ABA Seminar Discusses Erosion Of The Exclusive Remedy Doctrine


Phoenix, AZ (CompNewsNetwork) - Asking, "If something that was exclusive is no longer exclusive, is it still considered exclusive?", Moderator Jim Reiter set in motion a detailed discussion of the erosion of the Exclusive Remedy Doctrine at the ABA's Mid Winter Conference Thursday. Saying that "ERD is under attack" in his home state of Michigan, Reiter lead a panel of experts on various methods and situations where exclusive remedy may no longer apply.

The Exclusive Remedy Doctrine is, of course, an essential part of the no fault premise that workers' compensation has operated under for nearly 100 years. Employees collecting benefits under a workers' comp claim generally can expect that to be their only available avenue for compensation. It is their “exclusive remedy”; In the arrangement employers lost common law defense, and employees gained medical and labor benefits.

The panel Thursday discussed several areas where that protection for employers and the companies that provide their coverage is now being “chipped away”. One of the most provocative threats the ERD is facing is in the state of Michigan, where parties are attempting to use the RICO statutes to claim damages through racketeering and corruption. Attorney Janet Lanyon discussed this case, reporting that adjusting activity is the basis for these racketeering claims. She also revealed that currently 3 other RICO claims have been filed as class action suits in the eastern district.

Under RICO Section 1962c, defending entities must have 2 predicate acts within 10 years before the winners are entitled to treble damages. In the case discussed by Lanyon, the allegations are the enterprise had the purpose of defrauding the injured worker of benefits by wrongfully disputing claims based on IME's, and damages alleged are based on delayed benefits and the need to hire a lawyer.

Some of the potential defenses Lanyon indicated employers and TPA's might employ include good faith/no fraudulent scheme, lack of proximate cause and no injury to business or property, which is a basic tenet of RICO legislation.

Miami Attorney Mark Zientz discussed a case determined less that 3 weeks ago, Coastal Nation Vs. Gutierrez. As part of his presentation, Zientz listed 7 items in Florida that are considered exceptions to the Exclusive Remedy rule:

1) Employer carries no coverage

2) Intentional acts of a physical nature

3) Intentional acts of a mental nature

4) “Scanlan” exceptions (precedent case in fl)

5) Employer estoppel (inconsistent positions)

6) Gresham transfer exception (general denial of benefits)

7) Loss of wage earning capacity

Ohio attorney William Ross disclosed that erosion of the standard has been happening in Ohio since 1982. That year, the Blankenship case, which was related to the intentional hiding of toxic chemicals, cleared the way for intentional torts in addition to workers' comp benefits. In 1984, another case, the Jones decision, opened the floodgates for intentional tort according to Ross.  

In Ohio the current common law standards for exemption to ERD include:

1)      Dangerous process, procedure or working environment

2)      Knowledge of such dangers by the employer, and

3)      Failure by the employer to address or tacit approval of the situation

The general consensus seemed to be that employers can no longer rely on WC as being a protection from further liability or tort activity. Additional diligence towards safety and correction of known issues can go a long way to protect employers in an increasingly volatile legal environment.

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