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CASE NO. 4245 CRB-6-00-5
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
MAY 29, 2001
DAVID R. BILODEAU
BRISTOL ASSOCIATION FOR RETARDED CITIZENS
CONNECTICUT HOSPITAL ASSOCIATION WORKERS’ COMPENSATION TRUST
The claimant was represented by Thomas Willcutts, Esq., 21 Oak Street, Suite 602, Hartford, CT 06106-8002.
The respondents were represented by Neil Ambrose, Esq., Letizia, Ambrose & Cohen, P.C., One Church Street, New Haven, CT 06510.
This Petition for Review from the May 17, 2000 Finding and Award of the Commissioner acting for the Sixth District was heard January 26, 2001 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners George A. Waldron and Ernie R. Walker.
JOHN A. MASTROPIETRO, CHAIRMAN. The claimant has petitioned for review from the May 17, 2000 Finding and Award of the Commissioner acting for the Sixth District.1 He contends on appeal that the trier erred by allowing the respondents to apply their § 31-293 credit against certain permanency benefits rather than medical bills that were paid by his group health carrier, and in failing to make an award of interest against the respondents. We find no error, and affirm the trial commissioner’s decision.
The claimant was involved in a motor vehicle accident on December 2, 1995, that arose out of and in the course of his employment with the respondent Bristol Association for Retarded Citizens (BARC). He received treatment for his back and neck, which injuries the respondent accepted. Initially, it appeared as if the neck injury was resolving, while the lower back pain was worsening. The claimant underwent a disc excision at L5-S1 and a spinal fusion in February 1996. On July 2, 1996, the claimant’s treating physician, Dr. Casale, noted that his patient was developing complaints of neck pain unrelated to his earlier problems. One week later, the doctor corrected his report, and opined that the current neck pains were indeed connected to the December 2, 1995 accident. A myelogram disclosed thickening at the C7 nerve root, and Dr. Lange, who had performed the L5-S1 discectomy, recommended that the claimant again consider surgery. Theretofore, the respondents had paid for all of these treatments and tests. The claimant had also received temporary total disability benefits through August 1, 1996, when a commissioner approved a Form 36 based upon a medical report stating that the claimant was ready to return to full-time regular work, limited to 40 hours per week. He then began receiving temporary partial disability benefits.
On February 6, 1997, the claimant obtained a $103,000 settlement from his third-party action against the driver who was allegedly at fault for his automobile accident. The claimant and the respondents agreed that the respondents were entitled to a credit of $33,562.63 from the settlement as per § 31-293. Two weeks later, this Commission approved another Form 36 detailing the settlement and the respondents’ moratorium on future benefit payments, thereby terminating his compensation for temporary partial disability. See Mulligan v. N.C.H. Corp., 12 Conn. Workers’ Comp. Rev. Op. 223, 1499 CRB-7-92-8 (March 22, 1994) (employer must file Form 36 and obtain commission approval before discontinuing benefits on the basis of § 31-293 credit).
Meanwhile, Dr. Casale had declared that the claimant had reached maximum medical improvement to his back as of February 4, 1997, entitling him to 74.8 weeks of permanency benefits at a rate of $584.00 per week. The claimant then underwent surgery on his cervical spine on April 17, 1997, totally disabling him from work for 4.4 weeks, and leaving him with a 10% neck permanency. When the claimant submitted his bills for neck surgery, the respondents denied liability “despite numerous attempts by claimant’s counsel to resolve the issue, medicals causally relating the neck surgery to the December 2, 1995 accident, no medicals to the contrary and several hearings.” Findings, ¶ 26. The respondents did not accept liability for the neck surgery until September 8, 1998, following an independent medical examination by Dr. Selden. The claimant had requested that the medical bills for his neck surgery, which had been processed by his group health insurer, be offset in order to shorten the moratorium. However, the respondents applied their entire credit to the award of permanency benefits instead.
