“Have indemnity benefits been paid?” Often this is the first and only question people ask when evaluating whether a claim is compensable. There appears to be a misconception that compensable claims are established only by the voluntary commencement of indemnity benefits.
“Have indemnity benefits been paid?” Often this is the first and only question people ask when evaluating whether a claim is compensable. There appears to be a misconception that compensable claims are established only by the voluntary commencement of indemnity benefits. However, a workers’ compensation claim in Georgia can be deemed compensable by one of two ways: voluntary payment of indemnity benefits or by adjudication (i.e., award). How a claim becomes compensable is often a source of great confusion and is particularly misunderstood in claims involving the issue of a change in condition versus new accident. Many believe that the sole factor distinguishing a change in condition from a new accident claim is whether indemnity benefits have been paid. Some employers, insurers, and even lawyers, believe that the two year change in condition statute embodied in O.C.G.A. § 34-9-104(b) only applies if income benefits have been paid and that medical only claims, where the employer/insurer only provide medical benefits, cannot subsequently result in a change in condition since the original condition has not been accepted and established by the payment of income benefits.
However, Georgia statutory law mandates and case law seems to suggest that the change in condition statute applies not only to cases deemed compensable by voluntary commencement of indemnity benefits, but also those cases established as compensable by an award. The change in condition statute provides that “any party may apply under this Code section for another decision because the change in condition has ended, decreased, increased, or authorizes recovery of income benefits awarded or ordered in the prior final decision”… O.C.G.A. § 34-9-104(b). Thus, the change in condition statute plainly indicates that it goes beyond the scope of voluntary payment of indemnity without an award, but also applies to those cases deemed compensable by an award.
To clarify the frequently misunderstood and debated topic of what compensable means in a change in condition claim, the Georgia Court of Appeals issued a recent decision that addresses the issue of compensability established by award in a change in condition versus new accident claim. In Footstar, Inc. v. Stevens, 275 Ga. App. 329, 620 S.E.2d. 588 (2005), the Claimant was the manager of a Kmart store shoe department, which was owned and operated by Footstar. The Claimant alleged that she was injured on November 8, 1999, while putting merchandise into an overhead bin, when several cases fell, hitting her head, neck, and shoulder. Id. at 330. At the time of her injury, Travelers Insurance Company (Travelers) provided workers’ compensation coverage to Footstar and accepted the claim as “medical-only.” Id. The Claimant continued working for Footstar even after their insurance carrier changed from Travelers to Liberty Mutual Insurance Company (Liberty Mutual) on January 1, 2001. Id. at 331. Since the insurance carrier changed, Travelers requested a hearing, which took place in October, 2001 to determine which carrier was responsible for payment of the Claimant’s continued medical treatment. In his December, 2001 award, the Administrative Law Judge found Travelers liable for the Claimant’s continued medical treatment on the following grounds: the Claimant sustained a “compensable injury” on November 8, 1999, she was not disabled since she continued to work for Footstar, and she had not sustained a new injury or had a new accident during Liberty Mutual’s coverage. Id.
Finally, the Claimant ceased working for Footstar on January 5, 2002 and subsequently requested a hearing seeking indemnity benefits and to determine which insurance carrier, Travelers or Liberty Mutual, was liable for payment of such benefits. The Administrative Law Judge ruled after a second hearing in October, 2003, that there had not been a change in the Claimant’s condition since Travelers never paid indemnity benefits. Consequently, since a change in condition had not been established, the Administrative Law Judge found Liberty Mutual liable based on a January 5, 2002 fictional date of accident, the date the Claimant was forced to stop working for the Employer due to her injuries. Id.
Liberty Mutual appealed to the Appellate Division, who reversed the Administrative Law Judge’s 2003 decision in part. The Board adopted all findings of fact and conclusions of law, except for the factual finding that a new injury had occurred on January 5, 2002 and the holding that the change in condition statute did not apply to “medical-only” claims. Id. Referencing the Administrative Law Judge’s December, 2001 award, the Board found that the change in condition statute (O.C.G.A. § 34-9-104(b)) did apply to “medical-only” claims if a compensable injury had been established by award. Id. Therefore, the Board determined that Travelers was liable for payment of the Claimant’s indemnity and medical benefits, since it was the insurance carrier at the time of the Claimant’s “compensable injury.” Id. Travelers appealed to the Superior Court on the grounds that the Administrative Law Judge’s December, 2001 decision awarded only medical benefits to the Claimant and a change in condition could not have occurred since it had never paid indemnity benefits. The Superior Court affirmed the Full Board’s decision, and Travelers then filed their appeal with the Georgia Court of Appeals, still contending that the change in condition statute did not apply to cases where indemnity benefits had never been paid. Travelers further argued that since there had not been a change in condition established, the Claimant had a “new accident” on January 5, 2002 and therefore, Liberty Mutual was the carrier liable for any indemnity or ongoing medical benefits. Id.
The issue before the Georgia Court of Appeals was whether the Claimant’s injury was compensable as a change in condition or as a new injury. Despite Travelers’ carefully crafted arguments that the prior award granted only medical benefits to the Claimant and that O.C.G.A. § 34-9-104(b) applies only to prior awards of income benefits, the Court held that regardless of whether Travelers paid indemnity benefits to the Claimant, the legal effect of the Administrative Law Judge’s December, 2001 award establishing the Claimant’s November 8, 1999 injury as compensable mandated finding Travelers liable for payment of indemnity and medical benefits. Id. at 334. The Court reasoned that the statutory definition of “change in condition” makes no reference to what type of compensation must have been awarded, only that the “wage-earning capacity, physical condition, or status of the employee . . . was last established by award or otherwise.” O.C.G.A. § 34-9-104(a)(1). Id. As a practical matter, the Board, Superior Court, and the Court of Appeals, all properly ruled that the prior December, 2001 award in Footstar established a compensable injury, which had the same legal effect as if Travelers had paid indemnity benefits. Accordingly, since there had been an award of compensability, even though the prior decision awarded medical benefits only, the change in condition statute still applied to the medical-only claim to determine if the Claimant had suffered a change in condition or a new accident. Although the central issue in Footstar involved the issue of change in condition versus new accident, the case reinforces the definition of “compensable” in Georgia. Change in condition versus new accident claims are very fact specific and hotly contested, and it is critical to understand the difference between them. As a prerequisite for a change in condition, there must be a compensable injury established by an adjudication and/or award or the voluntary payment of indemnity benefits. The next time a change in condition versus new accident claim arises, your question should be two-fold: have indemnity benefits been paid or has compensability been established by an award?