WORKERS’ COMPENSATION
FINAL EXAMINATION
SPRING SEMESTER, 2005
PROFESSOR LARRY J. PETERSON
AND PROFESSOR T. MICHAEL KILBURY
Note: This test consists of 80 points. The total points available for each question are identified. Your 3 semester quizzes represent an additional 20 points.
BACKGROUND:
Harris Heath (HH) is a personnel manager for “Make-‘em Molds,” a metal stamping company. The principal business of this firm is to manufacture metal rails, connectors and decking component parts used in portable boat dock components and in the assembly of pre-fabricated decks and raised patios.
Forty-five assembly workers, six supervisors/machine technicians, four shipping and receiving workers, ten clerical/support staff, four sales staff and six officers/executives (including Harris) are employed by “Make ‘em.” Harris’s job includes policy development and administration in the human resources/personnel arena, including recruitment/selection of workers and replacements (except officers or executives), hiring/firing decisions, payroll and benefit administration, vacation and leave policies, drug testing administrator and she serves as the company’s contact person for reported on-the-job injuries.
She has held this position for 5 years. She is not a college graduate, but does have a 2 year Associate of Arts certificate from “Local Business College” in personnel administration. She presently earns a salary of $41,600.00 annually, which according to her last performance review by “Make ‘em’s” owner and President, Jim Smith, was based on, “$20.00 per hour calculated over a standard work year of 2,080 hours or 52 weeks at $800.00 per week.”
Harris works 9-5, Monday-Friday per Mr. Smith’s scheduling instructions. Her work is to be performed on company property located at 111 Assembly Street. She travels only occasionally, mostly for training and education seminars for approximately 2-4 days per year. She receives 2 weeks per year vacation.
Until February of this year, Harris had no supervisor other than Mr. Smith. Smith, however, owns four other companies; two are engaged in related business operations. “Make ‘em Assembly” is a company which assembles a portion of “Make ‘em Molds” products into preassembled docks for sale and direct delivery to retail customers. “Make ‘em Remodels” is a construction company. Effective February 1, Smith hired a “Director of Human Resource Operations - Smith Companies.” This position centralized the human resource departments of all five Smith Companies. All Smith Companies’ personnel managers are directly subordinate to this position. After a 2 month recruitment period (during which all five personnel managers from the various Smith Companies applied for this job), Joe College was hired. College is a 23 year old, holding a Masters of Arts degree in industrial relations/payroll systems from Jobber University. College was assigned an office across the hall from Harris (and right next door to Smith) at the “Make ‘em Molds,” Assembly Street facility. College was paid $100,000 per year to start plus full benefits and given a 4 weeks per year vacation. College is aware that Harris was an applicant for the director position. He knows that there is some jealousy regarding his selection. However, he has advised Smith that Harris is doing a good job. He wants her to stay with the company. To promote his acceptance and ease the strain of his appointment to a $100,000.00 position, he brought rolls and coffee every Tuesday morning for the past 10 weeks. The administrative supervisors and clerical staff workers at “Make ‘em Molds” have enjoyed those treats. This has become an expectation by those at “Make ‘em Molds”. These treats were always available by the 9:00 a.m. Tuesday, clerical/supervisor coffee break.
Last Tuesday, College was running late. He was preparing for a 9:30 a.m. meeting with the construction foreman of “Make ‘em Remodelers” and the owners of a current remodeling project to discuss a construction schedule delay. At 8:50 a.m. he realized he would not have enough time to stop for rolls and coffee and make his meeting. His favorite coffee shop- “Ready Rolls” -is directly across the street from “Make ‘em Molds” office.
He telephoned Harris. He asked Harris if she would mind grabbing $20.00 out of the “Make ‘em Molds” office petty cash at the reception desk, run across the street and buy 3 dozen danish rolls and a gallon and a half of coffee. Harris agreed. Unknown to Harris, part of this purchase would be used at College’s 9:30 a.m. meeting.
