Personal Comfort Doctrine Does Not Provide Comfort In Workers’ Comp

Under any workers’ compensation act, an injury is compensable if it “arises out of” and occurs within “the course and scope” of an employee’s work activities.  One area that is subject to frequent litigation is instance where an injury occurs during work breaks, or other non-work related activities. These personal comforts give members of the claims management team pause as to whether such an injury is compensable.

 

 

A Not So Uncommon Scenario

 

It is break time at the Acme Widget Company. Joe Friday missed breakfast and the company cafeteria is not yet open for lunch. Thankfully, there is a great coffee and donut shop across the street, which is frequented by employees before, during and after work. Joe decides to head over and grab a fresh jelly donut and cup of coffee. While carefully crossing the street he is struck by a car that did not stop for a traffic signal and suffers a broken leg. Would this claim be compensable?

 

 

Understanding the “Personal Comfort” Doctrine

 

The “personal comfort doctrine is a legal principle created by the courts to address the nature of typical workplace environments. Under this doctrine found in most jurisdictions, employees can engage in activities to provide personal comfort and still be covered under the protections of a workers’ compensation act. Such common activities include using a restroom, smoking or coffee breaks, eating food and drinking non-intoxicating beverages.

 

Application of this doctrine varies in every jurisdiction. In reviewing such matters, courts will examine various issues. These factors include:

 

  • Whether the activity was “contemplated” as part of the employment;

 

  • The nature of the activity prior to the accident; and

 

  • Any benefit to the employer when the employee engages in the activity resulting in injury.

 

 

Application of the Doctrine

 

Most workers’ compensation acts are interpreted in a light favorable to the employee. This result in injuries occurring during normal work hours, but off the employers premises or not directly related to one’s position, to be compensable.

 

Examples of injuries successfully using the personal comfort doctrine are numerous. In one example, an employee was crossing a street to get a pack of cigarettes. Although the injury did not occur on the employer’s property, the court found injuries similar to Joe Friday’s to be compensable.  Holly Hill Fruit Products, Inc. v. Krider, 473 So. 2d 829 (Fla. Dist. Ct. App. 1st Dist. 1985).

 

The reasons for this finding include the following:

 

  • The employee’s conduct was an “inevitable attendant danger;”

 

  • The actions of the employee were conducive to a pleasant work environment; and

 

  • While the employee was off the worksite for a short period, he did not remove himself from his employment activities.

 

 

Avoiding Unnecessary Workplace Exposures

 

Proactive members of the claim management team can work with interested stakeholders to reduce exposures and avoid “personal comfort” doctrine issues. Proactive steps can include:

 

  • Providing or making essential items available to employees on the worksite or premises. This includes having refreshments available free of charge or at an on-site store. By doing so, they maintain more control of their worksite;

 

  • Prohibiting smoking on company premises. Employers are recognizing the health benefits of tobacco-free workplaces. They can also coordinate with their health plan providers on accessibility of smoking cessation products or services to reduce the dependence on cigarettes; and

 

  • Establishing clear company policies regarding departure from the company premise during the workday. This can include a clear statement that leaving the workplace for any non-work related reason removes them from their employment and workers’ compensation activities.

 

 

Conclusions

 

It is important for interested stakeholders to understand the “personal comfort” doctrine.  This can assist with properly managing a claim where it is at issue and help employers minimize their risks to promote a safe work environment.

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2016 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

 

Ensure Case Integrity With Unrepresented Work Comp Claimant

There is never a requirement under a workers’ compensation act that an injured worker retain legal representation.  While more injured parties seek legal representation at some point during the life of a claim, the pro se litigant can cause a special series of problems.

 

What does it mean to be Pro Se?

 

The term “pro se” is comes from the Latin phrase, which means “for oneself.”  This term was later adopted in the English common law and associated with a litigant who represented them self in a legal proceeding.

 

 

Self-Representation in Workers’ Compensation

 

In workers’ compensation cases, parties will often not be represented by an attorney at the onset of a claim.  Due to the legal complexities of workers’ compensation cases, a vast majority of disputed cases result in the claimant obtaining legal representation.  This includes professional assistance to navigate the rough waters of litigation and advise the claimant regarding settlement or resolution of their claims.

