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Trampling The "Change In Condition" Statute---The Supreme Court And Footstar

November 03, 2006 BY J.C. Roper

Before the Footstar case, relative to a “change in condition”, in the absence of an award and payment of income benefits, a “change in condition” could not result from a “medical only” claim. Without payment of income benefits, as Administrative Law Judge Stenger reasoned at the trial level, the subsequent disability date must then constitute a “fictional new injury.” Footstar, Inc., et. al. , Inc. v. Stevens, 620 S.E. 2d 288,275 Ga.App. 329 (2005). On writ of certiorari, the Supreme Court addressed whether the statute governing change in condition cases is applicable only to claims wherein an “award” of benefits has been established, meaning an award of income benefits. The Supreme Court’s advance was released November 20, 2006. Footstar et. al v. Liberty Mutual Insurance Company et. al., S06G0125.

The facts of Footstar are not unique wherein a workers’ compensation insurer disputes coverage of injury that did not arise on or after its coverage began, controverting the claim based upon the fact that the injury occurred when a prior carrier was on the risk. This claim involved the classic fight between competing insurance carriers to determine which carrier was responsible for income benefits where no prior income benefits had been paid pursuant to an “award” of benefits or otherwise by the carrier on the risk when the accident occurred. Specifically, the dispute arose because the initial carrier, after having come off the risk, paid only medical benefits, establishing the injury as a “medical only” claim, and the employee was not disabled from work while the initial carrier was on the risk.

The claimant was injured in November of 1999, and she continued working as a manager in the shoe department of a K-Mart store, although encumbered by the injury. Travelers, (carrier number 1) accepted the claim as “medical only”, and the claimant continued working in order to avoid financial hardship associated with loss of income or a reduced weekly wage as a consequence of the work injury. Notably, she continued working her normal duty job through 2000, and the authorized treating physician generated a regular duty work release on the request of the employee, because she could not afford to be out of work.

On January 1, 2001, Liberty Mutual (carrier number 2) came on the risk as the employer’s workers’ compensation carrier. Seven months later, Travelers sought a determination of which insurance carrier was obligated for continuing medical treatment. The State Board found Travelers to be responsible for continuing medical treatment. The ALJ’s award did not address income benefits.

The claimant continued working normal duty, and her condition did not became disabling until January 5, 2002. A hearing was requested in October 2002 by the employee to determine her entitlement to income benefits and to determine which insurance carrier was responsible for income benefits.

The ALJ adopted his prior December 2001 Award finding the two year statute of limitation relative to a change in condition did not apply, because the employee was never paid income benefits by Travelers, and that since the injury could not have resulted from a change in condition (income benefits were not paid by Travelers), the disability date had to be a new injury (“fictional new accident”). This finding meant that Liberty Mutual (carrier number 2) was now responsible for any benefits due the employee.

Travelers appealed the award of income benefits, and the Appellate Division affirmed in part and reversed in part, instead finding that the “change in condition” statute did apply to medical only claims, and also reversed the finding that a new accident had occurred on the employee’s date of disability (January 5, 2002) when she stopped working. This reversal meant that now Travelers was responsible for the injury and income benefits. Travelers appealed the State Board’s decision to Superior Court, which affirmed the State Board. The Court of Appeals affirmed the Superior Court, and a writ of certiorari was granted to the Supreme Court to decide whether the statute applicable to a change in condition is limited to claims in which there has been an “award” of benefits.

Justice Robert Benham, writing for the majority, answered the question reasoning that the two year statute of limitation in O.C.G.A. §34-9-104 (b) does not exclude claims for a change in condition wherein the claim was initially accepted as “medical only”, because the determination of a change of condition is controlled by subsection (a)(1), not subsection (b). Subsection (a)(1) of the “change in condition statute” makes no mention of income benefits, and the 1999 ALJ Award of Judge Stenger, which established only compensability for medical benefits, satisfied the definition of a “change in condition” pursuant to subsection (a)(1). Therefore, the employee had met her burden showing she experienced a change in her wage earning capacity or physical condition for the worse, connected to the November 1999 injury. The change in the employee’s condition occurred after the 2001 award of medical benefits only.

The Supreme Court has turned the “change in condition” statute on its head. After the Footstardecision, no longer is an award of income benefits a condition precedent for a change in condition. An award determining compensability, even if the determination only addresses medical benefits, is sufficient to sustain a subsequent claim for a change in condition.

As the Supreme Court has interpreted application of O.C.G.A. §34-9-104(b), the two year statute of limitation found in subsection (b) is applicable only to claims where income benefits have been paid by award.“Medical only” claims are not subject to a statute of limitation where only an award of medical benefits have been issued, and insurance carrier number one could be forever on the risk for income benefits. The employee’s entitlement to income benefits is triggered on the date of disability, but there can be no new accident date that would expose carrier number two to payment of indemnity benefits so long as the disability relates back to the underlying medical only injury.

The Supreme Court trampled on the “change in condition” statute, and the “fictional new date of accident” theory in these sort of competing insurance carrier claims is now just that--fiction.

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