Monday, November 16, 2009

Pleading issues

Demand of strict proof thereof

Civil defendants must answer a complaint truthfully and in good faith.  Parties cannot demand "strict proof" of facts they know to be true and must explicitly admit or explicitly deny allegations.  A recent article examining Illinois pleading suggests that 5/2-610 does not allow pleading based on insufficient knowledge and a party with insufficient knowledge  must either file an affidavit asserting insufficient knowledge but then loses the ability to deny the allegations.  This may undermine the ability to contest a motion for summary judgment.  Attorney Margolis writes an excellent article on this obscure point in "Pleading Lack of Knowledge; Not a Denial Under Illinois Law, " 104  IL STATE BAR J., July 2016.

In a case involving a pleading denying facts based on insufficient knowledge, was not an admission of a fact to support summary judgment.  A defendant alleges she was following another vehicle but did not admit the plaintiff's vehicle was stopped at a stop light when the accident occurred.  The accident was not witnessed.  There was insufficient information to establish a cause of action based on those facts alone, and plaintiff was unable to proceed under the Dead Man's statute because the defendant had died.   The court affirmed a summary judgment on behalf of the defendant's representative that the pleadings did not support all elements of the claim and a jury could not make a finding of negligence without relying upon conjecture.  Plaintiff conceded in oral argument that negligence could not be inferred simply because the defendant was following the vehicle before the collision  had occurred.  The case was distinguishable if defendant had admitted the plaintiff's car was stopped which would have created a prima facie case of negligence but these facts allowed other inferences that the plaintiff stopped quickly, stopped unsafely, stopped due to road or mechanical conditions.   Peakcock v Waldeck, 2016 Ill App. (2d) 151403  (August 8, 2016). 

Missouri Rule 59.01 provides

"A responding party may give lack of information or knowledge as a reason for failure to admit or deny if such party states that the party has made reasonable inquiry and the information known or readily obtainable by the party is insufficient to enable the party to admit or deny."

Failure to appear supports default

The court of appeals affirmed a default award against an employer when it failed to respond to pleadings and a final hearing for  Missouri benefits even though the employer  had provided benefits under Texas law.   Harrington v Employer Solutions Staffing, 472 S.W.3d 252 (Mo. App. 2015)

Claimant was hired in Missouri to perform a painting job in Texas and sustained various injuries in 2012.  The employer did not appear at a hardship hearing and was ordered to pay temporary weekly disability benefits and medical.  The employer did not appear at a second final hearing which ordered more benefits and penalties.  The employer's defense was that it was being defended by a carrier in the Texas claim and mistakenly thought the carrier was also defending the Missouri claim.   The Commission reduced some of the award related to TTD and penalties because the employer had been providing weekly benefits but made the express finding that by the time of the final award, the employer was already aware that no one had appeared at the temporary award. 

The court found there was no issue of law to appeal and whether the employer had a good faith excuse was a finding of fact based on their credibility and the Commission did not find their excuse for failure to defend the case as a reasonable one.

Pleadings limit scope of discovery
Pleadings which included psychiatric injuries but were later amended to exclude them removed any waiver of privilege to compel the release of the records.  The court found records protected by physician-patient privilege even though it was possible that psychiatric records might be relevant or lead to discoverable evidence if they contain some statements about the accident itself.  The privilege might be waived when the psychological condition arguably caused or contributed to the accident.  State ex rel Stacey Phillips, 469 S.W.3d 506 (Mo. App. 2015)

Late answer admits causation if pled
In Yount v Circle K, 2014 Mo WCLR Lexis 65 (May 6, 2014) the Commission enhanced an award of PPD from 7 1/2 to 25% for an ankle injury.  It concluded medical causation was a finding of fact which the employer could lose by default from a late answer, rejecting the opinion of the ALJ that it was a issue of law.  The Commission found  no default because the claimant did not pled the accident was the prevailing cause of the disputed medical condition, a peroneal tear.
ALJ  Robbins
Atty:  Larsen, Weiss
Experts:  Krause, Volarich

Compensation rate in claim used to resolve rate dispute
The ALJ adopted the compensation rate claimant alleged in his claim for compensation, even though the evidence suggested rates that were possibly higher or lower.  Voidanoff v United Samsco Assoc., 2014 MO WCLR Lexis 2.   King v American Employment Group, 2014 Mo WCLR Lexis 143 (December 30, 2014).  The employer raised a colorable defense against default that the claim was sent to the wrong corporate entity. 

Late answer admits facts in claim

8 CSR 50-2.010(8)(B) that provides "statements of fact in the Claim for Compensation shall be deemed admitted for any further proceedings."

In Skidmore v Gilster Mary Lee, DOLIR 11-26-08, claimant’s assertion that he "pulled a pin to release a trailer when he hurt his neck" could not be contested, since an answer was never filed to the original or the amended claim. In both cases, the Commission found no waiver of legal defenses.

The failure to file an answer can still result in a finding of accident, even when no accident is clearly documented in the medical records. The administrative law judge based on inconsistent medical histories denied benefits in Soles v Computer Con, DOLIR 9-2-03, which the Commission reversed the denial and awarded benefits.