 

 

The Double-Edged Sword of Claimant Representation

 

Members of the claim management team, defense attorneys and employer representatives should always treat the injured worker with dignity and respect in all circumstances.  In many instances, the interested stakeholders on the defense side should go the extra mile to avoid conflict, which results in the claimant obtaining legal representation.  On the other hand, competent counsel for the injured worker is not always bad.  Unrepresented parties will not typically understand the workers’ compensation benefit structure.  This can result in frustration and delay for all parties.

 

 

Treat Unrepresented Employee With Dignity & Respect

 

The unrepresented workers’ compensation litigant will likely have no prior legal training or background.  This can result in delays in settlement and cause confusion later on.  When dealing with the unrepresented, it is important to do the following:

 

  • Provide a disclaimer that the claim management team and/or defense attorney is NOT their legal representative. The consequence is they cannot provide legal advice to the worker, nor can they provide instruction on future actions that impact entitlement to benefits;

 

  • Continue to treat the unrepresented employee with dignity and respect. This includes all written and verbal communications; and

 

  • Instruct the injured worker to have their attorney contact the claims management team and/or defense attorney if they change their mind and obtain legal counsel.

 

 

Reaching Settlement with the Unrepresented Claimant

 

Settling workers’ compensation cases with can be difficult.  While all litigants are held to the same standard as an attorney practicing workers’ compensation law, state industrial commissions and compensation judges will take extra steps to ensure the integrity of the law is upheld and the pro se litigant understands fully the settlement agreement.  Parties drafting such settlement agreements may want to consider adding certain questions to the document to impress upon the employee and the courts the settlement was taken seriously.  Here are some examples to include:

ANSWER       INITIALS

  1. Have you read the entire Stipulation?                                   _____              _____

 

  1. Do you acknowledge that you have been provided

with the opportunity to be represented by your own

attorney, and that it is your own choice to have or not

have legal counsel review this Stipulation for

Settlement?                                                                                         _____              _____

 

  1. Do you acknowledge that, by executing this

Stipulation for Settlement without legal counsel,

you agree to waive voluntarily your right to legal

counsel?                                                                                              _____              _____

 

Having the employee answer the question yes/no and initial the answer adds to the steps one might want to consider.

 

 

Conclusions

 

In some instances, a pro se litigant can be a challenge to interested defense stakeholders.  This will require those parties to take extra steps to ensure the integrity of the workers’ compensation act and protecting a settlement against future judicial scrutiny.

The Employers Secret to Workers Comp Defense: Attorney Ted Ronca Tribute

We recently learned some sad news that one of our long-time contributors to Workers’ Comp Roundup, Attorney Ted Ronca, has passed away due to health complications.  Ted was a wealth of knowledge in representing employers in workers’ compensation and a frequently used legal resource for questions and clarification by our primary blog writers, Michael Stack and Rebecca Shafer.

 

We pay a tribute to him with a compilation of some of this extensive writings. Because his library of articles is so large, and the information so valuable, we have broken it into 3 parts. Employers are recommended to use this information as a reference for workers’ compensation defense best practices.

 

Part 3 of 3:

 

Little Used Federal Laws Give Employer Disability Management Control

Employers interact with employee disability through a number of laws. Until now, there has been little attention focused on how to coordinate statutory compliance to achieve better overall results. Workers compensation, in particular, has operated with little or no coordination with other laws.

 

Three Critical Times Employers Should Seek Workers Compensation Advice

Work comp is a real time problem in progress. If you’re an employer, chances are you could use some, or much, advice. But advice often comes with an expiration date and, if not taken, will spoil faster than an open container of milk on July 4th weekend.

 

Employers Can Spot A Claim Months Before It Occurs

A witnessed, sudden, accident presents far fewer problems than a claim without a witness. Yet, many un-witnessed claims are quite real, stemming from long term degenerative conditions. Many of these claims are filed and flagged as highly suspicious.

 

3 Types of Medical Exams Employers Have Not Heard Of

Employers who are willing to make better use of claim tools already in existence around them can achieve precisely what they have been hoping, in vain, that their carriers will do for them. The tools are: Occupational Health and Safety Administration(OSHA) physical exam, Department of Transportation (DOT) medical exam, Americans with Disabilities Act (ADA) medical exams

 

The Employers Secret to Workers Comp Defense Lies in these Three Quotes

Three quotations are all an employer needs to understand handling difficult comp claims. Two are actual quotes, but the third – and best – was made up and appeared in a 1917 newspaper story.

