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What Do New Workers' Compensation Reforms Sweeping the Country Have in Common?

AOECOE – Not Just Another Acronym

California Senate Bill 863 was passed in the fall of 2012 and went into effect on January 1, 2013. Senate Bill 1062 was just signed into law by Governor Mary Fallin of Oklahoma and will take effect January 1, 2014. On April 30, 2013, Tennessee Governor, Bill Haslam, signed into effect Senate Bill 200. House Bill 154 is expected to go into effect in Georgia in July, 2013. What are these bills? The first of many sweeping Workers' Compensation reforms. A common theme in these bills and other pending reforms is to level the playing field for employers and accept only those claims that arise out of the course and scope of employment, AOECOE.

A well-known term of art in the Workers' Compensation arena, AOECOE is not just an acronym. It is transitioning from a term of art to a statement with teeth, as reforms are actually including such wording into bills. The purpose of doing this is to establish whether an employee's alleged injury is work-related and happened in the course and scope of employment, or whether the injury is non-industrial or affected by third parties.

Workers' Compensation is a no fault system and thus benefits the injured worker, as, in order to receive benefits, he or she does not need to prove that the employer was negligent. However, it is the injured party's burden to show that the injury did, in fact, occur while at work, while employed as an employee and while undertaking some activity for the benefit of the employer. The injury itself must have been caused by the accident or employment conditions, and not from some other non-industrial related factors or degenerative factors.

The determination of AOECOE has long been an OSHA policy. OSHA's Injury and Illness Recordkeeping Regulation Section 1904.5: Determination of work-relatedness contained under section (a) basic requirement states in order for an injury or illness to be work-related an event or exposure in the work environment is either caused or contributed to the resulting condition or significantly aggravated a pre-existing injury or illness. Work-relatedness is presumed for injuries and illnesses resulting from events or exposures occurring in the work environment.

California's SB 863 was signed into law by Governor Brown on September 18, 2012, for a January 1, 2013, effective date. While certainly not the first bill to consider AOECOE issues, it is one of the most significant Workers' Compensation reform bills to specify AOECOE language. SB 863 calls for an Independent Medical Review (IMR). While this process may be problematic for an employer, since an IMR can be requested only by an injured worker following a denial, modification, or delay of a treatment request through the utilization review (UR) process, the bill specifically states that this does not apply if the injury is in question for AOECOE reasons.

On May 8, 2013, Oklahoma Governor Fallin signed into law historic Workers' Compensation reform, Senate Bill 1062. The bill defines compensable injury as arising out of the course and scope of employment and does not include: any strain, degeneration damage or harm to disease or condition of the eye or musculoskeletal structure or other body part resulting from the natural result of aging, osteoarthritis, degenerative process or pre-existing, except if a treating physician clearly confirms an identifiable and significant aggravation arising out of AOECOE.

On April 29, 2013, Tennessee Governor Haslam signed a Workers' Compensation reform bill into law, SB 200. It specifies that injuries arise out of and in the course and scope of employment only if proven by a preponderance of evidence that employment contributed more than 50% to causing the injury, AOECOE.

In my experience, the majority of injuries are real, but they are not AOECOE. Injured parties may exaggerate the severity and extent of their injuries or may attempt to hide pre-existing conditions. So how do any employers determine if injuries are AOECOE? The answer is simple. They need to ascertain what the employees' statuses are pre-injury. This is effectively done with baseline testing.

Baseline testing is a bookend solution. To be effective, it should be objective, meet the criteria for evidenced-based medicine, be job related and consistent with medical necessity. It needs to be specific to the metrics being evaluated. A good example of a specific baseline test that is recognized in some jurisdictions by statute is audiometric testing. Hearing tests are routinely done in environments with high noise exposure to determine a baseline that is referenced once a claim is filed. This is commonly referred to as the lock box defense.

Audiometric testing is beneficial for documenting hearing loss but is not designed to address other conditions such as musculoskeletal disorders (MSD). MSDs are the most frequent and costly claims for an employer. In order for a baseline test to be utilized for MSD, it must not only be objective and reproducible, it must contain measurements to ascertain electromyography (EMG), range of motion (ROM) and function.

