Negative Consequences May Flow From Workers' Compensation Denial

more+
less-

[author: SCOTT T. SILVERMAN]

Your company just won its workers' compensation case, and the employee was denied benefits.  Time to celebrate, right? WRONG. You may have just bought yourself a civil lawsuit for damages.

In Ocean Reef Club, Inc. v. Wilczewski and Leon, No. 3D09-2779 (Fla. 3d DCA March 21, 2012), the Third District Court of Appeal made two findings of which all Florida employers should be aware: (1) an employer with knowledge of workers' compensation injuries, but who fails to properly report them, is prevented from claiming workers' compensation tort immunity, because the employee failed to file for benefits or because benefits were denied as time-barred; and (2) an employer cannot claim workers' compensation tort immunity when its carrier has denied coverage on the ground that the asserted injuries were not within the course and scope of employment.

In Ocean Reef, employees, a hair stylist and nail technician in a beauty salon, had notified their supervisors of asthma-like symptoms, headaches and respiratory problems, resulting from chemical fumes, for which they sought medical treatment.  However, neither they nor their employer gave notice to the insurance carrier of these illnesses.  It was only after Ocean Reef was sued for damages, that it notified the carrier, which denied coverage on the basis that the illnesses did not occur in the course and scope of employment and that the statute of limitations had run.  Ocean Reef then moved for summary judgment on tort immunity in the civil action, which was denied.  The denial then went to the Third District on appeal.

The Third District held that an employer could not fail in its statutory obligation to provide notice of work-related injuries, and then argue that the tort immunity applied, because the employees did not give notice, and that the workers' compensation claim was barred due to the passage of the statute of limitations.  The court also found that it would be inequitable for the employer, through its insurance carrier, to assert there were no work-related injuries and no workers’ compensation coverage, and then later, when the employee brought a tort action against the employer, to assert a workers’ compensation coverage defense.  An employer simply cannot take such inconsistent positions.

The lessons for employers are: (1) to make sure that supervisors make the required notice of injury so that the employee will be limited to the workers' compensation remedy;  and (2) to coordinate the defense of workers' compensation claims with civil litigation to make sure that inconsistent positions are not taken.  Had this employer made the required notice of injury during employment, or had made sure that an inconsistent defense was not taken in the workers' compensation proceeding, it would not now be looking at a significant civil damages exposure.