NC Court of Appeals Addresses Causation Standard for Workers’ Compensation “Misrepresentation Defense”
As discussed in my previous post, for claims arising on or after June 24, 2011, there is a new misrepresentation defense available to employers facing workers’ compensation claims. An Employer must prove all of the following elements by a preponderance of the evidence to succeed on the “Misrepresentation Defense”:
- The Employee knowingly and willfully made a false representation as to the Employee’s physical condition;
- 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
- There was a causal connection between the false representation and the Employee’s injury or occupational disease.
The North Carolina Court of Appeals recently addressed the third, or “causal connection,” element of the defense in Purcell v. Friday Staffing, 761 S.E.2d 694 (August 2014).
Background of the Case
In Purcell, Plaintiff suffered a prior work-related back injury while working for a previous employer in August 1999. Her lumbar MRI examination revealed a disc protrusion at L5-S1 and disc degeneration at L4-5. Following conservative treatment, Plaintiff underwent a microdiscectomy and was ultimately assigned a permanent partial disability rating to her back. She was assigned permanent work restrictions of no lifting greater than 20 pounds, but she was encouraged by her treating physician to find sedentary work. She ultimately settled out her workers’ compensation claim.
Following settlement of her workers’ compensation claim, Plaintiff worked for subsequent employers. In addition, she continued to receive medical treatment, which included physical therapy, use of a TENS unit and a repeat lumbar MRI examination, which revealed a disc bulge at L4-5. In January 2008, Plaintiff told her primary care physician that she was seeing a neurosurgeon and may need back surgery.
Plaintiff Applies with Friday Staffing
In May 2010, Plaintiff applied for employment through Defendant-Employer, a company that fills the labor needs of its clients. As part of the employment application process, Plaintiff completed both a “Friday Essential Functions Questionnaire,” as well as a “Medical History Questionnaire.” Defendant-Employer also conducted an in-person interview with the Plaintiff. During this process, Plaintiff represented she could lift and carry more than 50 pounds; frequently bend, pull, push, kneel, squat, and twist; stand for long periods of time; and sit for long periods of time.
In addition, the Plaintiff represented she never filed a workers’ compensation claim; never suffered any injury or underwent surgery; and never received treatment or consultation for back pain or possible back injuries.
Defendant-Employer hired plaintiff, and they matched her with one of their clients that manufactured automotive parts. Plaintiff began working as an assembly line worker for Defendant-Employer’s client. The job profile noted requirements of occasional walking and stooping; frequent overhead reaching; pushing 40 to 45-pound baskets of automotive parts; lifting automotive parts from baskets to assembly line; and carrying boxes of automotive parts from a staging area to a table. As part of the Plaintiff’s specific work assignment, she was required to constantly lift trailer arms weighing between 20 to 25 pounds, which was outside of Plaintiff’s restrictions assigned for her prior workers’ compensation claim.
On approximately July 18, 2011, Plaintiff alleged she injured her neck and back due to constantly twisting and bending over to pick up trailer arms from a pallet while working on the assembly line. Defendants denied liability for Plaintiff’s claim.
Industrial Commission Decision – Compensability Denied
At the Industrial Commission, both the Deputy Commissioner and the Full Commission on appeal affirmed Defendants’ denial of the compensability of Plaintiff’s claim pursuant to N.C.G.S. § 97-12.1 or the “Misrepresentation Defense.” Specifically, the Industrial Commission concluded that “(1) Plaintiff knowingly and willfully made a false representation as to her physical condition; (2) Defendant-Employer relied upon said false representation by Plaintiff, and the reliance was a substantial factor in Defendant-Employer’s decision to hire her; and (3) there was a causal connection between the false representation by Plaintiff and her claimed injury.”
North Carolina Court of Appeals Hears Causation Issue
Plaintiff appealed the Industrial Commission’s decision to the North Carolina Court of Appeals. Specifically, Plaintiff contended the Industrial Commission erred Defendants had proven the third element, the requisite causal connection. She did not challenge the Industrial Commission’s conclusion Defendants had proven the first and second elements.
Purcell’s causal connection interpretation issue presented a case of first impression before the North Carolina Court of Appeals. Through statutory interpretation, the Court determined the statutory language was ambiguous, and as a result, the Court looked to the legislative intent and history of the N.C.G.S. § 97-12.1 . The Court determined the North Carolina General Assembly intended to adopt the “Larson Test,” which requires that “[t]here must have been a causal connection between the false representation and the injury.”
As a result, the North Carolina Court of Appeals held that to satisfy the “causal connection” element of N.C.G.S. § 97-12.1, Defendants must prove by the preponderance of the evidence that Plaintiff’s “undisclosed or misrepresented injury, condition, or occupational disease increased the risk of the subsequent injury or disease.”
In the Purcell case, the Court held the Industrial Commission did not err in denying Plaintiff’s claim based on N.C.G.S. § 97-12.1, as the evidence revealed Plaintiff was exceeding her work restrictions when she injured her back. Expert testimony revealed that Plaintiff was at an increased risk of injury if she exceeded her restrictions thus satisfying the “causal connection” requirement set forth in N.C.G.S. § 97-12.1.
Takeaway for Employers
What’s the takeaway for Employers? Implementing a “Top Notch Hiring Program,” which may consist of accurate, detailed job descriptions lays the necessary groundwork for “The Misrepresentation Defense.” At the legally permissible time, Employers may inquire with the medical provider whether the Employee was at an “increased risk” of developing the alleged injury/condition by performing the job in question when the duties and requirements of the job as specifically noted on the job description exceeded the Employee’s abilities.
I regularly assist clients with updating and refining hiring practices to preserve this important cost-saving measure. If you have questions about your hiring practices, or what qualifies as a “legally permissible time” for addressing the “increased risk” requirement of the defense, please reach out to me at firstname.lastname@example.org or 919-863-8846.