Claimant prevailed on his Petition seeking acknowledgement of a back injury and payment of approximately $2,000.00 in unpaid medical expenses. The Industrial Accident Board awarded a fee which it computed as “the lesser of $9,400.00 or thirty percent of the value of the award.” Employer filed a Motion for reduction of the fee, as claimant’s attorney refused to accept any less than the $9,400.00 maximum figure. The Board agreed with the Employer and reduced the fee to approximately $5,400.00.
Claimant appealed the Board Decision, arguing that the Board failed to consider the appropriate Cox factors to support the amount of its award, and further asserting that the $9,400.00 fee was justified by various medical bills not at issue regarding the Petition, which were paid by the Employer months before the Petition was even filed.
The Superior Court rejected the appeal. The Court found that claimant’s attorney was precluded on appeal from arguing that the Cox factors were not considered, because in briefing at the Board level, claimant’s attorney admitted that this case law was considered, and could not change his position on appeal to fit a new argument. The Court disagreed with claimant’s argument concerning bill payment, holding that only benefits which are actually at issue at the time of the Hearing may be the basis for an attorney fee – medical bills paid well in advance of the filing of the Petition were clearly not at issue.
Anthony M. Frabizzio and Gregory P. Skolnik, Attorneys for the Employer
LaRue v. Evraz Claymont Steel, C.A. No. N15A-07-003 PRW (Del. Super. Ct. Feb. 10, 2016)
LITIGATION CASE LAW UPDATE
Delaware Supreme Court Clarifies When Bad Faith Failure-to-Settle Claims Accrue in the Context of Excess Judgments
On March 4th, 2016, a three justice panel comprised of Chief Justice Strine, Justices Vaughn and Seitz, issued an Opinion finding that in the context of bad faith failure-to-settle claims against the insurer, the cause of action accrues after the excess verdict is awarded by the jury. See Connelly v. State Farm Mutual Auto Insurance Company, Del. No. 426, 2016.
This court case arose out of a 10/12/07 motor vehicle accident when Ronald Brown rear-ended Christina Connolly’s car. Brown had an insurance policy with State Farm that provided auto liability coverage of $100,000.00 per person and $300,000.00 per occurrence. State Farm rejected Connolly’s offer of settlement and proceeded to take the matter to trial in the Superior Court. The jury awarded Connolly $224,271.41. Brown and Connelly filed 4 post-trial Motions and in a March 30th, 2012 Opinion the Superior Court denied Brown’s Motions and ordered judgment for Connolly for the jury award, pre-judgment interest of $92,958.96, costs of $5,435.28, and post-judgment interest of $10,580.64 for a total of $330,246.29 owed. State Farm paid Connolly $151,601.93 of the total owed. This left a remaining balance of $181,644.36 on the award. No appeal was taken.
Subsequently, Brown assigned his rights to pursue legal actions against State Farm to Connolly, who brought a claim against State Farm for bad faith refusal to settle. In response, State Farm moved to dismiss Connolly’s Complaint, contending it was barred by the three year statute of limitations under 10 Del. C. §8106. State Farm put forth that the statute of limitation had begun to run either on May 10, 2011, when Connolly made a settlement offer or alternatively on June 9, 2011, when the offer expired. On July 22, 2015 the Superior Court granted State Farm’s Motion to Dismiss Connolly’s claims.
On Appeal, the Delaware Supreme Court rule reversed the Superior Court’s findings that Connolly’s bad faith failure to settle claim was time barred under the three year statute of limitations, and instructed that this type of claim accrues after the excess judgment becomes final and binding.
The Delaware Supreme Court found it persuasive that many other jurisdictions have adopted this position. Chief Justice Strine noted in the Opinion that adopting this approach will conserve litigant and judicial resources. The Chief Justice also explained that this approach to the statute of limitations should align the interests of the insurer and its insured as they defend the third party claim without having to worry about a stayed breach of contract/bad faith claim, thereby avoiding a potential conflict of interest.
Moving forward, this case will be instructive to insurers during the negotiation process where the possibility of an excess judgment exists.
For more information on this decision or with other legal questions, please contact Kristen S. Swift or attorneys in our Liability Department at 302-573-4800302-573-4800.
EMPLOYMENT LAW UPDATE
Job Rejection Due to Obesity, Future Health Risks Not Unlawful; No ADA ‘Impairment’
For obesity-even morbid obesity-to be considered a physical impairment under post-ADAAA law, it must result from an underlying physiological disorder or condition, the Eighth Circuit ruled in refusing to revive an employee’s claim he was unlawfully denied a machinist job based on the employer’s determination that he posed significant health and safety risks due to his high Body Mass Index. His claim that he was “perceived” as disabled also failed since the ADA does not prohibit discrimination based on a perception that a physical characteristic (as opposed to a physical impairment) may eventually lead to a physical impairment. Thus, the court affirmed dismissal on summary judgment against his ADA and state-law claims (Morriss v. BNSF Railway Co., April 5, 2016, Wollman, R.).
