(WorkersCompensation.com) This past February, an Indiana Court of Appeals upheld a verdict awarding more than $400,000 in compensatory and punitive damages against a former employer for retaliation when an employee filed a workers' compensation claim. This decision is not an outlier. A Florida jury recently awarded more than $600,000 for a retaliation claim, and the U.S. Court of Appeals for the 10th Circuit recently reduced a $4.2 million jury decision to $2 million, which was still a staggering sum.

As news of these awards spreads, the result is claims alleging workers' compensation retaliation becoming a rapidly growing field within employment law. With this growing volume of retaliation claims and the size of the respective verdicts, it is important for insurers and risk managers to protect against these claims.

It is unlawful to discharge or discriminate against an employee for claiming or seeking to claim workers' compensation benefits. Although federal law does not contain a prohibition against workers' compensation retaliation, most states have enacted laws that prohibit employers from retaliating against employees who file a workers' compensation claim.

For example, in New Jersey, N.J.S.A. 34:15-39.1 governs the unlawful discharge or discrimination of an employee for claiming compensation benefits. The remedies available under N.J.S.A. 34:15-39.1 include punitive damages, administrative penalties, and the right to file a criminal disorderly person's offense against the employer.

To be protected in most states, an employee must act in good faith in seeking workers' compensation benefits. Similarly, there is no statutory requirement that an employee must file a formal claims petition before making a retaliation claim. Rather, an employee may effectively establish the existence of a workers' compensation claim by simply notifying his employer of an injury and inquiring as to the procedure for getting medical bills paid.

Although variations exist between states, all retaliation laws uniformly require an identifiable, detrimental change in the terms or conditions of an employment relationship. An identifiable, detrimental change may include demotions, changes in position or responsibilities, lowered pay, or unwarranted disciplinary actions.

Why the High-Value Awards?

Juries deciding workers' compensation claims have levied hefty punitive damages over the past decade. A few factors appear to drive this trend.

Public Awareness. Attorneys for plaintiffs are specifically targeting workers' compensation retaliation claims. Targeted advertising mixed with headline-grabbing jury verdicts is a recipe for increased claims.

Public Perception. Another factor is the tendency of jurors to believe that employers do retaliate. Everyone seems to have their own story about how a family member or friend was treated badly by an employer when they were hurt on the job. While this is a factor in all forms of retaliation cases, it seems heightened in the workers' compensation arena.

Timing. A common timeline results in the denial of an underlying claim immediately prior to an employee's termination. Although the termination may be warranted in many circumstances, no conduct is likely to irritate a jury as much as the loss of employment after the employee seemingly has sacrificed physical health in the employer's service.

Fraud. State and local prosecutors, workers' compensation professionals, and risk managers all engage in advertising designed to encourage employees to report insurance fraud. The effective use of social media as a tool for identifying fraud has further fostered a perception that Big Brother is constantly watching. While these initiatives have proven to be effective cost-saving tools, the unintended consequence is a contention among workers that employers believe all claims are fraudulent.

What to Expect at Trial

In order to avoid claims in the first place, it is important to know what employees will highlight during the trial of a retaliation claim. In this regard, timing between the injury and termination is paramount. If an employee is fired within days or weeks of making a claim, a jury may draw the inference that the two events were connected. Past behavior also is key, as the employee will seek to demonstrate a dearth of disciplinary history or a lack of recorded problems prior to the injury.

While timing and history remain paramount, an employee may seek to prove that the conduct or comments of a manager suggest a retaliatory motive. The employee also may establish a retaliatory motive through disparate treatment—namely, evidence that similarly situated employees were not terminated for identical conduct. If a manager recommends terminating an employee who made a workers' compensation claim and any of these indicators are present, the termination should be carefully scrutinized.

Although timing must be thoughtfully considered, this does not mean that an employer should wait months or years to investigate a disciplinary action. If the employee is committing gross misconduct, such as stealing or sexually harassing another employee, the matter must be addressed. The key is that an investigation must be thorough and the resulting proof of the behavior must be concrete. If during trial an employee can show major flaws in the investigation or the evidence of wrongdoing, a jury may presume the disciplinary action to be meritless.

Conversely, when the problem is performance, swift action is rarely necessary. In this regard, it is essential to first ascertain whether the performance issue is a product of the injury. If so, the employer should initiate its accommodation process under the Americans with Disabilities Act (ADA). Unlike a disciplinary action, such as coaching, the accommodation process is not a precursor to termination. If the performance issue is unrelated to the injury, allowing time to pass will naturally diminish any connection between the two events.

Review of Management

It is pivotal for managers making termination decisions to be well trained in order to carefully document the basis for the termination. If a manager recommends termination of an employee with no history of disciplinary problems prior to the injury and that recommendation is not related to the employee's diminished functioning because of the injury, there is a good chance that the manager was not performing his duties. People rarely become bad employees simply because they file a workers' compensation claim. More likely, the supervisor allowed the unwanted behaviors to persist before the accident. In these circumstances, it may be difficult for coaching and other disciplinary actions to overcome a lack of disciplinary actions before the injury.

Managers also should be trained and understand that discussing an employee's workers' compensation claim, the injury, or its resulting limitations is inappropriate. Managers should treat this information with the same respect they treat any other medical information. In the same vein, no manager should be required to gather or receive any claims-related information from the employee. By insulating the manager from the claims process, he can maintain impartiality. If there is a belief that the employee's claim is fraudulent, having the supervisor involved in the investigation will destroy his ability to be viewed as impartial toward the employee. Similarly, the individuals handling the workers' compensation claim should never intrude upon or involve themselves in any question related to the worker's continued employment.

While there is a general trend toward punitive damages in retaliation claims, with adequate training and preparation, these claims may be avoided.

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