She left immediately. She went directly across the street to “Ready Rolls,” made her purchase and was returning to “Make ‘em Molds” when she was struck by a pick up truck. She was thrown to the curb. She suffered a broken right shin bone (fibula), chest wall contusions, and a sore neck. She was taken by ambulance to the local hospital. According to the video camera at the intersection where the accident occurred, the time of the accident was 8:57 a.m. She was admitted at 9:00 a.m. according to hospital records. Her leg was set and place in a short cast. She was placed in a neck brace. Her chest wall contusions were evaluated but not treated. She was released and advised to “take the rest of the week off.” She was advised to return to her regular doctor on Friday to evaluate a return to work next week. Harris’s hospital bill totaled $2,700.00. The ambulance bill was $300.00. Harris did not work Tuesday, Wednesday, Thursday, or Friday.
On Friday, her doctor advised her that she could return to work on Monday, if her employer would allow her to work either sitting or standing; but she should work only one-half days (4 hours) for the next 2 weeks.
She advised Smith of these restrictions by telephone. Smith agreed but stated that, “if you are only working half-time, we can only pay half-pay, $400.00 per week.” Harris agreed. She worked the next 2 weeks at half-time and was paid $400.00 per week. She then was released by her doctor to full work at her regular duty. She ultimately returned to her doctor 4 weeks later when the cast was removed. The three visits to her doctor resulted in additional $600.00 in medical bills.
QUESTION NO. 1:
15pts.
Did Harris suffer a compensable injury under the Workers’ Compensation Act on Tuesday, May 3, 2005? Analyze all possible claims and defenses.
QUESTION NO. 2:
10pts.
If Harris’s claim proves compensable, what benefits will Harris be entitled to under the Workers’ Compensation Act based only upon the facts as are reported above?
ADDITIONAL FACTS:
The intersection video which identified the time of the accident also showed the vehicle which struck Harris. The vehicle was a pick-up. It bore the logo “Anchor All” and identified a business phone number, fax number, and e-mail address. At the time of the accident, the pick-up was driven by Jason Stable.
Jason Stable and his brother, Johnny, are the owners of “Anchor All.” The business is organized as a lawful partnership, registered as such with the state of Minnesota. “Anchor All” performs foundation and block work on small residential projects. The preceding day, “Anchor All” had been hired by Smith of “Make ‘em Molds” to finish fitting and foundation work on a project being built by “Make ‘em Remodelers.” “Remodelers” two foundation workers had walked off of the Westburn job site the previous Thursday, (i.e., April 28). The foundation project was approximately one-third complete. Smith had estimated that the project would take his two foundation workers 2 weeks to complete. Each had worked 2 days. Smith’s foundation workers were paid $18.00 per hour for a planned 40 hour work week.
Smith had used Anchor’s services in the past. He and Jason had reached an agreement over the phone yesterday, on May 2. Jason and one of the Anchor’s two foundation workers, Bruce Bing, were en-route to a meeting with College and Mr. and Mrs. Westburn to finalize and sign the foundation contract, review the work schedule, work deadlines, and pick up foundation blue prints when the collision with Harris occurred.
The contract drafted by Smith included the following items:
Work must be completed by May 13;
“Anchor All” will work 10 hours per day from Monday through Friday; 7:30 a.m.-6:00 p.m. with no work from 12:00 to 12:30 p.m. so that the Westburns can enjoy their lunch;
“Anchor All” will use “Make ‘em Remodelers” post hole drills, trenchers, and concrete mixers already on site. “Make ‘em Remodelers” will supply cement and sand as needed;
“Anchor All” will supply its own hand and cement finishing tools;
“Anchor All” will be paid $2,400.00 for this project calculated on 160 project hours at $15.00 per hour;
“Anchor All” will supply all insurance for its workers and work performed on this project.
Jason received very minor injuries in this accident. His truck swerved to avoid Harris. It struck a light pole. He cut his forehead on the steering wheel. At the scene, he asked College for the contract and he signed it. He was transported by police to the hospital for an alcohol and drug test, which proved negative.
