. However, it may seek reimbursement from the Special Disability Fund for those additional benefits if it has filed a notice of a right to reimbursement before the written decision making that award is filed and any benefits are paid."

Outcome...

After hearing the arguments of the attorneys representing the Fund and the Carrier in this workers comp case, the Commissioner's Court rendered the following opinion:

"We have before us what on its face appears to be a straightforward workers comp claim by a carrier for reimbursement under the Special Disability Fund. There is no argument between the parties but that the injured woman's injuries were real and debilitating. There is also no quarrel as to the amount of compensation paid to her.

The only issue before this body in this workers comp case is the timeliness of the Carrier's claim for reimbursement.

Although we might empathize with the Carrier's reasons for failing to file their claim timely, we must consider the effects of our doing so. For this body the question is not the claim of good faith error postulated by the Carrier. Instead we rely on their claim of 'substance'. As such we must decide if the substance of missing the required filing deadline outweighs the need for strict adherence to the state's controlling statute.

We can neither empathize with the Carrier's claim of good faith error, or with its substance. The interpretation of the state statute controlling the deadline for filing a Special Disability Fund Claim cannot lie with this body.

If we were to permit the Carrier's request for an exception of 5 days after the filing deadline, this body would assuredly be convening shortly hereafter to interpret a 'good faith' 'substantive', 6, 8, 10 day or more exception to the filing deadline. The requests for exceptions could conceivably continue ad infinitum.

We therefore must find in favor of the Special Disability Fund and deny Cross National Insurance Company's request for exception."

Important Points...

  • Each state has a form of Special Disability Fund. The Fund exists to provide financial assistance to insurance carriers who are faced with multiple claims from the same re-injured employees.

  • The Special Disability Fund exists as a form of insurance "pool" for insurance carriers. The fund is supplied by the state and by the individual carriers to help supplement the cost of multiple workers comp cases requiring compensation for employees who are re-injured on the job.


*This case example is for educational purposes only. It is based on actual events although names have been changed to protect those involved. Any resemblance to real persons or entities is purely coincidental.

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TYPE OF ACCIDENT
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PERSONAL INJURY
WORKERS COMPENSATION
MEDICAL ERROR
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