In May 2011, BNSF Railway Co. extended a conditional job offer to the employee for the safety-sensitive position of machinist. After he underwent two physical exams and provided medical documentation, the company’s medical department determined that he was not qualified “due to significant health and safety risks associated with Class 3 obesity (Body Mass Index of 40 or greater).” As a result, BNSF withdrew his job offer.
He sued, asserting that he suffered unlawful discrimination based on his actual and perceived disability of obesity. Granting summary judgment to BNSF, the district court found he could not show he was regarded as suffering an actual disability since he failed to show his obesity was a physical impairment, i.e., a physiological disorder or condition that affected one or more major body systems. He was also not unlawfully “perceived” as disabled since BNSF only acted on its assessment of his predisposition to develop an illness or disease in the future, which is not included in the ADA’s definition of physical impairment (and thus disability).
In determining whether the employee could show that his obesity was regarded as an actual or perceived impairment the Eighth Circuit followed the district court’s lead and looked to the EEOC’s regulations, which clearly define the term to mean “[a]ny physiological disorder or condition . . . affecting one or more body systems . . .” The appeals court squarely rejected the employee’s reading of the language contained in the EEOC’s interpretive guidance referring to weight that is within the “normal” range as not being an impairment. Rather, “even weight outside the normal range-no matter how far outside that range-must be the result of an underlying physiological disorder to qualify as a physical impairment under the ADA.”
Noting that both the Sixth and Second Circuits (and several lower courts) have reached the same result, the court rejected the employee’s assertion that those cases were inapposite since they were decided prior to the enactment of the ADAAA. Notably, in enacting the ADAAA, Congress did not express any disagreement with judicial interpretations of the term “physical impairment” while expressly stating its intent to abrogate the Supreme Court’s interpretation of “substantially limits a major life activity.” Similarly, although Congress instructed the EEOC to revise its definitions of “substantially limits” and “major life activity” it gave no instructions regarding the definition of physical impairment.
The court also rejected his contention that his obesity was in and of itself a physical impairment since it was labeled “severe,” “morbid,” or “Class III” obesity. This contention garnered no support from the EEOC regulations, which state that weight is merely a physical characteristic-not a physical impairment-unless it is both outside the normal range and the result of an underlying physiological disorder. To the extent the EEOC Compliance Manual states that “severe obesity,” namely, “body weight more than 100% over the norm,” is an impairment, it contradicted the ADA’s plain language as well as the EEOC’s own regulations and interpretive guidance, which all define “physical impairment” to require an underlying physiological disorder or condition. Moreover, even if “body weight more than 100% over the norm” did qualify as a physical impairment without an underlying physiological disorder or condition, the employee did not weigh enough to meet this definition.
He also failed to revive his claim that BNSF unlawfully perceived him has having a physical impairment since it considered his obesity to present an unacceptably high risk that he would develop certain medical conditions in the future. While the ADA prohibits discrimination on the basis of a presently existing “physical impairment” it does not prohibit an employer from acting on its assessment that there is an unacceptable risk of a future physical impairment.
Here, the questionnaire and treatment records the employee and his doctor provided to BNSF notified the company that he was not suffering from any physical impairment. Moreover, while his physical exams revealed that his BMI exceeded BNSF’s internal limits for safety-sensitive positions, they did not reveal that he had a physical impairment. Indeed, it was undisputed he was denied employment because BNSF believed by having a BMI of 40, he would or could develop health risks in the future. Accordingly, the district court properly rejected his argument that BNSF perceived him as having a physical impairment.
Johnson, Marjorie, J.D. “Job Rejection Due to Obesity, Future Health Risks Not Unlawful; No ADA ‘Impairment’.” Employment Law Daily. Wolters Kluwer Legal & Regulatory US, 7 Apr. 2016. Web. 11 Apr. 2016.
Heckler & Frabizzio’s welcomes Jessica Whaley
We are pleased to welcome new addition Jessica Whaley to Heckler and Frabizzio! She will be joining our firm as a law clerk pending her anticipated successful completion of the July Bar exam, after which time she will be named an Associate of the Firm. Jessica will graduate from Widener University School of Law in May and prepare for the July exam. She has a degree from Roanoke College in Political Science where she made the Dean’s List all four years of college and graduated Magna Cum Lauda.
Workers’ Compensation Seminar
On Wednesday, May 4, 2016 from 8:30 AM – 4:30 PM, attorneys Maria Paris Newill and John J. Ellis will be speaking at the seminar on Workers’ Compensation. This section of the Delaware State Bar Association will be sponsoring 6.5 hours of CLE credit, including 1.5 hours of Enhanced Ethics for Delaware and Pennsylvania attorneys. This will take place in New Castle County at the Christina Ballroom, Chase Center on the Riverfront at 815 Justison St., Wilmington, DE 19801. Topics include: Cultural and Socioeconomic Issues in Client Counseling, Interplay Between Social Security Disability Insurance and Workers’ Compensation, Case Law and Utilization Review Roundup, Creativity in Commutations, The Self-Limiting Injury, Ethics of Disclosure, Causation and the Unusual Diagnosis, etc. Lunch will be included!