Workers' Compensation - H. Michael Bagley, Daniel C. Kniffen, John G. Blackmon, Jr., and Phillip Comer Griffeth

• Publication year: 1995

Workers' Compensationby H. Michael Bagley^* Daniel C. Kniffen^** John G. Blackmon, Jr.^*** and Phillip Comer Griffeth^****

I. Introduction

This survey period again saw the introduction of a package of amendments to the Workers' Compensation Act (the "Act") steered through the legislative process by the Chairman of the State Board of Workers' Compensation (the "State Board") and his advisory committee. Though not as dramatic as in past years, subtle changes could have significant impact. The bulk of the amendments arose out of the Board's increasing concern about fraud and abuse in the state's workers' compensation system. Meanwhile, the state's appellate courts continued to tackle the complex issues surrounding compensability of heart attack and psychological injury claims. For the most part, the exclusive remedy doctrine, which bars a tort action for work-related injuries, withstood its increasing assaults.

II. Legislative Changes

The General Assembly continued the trend for this decade by again effecting several substantive changes to the Act in 1995.¹ Effective July 1, 1995, except where specifically designated retroactive, these amendments to the Act were the second consecutive package designed and sponsored by the Chairman of the State Board of Workers' Compensation, Harrill L. Dawkins.²

A. Limitation on Corporate Officer Exemptions

Section 34-9-2.1 of the Official Code of Georgia Annotated ("O.C.G.A") has provided a mechanism for corporate officers to elect to be exempted from coverage under the Workers' Compensation Act.³ Since its enactment in 1982, there have been no limits on the number of officers that could be exempted from coverage.⁴ This unlimited avenue of corporate exemption was potentially problematic since it provided the mechanism for an employer to avoid Workers' Compensation coverage for all employees by deeming them "corporate officers,"⁵ solely for the purpose of exempting them from the Workers' Compensation Act.

Seeking to place reasonable limits on what had heretofore been an unlimited exemption for corporate officers, O.C.GA. section 34-9-2.1(a) was amended in 1995.⁶ The exemption was limited to no more than five corporate officers, and in order for the written certification of exemption to be in effect,⁷ the corporate officer must be identified by name, as well as by the office held at the time of certification.⁸

B. Modification of Subrogation Procedures

Subrogation was one of the most controversial elements of the sweeping legislative changes enacted in 1992,⁹ and the area has continued to be fraught with controversy and confusion.¹⁰ The General Assembly made an effort to modify two aspects of the subrogation provisions to make the process of subrogation more workable.

It was not clear from re-enactment of subrogation in 1992 whether or not death benefits would be recoverable by an employer in a subrogation action.¹¹ In Bankhead v. Lucas Aerospace Ltd.,¹² the United States District Court for the Northern District of Georgia held that the subrogation statute would not allow an employer to recover for death benefits.¹³ The court reasoned that death benefits were simply not among those enumerated in O.C.G.A. section 34-9-11.1.¹⁴ Therefore, the employer had no right of subrogation for death benefits.¹⁵ The General Assembly amended the list of payments made by an employer which are subject to recovery via subrogation in 1995 by inserting "death benefits" among the types of payments that are recoverable.¹⁶

There has also been much controversy over the automatic assignment of the injured employee's cause of action to the employer after one year from the date of injury.¹⁷ In Bennett v. Williams Electrical Construction Co.,¹⁸ the court of appeals held that the assignment was automatic and complete.¹⁹ This created a number of unanticipated problems for employers who suddenly found themselves confronted with the possibili- ty of tort claims by employees based upon the employer's failure to assert rights on behalf of the employee against the third-party tortfeasor.

