Spring 2010 SBH Work Comp Quarterly
PDF FormatRestrictions to Exclusive Remedy Provision of ORS 656.018
Recently, the Oregon Court of Appeals issued a decision that further restricts the protections of the exclusive remedy provision of ORS 656.018. In Merten v. Portland General Electric (March 24, 2010), the Court reversed the trial court’s grant of summary judgment in favor of the employer and held that an injured worker is not barred by the exclusive remedy provision from bringing a civil claim for fraudulent processing of his workers’ compensation claim.
FACTS
**Please note when a court reviews a motion for summary judgment, it construes the facts in a light favorable to the nonmoving party. In other words, the court presumed all of Merten’s allegations were true.**
In April 2003, Merten fell from a power pole. He immediately reported the injury to his employer but did not file a claim until August 2003. He alleged injuries to his shoulder and low back and indicated he had received medical treatment from Dr. Krier. The employer contacted Dr. Krier for records but his office did not disclose the records.
In September 2003, the employer contacted Merten and informed him it had not received any medical records related to his claim and if the records were not received by October 3, 2003, his claim would be denied. Claimant was also informed the employer had the right to “reverse the denial and accept the claim at any time.” By October 6, 2003, the employer had not received any medical records and, therefore, a denial was issued with the 60-day appeal notice. However, the denial noted “[w]e will review your claim again for possible approval, once we receive medical documentation from your physician.”
Instead of requesting a hearing, Merten continued to communicate with the employer regarding his injuries. Merten claimed the employer repeatedly told him that, if he submitted medical records documenting his injuries from the fall, the employer would accept his claim. These communications persisted after the 60-day appeal deadline had lapsed.
In May 2006, more than 200 days after the denial was issued, Merten contacted the employer to obtain a claim number to facilitate payment of his upcoming shoulder surgery. He also inquired about compensation for his low back. At this point, the employer told him that his back injury was no longer an issue because he was time barred from appealing the October 6, 2003 denial. However, the employer eventually accepted the shoulder injury.
In December 2005, Merten filed a civil claim for fraud alleging the employer never intended to open his injury claim and told him that it would do so only to prevent him from making a timely request for a hearing on the denial. A trial court granted the employer’s request for summary judgment and agreed that a civil fraud claim was barred because the Workers’ Compensation Act provided his exclusive remedy.
On appeal, the Oregon Court of Appeals disagreed with the trial court and reasoned that Merten’s fraud allegations arose from “non-work-related” communications and the Oregon Workers’ Compensation Act did not provide the exclusive remedy. The case was remanded back to the trial court to determine whether the communications were fraudulent.
ANALYSIS
Generally, when a worker sustains an injury that arises out of and occurs in the course of employment, the worker can only seek remedies provided for under the Oregon Workers’ Compensation Act. 656.018(1)(a). There are some notable exceptions. For example, an injured worker is permitted to bring a civil negligence claim when benefits are denied on a major contributing cause basis. Smothers v. Gresham Transfer, Inc., 332 Or 83 (2001).
In Merten’s case, the Court of Appeals evaluated whether representations made during the processing of his workers’ compensation claim were sufficiently connected to his employment such that the representations occurred “in the course and scope” of his employment. The Court reasoned the employer’s discussions with Merten about his claim were “non-work-related” communications and, therefore, any harm resulting from those communications did not arise out of and occur in the course of his employment. This reasoning appears to be inconsistent with the Supreme Court’s decision in Robinson v. Nabisco, 331 Or 178 (2000), which held that an injury sustained during an independent medical examination evaluation occurred in the course and scope of employment. Neither an IME nor communications about a claim for benefits have any direct relationship to a worker’s employment, but there is an argument they both share an indirect relationship to employment.
The Court also explained that Merten’s fraud claim “is not the sort that can be compensated by the Workers’ Compensation Act. It cannot be treated by ‘medical services or result in disability or death,’ as required by ORS 656.005(7)(a).” Ultimately, the Court found that fraud is not the type injury that can be established by medical evidence supported by objective findings and, therefore, the claim falls outside of the Workers’ Compensation Act. With this analysis, the Court likely reached the correct decision. The issue of whether the employer’s communications with Merten were fraudulent remains to be determined by the trial Court.
RECOMMENDATIONS
From a practical perspective, the Merten decision has less to do about what types of harm can be remedied by the Workers’ Compensation Act and more to do with reasonable processing obligations and how best to communicate with claimants. In terms of processing obligations, it is important to remember that even when a claim has been denied, the processing agent must continue to evaluate factual and medical evidence to determine whether there is a legitimate basis to deny the claim for benefits. Brown v. Argonaut Insurance Company, 93 Or App 588, 592 (1988) (a denial becomes unreasonable if new evidence eliminates any legitimate doubt about liability). However, the obligation to evaluate evidence ends when the 60-day appeal deadline passes.
The Merten case also reminds us that verbal communications with claimants can be perilous. Although there may be no bright line rules about what you can and cannot say to claimants, there are two guiding principles. First, when the subject turns to whether a claim will be accepted or denied, do not offer predications. Claimants may rely on those representations to their detriment and, potentially, to your detriment as well. Second, steer clear of offering advise to claimants. If claimants have questions about their rights and responsibilities, refer them to the Oregon Ombudsman for injured workers.
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