Update on Colorado Appellate Decisions in Workers' Compensation Law

• Publication year: 2002
• Pages: 119

31 Colo.Law. 119 Colorado Lawyer 2002.

2002, January, Pg. 119. Update on Colorado Appellate Decisions In Workers' Compensation Law

---

119

Vol. 31, No. 1, Pg. 119

The Colorado Lawyer
January 2002
Vol. 31, No. 1 [Page 119]

Specialty Law Columns
Workers' Compensation Report
Update on Colorado Appellate Decisions In Workers' Compensation Law
by Ralph Ogden

This article addresses the exclusivity rule as applied to sexual harassment claims; work performed at qualified residences; apportionment and causality issues; and specific versus general penalties. It also discusses a district court case addressing constitutionality of some IME provisions

The article was written by Ralph Ogden of Wilcox & Ogden Denver - (303) 399-5005

The author represented Sondra Holliday in Holliday v. Bestop, Inc., 23 P.2d 700 (Colo. 2001), and also was co-counsel (with Shelley Dodge) for the plaintiffs in Smith v. Whiteside, Denver Dist. Ct. 00CV9120, both of which are discussed in this article.

This article is an update of recent decisions from the Colorado Court of Appeals and the Colorado Supreme Court regarding workers' compensation issues. A previous update was published in the August 2001 issue on page 105.

Compensability

In Horodyskyj v. Richard Karanian,1 the plaintiff worked as an apprentice electrician for Argus Electric Service. He sued Argus and Richard Karanian, who also was the owner and president, for sexual harassment amounting to battery, intentional infliction of emotional distress, invasion of privacy, and other similar torts. The Court of Appeals held that: (1) co-employee immunity and the exclusivity bar of the Workers' Compensation Act ("Act") were affirmative defenses that could be waived; (2) the alleged intrusive physical touching and offensive comments by the company president occurred in the course of Horodyskyj's employment; (3) sexual harassment did not fall into the category of inherently private misconduct and therefore arose out of the employment relationship; (4) the harassing employee was not entitled to co-employee immunity because he acted with personal animus; and (5) "[t]o the extent that Ferris v. Bakery, and Stamper v. Hiteshew, are inconsistent with . . . [these] conclusion[s], we decline to follow these decisions."2 (Citations omitted.)

The Colorado Supreme Court granted certiorari to consider whether the Court of Appeals erred in holding that sexual harassment claims against the employer were barred by the exclusivity provisions of the Act, and then reversed.3 The Court held that "in the usual case, injuries resulting from workplace sexual harassment do not arise out of an employee's employment for purposes of the Workers' Compensation Act. . . . [The Act] was not intended to cover injuries resulting from the usual case of workplace sexual harassment."4

The Court first noted that in Popovich v. Irlando5 and In re Question Submitted by United States Court of Appeals (Tolbert),6 it had articulated a test for determining whether injuries arise out of employment for purposes of the Act, but that "[c]onflicting interpretations of this test in several recent decisions by the Court of Appeals . . . have created a split of authority in this area of the law." Although it identified those "conflicting" decisions, the Court did not specifically approve or reject any of them and, instead, discussed the correct rule for making these determinations.

The Supreme Court discussed the "willful assault" tests discussed in both Popovich and Tolbert and then distinguished both cases: ". . . neither of those two cases addressed the issue raised here, namely, whether an employer can be held liable for tort damages based on sexual harassment where the parties have not conceded that the co-employee's allegedly harassing acts were neutral."7 In other words, where the allegedly harassing conduct is not neutral, and where it is targeted against the plaintiff, neither Tolbert nor Popovich contains the dispositive holding.

The Court then rejected as being "unsound" the Court of Appeals' application of the "friction and strain" doctrine. The lower court had reasoned that in cases where the parties are acquainted with each other only through their employment, any injury resulting from a dispute between them arises out of employment because "work brought the employees together and created the relation and conditions resulting in the dispute."8 This reasoning was unsound, according to the Supreme Court,

. . . because it broadens the scope of coverage under the Act by eliminating the causality requirement needed for an injury to arise out of the employment. The nexus requirement is eroded where the test is improperly framed as "but for the bare existence of the employment" rather than "but for the conditions and obligations of employment." . . . The mere fact that two employees met through their employment is not enough to cause offensive on-the-job conduct between them to fall within the "friction and strain" of the job. As a matter of policy, sexual harassment is not a risk inherently connected to the employment relationship. The Tolbert dicta does not apply here.9

The Court also discussed the three categories of assault that it had identified in Tolbert, Popovich, and a number of other cases, and reiterated that ". . . an injury is compensable under the Act as long as it is triggered by a neutral source that is not specifically targeted at a particular employee and would have occurred to any person who happened to be in the position of the injured employee at the time and place in question. . . . [H]owever, employee claims are not barred by the exclusivity provisions if the assault originates in matters personal to one or both of the parties." The Court concluded this part of its opinion by stating that ". . . sexual harassment ordinarily does not fall into either category of assaults that are compensable under the Workers' Compensation Act. Acts of harassment are highly personal and, except in the most unusual cases like Tolbert, will fall into the category of inherently private assaults that 'd[o] not arise out of the employment under any test.'"10

This reasoning also might be applied to other assaults that involve some inherently private dispute between the parties but are inflicted in the course of employment - that is, within the time and place limits of the employment relationship and during an activity connected with the employee's job-related functions. However, the Court did not discuss how conduct such as sexual harassment, which is personal to one or both parties, could subject an employer to liability under a theory of respondeat superior, which generally subjects the principal to liability for conduct of the agent that is in the scope and course of the agency relationship. Although the Court seemed to assume that at least in harassment cases, such liability exists, the issue was not one on which it granted certiorari and therefore will remain undecided for the time being.

In the last part of its decision, the Court discussed the public policies behind state and federal anti-discrimination statutes, and held that these policies also mandated the exclusion of these claims from the purview of the Act: ". . . in the typical case to bar a sexual harassment claim under the exclusivity provisions of the Workers' Compensation Act would be to thwart the strong public policies against sexual harassment. It would ignore the reality that many injuries stemming from sexual harassment will not result in any disability for which workers' compensation is available, leaving those victims without a remedy."11

The Court concluded by holding that "cumulative remedies [in addition to those provided by state and federal statutory law], such as common-law claims, are available to victims of sexually discriminatory conduct in the workplace."12 Thus, a worker victimized by such conduct may bring both statutory and common law claims for redress without running afoul of the exclusivity provisions of the Act.

Thornbury v. Allen (Thornbury II)13 is the second appeal in this case involving the qualified residence provisions of CRS § 8-41-402(1) and the statutory employer provisions of CRS § 8-41-401(1).14 Thornbury was injured when she attempted to clean and then inspect glass shelving in Allen's condominium unit. Allen owned this unit and rented it out through VRI of Colorado, which agreed as part of the rental agency agreement to provide housecleaning services. These services were performed by VRI's employees such as Thornbury.

Thornbury sought and received workers' compensation benefits from VRI. She sued Allen for negligence in a separate proceeding, and Allen defended under the "qualified residence" and statutory employer sections of the Act. CRS § 8-41-402(1) provides, in pertinent part:

[The Act] shall not apply to the owner or occupant, or both of residential real property which meets the definition of a "qualified residence" under section 163(h)(4)(A) of the Federal "Internal Revenue Code of 1986" as amended, who...