Cost Containment Strategies for the Beginning of North Carolina Workers’ Compensation Claims – The Misrepresentation Defense (Part 2 of 10)

When contemplating cost containment strategies for workers’ compensation claims, it is important to start at the beginning, as timing is vital.  To provide employers and claims adjusters with a comprehensive discussion of cost containment strategies, this Blog Post will start at the very beginning – before there is even a workers’ compensation claim.

As part of North Carolina’s June 24, 2011, Legislative Reform, employers now have an additional defense available to workers’ compensation claims arising on or after June 24, 2011. However, to use this defense, employers must do their homework BEFORE an alleged work accident happens.

An employer may plead an affirmative “Misrepresentation Defense” when an employee intentionally misrepresents his/her physical condition at the time the employee is entering into the employment relationship, and the employee alleges a work injury with a causal tie to the misrepresentation.  N.C.G.S. § 97-12.1

An employer bears the burden of proving each and every element of the “Misrepresentation Defense” by a preponderance of the evidence, or the greater weight of the competent evidence of Record.

Pursuant to N.C.G.S. § 97-12.1, an employer must prove ALL of the following elements to succeed on the defense:

1. The employee knowingly and willfully made a false representation as to the employee’s physical condition;
2. The employer relied upon one or more false representations by the employee and that reliance was a            substantial factor in the employer’s decision to hire the employee; and
3. There was a causal connection between the false representation and the employee’s injury or occupational disease.

To satisfy the first and second elements of the Misrepresentation Defense, an employer may gather information on a prospective employee’s physical condition to determine whether he/she can safely perform the job BEFORE finalizing the employment relationship.

Timing is vital. 

To preserve the Misrepresentation Defense AND to ensure compliance with employment laws/regulations such as the Americans with Disabilities Act, an employer should ask about the employee’s physical condition to determine whether he/she can safely perform the job:

1. At the time of hire;
2. At the time of receiving notice of the removal of conditions from a conditional offer of employment; or
3. During the course of a post-offer medical examination.

Practice Tip – The key to successful implementation of the Misrepresentation Defense is a top-notch hiring program.

An employer may find it useful to:

1. Prepare accurate Job Descriptions detailing with specificity the essential functions and physical demands of their positions.

• Have the prospective employee sign off on the Job Description, thus confirming both his/her understanding of the requirements and functions of the position, as well as his/her affirmative representation that he/she is physically capable of performing the essential functions of the job, with or without reasonable accommodation;

2. Utilize a Post-Offer, Pre-Hire Questionnaire to ask for information such as prior work injuries, medication usage,   work restrictions, surgeries, and permanent partial disability ratings.

• The time to utilize this tool is once a conditional offer of employment has been extended.  Successful completion of the Post-Offer, Pre-Hire Questionnaire is a condition precedent to the employment offer being finalized.

3. Utilize a Post-offer, Pre-Hire Physical to determine the prospective employee’s fitness for duty.

• Much like with the Post-Offer, Pre-Hire Questionnaire, the time to utilize this tool is once a conditional offer of employment has been extended.  Successful completion of the Post-Offer, Pre-Hire Physical is a condition precedent to employment being finalized.

By utilizing these practices, an employer is clarifying the nature of the position and the importance of securing an employee who is able to perform the essential functions and responsibilities of the job.  These practices give a prospective employee the opportunity to reveal that he/she is physically capable of performing the job, and the employer’s reliance on these disclosures is inferred and expected.

As for the third and final element of the “Misrepresentation Defense,” an employer must prove there is a causal connection between the alleged work injury and the physical conditions falsely represented to the employer by the employee at the time of his/her hire.  Specifically, the question is whether the employee’s undisclosed physical condition increased his/her risk for injury.  (Purcell v. Friday Staffing, __ N.C. App. __, 761 S.E.2d 694 (2014))

By developing a comprehensive hiring program, not only will an employer ensure prospective employees are physically capable of performing the job, but an employer also protects itself against potential future workers’ compensation claims should a prospective employee misrepresent his/her physical abilities.

Questions?  Please contact Jennifer directly at (919) 863-8846 or jjones@cshlaw.com.