In addition, baseline testing must be legally defensible. In 1990, Congress enacted the Americans with Disabilities Act that outlines what makes a legally defensible test. To be legally defensible, the testing needs to be job-related and consistent with business necessity i.e. the employer must show that it “substantially promote[s]” the business' needs. It must be repeatable, objective and address functionality. Also, since baseline testing is considered to be a medical exam, it needs to evaluate some functions of the job.

Baseline testing is not a post-offer, pre-placement test, as it can not identify disability because the data is not read and no hiring decisions are made with baseline evaluations. When a work-related injury occurs, a post loss test is conducted, at which time the baseline test is read and compared to the post loss results, hence the bookends.

When compared, the results can determine if an injury exists and if it has arisen out of the course and scope of employment, thus determining an employer's true responsibility. Good baseline testing is non-discriminatory and prevents “false” claims. The sweeping Workers' Compensation reforms allow for a new definition of “false” claim: one that is not AOECOE. A false claim no longer means fraud! A proven example of an effective baseline test is the EFA-STM.

Workers' Compensation statutes are helping employers by allowing them to accept the claims that are only AOECOE. Employers need to see that they comply with legislation, and baseline testing now gives them an objective assessment to do just that.

A Tale Of Two Broken Hearts

Imagine, if you will, twin boys born on some sunny day not too long ago. Neither one of the boys, nor their parents, nor even the delivering doctors knew that both boys were born with a heart condition. This congenital heart anomaly, a patent foramen ovale, left a small hole open in the walls of each brother’s heart, exposing them to higher risks of stroke.

These twin brothers, let’s call them Keven and Kenny, seemed to be joined at the hip. They enjoyed all the same activities, all the same food, went to the same school, and, when they decided it was time to purchase homes of their own, bought two adjacent houses. Being as close as they were, they tore down the fence between their properties and right in the middle built a small gazebo where they could enjoy breakfast with their families every weekend morning.

In choosing a profession, Keven wanted a job that would keep him physically fit while allowing him to serve the community and even save the lives of his fellow citizens. So he became a firefighter. The job kept him physically fit and allowed him to maintain a clean bill of health … except for that congenital heart anomaly, which no one knew about.

Kenny, on the other hand, decided to pursue the absolute highest calling — the profession which the bravest and noblest aspire to. He didn’t want to become a physician, or an engineer, or even a scientist. He decided to become a workers’ compensation defense attorney (not unlike your humble author).

Still, the two twin brothers were in every other respect exactly alike, and spent every Sunday morning having breakfast together in that shared gazebo, along with their wives and children.

Then, tragedy struck! One morning, as Kenny and Keven sat next to each other, enjoying the morning air, each with a newspaper in the left hand and a piece of toast in the right, they suddenly sat straight up, looked into each other’s eyes, and both collapsed to the ground with strokes.

Their families rushed them to seek medical treatment and, fortunately, each of the two brothers recovered. Before long, they were sitting next to each other in their shared gazebo, when Kenny had an idea. Why not file workers’ compensation claims for the strokes — surely, the stress of being a firefighter caused Keven’s stroke. And, if being a firefighter is stressful enough to cause a stroke, then being a workers’ compensation defense attorney is even more so!

As the cases progressed, each of the two brothers agreed to use an Agreed Medical Evaluator, and each AME came to the same conclusion: the AMEs both found that, in their respective cases, the “stroke … occurred in an individual whose only major risk factor for stroke in terms of this industrial analysis appears to be his congenital heart defect … all of his conditions apportion 100% to non-industrial causation.”

Kenny was crushed — his case was effectively at an end as the workers’ compensation Judge ordered him to take nothing. After all, the Agreed Medical Evaluator had found that there was only one cause for his stroke — a non-industrial condition acquired at birth. How could any legal system, short of denying a defendant-employer due process, require workers’ compensation payment for something so patently and obviously unrelated to any work causes? Keven’s case, on the other hand, was just warming up.