 

Author: Attorney Theodore Ronca was a lawyer from Aquebogue, NY. He was a frequent writer and speaker, and represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years.

Defense In Depth On Work Comp Claims: Attorney Ted Ronca Tribute

We recently learned some sad news that one of our long-time contributors to Workers’ Comp Roundup, Attorney Ted Ronca, has passed away due to health complications.  Ted was a wealth of knowledge in representing employers in workers’ compensation and a frequently used legal resource for questions and clarification by our primary blog writers, Michael Stack and Rebecca Shafer.

 

We pay a tribute to him with a compilation of some of this extensive writings. Because his library of articles is so large, and the information so valuable, we have broken it into 3 parts. Employers are recommended to use this information as a reference for workers’ compensation defense best practices.

 

Part 2 of 3:

 

Deny Work Comp Claims From Disallowed Unemployment

Can a worker who files a claim for unemployment and loses because of a justifiable dismissal then file for workers comp? Yes. And it happens all the time. The danger for employers is that the existence of the unemployment claim is not automatically known to the carrier or the New York Workers Comp board, causing many comp claims that could be defeated to be allowed at great expense, ultimately, to the employer.

 

Investigating Work Comp Fraud: Concealed Working Off The Books

If an employer has, say, a hundred or more workers who are semi-skilled, sooner or later there will be a comp claim in which suspicion grows that the worker has healed but is working off the books. This is a common problem in large metropolitan areas where activity is more easily concealed.

 

Injured Worker’s Personal Problems Lead To Dangerous Workers Comp Claims

There are classes of comp claims that start as ordinary reports of injury but quickly turn into claims nightmares. Among these is the younger worker claim in which an otherwise healthy person develops an inexplicably complicated claim. An explanation that needs to be considered is “trouble at home leads to trouble at work”.

 

‘See Attached’ Is Best Way To Complete First Report of Injury

The employer’s first report of a possible accident can be a dangerous trap when dubious claims are being reported. This is due to the fact that first injury forms are not designed to capture the information necessary to make decisions which are critical in the first days following an accident report. The decisions can be triaged into categories: there has been a clearly compensable accident, there has not been a work related accident, there has been a report which requires further investigation. (The second, there has been no compensable accident, also requires further investigation to document reasons for an objection.)

 

Defense In Depth On Work Comp Claims: The Employer’s Role

“Defense in depth” is a principal from conflict theory which promotes using several defenses in coordination instead of seeing them as separate defenses to be used one at a time. Sometimes, the phrase “mutually supporting” is used. In work comp hearings, defense issues often are identified and documented but they are not processed so that the use in hearings is enhanced.

 

 

Author: Attorney Theodore Ronca was a lawyer from Aquebogue, NY. He was a frequent writer and speaker, and represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years.

Two Basic Rules To Solve Workers Compensation Problems: Attorney Ted Ronca Tribute

We recently learned some sad news that one of our long-time contributors to Workers’ Comp Roundup, Attorney Ted Ronca, has passed away due to health complications.  Ted was a wealth of knowledge in representing employers in workers’ compensation and a frequently used legal resource for questions and clarification by our primary blog writers, Michael Stack and Rebecca Shafer.

 

We pay a tribute to him with a compilation of some of this extensive writings. Because his library of articles is so large, and the information so valuable, we have broken it into 3 parts. Employers are recommended to use this information as a reference for workers’ compensation defense best practices.

 

Part 1 of 3:

 

What Your Employees Fear Most After A Work Comp Injury

Fear, silence, and uncertainty do more to drive workers’ compensation costs than is generally appreciated – and these factors are fairly simple to control through employer involvement. Attorneys in the field quickly learn that an unpaid medical bill is certain to drive a worker to a lawyer, but there are many other fears which will also do the same thing. Job security is perhaps the second greatest fear, but much else can cause dangerous anxiety. Your workers will quickly find themselves worrying about problems which don’t exist and can’t exist, but these problems will be very real unless someone communicates with them.