The trial commissioner found that the respondents’ denial of the claimant’s neck injury until September 8, 1998 constituted an unreasonable contest. He ordered BARC and its insurer to pay $3,500 in attorney’s fees as a result. He did not agree, however, that their credit could be reduced by neck surgery payments that had been made by the claimant’s group health carrier. “While recognizing the potential implications and ramifications of reaching such a conclusion, I am compelled to follow that precedent and rational[e] as set forth in [Pokorny v. Getta’s Garage, 219 Conn. 439 (1991)].” Findings, ¶ X. He then found that the claimant was owed a total benefit amount of $53,402.40, which was subject to the full amount of the $33,562.63 credit. Taking into account advances already made, the respondents owed the claimant a remainder of $6,737.20, which the trier ordered them to pay.2 The claimant has petitioned this board for review of that decision.
Two issues confront us on appeal. The primary claim of error concerns the method used by the trier to determine which benefits could be used to satisfy the respondents’ credit, while the secondary topic is a protest against the trier’s omission of an interest award in light of his finding that the respondents had unreasonably delayed the acceptance of his neck injury. We address these subjects in that sequence.
A logical starting point in our analysis is § 31-293 C.G.S., which allows an injured employee to proceed at law against a third party when his compensable injury was sustained under circumstances that make the third party legally liable to pay damages. The statute also allows the employer to join in that action as a party plaintiff, and if “any damages are recovered, the damages shall be so apportioned that the claim of the employer . . . shall take precedence over that of the injured employee in the proceeds of the recovery . . . . If the damages . . . are more than sufficient to reimburse the employer, damages shall be assessed in his favor in a sum sufficient to reimburse him for his claim, and the excess shall be assessed in favor of the injured employee.” The employer’s “claim” is defined as “(1) the amount of any compensation which he has paid on account of the injury which is the subject of the suit and (2) an amount equal to the present worth of any probable future payments which he has by award become obligated to pay on account of the injury.” An employer may count the excess proceeds received by a claimant in a third party action as a credit against both known and unknown future benefits to which he later becomes entitled. Enquist v. General Datacom, 218 Conn. 19 (1991); Longo v. Liebovitz, 3464 CRB-3-96-11 (Jan. 15, 1998). This is so even where the claimant has realized less from the settlement than the amount of the employer’s outstanding lien. Schiano v. Bliss Exterminating, 13 Conn. Workers’ Comp. Rev. Op. 45, 47, 1852 CRB-4-93-9 (Dec. 7, 1994), aff’d, 57 Conn. App. 406, 417-19 (2000).
Here, the amount of the respondents’ $33,562.63 credit was agreed upon by the parties, and is not in dispute. What is in dispute is the manner in which the respondents satisfied their moratorium. From the claimant’s perspective, the obvious purpose of his bringing a third-party action against the alleged tortfeasor was to obtain damages beyond the benefits he had already received through workers’ compensation. His entire recovery from his civil suit settlement was $33,562.63, which in turn became the amount of the respondents’ statutory credit under § 31-293. When the claimant settled his case, he did so under the assumption that he would ultimately be able to keep some of the money he had received in the compromise. He intended to accomplish this by submitting the bills for his upcoming neck surgery to his health insurance carrier, and allowing the respondents, who would otherwise have been liable for such surgery, to deduct the cost of his medical bills from the $33,562.63 offset, rather than having them take the full credit against his not-yet-paid permanency benefits. See Claimant’s Brief, p. 3. The eventual cost of said surgery was $28,871.68, according to Claimant’s Exhibit A.
The claimant envisioned this proposal as a “win-win” strategy for both parties, as each would thereby derive a significant benefit from the settlement. To his dismay, the respondents did not adhere to his accounting plan. They instead contested the compensability of the neck surgery, and recouped the value of their credit via a moratorium against the payment of specific indemnity benefits to the claimant. The claimant now categorizes these dealings as having secured an improper windfall for BARC and its insurer, for they managed to avoid paying for his surgery and also withheld the tender of $33,562.63 in permanent partial disability benefits.