Keven’s attorney argued that, under Labor Code section 3212, “any heart trouble that develops or manifests itself during a period while [the firefighter] is in the service of the office, staff, department, or unit … shall be presumed to arise out of and in the course of the employment.”

Now, isn’t that presumption rebutted? After all, as in both the case of Kenny and Keven, the Agreed Medical Evaluators have found that the sole reason for both strokes was the congenital heart condition — exactly 0% of the causation had anything to do with work as a firefighter or as a workers’ compensation defense attorney.

Well, as Kenny feels once again misused and ignored by the system he so gallantly serves, Keven has another line of defense: “The … heart trouble … so developing or manifesting itself … shall in no case be attributed to any disease existing prior to that development or manifestation.”

Keven’s attorney would have to prove that Keven is a firefighter — something he could establish without much difficulty (showing up at the Board with a fire axe is not recommended, even if you believe you’ve got “an axe to grind”). Then, he would have to prove that Keven’s injury could be considered “heart trouble.” This should be no problem, considering the fact that case-law has established that there are very few non-orthopedic injuries that might be considered not heart trouble (Muznik v. Workers’ Comp. Appeals Bd. (1975)).

But what about that pesky requirement of “in the service of the office …” as required by Labor Code Section 3212? If the firefighter is sitting in his and his brother’s gazebo, drinking coffee on a beautiful Sunday morning and indulging in that antique of an information-delivery device that people so often read, is he really in the service of the fire department?

For example, the Court of Appeal in Geoghegan v. Retirement Board (1990) upheld a retirement board’s denial of benefits for a firefighter who sustained a heart attack while skiing.

Now, before the applicants’ attorneys out there start mumbling something about a ski-lodge burning and a San Francisco firefighter being called in to ski down the slopes and shovel ice onto the flames, your humble author assures you, this was a vacation. The treating physician found that the heart attack was caused by the altitude and Mr. Geoghegan had recently passed the fire department’s physical exams with skiing flying colors.

The Board of Retirement had rejected Geoghegan’s application for retirement benefits, and he appealed. There, the Court of Appeal rejected Geoghegan’s argument that Labor Code section 3212 applied and that he should be, at that very moment, counting his money instead of appealing his case, because the trial court had found that “the conclusion is inescapable that plaintiff’s disability was due to the myocardial infarction caused by the cold and altitude encountered while skiing.”

Previous decisions, as cited by the Geoghegan Court, included Turner v. Workmen’s Comp. App. Bd. (1968) and Bussa v. Workmen’s Comp. App. Bd. (1968). In Turner, a police officer’s heart attack sustained while on duty after a day off spent abalone fishing was found non-industrial, and the presumption of Labor Code Section 3212.5 was rebutted. In Bussa, a firefighter’s exertions on a second job were used to rebut the presumption of industrial causation for his heart attack.

Well, Keven’s attorney could easily fire back that those three cases can be distinguished because they don’t touch on the anti-attribution clause (“[t]he … heart trouble … so developing or manifesting itself … shall in no case be attributed to any disease existing prior to that development or manifestation.”) And, as the Agreed Medical Evaluator in Keven’s case had found that 100% of the disability was caused by a congenital heart defect, that leaves (let me get my calculator here …) 0% available for causes not “attributed to any disease existing prior to that development or manifestation.”

Geoghegan was already a firefighter when he sustained his heart attack; Turner was already a police officer when he sustained his heart attack; and Bussa was already a firefighter when he had his heart attack. On the other hand, each of these cases showed an injury attributed to something other than a condition in existence prior to the start of the applicant’s career with the fire or police department.

Keven, on the other hand, was not exerting himself at all — he was having coffee with his twin brother and their respective families over a relaxing Sunday breakfast.

But doesn’t something seem strange about sticking the fire department with the bill for a condition which existed at birth? After all, we’re talking about medical care and temporary disability and permanent disability and maybe even a pension. That’s not to mention the litigation costs. The city in which Keven is a firefighter could be deprived of a firetruck or several firefighters’ salaries if it is liable for Keven’s stroke.

