FAQs

Are Claims For Work-Related Stress Stemming From A Personnel Decision Compensable?

Court Decisions FAQs

New York Workers’ Compensation law does allow for stress related mental injuries to be found compensable in certain situations. It is a very fact specific area of the law.

In general, Workers’ Compensation Law §2(7) precludes claims for mental injuries based upon work-related stress “if such mental injury is a direct consequence of a lawful personnel decision involving a disciplinary action, work evaluation, job transfer, demotion, or termination taken in good faith by the employer.”

A recent Appellate Division case, Matter of Haynes (Catholic Charities), (N.Y. App. Div. 3d Dep’t Jan. 28, 2016) presented this very issue. In that matter, the claimant alleged a psychological condition was the result of being assaulted by a client at work. The employer argued the claimant’s mental condition was instead related to two warning letters issued to the claimant in good faith. The employer’s argument being the psychological condition was due to the disciplinary action and therefore not a compensable condition/injury under the law. The claimant asserting the psychological condition pre-existed the disciplinary action, due to a specific work incident, and therefore was a compensable mental injury.

“Whether an employer’s actions constitute a lawful personnel decision undertaken in good faith is a factual issue to be resolved by the Workers’ Compensation Board.” Miles v. State Ins. Fund, 267 A.D.2d 511 (N.Y. App. Div. 3d Dep’t 1999). Under the specific circumstances of this case, the Court affirmed the Board’s ruling. The Board found the claimant’s mental injury stemmed from work-related stress (assault at work) and was being treated for her condition prior to the issuance of the two employment related warning letters. Had the Board found the claimant’s psychological condition was instead related to the warning letters the outcome of this case would have been significantly different.

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The Overlap Between Social Security Disability and New York Workers’ Compensation

FAQs Practice Tips

Many claimants in the workers’ compensation (WC) system are either receiving Social Security Disability (SSD) benefits or applying for SSD benefits. It is important to have some knowledge of how Social Security Disability benefits can impact the WC claim and how a person’s application/eligibility for SSD can affect the WC claim.

The Meaning of Disability 

In New York, a WC claimant must produce medical evidence of a causally related degree of disability in order to receive ongoing indemnity benefits for lost time from work. A claimant can receive indemnity benefits if they are totally disabled (100%), or have any degree (1% or more) of casually related degree of disability. The claimant’s weekly disability benefit rate is determined by the ongoing degree of disability.

The Social Security Administration (SSA) does not provide degrees of disability (i.e. 25%, 50%, 75%, 100%), a claimant either meets their definition of disability, or they do not. Social Security’s definition of disability is “the inability to do any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.” For the year 2016, the Social Security Act classifies “substantial gainful activity” (SGA) as earning more than $1,130.00 per month. Each year Social Security adjusts the amount of earnings per month which they consider to be SGA. Here is a chart for the SGA dated back to 1975.

Additionally, WC only takes into consideration disability due to the compensable injuries/conditions. Social Security takes into consideration all of the applicant’s disabilities.

Indemnity Benefits/Return to Work

It cannot be assumed that a claimant who is receiving Social Security Disability benefits is not working. While it is likely a person who is receiving SSD benefits has not returned to work in any capacity, it is possible for an SSD beneficiary to be working. As the SSA wishes to encourage people to return to work, they allow for a trial work period which does not jeopardize their SSD benefits. During a trial work period, the claimant can earn above $810.00 per month in up to nine months during a sixty month (5 year) period and still be entitled to SSD benefits. It is likely if a WC claimant is working and receiving SSD benefits, there will still be a reduced earnings claim through workers’ compensation.


Medicare Eligibility/Settlement

Social Security Disability beneficiaries automatically become eligible for Medicare two years (24 months) from the date they become eligible for benefits. The date an applicant becomes eligible for benefits is five months after the disability onset date established by Social Security. For example, the claimant receives a Notice of Award in June 2015 with a disability onset date determined to be May 2013. Due to the five month waiting period, the applicant is eligible for SSD benefits as of October 2013. Under SSD rules, the applicant will automatically be eligible for Medicare two years from the date they first started receiving SSD benefits. In this example, they will be eligible for Medicare as of October 2015.

As previously discussed, determining whether a claimant is eligible for Medicare benefits is extremely important when considering settlement which involves closing future medical benefits.

