Kiser v. National Life Insurance Co. (June 28, 1996)
STATE OF VERMONT
DEPARTMENT OF LABOR AND INDUSTRY
Perry Kiser File #: G-11285
By: Barbara H. Alsop
v. Hearing Officer
For: Mary S. Hooper
National Life Insurance Commissioner
Company
Opinion #: 38-96WC
Hearing held at Montpelier, Vermont, on May 14, 1996.
Record closed on May 21, 1996.
APPEARANCES
Bernard D. Lambek, Esq., for the claimant
Keith J. Kasper, Esq., for the defendant
ISSUE
Whether the insurer is entitled to credit for the amount the claimant received as temporary total disability compensation while still being paid by the employer.
THE CLAIM
1. Reimbursement or credit for $6,938.79 paid in temporary total disability compensation for the period from August 16, 1993, through October 18, 1993, and from October 22, 1993, through December 31, 1993.
STIPULATIONS
1. On August 16, 1993, the claimant was an employee within the meaning of the Workers' Compensation Act.
2. On August 16, 1993, the defendant was an employer within the meaning of the Workers' Compensation Act.
3. On August 16, 1993, while in the employ of the defendant, the claimant suffered a work related injury, for which he began to lose work on August 17, 1993.
4. At the time of the claimant's injury, his average weekly wage was $536.50, resulting in a compensation rate of $357.67.
EXHIBITS
1. Claimant's Exhibit A: Memorandum to File dated May 13, 1994.
2. Claimant's Exhibit B: Denial letter dated January 31, 1994.
3. Claimant's Exhibit C: Letter of July 6, 1994, from Stacey Menzies to Bernard Lambek
4. Claimant's Exhibit D: Letter of July 19, 1994, from Patricia Turley to Stacey Menzies
5. Claimant's Exhibit E: Letter of August 23, 1994, from Patricia Turley to Janet LaPerle
6. Claimant's Exhibit F: Letter of September 20, 1994, from Department
7. Claimant's Exhibit G: Letter of October 6, 1994, from Bernard Lambek to Stacey Menzies
8. Claimant's Exhibit F: Change of Employment Form
9. Defendant's Exhibit 1: Letter of October 20, 1994, from Gail Baker to Perry Kiser
10. Defendant's Exhibit 2: Payroll records for Perry Kiser
11. Defendant's Exhibit 3: Time summary
12. Defendant's Exhibit 4: Employee Guidebook
FINDINGS OF FACT
1. The stipulations are accepted as true, and the exhibits are admitted into evidence. Notice is taken of all forms filed with the Department in this matter, including a Form 21, Agreement for Temporary Total Disability Compensation, approved by the Department on October 26, 1995.
2. The claimant worked for nine years for the employer in the micrographics storage area. In the months leading up to August of 1993, he had been suffering from problems with his arm. He noticed that his right hand was asleep all the time, and he had a dull ache in his shoulder when his arm was hanging loosely at his side. He left work on August 16, 1993, and went to see Dr. Russell Davignon.
3. Dr. Davignon recommended to the claimant that he take some time off, and the claimant took two weeks off, using his sick time. The claimant received 50 days of sick time a year as a benefit of working for the defendant.
4. After two weeks off, Dr. Davignon recommended to the claimant that he stay out of work for another thirty days. The claimant complied, again using his sick time benefits.
5. On October 19, 1993, the claimant received a telephone call from the medical department at the defendant, advising him that he was running out of sick time. He advised them that he was being treated by Dr. Davignon, and someone from the medical department got in touch with Dr. Davignon. It was agreed that the claimant would attempt light duty work.
6. The claimant returned to work on October 20, and worked in an office sorting checks. He returned to work on October 21, and continued to do office work. His supervisor had him meet with her and William Cassidy, a senior vice president of the defendant, at 3:00 p.m. At that time, he was told that his services were no longer needed by the defendant. When the claimant expressed concern because he was scheduled for surgery in December, he was told that he would be placed on a paid leave of absence through December so that his benefits would remain intact through the surgery.