 

Two Basic Rules To Solve Workers Compensation Problems

Nearly all compensation problems are solved by employers if they follow two basic rules: 1. Communicate early, 2. Communicate thoroughly.

 

The Work Comp Claim Isn’t Over Until It’s Over

Yes, this article honors Yogi Berra, but not for the reason you might think. His now famous phrase, about a game (or a season) not being over until it’s over has become the archetype for a thought which is a) true, b) egregiously obvious and c) useless. But Yogi may well have the last laugh.

 

Warning For Employers: Social Security Problems & Consequences For Workers Comp

The trust funds for the Social Security disability benefits program are nearly exhausted and will be gone by 2016. What consequences are there for an employer’s workers compensation costs?

 

Pay Particular Attention To Work Comp Claims That Overlap With Other Laws

“Flexibility” when you’re involved in a claim of any kind, gives you options – and that means having several ways to deal with a problem. But flexibility can mean much more. It can also give an employer freedom of action; in addition all others involved in a claim do NOT have the same advantages that the employer has.

 

Author: Attorney Theodore Ronca was a lawyer from Aquebogue, NY. He was a frequent writer and speaker, and represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years.

 

Look At The Big Picture In Litigated Work Comp Files

Litigation is bound to happen at some point in your work comp program.  It could be that a case that was once compensable is now no longer deemed compensable.  It could be that you received a petition for hearing out of the blue from a former employee.  You can be added to the litigation other parties are having over a different issue.  Litigation is bound to happen.

 

The legal case can present itself many ways.  Some could be a clear disputed injury date, and another could be as vague as an occupational exposure injury of which you are 1 of 15 named defendants.

 

 

“We Do Not Have Any Exposure” Is Not Accurate

 

The important thing to remember is to look at the big picture in the case.  The plaintiff feels that something they did while working for you lead to them being injured.  The response of “we do not have any exposure” is not accurate.  Even the wildest case has exposure of some sort, and it is key to not overlook the merits of the case no matter the allegation.

 

I see many examples of cases that started off as being nominal and later it turned out the employer was responsible for a sizeable sum of money contributed towards the settlement.  This is due to the attorney/adjuster/employer not considering the case as a whole.  What starts off as an elbow injury can turn in to a shoulder or neck claim that could be post-surgical in nature, depending on how the injury occurred and the medical evidence.  With this type of claim, all of the sudden you have a larger case on your hands.

 

 

Petition Can Be Worded To Broaden The Scope Of Injury

 

Plaintiff attorneys also know how to word a petition.  If you look closely, rarely are they narrow in scope.  Words like “general” or “repetitive” or “occupational exposure” hold different weight in different jurisdictions.  The petition is worded this way in order to broaden the scope of the injury.  Instead of saying “left elbow” it may say “left upper extremity.”  That alone is a great example of the plaintiff counsel using wording to help their own case.

 

Any surgical case can have a large exposure in both in the medical and wage loss fields.  Certain states have Permanent Partial Disability (PPD) rating, and just this rating could mean the injured worker is entitled to certain ongoing future benefits whether they work at your factory or not.

 

Another area to consider is the potential lien exposure.  Not just from Medicare or Medicaid, but from other health insurance providers as well such as Blue Cross/Blue Shield, United Healthcare, and so on.  They will add themselves to the suit, and their lien interests have to be considered towards a settlement.

 

 

Choose Legal Council That Is Well Versed In Work Comp

 

Adjusters are trained to reserve cases on overall exposure and need to know early on in the litigation process if you have no intentions of returning a worker back to their job.  If you decide on this aspect 14 months later, you can expect a reserve increase to follow.

 

In order to settle cases on a timely basis, you need to have legal counsel that is well-versed in work comp.  They need to have a relationship with the Judges, plaintiff attorneys, doctors, etc. It is very important to choose counsel based on a referral or recommendation.  The attorney should know your factory, the layout, and the jobs involved.  It is only to your advantage to develop a personal relationship with your legal counsel.  The better they know you, the better they can handle your cases.

 

So keep in mind to look at the big picture in your litigated cases.  Look at it from the injured workers point of view and the motivation of the plaintiff counsel.  What are their next steps going to be, and how are they going to present their case?  If you can figure out the answers to those questions, you will end up resolving your litigation quicker, cheaper, and more efficiently than your industry peers.