In a two-dimensional, zero-sum context featuring only the claimant and the respondents, we might agree that this indeed constitutes an unjust apportionment of compensation. However, the claimant’s moratorium-reducing strategy necessarily rested on the premise that there was an outside entity required to (or otherwise disposed to) assume the ultimate liability for his neck surgery, i.e., his group health insurance carrier. The existence of such an obligation would be unusual under our law. Both § 31-299a(b)3 and § 38a-470 4 provide that a group health insurer possesses reimbursement rights against an employer or its compensation carrier when, pursuant to a health insurance policy, it pays benefits for medical treatment that is later shown to be related to a compensable injury. The trier made no finding that the claimant’s health insurer was contractually exempted or legally time-barred from availing itself of those rights, nor did the claimant assert that such rights were inoperative here for one of those reasons. August 24, 1999 Transcript, pp. 59-61. The claimant also gave no indication that the group health insurer had consented to pay for his neck surgery despite its potential compensability. Instead, the claimant asserted that, absent any express statutory restriction on the manner in which a moratorium may be exhausted, the respondents would have been free to choose not to pay certain medical bills during a moratorium, as their credit could be applied to both medical and indemnity benefits. Id., pp. 53-61.
Our Supreme Court has held that, where a medical insurance carrier covers the cost of a workers’ compensation claimant’s medical bills and then fails to assert a lien against the workers’ compensation insurer, the latter is not required to pay to the claimant the amount of his medical bills. Pokorny v. Getta’s Garage, 219 Conn. 439 (1991). The Pokorny Court had to balance the remedial purpose of the Act, which favors a broad construction benefiting disabled employees, with the Act’s prohibition of double recovery by a claimant. Id., 453-54. “The language of § 31-294(c) [now § 31-294d] requires an employer to provide medical care to the injured employee. This language does not support an interpretation requiring the employer to pay to the employee the cost of such medical care when the employee has not been burdened by that cost. . . . [Instead,] § 31-294 establishes a direct relationship between the employer and its compensation carrier, and the medical provider, to the exclusion of the employee . . . .” Id, 455-56. The Court concluded that the legislature did not intend that an employee would receive the amount of his medical bills in addition to the health care itself. By receiving medical care, albeit at his own medical insurer’s expense, he had received all that he was entitled to under the Act, “and any issue regarding [the respondents’] obligations to pay for those bills lies between them and the medical insurance carrier.” Id., 457. Moreover, the language of § 31-299a and § 38a-470(b) [formerly § 38-174n], which requires direct payment to the medical provider by the employer or its compensation carrier, “indicates that the intent of the legislature was to remove the employee completely from the arena of battle over payment of medical expenses,” rather than to make the employee a beneficiary of a medical insurance carrier’s failure to assert its lien rights. Id., 458, 459.
The claimant tries to avoid the application of Pokorny to this case by reminding this board that Pokorny did not concern a moratorium, and by asserting that the February 1997 approval of the respondents’ Form 36 excused the respondents from paying any benefits, medical or otherwise, until the entire value of the instant moratorium was consumed, thereby preventing the health insurance carrier from having a valid lien under § 38a-470. We are ultimately unpersuaded by these contentions. The existence of a moratorium results from a recognition of the fact that a claimant has personally collected damages from a third party for a compensable injury. Because a workers’ compensation claimant is not entitled to double recovery for his injury, for the purpose of future payments on his claim, those civil damages are essentially treated by § 31-293 as a cash advance that has come from his workers’ compensation insurer. See Enquist, supra. Accordingly, the insurer possesses a “credit” for the amount of the claimant’s recovery in the judgment or compromise that results from the third-party suit.