7. The claimant was escorted from the building, and was not allowed to return for his coat and belongings. He was allowed to get them on a later date.
8. The claimant continued to receive his regular pay checks through the end of the year. He had surgery in December, and the surgery was paid for by his health insurance through the defendant.
9. In January of 1994, the claimant attempted to collect unemployment benefits. However, he was told that he could not because of his physical limitations after the surgery. He was told to apply for workers' compensation benefits. The claimant on January 13, 1994, made his first claim for a work related injury to the employer. The claimant made the extraordinary claim at the hearing that no one at the employer had advised him that he had a work related injury, and that he was eligible for workers' compensation benefits.
10. The workers' compensation claim was initially denied, but was then approved after the claimant had an interview with Stacey Menzies, a claims adjuster for Liberty Mutual Insurance Company, in late January. The claimant received retroactive benefits to January 1, 1994, and was initially satisfied with those benefits. The claimant, in his interview with Ms. Menzies, denied knowing what the nature of the payments he received after his firing was. He speculated that it might be severance, but denied specific knowledge of the intent of the payments.
11. At some time in the spring of 1994, the claimant retained counsel and made a claim for workers' compensation benefits back to the initial date on which he began to lose work, August 17, 1993. This apparently generated numerous contacts between the carrier, in the person of Ms. Menzies, and either Mr. Lambek, the attorney for the claimant, or his legal assistant Patricia Turley.
12. Ms. Menzies had prepared a Form 21, Agreement for Temporary Total Disability Compensation, which did not reflect payment for benefits from August of 1993 through December 31, 1993. Prior to an informal conference with a workers' compensation specialist within the Department of Labor and Industry, the parties reached an agreement that temporary total disability benefits should be paid back to the beginning of the claimant's disability. Ms. Menzies testified that she authorized this payment because it was her understanding that the insurer had primary and direct responsibility for compensation during a period of work related disability under the Workers' Compensation Act, and that she did not know for a fact that the claimant received wages during the period in question.
13. In October 1994, Liberty Mutual Insurance Company paid the claimant in a lump sum the benefits for the period from the date of injury through the end of 1993, omitting only the two days actually worked by the claimant. The insurer also advised the employer that it had made this payment.
14. Consequently, on October 20, 1994, the employer, through Gail Baker, the Wellness Coordinator, wrote to the claimant requesting that the claimant sign over the checks to the employer, as the employer had paid the claimant his full salary for the same period of time. When the claimant did not respond to that letter, Ms. Baker called the claimant, who indicated that he had no intention of returning any of the money to either the employer or the insurer. The claimant did not tell Ms. Baker that he was represented by counsel. Had the claimant so advised her, Ms. Baker would have referred the matter to in-house counsel to pursue.
15. Ms. Baker testified that she was responsible for all workers' compensation claims at the employer. She indicated that her first notice of the claim in this case was in January of 1994.
16. Susan Chiapetta, the Vice President for Human Resources at the employer, testified that the claimant was entitled to 50 days of sick time per year. Although the sick time was earned on a monthly basis, it was credited at the beginning of the calendar year, so that it was all available at any time during the calendar year. Her job entails reviewing all of the benefits paid to employees, and she has reviewed those paid to the claimant after August 16, 1993. Every paycheck he received after that date until the end of the year was a normal paycheck, reflecting payment for his previously regular hours worked and benefits earned or used.
17. Ms. Chiapetta testified that, as of October of 1993, the claimant had used up all of his sick time. After he was terminated, he was placed on a paid leave of absence through December 31, 1993. This is consistent with the employer's Change of Employment Form, offered by the claimant as Claimant's Exhibit H, which reflects that the claimant was to be terminated December 31, 1993, after a leave of absence that started on October 25, 1993, and showing a last day on payroll as being December 31, 1993. This was neither severance pay nor sick leave. Every check he received in the period from October through the end of the year reflected his regular payments and benefits. The claimant did not receive either a sick leave, pursuant to §2.9 of the Employee Handbook, nor did he receive any of the paid leaves provided for in §2.10 of the Handbook.