Late answer waives "fact" of pled compensation rate

T.H. v. Sonic Drive In of High Ridge, 388 S.W.3d 585 (Mo. App. 2012),

2012 MO WCLR Lexis 1585 (Mo. App.  2012) 2012 Mo WCLR Lexis 102 (May 2, 2012) The claimant offered no evidence regarding compensation rate and alleged she was at the "maximum" rate on her claim for compensation. When the employer filed a late answer, the claimant asserted the employer had to pay the maximum disability rate of $376.55 per week. The ALJ agreed and awarded the maximum rate, but the Commission reversed and instead applied the minimum rate of $40 a week.

ALJ Tilley
Atty: Cantor, McManus
Expert's: Packman, Harbit

Comment:   Sonic presumably did not introduce any wage evidence because the business was closed or no wage information was available. 

An attorney also has an ethical obligation under Rule 4.3-1 to make a “good faith argument” that facts alleged are supported or could be supported. Similarly, Rule 4.3-3 prohibits an attorney from making a false statement of fact or law to a tribunal.   This may not be as demanding as  Rule 11 in federal practice that requires a reasonable inquiry as a basis of fact.   Enforcement of pleading rules in a case like Bell Atlantic Corp v Twombly, 550 U.S. 544 (2007) is unlikely to every trickle down to the day to looser pleading standards in comp.   Mo Rules of Court Rule 55.03 ( c ) requires allegations have or are likely to have some evidentiary support after a reasonable inquiry.  Any attorney may not automatically use boilerplate pleading of "maximum" rate unless  there is some good faith reason to believe with further discovery that claimant has earnings to qualify for the maximum rate to attempt to "trap" the employer by knowingly asserting  an inflated rate.

Failure to assert an affirmative defense of abandonment of care

Claimant states that he hurts his back, he is taken off work by a company doctor, and the employer disputes disability benefits during the time the claimant goes off with a buddy to the coast on a drinking binge, flies to Hawaii and stayed until he ran out of money. The claimant was in prison before for fraud and admits he lied about back pain to get out of manual prison labor. The employer files a denial of "each and every claim " but did not specifically deny benefits because claimant abandoned his treatment, which is an affirmative defense which must be specifically pled. Hayes v Compton Ridge Background,  135 S.W.3d 465 (Mo. Ct. App. 2004).

No waiver of  idiopathic defense.

An idiopathic defense is not waived if it is not specifically pled, according to Crumpler v Wal-mart, DOLIR 10-18-08 (discusses that affirmative defense must be asserted when the defense is an exception to general liability created in other sections, such as statute of limitations)

No waiver of PPD defense

The only medical expert who assessed disability concluded that the injured worker sustained 30% disability to his left eye when he was struck with a piece of wood, but claimant asserted on appeal that he should have no less than 75% disability because he pled that amount on the claim form and the employer was late filing an answer. Claimant asserted the Commission exceeded its authority by awarding less than 75% because disability was a finding of fact and the employer waived its defenses when it filed an untimely answer. Taylor v Labor Pros, WD 75174 (January 8, 2013).

There is no clear intention for the CSR rule to allow proof of the amount of disability solely by a gratuitous comment in a claim for compensation. Such an interpretation went beyond the anticipated scope of the regulation in light of its use of a standardized Claim for Compensation form that does not include a disability percentage estimation, and it usurps and undermines the "special province of the Commission" in determining disability percentages.

Claimant describes intermittent eye pain but does not use glasses, eye drops or sun glasses for his photophobic symptoms. His vision was 20/40 and 20/20 when corrected. The decision to make such findings has no material purpose to the holding except to perhaps demonstrate indirectly that such symptoms may not reflect of a 75% loss of visual acuity. It is unexplained what basis may have existed at the time the claim was filed to alleged that degree of disability.

No waiver of arising out of defense

An employer can face harsh penalties by not filing an answer on time, but the business does not lose the right to contest legal issues whether an accident arises out of employment, based on a recent court of appeals decision, Anderson, dec. v Veracity Research, 299 S.W.3d 720 (Mo. Ct. App. 2009). Claimant died in a fatal car accident when he lost control of his car. Experts identified a BAC equivalent to 10-11 alcoholic drinks. The employer did not assert that alcohol consumption was proximate cause of the accident, and officers of the Blue Springs Police Department could not state whether this was an a proximate cause to the accident. The employer contested claimant had removed himself from the course of his employment and was engaged in personal endeavors. Any inference or presumption arising from the fact that claimant was injured while on an out of town business trip was effectively rebutted by the evidence that claimant's accident was at midnight beyond normal working hours ending at 2 p.m., that alcohol was not permitted on the job, and that he possessed none of his tools of the trade he used to investigate claims fraud.

Misnomer of correct entity in name

Claimant filed a claim against Doll but not against the "father" entity R.W. Andherson, and the carrier denied claimant was not an employee even though  the names were used interchangeably.  The ALJ allowed amendment on the day of the hearing to the additional entity noting no request for continuance or evidence of prejudice.  Keith v R.W. Andherson, 2013 MO WCLR Lexis 221 (Dec. 11, 2013)
ALJ  Kohner
Experts:  Woiteshek, Koo

The Commission found no prejudice when a claim may have been filed against the wrong corporate entity.  King v American Employment Group, 2014 Mo WCLR Lexis 143 (December 30, 2014).