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%.  He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a monthly basis working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Is Workers’ Compensation Destroying Social Security Disability?

Believe it or not, the title is based on actual allegations being made in DC. Members of congress have published a statement linking declining workers’ compensation costs to rising Social Security Disability Income costs (both being measured per hundred dollars of wages paid in the national workforce). The ominous conclusion is that savings in workers’ compensation costs must be transferred to the SSDI trust funds (which are now officially zero).

 

To prove the assertion, one can look at the gradual rise  in SSDI costs since 2000, vs the gradual decline in workers compensation costs. Convincing? Hardly.

 

Some additional information is needed:

 

First, the Social Security regulations have been relaxed somewhat to allow for more people to qualify for disability income. That alone could account for the rise in SSDI.

 

Second, workplaces are safer than ever. Plus, more workers’ compensation boards are using objective evidence standards to measure disability.

 

Workplace safety has been on the rise, steadily, for decades, due to an economy based less on brute force activity and more on machine assisted tasking. In addition, safety technology and medical advances have greatly reduced the frequency and length of lost time.

 

Several decades ago, workers’ compensation was operating under assumptions which can be traced to the state of the art practices in medicine prior to 1914. Tables which awarded benefits for arm and leg fractures were based on average outcomes in treatment in English factories from 1848-1888. Those tables were incorporated into US compensation laws in the early 20th century and only recently have been replaced by modern methods of evaluation.

 

So what is to be made of increases in SSDI vs the decreases in workers compensation? Declining costs of workers’ compensation, if due to enhanced safety, should not be characterized as a “race to the bottom”, as was suggested in the congressional paper. Nor should rising SSDI costs be seen as the result of cost transfer from workers’ compensation to Social Security – especially where the definitions of disability were intentionally changed to allow for more disability awards.

 

Your correspondent has handled Social Security disability claims since 1977 and workers’ compensation claims since 1975. The bulk of Social Security claims are for conditions with onset after age 50, mostly through gradual degeneration.  About 20% of all claims are for chronic mental illness. The change in standards was long advocated by state agencies bearing the bulk of responsibility for many disabled.

 

 

 

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net

 

©2015 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

Defense Attorney Often Over-Looked as Cost Containment Strategy

The proper selection of defense attorneys is one of the most important things a self-insured employer can do to control cost of the larger workers’ compensation claims.  It is also one of the most over-looked ways to control claim cost.  Whether you are new to the world of self-insurance, or just not happy with the results your defense attorneys are achieving, the selection of new defense attorneys should be carefully considered.  An in-depth outline of the criteria you consider important in the selection process should be prepared and used to select the defense attorney that will best suit your needs.

 

 

Criteria to Consider When Selecting Your Attorney

 

Size:

 

Law firms come in many different sizes.  There are the large national law firms with an office in various large cities.  There are large local firms that have dozens of attorneys all working from one office.  There are also intermediate and small law firms that specialize only in workers’ compensation defense.  There are the sole practitioners.

 

The best size for the self-insured employer is the law firm that can cover all of the self-insured employer’s locations with experienced attorneys.  For a single location self-insured employer, just about any size law firm that has adequate resources to cover all your workers’ compensation claims can be considered.

 

Some risk managers opt to have multiple defense firms, picking the best defense attorney(s) at two or more law firms to handle their claims.  They even it let be known that the defense attorney has competition for the self-insured employer’s business.

 

 

Experience:

 

The number of years of law practice is only one aspect of experience.  When considering a defense attorney, ask how much of the attorney’s time is spent in defending workers’ compensation claims.  An insurance defense attorney may spend most of his time on automobile insurance claims and workers’ compensation is a side line.

 

A good way to measure experience is to ask for a list of references.  The truly experienced workers’ compensation defense attorney will have a long list of references of self-insured employers and insurance companies she/he has worked for.  Companies in your industry that are on the list of references should be contacted for their thoughts on the expertise of the defense attorney(s) you are considering.

 

 

Knowledge:

 

The defense attorney you are considering should have an in-depth understanding of the workers’ compensation laws and the administrative regulations of the state. The attorney should know inside out the hearings/trial process which could decide the outcome of your workers’ compensation claims. The attorney should know how to maximize the local practices for mediation, arbitration and settlement negotiations.

