Speech by Lowell K. Y. Chun-Hoon of|
King, Nakamura & Chun-Hoon Attorneys At Law, A Law Corporation
at the IRRA Luncheon Meeting at Ala Moana Hotel
17 September 2003
Luncheon Panel Topic:
GOING OUT OF MY MIND OVER YOU: Workers' Compensation Stress Claims and Medical Cost Containment In an Age of Fiscal Austerity
Speaking about workers' compensation stress claims from the perspective of the injured worker is a challenging and demanding assignment. Though I've made my livelihood as a union attorney for twenty-six years, I would have to think that workers' compensation claimants in general, and those who file stress claims in particular, are today one of the least popular constituencies in the state. Though it is usually not quite articulated, there seems to be an unspoken belief that the greed and sloth of these malingering misfits are threatening to destroy a healthy business climate in Hawaii.|
I would guess that in the court of public opinion, people who claim workers' compensation stress injuries are perceived as a group of chronically disgruntled employees, lost and disaffected souls who project their personal inadequacies and insecurities on to the work place. Mental health professionals label them as having Somatoform Pain Disorders, Personality Disorders, and narcissistic and histrionic traits. In less scientific terms, we might just call these people whiners and cry babies.
If this were true, it would not take any serious analysis to deal with the problem. You would just deny them benefits by law and be done with it. I suspect this is what some advocate, because they believe the stereotypical picture I've just presented. Unfortunately, at least from the perspective of easy analysis, this formulation is inconsistent with many of the flesh and blood people I have personally encountered. In fact, there really are a number of people who are conscientious, responsible, and ethical, who reach the point where they file work injury stress claims not because they want to, but because their mental impairment and incapacitation leaves them virtually no choice if they are to survive financially and emotionally.
My premise is these people ought to be given the same general opportunity to be covered under workers' compensation as anyone with a physical injury, and that a fair and appropriate balance has already been struck in this area. Rather than laboring to make even more amendments to existing law, the effort to create a more cost effective system should be directed toward simple procedural changes that can streamline the system and result in economic savings by shortening periods of disability, reducing controversy over obtaining medical care, and expediting and enhancing the injured workers' recovery to productivity.
To consider this premise, I should give you an abbreviated summary of the current state of the law, discuss several people I've represented who have suffered from stress injuries and how changes recently proposed in the standards for adjudicating these claims could have affected them. Lastly, I'll offer a very few, and by no means comprehensive, suggestions about ways, without increasing spending, that we can streamline the current system. These fleeting comments are not intended to be a global prescription for workers' compensation but at best a handful of insights that point the way toward improvement.
Since 1998, Hawaii law has been changed so a claim for mental stress resulting from disciplinary action is not covered under workers' compensation if certain conditions are satisfied. If the employee is in a non-union workplace, and the employer has acted in good faith in taking the disciplinary action, the claim is excluded. This is a truly daunting burden for the injured worker, since almost any plausible reason, whether actually true or not, can arguably be considered a "good faith" justification.
If the employee is covered under a collective bargaining agreement which sets a standard other than good faith to judge such action, such as just cause, then the claim is excluded if just cause for the action can be proven. Although this is a lesser standard than good faith, it still means the injured worker must prove the employer's disciplinary action is invalid before she can obtain coverage for a psychological injury. This is also completely at variance with the traditional conception of workers' compensation as a no fault system, where medical care, limited financial support, and rehabilitation are furnished without regard to blame.
This change occurred because in 1997, the Hawaii Supreme Court decided that a teacher who developed a reactive depression because of her principal's recommendation that she be suspended for five days had suffered a compensable work injury. In response, the amended law allowed employers to justify disciplinary action under either a good faith or just cause standard, the law validated legitimate employer discipline and essentially immunized such legitimate discipline from workers' compensation recovery when those standards could be satisfied.
In order to see how these 1998 amendments interact with the adjudication of real claims and authentic human beings, one needs to review a few of the actual situations in which these standards could be applied.
The first case involves an office manager terminated for failing to falsify an insurance classification. Her employer installed vinyl siding and roofing. Roofers have a very expensive insurance classification because they work at heights, and have a relatively high rate of significant injuries. The employee's supervisors instructed her to fill out an insurance policy questionnaire that asked what classes of workers the company employed. The questionnaire was used to set the actual premium rates for the company, since there is a different classification for different kinds of jobs which have different premiums, based on risk of injury.