Omission of LLC in name of party

The employer never appeared at the hearing and the Fund argued it didn't owe anything because the employee named the wrong business on its claim.

The claimant  omitted "LLC" on the claim for compensation.  The second injury fund introduced records from the secretary of state indicating the correct name.  The Fund claims it could not seek reimbursement from the employer unless the correct employer was named.  The Commission rejected the ALJ's finding that naming the wrong entity barred a recovery.

8 C.S.R. 50-2.010(14) provides that the rules of evidence for civil cases are applicable in hearings before the Division, but the Fund identifies no authority for the proposition that a statute governing civil pleadings in the circuit courts applies to an employee’s Claim for Compensation.  The commission found pleading requirements of 509.020 do not apply in worker's compensation cases.  The court finds no prejudice for a misnamed entity when the misnomer caused   no substantial mistake, where the appropriate entity was served with process, and where the entity was not misled by the misnomer.

The Second Injury Fund first provided documents to support the defense on the day of the hearing, and the ALJ found 302.312 allowed service on the day of the hearing as an exception to the general business records rule in 490.692 requiring 7 days notice. 

The commission  proceeded with what it called a "quantitative analysis" and found  claimant had an increased work hazard as she did not "regularly exercise custody and control over other people’s children in her normal non-employment life, much less that a regular feature of such hypothetical activity involved running after children over a slippery surface."     Morrero v Kids Kick Start Campus, 2013 MO WCLR Lexis 49.

ALJ Fowler

Schoemehl issues
The commission in a case of 1st impression concluded that in open cases before July 2008 a surviving spouse can obtain lifetime benefits when the injured spouse dies from unrelated causes and it is not dispositive whether or not a claim is filed.

The court of appeals case Edwards v Treasurer of the Second Injury Fund, ED 104109, (Mo. Ct. App. 2016) (Sep. 13, 2016) involved a permanent total award from a 2006 injury.  Claimant was awarded benefits in 2009 and died in 2014.  The Commission allowed a substitution of the widow to receive the PTD benefits.  The court noted since the commission merely substituted parties it did reach any issue on the merits, and the substitution itself was not subject to appeal because it was not a final award.  The case was dismissed for lack of jurisdiction. 

The holding in Ogden v Conagra, decided by the Commission on August 5, 2016, has important implications for open PTD cases with accidents before July 2008.  In 2008 the legislature changed the rules to preclude Schoemehl benefits of ongoing life-time benefits when an injured employee receiving PTD benefits died from unrelated causes.

The facts in Ogden involve a 2001 accident, a 2009 claim and a 2014 death.  The employer disputed it owed anything more to the widow when the death was from unrelated causes because the claim was filed after he legislative fix.  The employer had continued to pay benefits for disability and medical approaching 2.5 million in the case. 

The Commission concluded the issue was whether there was a cause of action pending and not whether a claim had been filed or not.  The Commission noted there was no reason to file a claim and no justiciable issue because benefits were provided. 

 Many cases following Schoemehl struggled  to define whether or not a claim was pending to qualify for benefits when a death was unrelated.  The fight in these cases is not a fight over traditional death benefits such as burial expenses (arguably barred by  Missouri's 300 week rule) but whether a spouse can step in the shoes of the employee and keep the checks coming as a life time annuity whatever the cause of death. 

 Gervich v Condaire, 370 S.W.3d 617 (Mo. 2012) found the spouse had a (contingent)  property interest in potential PTD benefits even though the contingency was not satisfied  until after the legislative fix when the spouse died.  Similarly, in Busick v Wilson Plumbing, 2013 MO WCLR Lexis 105, a claim was filed after the 2008 fix, and  the same 2-1 majority of the Commission concluded "we are persuaded that the Gervich court's focus on the date of injury means that an employee's dependents may recover under Schoemehl where the injury giving rise to the claim for permanent total disability benefits occurs before closing of the Schoemehl window, regardless whether the claim for compensation is filed after June 26, 2008." The dissenter in Busick wrote a concurrence in Ogden and stated he "reluctantly" agreed to reverse the denial of benefits, as a result of Gervich, but regarded Schoemehl  decision as perverse that offends the notions of fundamental fairness. 

Ogden did not involve any statute of limitations issue as the case involved ongoing benefits until claimant died from an unrelated heart attack.  

Ogden demonstrates  the long tail of some comp litigation and involved ongoing benefits more than a decade after the accident.  Similarly, in Agnew a Aalco, 2014 MO WCLR Lexis 133, the court awarded Schoemehl benefits in a "found dead" case .  In both Ogden and in Agnew,  the court reported that the employer had provided more than 2 million in benefits in each case. 

The holding has  has large financial implications for a small population of old outstanding cases.    The Commission denied a request for costs and fees by the employee and found the area of law was unsettled.