 

Not only does the defense attorney need to have extensive knowledge of workers’ compensation, but also have knowledge of areas of the law that can overlap workers’ compensation – for example: subrogation, social security disability, vocational rehabilitation, products liability and automobile liability.

 

 

Philosophy:

 

It is often difficult to determine initially, but the self-insured employer needs to know if the defense attorney have a rigid way of doing things, or is willing to consider the recommendations of the client.  The defense attorney hired should be amendable to complying with your Litigation Management Best Practices.

 

 

Cost:

 

A discussion with the defense attorney about fees should be a part of your interview process. Not only do you need to know the hourly rate for the partners, but also the hourly rates for junior partners, paralegals and clerical staff.

 

You should confirm the defense attorney will delegate work to subordinates whenever possible to achieve cost-effectiveness without diminishing the quality of the defense.  If the senior partner is handling every aspect of the defense of a claim, you will pay a lot more than when the partner delegates appropriate task to the paralegal, for example.

 

Depending on your preferences, the defense attorney should bill for services in the time frame you select.  While some self-insured employers opt to get just one bill at the end of the claim, most employers are requesting monthly bills or quarterly bills to avoid billing surprises.

 

The defense counsel you select should be instructed on what leeway they have in incurring cost for experts, court reporters, etc.  Also, the attorney should know prior to starting work your parameters for the cost of legal research.

 

The defense attorney should understand prior to starting to work for your company that your company will consider legal fee audits.

 

 

Additional Considerations:

 

Before hiring any defense attorney to handle your workers’ compensation claims, an in-depth interview with the attorney should be completed.

 

The defense attorney you select should be willing to comply with your reporting requirements whether it is monthly reporting, quarterly reporting or reporting all significant events timely.

 

It is often a good indication of the attorney’s professionalism when the attorney is active in the local and state bar examinations.  If the attorney is on the bar association’s workers’ compensation committee, that is even better.

 

 

Properly Selecting An Attorney Is Worth the Time

 

The proper selection of new defense counsel will take some of your time, but the selection of the highly qualified defense attorney that best meshes with your needs will result in a reduction of the cost of your litigated claims.

 

 

 

Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, and founder of COMPClub an interactive training program teaching workers’ comp cost containment best practices.  Through this platform he is in the trenches on a monthly basis with risk managers, brokers, consultants, attorney’s, and adjusters teaching timeless workers’ comp cost containment strategies, as well as working with members to develop new tactics and systems to address the issues facing organizations today. This unique position allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

Employers/Carriers/TPAs/Brokers/Vendors looking for additional information FREE resources for Workers Comp cost containment best practices are invited to access Amaxx Workers’ Comp Cost Containment Essentials training series

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

Is an Injured Employee’s Transitional Duty Work at a Charity Tax Deductible?

Some employers have their injured employees work transitional duty at a charitable organization until they fully recover. For example, the employer will send the employee to their local Goodwill or Humane Society, if they cannot accommodate the injured worker’s medical restrictions in house.

 
When this happens and the employer continues to pay the employee’s salary yet “donates” the employee’s time to the charity (rather than having the insurance company pay workers comp indemnity lost wages), are the wages a charitable donation?

 

 
IRS Section 162

 
United States tax law Section 162 of the Internal Revenue Code is found at 26 U.S.C. § 162. It concerns deductions for business expenses. According to the IRS, to be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in the business. A necessary expense is one that is helpful and appropriate for the business. An expense does not have to be indispensable to be considered necessary.

 

 

The United States Supreme Court in the case of Welch v. Helvering found that the words “ordinary” and “necessary” have different meanings, both of which must be satisfied. The Supreme Court said that an “ordinary” expenseis customary or usual and of common or frequent occurrence in the taxpayer’s trade or business. A “necessary” expense is one that is appropriate and helpful for development of the business.

 
Section 162(a)(1) allow as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including “ a reasonable allowance for salaries or other compensation for personal services actually rendered.”

 
Section 162(b) excepts charitable contributions and gifts from business deductions. It states that: “No deduction shall be allowed under subsection (a) for any contribution or gift which would be allowable as a deduction under section 170 were it not for the percentage limitations, the dollar limitations, or the requirements as to the time of payment, set forth in such section.” (See classification issues, below).