18. According to Ms. Chiapetta, the claimant was terminated pursuant to §7.2 of the Employee Handbook. The specific language covering the claimant's termination is as follows:
Involuntary terminations for poor performance or excess absenteeism
generally do not take place without the consideration of your senior
management and Human Resources.
Decisions concerning severance pay or wages in lieu of notice are
made by your manager in consultation with Human Resources.
The claimant was not terminated for excessive absenteeism but for performance issues that predated his work related injury. Although no formal provision exists in the Handbook, Ms. Chiapetta noted that most terminated employees received two weeks' pay in lieu of notice for a termination for cause.
19. Ms. Chiapetta testified that the claimant received the unusual benefit of a paid leave of absence because of his projected surgery in December. It was the employer's intent to provide the claimant with medical benefits through the surgery, apparently as a humanitarian gesture. The claimant never suggested to the employer that the need for surgery was caused by a work injury.
20. The claimant was paid $6,938.79 by Liberty Mutual for the period between August 17, 1993, and December 31, 1993. The claimant testified that he has spent this money.
21. The claimant has presented evidence of his fee agreement with his attorney for a contingency fee of 30% of any recovery of temporary total disability benefits, if contested, and permanent partial disability benefits. Subject to the limitations in Rule 10(a) of the Workers' Compensation and Occupational Disease Rules, this agreement is acceptable. The claimant has not presented any evidence as to costs.
CONCLUSIONS
1. In workers' compensation cases, the claimant has the burden of establishing all facts essential to the rights asserted. Goodwin v. Fairbanks, Morse Co., 123 Vt. 161 (1963).
2. The dispute in this case arises because of a mutual mistake of fact between the claimant and the employer. That mistake was that neither party knew that the claimant was suffering from a work related injury at the time that National Life paid the claimant for his sick time, and his wage continuation (although a skeptical observer may question the claimant's denial of knowledge). Because of that fact, National Life voluntarily continued the claimant's salary and benefits for a period of slightly more than two months after the expiration of his sick leave, allowing the claimant to maintain his health insurance, and incidentally all other benefits of a regular employee.
3. The claimant argues that Liberty Mutual is estopped from "reneging on the settlement agreement". The "settlement" agreement in question is the Form 21, Agreement for Temporary Total Disability Benefits, endorsed by the parties and accepted by the Department on October 26, 1995. The claimant has previously made this argument in his prehearing Motion to Dismiss, which was denied. The claimant has made no additional showing to alter the rule in the case that was established in that denial. The parties, in endorsing the Form 21, made a material mistake of fact. The Department, in approving the Form 21, was not apprised of the true nature of the payments made to the claimant by the employer during the period of dispute, and therefore could not approve the Form 21 in an intelligent manner. The Department's approval of the Form 21 is withdrawn.
4. The claimant alleges that the payments received during the period after his firing, from October 21, 1993, to December 31, 1993, cannot be wages or salary because the claimant had been fired. He argues that he was not on a leave of absence, because he could not return to work because of his firing. He points to the Employee Handbook for the principle that the claimant's "leave" was not one recognized by the employer in developing the Handbook. All of these arguments ignore the fact that, during that period of time, the claimant continued to receive all benefits as if he were still a working employee of the defendant. Nothing in the accounting by the employer suggests that the claimant's payroll account was any different after the firing than it was before the firing. The Change of Employment Form, offered into evidence by the claimant as Claimant's Exhibit H, clearly indicates that the claimant was to receive his regular pay through the end of the year. There is simply no evidence, other than the claimant's speculation, that the payments were in the form of a severance package. I find that the claimant received his wages during the period beginning when he first lost work because of the injury until December 31, 1993.