O.C.G.A. section 34-9-11.1(c) was amended in 1995 to modify the absolute assignment from the employee to the employer and to create, in its stead, a partial assignment.²⁰ One year after the work-related injury, the employer and employee will jointly hold the right of action against any third-party tortfeasor.²¹ Furthermore, while the employer or its insurer may intervene in any action to protect and enforce its subrogation lien, the statute specifies that neither the employer nor insurer is required to do so.²²

Although the modification to include death benefits within payments recoverable by subrogation was not retroactive and will take effect on July 1, 1995, the General Assembly attempted to rectify all of the assignment problems that developed as a result of the re-enactment of subrogation in 1992 by making the 1995 corrective language retroactive.²³ The retroactive modification of what is apparently a substantive right under Georgia's Workers' Compensation Act has previously survived constitutional challenges.²⁴ Moreover, the retroactive modification of workers' compensation subrogation rights has been upheld in other states.²⁵

C. Enhancement of Civil and Criminal Penalties

The Board has long possessed the authority to assess penalties for failure to follow directives, for making false or misleading statements, or for failure to comply with the insurance requirements of the Act.²⁶ The magnitude of the penalties was increased in 1995 from a range of $500 to $5,000 to a range of $1,000 to $10,000 for intentionally making false or misleading statements or representations for the purpose of obtaining or denying any benefit or payment under the Act.²⁷ The penalty may be further enhanced with the assessment of the cost of collection against the offending party.²⁸ Note that the new provision in O.C.G.A. section 34-9-18(f) directs that the payment of any penalties be made to the General Fund of the State of Georgia, rather than to the Subsequent Injury Trust Fund.²⁹

Likewise, while criminal sanctions remain a misdemeanor punishable by incarceration of up to one year,³⁰ the potential fine imposed upon a finding of guilt for intentionally making a false or misleading statement or representation for the purpose of facilitating the obtaining or denying of any benefit or payment under the Act was increased from a range of $500 to $5,000 to a range of $1,000 and to $10,000 per violation, as well as the assessment of the costs of investigation and prosecution.³¹

D. Creation of Fraud and Compliance Unit

A new code section, O.C.G.A. section 34-9-24, was added to provide for the establishment of an office within the State Board of Workers' Compensation that will be known as the "Fraud and Compliance Unit."³² This unit is designed by statute to assist the Chairman of the State Board in investigating allegations of fraud and non-compliance as well as developing and implementing programs to prevent fraud and abuse.³³ While the unit itself will have no prosecutorial authority, the unit is required by statute to promptly notify the appropriate prosecuting attorney's office of any action which involves criminal activity.³⁴ This new code section also contains an immunity provision which should protect any employee or agent of the Board in the execution of their activities in this unit against civil liability for libel, slander, or any other relevant tort.³⁵

E. Workers' Compensation Truth in Advertising Act of 1995

Following the lead of several other states, including California,³⁶ the General Assembly adopted what shall be known as the Workers' Compensation Truth in Advertising Act of 1995 and codified the provisions at O.C.G.A. sections 34-9-30 through 34-9-32.³⁷ The stated purpose of the Act is "to assure truth and adequate disclosure of all material and relevant information in advertising which solicits persons to engage or consult an attorney or a medical care provider for the purpose of asserting a workers' compensation claim."³⁸ The provisions apply only to "television advertisement, with broadcast originating in this state, which solicits persons to file workers' compensation claims or to engage or consult an attorney, a medical care provider, or clinic for the purpose of giving consideration to a workers' compensation claim or to market workers' compensation insurance coverage . . . ."³⁹ Note that this provision applies not only to attorneys and medical providers, but also to any entity that seeks to "market workers' compensation insurance coverage."⁴⁰

In any of these circumstances, the Act requires the following notice in Roman font boldface thirty-six point type: "Willfully making a false or misleading statement or representation to obtain or deny workers' compensation benefits is a crime carrying a penalty of imprisonment and/or a fine of up to $10,000.00."⁴¹ Anyone violating this provision is subject to a fine of between $1,000 and $10,000 for each violation.⁴²

F. Empowering the Board to Force Participation in Mediation

The implementation of broad-based mediation has been one of the most significant developments in the last two years. However, the Board was technically without the legal authority to force mediation. O.C.G.A. section 34-9-100, relating to the Board's powers, has been modified to empower the Board to force mediation under the supervision and guidance of the Board.⁴³

G. Renewing the Admissibility of Medical Records

One of the features of the Workers' Compensation Act that avoided undue expense and burden was the hearsay exception for medical reports embodied in O.C.G.A. section 34-9-102(e)(2).⁴⁴ This exemption saved a substantial amount of time and money by avoiding the necessity of either deposing medical practitioners or subpoenaing them to the hearing. While this provision had been in existence for two decades, the court of appeals drew into question whether anything other than actual signed office notes would be...