The time for an employer/insurer to investigate and determine compensability of a work injury starts ticking as soon as it is known that actual
The time for an employer/insurer to investigate and determine compensability of a work injury starts ticking as soon as it is known that actual disability resulted from the injury. See Board Rule 221. Further, an employer/insurer is not granted an exuberant amount of time to perform its investigation. A notice of controvert needs to be filed within twenty-one days of disability generally, and a voluntarily accepted claim cannot be controverted sixty days after indemnity benefits are first commenced, except in limited circumstances. Id. Technological advancements and social media allow an employer/insurer to learn about a claimant’s background with greater ease; however, without knowing exactly what to look for, and the often problematic and time consuming task of obtaining records from third parties, such as medical providers, it is inherently difficult to have all the information that may be relevant in determining whether to accept or controvert an accident.
One of the limited circumstances that an employer/insurer can controvert after the aforementioned sixty day deadline is when new evidence is discovered. In Georgia Power Co. v. Pinson, 167 Ga. App. 90 (1983), the Court of Appeals held that the standard for what constitutes newly discovered evidence is that:
“[t]he evidence sought to be introduced must not be evidence of a cumulative or merely impeaching character, but must be of a character as likely would have produced a different result had the evidence been procurable [when disability was accepted, and indemnity benefits were initiated]. It must be shown that the evidence was not known to the party at the time [indemnity benefits began], and that, by reasonable diligence, this new evidence could not have been secured.”
Thus, what an employer/insurer knows, and what it could have known through due diligence, are two of the main issues an Administrative Law Judge will examine when determining whether the information presented amounts to newly discovered evidence. The following three cases further illustrate the complexities of deciding what was known, and should have been known by an employer/insurer during those initial sixty days following commencement of indemnity benefits.
I. The Anderson Case – What is Known to the Employer, is Known to the Insurer.
In Anderson v. Araguel, Sanders, Carter & Swain, et al., 163 Ga. App. 610 (1982), the Claimant was hired by a law firm to perform various jobs around the office; however, he was also hired by one of the partners to assist with an apartment complex the Partner owned. The Claimant called the Partner from a payphone near the apartment complex to get instructions on how to collect late rent payments, when an out-of-control vehicle accidently hit the Claimant, and injured his left leg.
The accident was immediately reported to the law firm and its Insurer, and while the Insurer’s representative investigated the accident, indemnity benefits were also immediately commenced. However, 165-days later, the Insurer learned that the Claimant was actually working solely at the Partner’s bequest when the accident took place so it filed form WC-3 to controvert the accident as not arising out of and in the course of employment with the law firm. The Insurer argued that the Employee/Employer relationship was newly discovered evidence, and thus, controversion after sixty days was proper.
The Court of Appeals disagreed, and based its decision on the rule that “[t]he Insurer is the alter ego for the Employer and what the Employer knows, the Insurer knows as a matter of law.” Here, the Employer, particularly one of the partners that owned it, knew that the Claimant was performing a task outside the scope of employment with the law firm; therefore, the evidence could have been learned through reasonable diligence prior to expiration of the sixty day deadline. Thus, the Employer/Insurer remained liable for the claim, even though as a factual matter the Claimant was not working for the law firm at the time of the accident.
II. The Spiva Case – Misrepresentations by the Claimant and the Employer can Serve to Thwart the Alter-Ego Theory.
In Spiva v. Union County, et al., 172 Ga. App. 151 (1984), the Claimant was seriously injured when his tractor overturned on him as he was plowing a garden at his home. Nevertheless, the Employer completed form WC-1, First Report of Injury, and indicated that the injury arose out of and in the course of employment. Further, when the Insurer’s representative contacted the Claimant to investigate, he did not affirmatively disclose that the accident did not occur during work for the Employer. As a result, the Insurer had no basis to question the accident, and indemnity benefits were commenced.
Nearly two years passed before the Insurer learned that the Claimant was actually injured at home, and not while performing work for the Employer; thus it had to rely on the newly discovered evidence theory as a basis to controvert the claim. The Court of Appeals noted that under the alter-ego theory previously discussed, an insurer necessarily has the knowledge of an employer; however, the Court held that the maxim did not apply in this case as the Employer misled the Insurer “so that it could not ascertain the actual facts before the first payment was made.”
In addition, the Claimant’s failure to affirmatively advise the Insurer’s representative that the accident occurred outside of work “provided an adequate basis upon which to toll the time within which…[to] controvert [the] claim.” Thus, the Insurer was allowed to controvert the claim in its entirety, even though it had paid indemnity benefits for nearly two years, and the Employer knew the accident did not occur at work from the onset.
III. The Pittman Case – Supervisor and Co-Worker Misrepresentations may also Serve to Thwart the Alter-Ego Theory
In Carpet Transport, Inc., et al. v. Pittman, 187 Ga. App. 463 (1988), the Claimant injured his shoulder while at work. The Employer/Insurer accepted the accident as compensable, and indemnity benefits were initiated shortly thereafter. Several months later, it was discovered that the Claimant’s injury actually occurred as the result of “horseplay” with a co-worker, and thus, the claim should have been denied.
The Employer/Insurer sought to controvert the claim based on the newly discovered evidence theory. However, the Administrative Law Judge found this contention groundless as the Claimant’s supervisor knew the facts and circumstances surrounding the accident when it occurred; thus, the Employer/Insurer could have learned of the “horseplay” defense had it performed reasonable diligence.
The Court of Appeals disagreed with the Administrative Law Judge’s reasoning, and remanded the case for further findings consistent with its opinion. The Court again highlighted that the aforementioned alter-ego theory cannot hold when “the employer is [itself] misled into misleading the insurer, and the employer thereby effectively misdirects the insurer so that it” could not obtain facts needed to make an appropriate decision within sixty days.
The Court went on to explain that newly discovered evidence is somewhat different in workers’ compensation, in light of time restraints imposed by Board Rule 221. An Administrative Law Judge must balance “the prompt and voluntary initiation of” indemnity benefits to the Claimant, while on the other hand “weighing the availability…of an opportunity for the Employer/Insurer to base a notice to controvert upon evidence which the Employer/Insurer was unable to discover earlier as a result of” the Claimant’s own misrepresentation. In essence, the Court said the entire situation at issue must be taken into consideration, including the inherent difficulty for any employer/insurer to properly investigate an accident within a relatively short time period.
IV. Conclusion – Investigate Thoroughly, and as Early as Possible to Avoid Problems Later.
An employer/insurer is in a much better position to determine whether to accept or controvert a claim the more it investigates and learns about an alleged work accident. Time constraints imposed by Board Rule 221 mean an employer/insurer must act quickly, and even though technology allows greater ability to investigate within those constraints, an employer/insurer must necessarily rely on information provided by an employer, a claimant, and others with knowledge of the accident. The newly discovered evidence theory may allow a way out of a previously accepted claim; however, the alter-ego theory means an employer/insurer must thoroughly question everyone with knowledge, and be wary and alert of possible misrepresentations.