The cessation of benefit payments to a claimant on account of a § 31-293 moratorium does not wholly relieve an employer and insurer from all vestiges of liability for necessary medical care related to a compensable injury, however. vis-à-vis a third party such as a group health insurance carrier, a workers’ compensation insurer’s moratorium on payments to a claimant is of minimal relevance. Here, the claimant successfully demonstrated that his neck surgery was compensable. Therefore, the respondents as opposed to the group health insurer were primarily liable for said surgery under the Act. Neither the claimant nor BARC nor its workers’ compensation carrier had the power to negotiate around this legally-mandated imposition of liability without, at minimum, the consent of the group health insurer. As the latter actually paid for the surgery, its theoretical statutory recourse would be to assert a lien against the respondents under § 38a-470, or to file a claim against them under § 31-299a in order to obtain reimbursement for medical costs that it should not have had to pay. Under this system, if a claimant, his employer, and his medical insurer each avails itself of the opportunity to assert its rights, no one should be left with a fortuitous windfall or deprivation. The medical insurer will be reimbursed for all of its costs, and the claimant will not receive net compensation from both the third party tortfeasor and his employer’s workers’ compensation insurer, as said insurer will be reimbursed for any sums it has paid out before the claimant realizes any further recovery from the civil suit.
The claimant states in his reply brief that the “double set off” obtained by the respondents in the instant case provided them with a windfall at the cost of the claimant receiving any net benefit from the third-party claim. Id., p. 8. The relevant law provides, however, that the claimant is not entitled to receive a net benefit from his third-party claim until the respondents’ credit under § 31-293 has been satisfied, i.e., they have been repaid for those compensation benefits that the claimant has received from them. See Enquist, supra. There are many third-party cases in which a claimant’s recovery is less than the amount of his employer’s credit for compensation benefits paid, thus leaving him with no net financial gain from the lawsuit. The ability of employers to bring their own third-party actions under § 31-293 reflects this possibility, as a claimant might not always be personally motivated to sue. As such, the failure of the claimant’s group medical insurer to press its reimbursement rights against the respondents, thereby leaving them with more than the drafters of the Act might have intended or expected, does not translate into a financial misdeed against the claimant.
Further, we disagree with the claimant’s criticism that it is “pure fantasy” to believe that the respondents could be required to repay the claimant’s health insurance carrier for the cost of the neck surgery. Id. As explained above, the moratorium in effect on the date of the claimant’s surgery does not prevent his medical carrier from seeking recovery from the respondents. The respondents refused to accept the claimant’s neck surgery until September 1998, which meant that said claim was a “controverted claim” under § 38a-470(a) and a contested claim under § 31-299a(b) at the time the medical bills in question were incurred. Therefore, the private health insurer was in a position to file a § 31-299a claim against BARC and its compensation carrier for the value of the benefits that the private insurer had paid. Given the evident purpose of § 38a-470, we believe it likely that the group medical insurer was also entitled to file a lien against the respondents (assuming their insurance contract allowed for it as per § 38a-470(b)), despite the presence of the moratorium and the fact that the claimant’s neck surgery postdated its inception. However, at this time we need not make a binding determination of the applicability of § 38a-470 to this particular case. We need only state that there was a realistic likelihood that the claimant’s private health insurer would pursue its reimbursement rights under the law, thereby allowing the respondents to apply their § 31-293 credit against the claimant’s unpaid permanency benefits rather than against the cost of the medical bills that had been covered by his health insurer.
The other issue raised by the claimant in his brief was the absence of an interest award in the trier’s decision. The findings indicate that the respondents’ actions in contesting the claimant’s neck injury constituted an “unreasonable contest/delay.” Findings, ¶ S. Because of this “unreasonable delay,” the commissioner awarded the claimant $3,500 in attorney’s fees. Findings (Order), ¶ 1. Under § 31-300, an undue delay in the payment of adjustments or compensation may result in an award of interest and attorney’s fees. Meanwhile, in cases where the commissioner finds that an employer or insurer has “unreasonably contested liability,” without unduly delaying payment, only a reasonable attorney’s fee may be awarded. There is no evidence here that any payments were delayed. Therefore, we find no error in the trier’s restriction of sanctions to an award of attorney’s fees.
The trial commissioner’s decision is hereby affirmed.
Commissioners George A. Waldron and Ernie R. Walker concur.