The supervisor instructed the office manager to write that the employees did not do roofing work, but were siding or sheetmetal workers to obtain the savings from this less injury-prone classification. She had terrible conflicts because she recognized this to be fraud, but feared retaliation if she did not comply. Ultimately, she decided to follow her own conscience and refused to falsify the forms.
When the office manager did not cooperate with her employer, she was terminated within a week of refusing to falsify the insurance questionnaire supposedly because her position had been eliminated. As a result of this psychological trauma, she underwent psychotherapy for some three years. If all mental stress claims resulting from personnel actions were excluded from workers' compensation coverage, as was proposed in the last legislature at one time, this termination would have resulted in denial of the claim. If this claim had been litigated and a hearing officer or appeals board concluded the employee had eliminated her position in good faith, the claim would also have been denied.
In actuality, the office manager's claim was ultimately accepted, because the insurer did a careful investigation, there was a co-employee who corroborated important aspects of the office manager's testimony, and she wound up testifying for the prosecutor's office against her bosses, and they eventually pled guilty or no contest to the charges brought against them. Because she was successfully rehabilitated to a new job after a modest amount of retraining, she wound up with only 3% permanent partial disability of the whole person, or $4,857.84, plus $335.85/week for the approximately 68 weeks and 3 days it took to rehabilitate her medically and vocationally to new employment. Her attorneys fees and costs for a case that went on for 3 years and 3 monthsalbeit with no hearingswere, with a 30% discount were $2,142.81. As a result, besides medical care, vocational assistance, and two-third's of her wages for the 68 weeks off work, she took home $2,715.03, net, for her ordeal.
In another case that occurred in the late 1980's a charitable hospital tried to force 62 year old administrator to resign by throwing her a surprise "retirement party" but she refused to accept the retirement. As a result, she was demoted from the number two job in the hospital to a non- existant job called "materials management" and given a basement office with no windows.
Even though she had been so dedicated that she traditionally spent Christmas mornings for years at the hospital spreading good cheer among he patients rather than with her own family, she was given no furniture for her dusty basement office and had to rummage through the hospital to find spare furniture for her office. As a result of her demotion, she eventually suffered Major Depression, had virtually no appetite, and experienced prolonged insomnia.
The U.S. Equal Employment Opportunity Commission voted to intervene in a suit brought by her private attorney and eventually the hospital wound up not only paying extensive monetary damages, but issuing a public apology which was posted prominently on the hotel's bulletin board. Unfortunately, the administrator was so traumatized by her demotion that she was never able to return again in any capacity. Indeed, at the hearing on her work injury claim, her testimony before the Department of Labor about how she was deprived of her dignity and self-respect was so moving that a female management attorney monitoring the hearing as an observer, actually wept herself.
Both of these hard working, devoted women would have had their claims denied under legislation that was originally proposed, but defeated last year in the state legislature. H.B. 387 as originally drafted would have denied coverage because these individuals suffered psychological injury as a result of personnel actions, and stress injuries arising from personnel actions would have been excluded from coverage. The hospital administrator clearly developed her Major Depression as a result of her demotion. Likewise, the office manager I first described developed her psychological condition due to being terminated from employment, even though she had displayed the moral fortitude to resist outright fraud.
Under existing law, which was not applied to the hospital administrator's case because it arose in 1987, she would have had to prove the employer's demotion was not in good faith, because the woman worked for a non-union employer. Though the demotion seems patently fabricated in retrospect, one cannot say confidently that the claim would be accepted. It could well be defended based administrative reorganization, economic cut-backs, and outsourcing of functions. Fully litigating such a fact intensive claim would probably have take at least one year to get her case through the Department of Labor, and perhaps another year and a half at the Labor and Industrial Relations Appeals Board thereafter. Even if she won the first hearing, the claimant would not necessarily receive benefits during the appeal, if the appeals board doubted her ability to prevail on appeal.
At the hearing before the Department of Labor, employer's will of course do their best to defend themselves against claims, as they have every right to do. In yet another claim I handled this past year, which did not even involve any disciplinary action at all, eight co-workers were called to testify against my client who had generated virtually the highest advertising sales revenue of any person in her department in the year before she suffered a mental breakdown. Two psychiatrists and a psychologist had submitted written reports that the salesperson's mental condition was legitimately the byproduct of her work.