Labor Market Attachment

In New York, if a WC claimant has less than a total degree of disability they have an obligation to remain attached to the labor market. If the claimant’s treating physician(s) opine the claimant has a partial disability (anything less than 100%) or there has been a finding by the Board that the claimant has a partial degree of disability (either permanent or temporary) the claimant has a legal duty to continue to search for work within his/her restrictions.

It is possible for a claimant to remain attached to the labor market while receiving Social Security Disability benefits. Remember, there is no obligation for the claimant to actually return to work to show attachment to the labor market, but there is an obligation to search for work. However, if the carrier or defense counsel has raised labor market attachment, it is important to know if the claimant has applied for, or is receiving SSD benefits. If a claimant is receiving SSD benefits, or has applied, it is most likely this individual does not have any interest or intention of returning to the labor market.

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Can A Party Appeal an Order of the Chair to the Board Panel?

FAQs Practice Tips

The Board may issue an Order of the Chair to address medical treatment variance requests. Orders of the Chair are most commonly issued when a treating medical providers files a variance request and the insurance carrier/self-insured employer fails to reply timely. According to the regulations [12 NYCRR 324.3(c)(6)], Orders of the Chair are not appealable under NY WCL §23.

If an Order of the Chair is not appealable, then how does a party address an adverse order entered by the Board for which their is a basis to argue the Order should be rescinded? i.e. the medical provider faxed the variance request to a wring fax number and the carrier did not get the variance request in order to respond timely. An Order of the Chair is neither an “award” nor a “decision” of the referee (see WCL 23; see also 12 NYCRR 300.13) and is outside the scope of the Board Panel’s review (see Matter of United Parcel Service, 2010 NY Wrk Comp 30303791. See also Matter of Livingston County, 2011 NY Wrk Comp 79905338).

The Board addresses this very issue in Matter of Brentwood School District, ruling:

If an Order of the Chair is defective or was improperly issued, the remedy is to make a written request to the Board for a rescission of the Order of the Chair, with notice to the other parties in interest, which will be addressed administratively by the Board. If it is administratively determined that the Order of the Chair should be rescinded, the Board will do so through a form EC-325.1, Rescission of the Order of the Chair. The Board Panel has no authority to direct that the Order of the Chair be rescinded.

Therefore, if you have reason to take issue with an Order of the Chair, instead of filing an appeal along with an RB-89, you should simply send correspondence to the Board and all parties of interest stating specifically why the Order of the Chair should be suspended.

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When Should a Medicare Set-Aside be Submitted to CMS for Approval Before Settlement?

FAQs Medicare Set-Aside (MSA) Practice Tips

Medicare is a federally sponsored health care plan that is available to individuals who are; a) 65 or over, b) to individuals who have received Social Security Disability Insurance (SSDI) benefits for more than two years, and c) to individuals with end stage renal disease. It is common for workers’ compensation claimants to be Medicare recipients.

The Medicare As Secondary Payer Act (Link) has made it clear that if medical expenses could be covered under either workers’ compensation or Medicare, workers’ compensation, and not Medicare, should pay. Workers’ compensation is primary and Medicare is secondary. Medicare is administered by the Centers for Medicare and Medicaid Services (CMS).

When the claimant has an open workers’ compensation claim, with regard to ongoing medical care a worker is currently entitled to workers’ compensation, the situation is fairly straightforward: Workers’ compensation should pay and Medicare should not.

The situation becomes much more complicated with regard to settlements. When the parties agree to a settlement and an employer/insurance carrier is relieved of its liability for future benefits, in most cases, some of the settlement proceeds is for the payment of future medical benefits. Until that amount is exhausted Medicare should not be expected to pay for medical expenses for the covered condition. When that amount is gone, Medicare should begin paying. The problems concern how to determine how much of a settlement should be allocated for future medical expenses and how to know when that amount has been exhausted. These allocations are typically referred to as “Medicare Set-Aside” (MSA) agreements.

There are no statutory or regulatory provisions requiring that you submit a “Medicare Set-Aside” proposal to CMS for review. However, the interests of Medicare must always be protected. The best way to ensure Medicare’s interests are properly protected is to obtain CMS approval of your proposed “set-aside.” Of course, if the employer/insurance carrier remains responsible for future medical treatment, there is no need to take Medicare’s future interests into account at the time of the “indemnity only” settlement as the employer/insurance carrier will continue to pay for the medical treatment for the work injury/condition.