1 The respondents also filed a petition for review, but withdrew their appeal on November 14, 2000, after the trial commissioner granted their Motion to Correct. See note 2, infra. BACK TO TEXT
2 The trial commissioner later corrected his findings to reflect that the respondents had issued a check to the claimant for $6,832.80 on November 24, 1998, which fully satisfied their remaining debt to the claimant. BACK TO TEXT
3 Section 31-299a(b) states, “Where an employer contests the compensability of an employee’s claim for compensation, and the employee has also filed a claim for benefits or services under the employer’s group health, medical, disability or hospitalization plan or policy, the employer’s health insurer may not delay or deny payment of benefits due to the employee under the terms of the plan or policy by claiming that treatment for the employee’s injury or disease is the responsibility of the employer’s workers’ compensation insurer. The health insurer may file a claim in its own right against the employer for the value of benefits paid by the insurer within two years from payment of the benefits. The health insurer shall not have a lien on the proceeds of any award or approval of any compromise made by the commissioner pursuant to the employee’s compensation claim, in accordance with the provisions of section 38a-470, unless the health insurer actually paid benefits to or on behalf of the employee.” BACK TO TEXT
4 Section 38a-470 provides, “(a) For purposes of this section, “controverted claim” means any claim in which compensation is denied either in whole or in part by the workers’ compensation carrier or the employer, if self-insured.
(b) Any insurer, hospital or medical service corporation, health care center or employee welfare benefit plan which furnished benefits or services under a health insurance policy or a self-insured employee welfare benefit plan to any person suffering an injury or illness covered by the Workers’ Compensation Act has a lien on the proceeds of any award or approval of any compromise made by a workers’ compensation commissioner less attorneys’ fees approved by the district commissioner and reasonable costs related to the proceeding, to the extent of benefits paid or services provided for the effects of the injury or illness arising out of and in the course of employment as a result of a controverted claim, provided such plan, policy or contract provides for reduction, exclusion, or coordination of benefits of the policy or plan on account of workers’ compensation benefits.
(c) The lien shall arise at the time such benefits are paid or such services are rendered. The person or entity furnishing such benefits or services shall serve written notice upon the employee, the insurance company providing workers’ compensation benefits or the employer, if self-insured, and the workers’ compensation commissioner for the district in which the claim for workers’ compensation has been filed, setting forth the nature and extent of the lien allowable under subsection (b). The lien shall be effective against any workers’ compensation award made after the notice is received.
(d) The written notice shall be served upon the employee at his last-known address, the insurance company at its principal place of business in this state or the employer, if self-insured, at its principal place of business, and the workers’ compensation commissioner, at the district office. Service shall be made to all parties by certified or registered mail. The notice shall be in duplicate and shall contain, in addition to the information set forth in subsection (c) of this section, the name of the injured or ill employee, the name of the company providing workers’ compensation benefits, the amount expended and an estimate of the amount to be expended for benefits or services provided to such injured or ill employee.
(e) The insurance company providing workers’ compensation coverage or the employer, if self-insured, shall reimburse the insurance company, hospital or medical service corporation, health care center or employee welfare benefit plan providing benefits or service directly, to the extent of any such lien. The receipt of such reimbursement by such insurer, hospital or medical service corporation, health care center or employee welfare benefit plan shall fully discharge such lien.
(f) The validity or amount of the lien may be contested by the workers’ compensation carrier, the employer, if self-insured or the employee by bringing an action in the superior court for the judicial district of Hartford or in the judicial district in which the plaintiff resides. Such cases shall have the same privilege with respect to their assignment for trial as appeals from the workers’ compensation review division but shall first be claimed for the short calendar unless the court shall order the matter placed on the trial list. An appeal may be taken from the decision of the Superior Court to the Appellate Court in the same manner as is provided in section 51-197b. In any appeal in which one of the parties is not represented by counsel and in which the party taking the appeal does not claim the case for the short calendar or trial within a reasonable time after the return day, the court may of its own motion dismiss the appeal, or the party ready to proceed may move for nonsuit or default as appropriate. During the pendency of the appeal any workers’ compensation benefits due shall be paid into the court in accordance with the rules relating to interpleader actions.” BACK TO TEXT
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