The eight witnesses testified about every scrap of gossip they had heard in the workplace about unhappy dates the woman had experienced, how she had complained about not having enough money to pay her son's college tuition, how they received personal mail for the claimant about unpaid medical and dental bills, and a prior divorce that had occurred about five years before the industrial accident. The company also did an analysis of every phone call the woman made on a company-paid cell phone in an effort to show that she was preoccupied with non-work related matters while on duty, although the claimant made most of her sales calls from a separate phone on her desk. Her disability sprang, the company said, not from her being overworked with insufficient support, but from this multitude of personal, non-work related problems, even though there was no mental health professional who endorsed this theory.
After the second day of hearings, I sat in my office with the woman who told me she felt completely isolated because she had devoted her life to the company but now felt completely from alienated the co-workers she once regarded as friends who had turned against her. Her TDI benefits barely paid her rent, and she had gotten canned goods more than once from the food bank. She told me, several times, she did not want to return alone to her apartment and wanted to kill herself, so I took her to the emergency room at Queen's. For reasons I have not fully understood, she was not kept at the hospital overnight. Even though fortunately she did not kill herself, and prevailed in her claim, she is still in the process of trying to piece her life back together. Although the third woman's case has nothing directly to do with changes in the law surrounding mental stress injuries since there was no discipline, but it is fairly representative of the kind of pain and despair a number of legitimate claimants endure in the course of litigating their claims.
I would like to think that most people would feel some sympathy for these three unfortunate women, and agree there ought to be a place for them to get some form of restitution for what they have experienced. Yet it is also fair to say that most attorneys specializing in the worker's compensation don't take cases like these because the clients' emotional condition make the cases demanding, because the standards of coverage make them difficult to win, and because the compensation an attorney can obtain which is regulated by the Department of Laboris limited and less than what one could earn in other fields, even in social security disability or federal workers' compensation.
For all the outcry about these kinds of cases, I think one must fairly ask if there truly is a need to exclude stress injuries from coverage. In the year 2000 only 509 mental disorder claims were filed among 31,836 total reported claims, or 1.6% of the total, according to the department's Workers' Compensation Data Book. In 2001, the same source reported only 469 cases out of a total of 30,179 cases statewide, or only 1.5% of the total.
The Department of Labor does not report the outcomes of its specific cases, but at the next higher level, the Labor and Industrial Relations Appeals Board, cases are reported by a commercial publisher, the Labor Relations Appeals Board Index. In 2001, there were only 30 reported decisions involving psychological injury. A review of the published case summaries showed 14 of the cases involved personnel actions of some kind and 10 of the 14 cases were denied by the Board. Of the ten denied cases, three involved verbal reprimands, a denial of leave, a suspension for sexual harassment, and a discharge from employment. In the four cases involving personnel actions where coverage was awarded, employees were denied any permanent partial disability benefits or had their temporary total disability terminated in three cases.
While one could not claim this sample represents iron clad statistical reliability, it suggests that about 2/3's of the claims involving personnel actions are already being denied by the Labor and Industrial Relations Appeals Board. This ratio suggests that legitimate personnel decision making is recognized to be exempt from workers' compensation liability. Since system wide, there are only about 469 to 509 claims for all psychological injuries in each of the past two years, it is also hard to believe that the even fewer number of claims involving personnel actions have any significant economic impact on costs.
This having been said, I would not deny that these kinds of cases can be vexatious to defend. But I would suggest that the effort to further exclude these claims from the system is unnecessary and misplaced. Instead, it would be far better, more productive, and more cost effective, to focus effort on achieving other procedural reforms within the system that would decrease cost by heightened efficiency in claims management.
Three simple ideas to achieve this, which would involve no significant new expenditures, and are only illustrative and not at all comprehensive, are as follows:
Although these specific ideas are hardly a panacea, they may suggest a new, more hopeful and constructive paradigm. Rather than endangering benefits for those who have legitimately suffered psychological trauma in the workplace, we ought instead to build a system that contains greater incentives for efficiency, rewards creativity in returning to productive work, and creates an ethic of accomplishment.
Such an outlook would not only be healthier for those afflicted by industrially-related mental impairments, but would probably go a long way toward keeping the rest of us from going out of minds, over these problems.