In July 2001 CMS issued a memo [Link] to its regional offices. It suggests that under certain circumstances parties to workers’ compensation claims should not settle those cases until after CMS has had an opportunity to review the settlement and approve the allocation to future medical expenses.  The memo discussed the circumstances under which the regional offices will “pre-approve” such an allocation/MSA. It discusses pre-approval in two categories of cases:

  1. Cases in which the workers’ compensation claimant is currently entitled to Medicare benefits.
  2. Cases in which the injured individual has a “reasonable expectation” of Medicare entitlement within 30 months of the settlement date and the settlement is over $250,000.

Medicare announced that the ‘threshold’ for reviewing cases was to be set at $25,000. Medicare refuses to provide a pre-approval of set-aside unless the lump-sum payment to the claimant exceeds $25,000.

Therefore, if you are settling a workers’ compensation claim and the employer/insurance carrier will not be responsible for future medical treatment after the settlement is approved, you should not seek CMS approval of the Medicare Set-Aside arrangement if the claimant is a Medicare recipient but your settlement is less than $25,000. CMS will not review the “set-aside” arrangement and will not provide a verification letter confirming the proposed “set aside” agreement properly takes Medicare’s interests into account. If the settlement exceeds $25,000 and the claimant is a Medicare recipient, you should obtain CMS approval of your Medicare Set-Aside arrangement prior to settling the claim.

If there is a “reasonable expectation” of Medicare entitlement within 30 months of the settlement date and the settlement is over $250,000, the employer/insurance carrier should obtain CMS approval of the Medicare Set-Aside arrangement. A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:

  • The claimant has applied for Social Security Disability Benefits;
  • The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision;
  •  The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits;
  •  The claimant is 62 years and 6 months old; or
  • The claimant has an End Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

It is important to note, if the claimant is receiving Medicare and your settlement is below $25,000 or the claimant has a “reasonable expectation” of Medicare entitlement within 30 months of the settlement date and the settlement is less than $250,000, you need not submit the “set-aside” proposal to CMS for approval of the Medicare Set-Aside arrangement, CMS will not review the proposal, but you are required to take Medicare’s interests into account. Therefore, the employer/insurance carrier should still ensure the settlement includes a Medicare Set-Aside arrangement.

After a case is settled, CMS encourages the parties to create some form of “set-aside” arrangement in which the funds for future medical expenses that would be covered under Medicare are placed in a trust or deposited in a separate account. Medicare will begin paying medical bills for the work-related condition only when the “set-aside” is depleted and the funds are accounted for.

If you have a Medicare Set-Aside question, or question about New York Workers’ Compensation in general, you can contact Declan Gourley here. To subscribe to my monthly newsletter, enter your e-mail address on the right side of the page and click the “subscribe” button.

Are Injuries That Occur During A Lunch Break Compensable?

FAQs

This is a very fact specific issue. Sometimes, as will be discussed in detail below, the most minor details can effect whether an injury is found to be compensable. Typically, injuries that occur during a lunch break are deemed to occur outside the scope of employment and therefore not compensable. Of course, there are limited circumstances when the injury may be found compensable, such as when the employer continues to exercise authority over the employee during the lunch break or the employer derives a benefit from the employee’s decision to purchase lunch at a particular location (Matter of Smith v City of Rochester, 255 AD2d 863 [1998]).

The Board has ruled “[I]n the absence of special circumstances, such as a direction on the part of the employer, performance of some duty during the lunch hour, or a lunch period at some odd time caused by something connected with the work, an employee is not considered to be in the course of his employment” (Matter of Guido v Terra-Rube Constr. Corp., 7 AD2d 554 [1959], affd 10 NY2d 858 [1961]).

I was successful in defending a claim filed by an employee who alleged injuring her back and right knee as the result of a fall on an escalator while on a break from work. The employer was located in a mall and the claimant testified she had taken a coffee break and feel on an escalator when going to get coffee. During cross-examination, the claimant testified while on her break she also stopped and purchased a sweater. This minor fact is likely the reason why the Board Panel ruled the claimant was on a lunch break, and therefore the accident did not occur within the scope of her employment. Had this important fact remained unknown, it is likely the Board would have ruled the claimant had been on a coffee break and therefore the injury was within the scope of her employment.

In short, injuries that occur during lunch break are generally found to have not arisen out of and in the course of employment.