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Give Me Shelter: Clarifying Home Ownership Issues In Catastrophic Claims

March 01, 2011 BY

          The extent and manner of home modifications in catastrophic claims present many problems in terms of claims management, which can lead to confusion and protracted litigation.  In Southern Concrete vs. Spires(A10A1981), the Georgia Court of Appeals recently clarified this issue in an area of first impression for the court. Specifically, they determined whether a Claimant is entitled to complete ownership  (“fee simple”) of a wheelchair-accessible home built and paid for by the Employer/Insurer on land owned by the Claimant.  In other words, the court addressed whether the Claimant should receive full ownership of that home which a Claimant could pass to future generations upon his death or whether a Claimant was only entitled to ownership of such a home for the duration of the Claimant’s life (“life estate”).

            In Spires, the Claimant was severely injured while working as a welder in 1988.  Since that time, his claim has been regarded as compensable by the parties and deemed catastrophic in nature due to the Claimant’s paraplegia.

            At the time of his accident, the Claimant lived in a house on 25 acres that he owned with his wife. Following his injury, the Employer/Insurer modified his home to accommodate the Claimant’s physical limitations.  Due to several problems with the home over the ensuing years including a leaky roof, sewage overflow into the home’s septic field, and sewage contaminating the well water, the county declared the Claimant’s house uninhabitable and condemned the property.

            As a result, in early 2006 the family was forced to vacate the premises and moved to a hotel paid for by the Employer/Insurer while a permanent housing solution could be worked out between the parties.  The parties subsequently agreed the Employer/Insurer would build and pay for a wheelchair-accessible home for the Claimant. 

            The dispute focused on where the house should be built as well as the manner in which the proposed home should be titled (fee simple/full ownership to the Claimant or only a life estate interest to the Claimant).   The Employer/Insurer contended the Claimant should only receive a life estate interest as that was the extent of the obligation to the Claimant as  “reasonable and necessary rehabilitation benefit.”  As such, following the Claimant’s death, the Employer/Insurer would retain title the property.  In contrast, the Claimant requested full title to the home, which prompted the present litigation.

            At the trial level, the ALJ ordered the Employer/Insurer to title the wheelchair accessible home to the Claimant in fee simple.  On appeal by the Employer/Insurer, the Appellate Division found that the Employer was not obligated to build a home for the Claimant on his property and that providing the Claimant a life estate interest in a suitable home, on a location selected by the Employer/Insurer would satisfy the relevant obligations under O.C.G.A. § 34-9-200.1 and Board Rule 200.1.  The Board noted the Claimant had the option of having the wheelchair-accessible home built by the Employer/Insurer at its expense on a) a portion of the Claimant’s property after the Claimant sold such property to Employer/Insurer; or, b) on land purchased by the Employer/Insurer elsewhere.  In either case, however, the Claimant was to receive only a life estate interest in the house and property.   Full title to the newly constructed home would remain with the Employer/Insurer.

            The superior court reversed the decision of the Appellate Division and adopted the findings of the ALJ. The Employer/Insurer appealed that decision to the court of appeals.

            The court of appeals reversed the decision of the superior court and reinstated the Board’s ruling that the Claimant was only entitled to a life estate interest in the wheelchair-accessible home to be built by the Employer/Insurer.   In so ruling, the court noted that O.C.G.A. § 34-9-200.1(a) instructs an Employer/Insurer to furnish the employee with “reasonable and necessary rehabilitation services” in the event of a catastrophic injury.   The goal of such rehabilitation services, as outlined in Board Rule 200.1(a)(5)(ii) and reiterated by the court, is to return a catastrophically injured Claimant to the least restrictive lifestyle possible.  However, the court of appeals held the workers’ compensation act does not explicitly require that such housing be provided to the Claimant in fee simple.  Rather, the ultimate aim of rehabilitation services is to restore the injured worker to the maximum usefulness that he or she can attain under his or her physical impairment.  While providing the Claimant with housing comes within the scope of this goal, granting full title and ownership of a house to a Claimant has no role in the goal of rehabilitation benefits.           

            The court of appeals cited to specific evidence of the rehabilitation provider in ruling for the Employer/Insurer.  The rehabilitation supplier testified at the hearing that granting the Claimant title to the new home was not reasonable and necessary for the Claimant to return to the least restrictive lifestyle possible as required by Board Rule 200.1 (a)(5)(ii).   The court noted such testimony was consistent with the nexus required between an injury and authority under law to provide rehabilitation services to the injured employee for a Claimant’s life rather than in perpetuity. 

            The Claimant attempted to argue that this home construction qualified as a medical device under O.C.G.A. § 34-9-200(a) which would foreclose any financial interest the Employer/Insurer may have.  In discounting that argument, the court of appeals found the home was prescribed as a rehabilitation service. Moreover, the Claimant’s argument would require the Employer to support a medical prescription beyond the Claimant’s life, which is contrary to law and intent of the workers’ compensation code.

            The Claimant also attempted to argue that the Board lacked authority to award a life estate to the Employer/Insurer as such issues involving land title disputes are reserved for the jurisdiction of the superior court alone.  However, the court correctly pointed out that there was no dispute as to who held title to the land in question.  In fact, the Board requires that issues of ownership be resolved before any construction to begin.  The court reiterated the Board has authority to determine what are reasonable and necessary rehabilitative services, which was at issue in the present case rather than specific question of ownership of the land in question.    

            Therefore,  the court of appeals held that granting a life estate interest in a suitable home on a location selected by the Employer/Insurer would satisfy the Employer/Insurer’s responsibilities under O.C.G.A. § 34-9-200.1 and Board Rule 200.1.            This is a very favorable ruling for the Employer/Insurer and one that provides guidance in this area of catastrophic litigation for all parties.   Specifically, the case helps to clarify what obligations an Employer/Insurer has in providing “reasonable and necessary rehabilitation benefits.”   Moreover, when faced with home construction/modification issues in catastrophic claims, the Employer/Insurer has definite legal authority to stand on in keeping a reversionary interest in home constructions made for the Claimant. Overall, this is an equitable and correct decision in terms of detailing the type of rehabilitation benefits available to a Claimant and one that should be cited in such cases.

The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved. 

Editorial Board:

H. Michael Bagley