5. I do not find, as the claimant would have me find, that the employer denied the claimant's workers' compensation benefits while it was paying his salary, thereby insulating that salary from treatment under 21 V.S.A. §693. This argument is based on a sentence from Larson, Workmen's Compensation Law, §57.43, where that pundit states that "[t]he employer can claim no credit if he denied workmans' (sic) compensation liability while paying the wages." This section is clearly inapplicable, since the employer's brief denial of benefits occurred at least one month after the employer stopped paying salary, when the insurance company was investigating the claim.
6. I find, pursuant to 21 V.S.A. §693, that the claimant was entitled either to his salary or to the benefits paid in October of 1994, but not both. The Workers' Compensation Act provides temporary total disability benefits as a wage replacement, and §693 simply codifies this principle. This is also consistent with the bulk of the cases cited by Larson, Workmen's Compensation Law, at §57.41 et seq. For example, in the case of Herrera v. Workmen's Compensation Appeals Board, 71 Cal.2d 254, 455 P.2d 425, 78 Cal.Rptr. 497 (1969), the Supreme Court of California, in reviewing a case with striking similarities to this case, found that the California statute, commensurate with Vermont's §693, barred recovery of workers' compensation benefits when the claimant received full wages for the same period of time. That Court said that "[i]f, after having received full wages during the period of his disability, petitioner were permitted to recover, in addition, the amount of the disability payments to which he was entitled, he would be given double payment for a single injury. Under such circumstances, an incapacitated employee performing no services would receive a larger payment than one rendering services. To interpret the statute as permitting such double recovery would not be reasonable." 78 Cal.Rptr. at 500. (footnotes omitted)
7. The only exception to the general rule that a claimant may not receive workers' compensation benefits for a period when he has also received his wages is where there is affirmative evidence that the payment of wages was a gratuity or gift, rather than an indeterminate wage continuation. Larson at §57.42(a). While there is no question that there was a generous intent in the continuation of the claimant's wages in this case, the purpose of the wage continuation was to ensure that the claimant's medical benefits were in situ for the projected surgery in December. The very nature of this intended purpose was commensurate with the primary goal of the Workers' Compensation Act, that is, the payment of medical expenses and wages (or wage replacement) while an injured worker is actively treating for a work related injury. The rub in this case was simply that the employer did not know and had no reason to know that the claimant was suffering from a work related injury.
8. It is also undeniable that the claimant realized that he was receiving a windfall from this injury. He received the lump sum payments representing the overpayment in October of 1994, and immediately was notified by the employer of its demand for repayment, at least in the amount received from the insurer. The claimant's denial of that demand, without informing the employer of his representation by counsel, smacks of bad faith. His claim at the hearing that he has spent the money and cannot therefore return it confirms this impression, since he knew or should have known of the existence of this claim against his right to retain the funds. Moreover, the mechanism of making the insurer and/or the employer whole does not require that the claimant repay a sum, only that he forgo a future benefit.
9. "Payments made by an employer or his insurer to an injured worker during the period of his disability, or to his dependents, which, by the provisions of this chapter, were not due and payable when made, may, subject to the approval of the commissioner, be deducted from the amount to be paid as compensation." 21 V.S.A. §651. The $6,938.79 paid by the insurer in October of 1995 was not due and payable, and hence that amount will be deducted from any remaining permanency to be paid to the claimant.
10. The claimant not having prevailed is not entitled to an award of attorney's fees or costs.
ORDER
THEREFORE, based on the foregoing findings of fact and conclusions of law, it is hereby ordered that:
1. Liberty Mutual Insurance Company be credited with a payment of $6,938.79 against the permanency benefits owed to the claimant; and
2. All claims by the claimant for attorney's fees and costs be denied.
DATED at Montpelier, Vermont this 28th day of June 1996.
______________________________
Mary S. Hooper
Commissioner