 

 
Employee’s Donated Time to Charity

 
According to Ron Larrow, CPA, MST, the wages an employer pays an injured worker donating their time to charity are a deductible business expense under Section 162. They are ordinary and necessary expenses as paid or incurred in the trade or business of the taxpayer without limitation. There are limitations to deducting charitable expenses. These expenses need not be reclassified as “charitable” deductions.

 

 

The employer’s ability to deduct these expenses incurred for wages is NOT further restricted by assigning the injured workers to help in the community instead of allowing the worker to not report to any particular place (such as an idle room or taking work home) because suitable assignments are not currently available.

 

 

In other words, these expenses need not be qualified as a charitable deduction to get the business tax deduction.

 

 
Issues of Classification

 

One problem with classification as a charitable deduction versus an ordinary business expense is that charitable donations are limited to 10% of taxable income of a C corporation.

 

An individual taxpayer who includes on their individual income tax return their share of an S corporation, LLC or partnership business income and is allowed a deduction for specifically allocated deductions such as charitable deductions are limited to 50% of adjusted gross income (AGI) for charitable deduction in addition to the limitation on use of itemized deductions, which are only deducted after computing AGI on the first page of the individual tax return. Some states, like Connecticut, do not allow those deductions for individuals.

 

 

 

Author Michael Stack, Principal of Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  As the senior editor of Amaxx’s publishing division, Michael is on the cutting edge of innovation and thought leadership in workers compensation cost containment. http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Contradiction of Famous 100 Yr Old High Court Work Comp Decision

Five weeks ago, a decision was published dealing with a worker who had a severe hand injury (Barclay v. Techno Design, Inc.) The decision hinged on whether the injury met the statutory requirements for a “serious” injury, which required the loss of fingers (the worker had loss the use of the fingers). The court held it was not a serious injury, according to the statutory definition.

 

 

Contradiction of High Court Decision

 

What is interesting about this decision is that the very same issue was the subject of the very first NY work comp decision to be issued by NY’s highest court (the Court of Appeals) in 1915!! The decision, “Matter of Petrie”, said that loss of USE of a finger is the same as actual loss of the finger –directly contradicting this latest decision a century later. The new decision made no mention of “Matter of Petrie”.

 

Your correspondent was planning on writing a piece about that first decision, to honor its centennial, but this newest decision now compels it. “Matter of Petrie” is the most cited case in NY comp and created the principle of liberal interpretation of the statute. Yet, somehow, in recent years the source of that principle has been forgotten.

 

 

Basic Principles Should Not Be Taken For Granted

 

The point of this piece is to emphasize that basic principles should not be taken for granted. The most important ones will fall into a black hole unless we understand where and how the basics arose. The present story is not finished. The recent decision was issued by the Appellate Division, which is one level below the Court of Appeals, so the result may well change in the near future.

 

 

1930 Amendment to Permit Employer to Change Treating Doctor

 

What other principles have been forgotten which might be of use to employers? Well, in 1930 the statute was amended to permit the employer to change the treating doctor if it was in the best interest of the worker (WCL Sect 13-a(3)). This was changed to prevent workers from being swept up by dubious medical practices. This is still the law, although few today believe it – it too has been forgotten. But every employer should write, preserve and remember that section. It needs to be judiciously used.

 

 

Long Term Disability Liens

 

In 1986, long term disability plans tried to assert a lien on NY comp awards – but were rebuffed with the statement that no such lien existed. However, a search of the law and Board forms showed that such a lien was established in 1947 (Sect 25(4)(c)) and the Board had created forms (still in force in 1986) for long term disability carriers to use. (The forms were found in a manila folder which had not been opened since 1952.)

 

 

Location of Board Headquarters

 

The NY comp law also required that the Board headquarters be in Albany and be open six days a week. For almost 70 years the Board headquarters was in lower Manhattan and was NEVER open six days a week. (That has since been corrected.)

 

 

Remember These Sections Exist

 

Employers cannot be expected to be work comp historians. But they can make the effort to find out what details of the law benefit them and, gently, remind others that those sections still exist.

 

 

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net

 

©2015 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

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