Your humble author directs you to the recent case of Kevin Kennedy v. City of Oakland. Mr. Kennedy, a firefighter, had sustained a stroke while he was off work and filed a workers’ compensation claim against the City of Oakland, reasonably arguing that the stroke was “heart trouble” as contemplated by Labor Code section 3212. After an Agreed Medical Evaluator found that Mr. Kennedy’s stroke was entirely caused by a congenital heart anomaly, and had nothing to do at all with any work-related activities or trauma, the workers’ compensation judge found that the City of Oakland was not liable for the injury.

Mr. Kennedy’s attorney made a fairly logical argument: Labor Code Section 3212 prohibits the attribution of heart trouble to “any disease existing prior to that development or manifestation” of heart trouble. Additionally, the same Labor Code section requires heart trouble in firefighters to be presumed industrial, although this presumption may be rebutted by other evidence. Here, there is no evidence available with which to rebut this presumption, because the AME found that 100% of the causation should be attributed to the congenital heart condition.

The workers’ compensation Judge, however, found that Mr. Kennedy could not recover — based on the opinions of the AME, the stroke had absolutely nothing to do with Mr. Kennedy’s employment.

Applicant petitioned for reconsideration, and the Workers’ Compensation Appeals Board granted reconsideration, reasoning that Mr. Kennedy’s patent foramen ovule was a condition existing prior to the development or manifestation of the stroke, and that Labor Code Section 3212 necessitated a finding of compensability. The Court of Appeal denied defendant’s petition for a writ of review.

In issuing its opinion, the Workers’ Compensation Appeals Board was consistent, echoing a similar decision in the matter of Karges v. Siskiyou County Sheriff, finding a deputy sheriff’s congenital heart condition compensable under Labor Code section 3212.5.

So … what’s to be done? Common sense and a basic inclination for fairness militate against this outcome. We’re not talking about a weak heart being aggravated by work conditions, but rather a firefighter at peak physical fitness succumbing to a condition with which he was born and an illness in which his work played no part. It’s entirely possible that if Mr. Kennedy had spent his life behind a desk, much like his imaginary twin brother Kenny, his heart would have been strained by office junk food and a sedentary lifestyle, much like your humble author’s.

As promised, here are a few crackpot arguments to be used only by the most desperate in such cases. Your humble author doesn’t know if these will work, but if they are the only alternative to writing a big check, perhaps they are worth exploring.

  1. As with the Karges decision, the argument should be raised that Labor Code Section 4663 is the more recent law, and therefore reflects the more current legislative intent. In litigated matters, judicial authority should be used to further this Legislative intent and not find impairment caused entirely by non-industrial factors to be compensable.
  2. In the writ denied case of Michael Yubeta v. Workers’ Compensation Appeals Board, a corrections officer’s claim for heart disease was ruled non-compensable when the Agreed Medical Evaluator found cardiovascular disease manifested prior to the start of his tenure with the Department of Corrections. In the Kennedy, matter, the defense might argue that the patent foramen ovule is the “heart trouble” contemplated by section 3212, and it manifested itself at birth, before the term of service with the fire department. Mr. Kennedy’s stroke, being directly and exclusively caused by this manifestation, should not be presumed compensable.

    After all, the poor guy had a hole in his heart — not in the sense that he couldn’t love or open up to other people, but the wall to his heart had an actual hole. Studies had shown that this practically guaranteed that he would sustain a stroke at some point in his life. (Understandably, this one is a stretch).

  3. Webster’s dictionary defines “attribute” as “to regard as resulting from a specified cause.” However, as the Labor Code does not use the words “apportionment” and “attributed” interchangeably, we can only suppose that they mean two different things. So, while section 3212 prohibits us from attributing heart trouble for purposes of AOE/COE (Arising Out Of Employment/In The Course Of Employment), perhaps we are still permitted to “apportion” the heart trouble to non-industrial causes. If such is the case, the Kennedy matter should have found the stroke compensable, and yet apportioned 100% to non-industrial causes.

    In other words, Mr. Kennedy should get the medical treatment but not the permanent disability indemnity.