At that time, Anchor maintained business offices in a local strip mall. Anchor had its own fax, telephone, and e-mail contact number or addresses. They advertised their services in the local yellow pages and neighborhood newspapers. They had two jobs under contract, the Westburn project, and three additional “hot prospects” at the time of the accident. Stable executed and complied with the contract terms and obtained insurance coverage through ACME Insurance. Jason, his brother, and their other workers completed the Westburn project on time.
Jason missed one day of work. He incurred a $170.00 hospital bill for stitches to his forehead. His passenger, Bing, was not as fortunate. Despite signs prominently posted within the pick-up that “employee’s and passengers must use seatbelts at all times,” Bing was not seat belted. He fractured his neck at the C4 level, he remains hospitalized. As of today, May 9, his hospital bills exceed $27,000.00. He was 43 years old at the time of the accident.
QUESTION NO. 3:
15pts.
Analyze the potential workers’ compensation claims of Jason and Bing. Are they entitled to workers’ compensation benefits? From whom? Discuss possible claims and defenses of these individuals and any potential liable entities.
ADDITIONAL FACTS:
Bing remained off of work and totally disabled by his doctor for the next 80 weeks. At that time, the doctor assigned maximum medical improvement to Bing and released him to light duty work with a 10 pound lifting restriction.
He had been earning $12.00 per hour while working for the partnership and always worked 40 hours per week. He tried to find work, but couldn’t. Two months after being released to light duty work, his brother let him deliver flyers for the brother’s business one time per week and Bing was paid $20.00 per week. Bing lived at home with his elderly parents and did not try to find anything else to do for the next 6 months.
QUESTION NO. 4:
8pts.
What benefits can Bing claim against ACME Insurance? Calculate those benefits and show your results. What defenses can the insurer raise to those claims?
ADDITIONAL FACTS:
During those 6 months the workers’ compensation insurer insisted that Bing’s qualified rehabilitation consultant (QRC) do vocational testing, develop a retraining plan, and verify exact restrictions from the doctor. The QRC received a narrative report from the doctor, which states:
The cervical spine was fractured in two places necessitating a fusion at the C4-5 and C5-6 intervetebral disc levels. The fractured posterior elements of the bony structures of these two vertebral bodies were surgically fused together. However, due to the severity of the fractures, a poor reduction occurred at the fusion site. Bing will have permanent restrictions of no lifting over 10 pounds and no job requiring movement of his neck up or down or from side to side.
The vocational testing showed that Bing had a learning disability and was illiterate. Nonetheless, retraining was suggested by the QRC. Bing enrolled in and started a 52 week course for eye glass lens polishing at the local technical school. The tuition was $3,400.00 and the tools cost $1,700.00. He lived 20 miles from the school and parking fees were included in the tuition. He completed the course. After graduation an intensive job search was undertaken. Bing fully cooperated in the job search. No job was found.
In the meantime, Bing had applied for, and received social security disability benefits. Those benefits started after he completed his retraining program. He started receiving $800.0 per month from the Social Security Administration. Bing notified the workers’ compensation insurer of these payments.
QUESTION NO. 5:
16pts.
What benefits are available to Bing? Calculate those benefits and explain when they start and how long they last.
ADDITIONAL FACTS:
Harris continues to have residual symptoms in her neck. While she was able to continue working she did not enjoy her regular recreational activities of bike riding or scrap booking. Holding her neck up or down while doing these activities aggravated the pain. In the mornings, she has stiffness. When she was treating, her doctor found loss of passive motion in the neck during his examinations. The x-rays had been normal.
She contacted an attorney to explore additional claims, benefits, and lawsuits.
QUESTION NO. 6:
16pts.
A. What claims can she bring and against whom?
B. Calculate those benefits and/or claims and explain what monetary benefits are available to her and from whom?
C. What other parties, if any, have claims as a result of Harris’s injuries and what are those claims?
D. Assuming that the responsible party or parties pays $25,000.00 to settle all of the claims of all of the parties, which you have noted in A., B., and C. above, how is that settlement allocated among Harris and the other entitled parties? Explain the allocation process and calculate, if appropriate, how the $25,000.00 is apportioned.