Twitter LinkedIn Share this page Facebook RSS

Blogs

Employment & Labor Law Blog Legal updates, news, and commentary from the attorneys of Baker Sterchi Cowden & Rice LLC

Hegger v. Valley Farm Dairy Co. – A Retroactive Election?

July 1, 2019 | John Kellogg

Effective 2014, the Missouri legislature amended certain provisions of the Workers Compensation Act, Mo.Rev.Stat. 287.010 et seq. A key goal was to make the Workers Compensation Act the exclusive remedy for employees who suffered occupational diseases like asbestos-caused mesothelioma. In Hegger v. Valley Farm Dairy Co. decision, 2019 Mo. App. LEXIS 816, 2019 WL 2181663 (Mo. App. May 21, 2019), the Missouri Court of Appeals addressed the application of the Act’s new occupational disease provisions in the situation where the employer went defunct before the enactment of the amended statute.

Facts

The facts of Hegger are straightforward:  Vincent Hegger worked for Valley Farm Dairy Company maintaining industrial equipment from 1968 to 1984.  Over this time, Mr. Hegger had continued exposure to asbestos fibers in the equipment he maintained.   Amerisure Insurance Company provided Valley Farm workers compensation coverage from 1983 to 1984 while Travelers Indemnity Company provided coverage from 1984 to 1985.  Valley Farm later went out of business, in 1998.  

In 2014 Hegger was diagnosed with mesothelioma caused by asbestos exposure.   In March 2014, Mr. Hegger filed for workers compensation benefits.   Specifically at issue was whether Hegger was entitled to the enhanced workers compensation benefits for mesothelioma provided for in the recently enacted Mo.Rev.Stat. 287.200.4, even though his employer Valley Farm went defunct long before the statutory amendment.   The administrative law judge and subsequently the Labor and Industrial Relations Commission ruled that because Valley Farm went defunct well before the 287.200.4 came into effect, Hegger was not entitled to enhanced workers compensation benefits. The Court of Appeals reversed.

The Statute

Section 287.200.4 of the Workers Compensation Act provides in relevant part:

For all claims filed on or after January 1, 2014, for occupational diseases due to toxic exposure which result in a permanent total disability, or death, benefits in this chapter shall be provided as follows:

(2) For occupational disease due to toxic exposure, but not including mesothelioma, an amount equal to two hundred percent of the state's average weekly wage as of the date of diagnosis for one hundred weeks paid by the employer; and

 (3)  In cases where occupational diseases due to toxic exposure are diagnosed to be mesothelioma:

(a)  For employers that have elected to accept mesothelioma liability under this subsection, an additional amount of three hundred percent of the state’s average weekly wage for two hundred twelve weeks shall be paid by the employer or group of employers such employer is a member of.  Employers that elect to accept mesothelioma liability under this subsection may do so by either insuring their liability, by qualifying as a self-insurer, or by becoming a member of a group insurance pool.  A group of employers may enter into an agreement to pool their liabilities under this subsection.  If such group is joined, individual members shall not be required to qualify as individual self-insurers.  Such group shall comply with section 287.223.  In order for an employer to make such an election, the employer shall provide the department with notice of such an election in a manner established by the department.  The provisions of this paragraph shall expire on December 31, 2038; or

(b)  For employers who reject mesothelioma under this subsection, then the exclusive remedy provisions under section 287.120 shall not apply to such liability.  The provisions of this paragraph shall expire on December 31, 2038 . . .

(Emphasis added.). The trade-off for employers is clear.  Elect to provide enhanced workers compensation benefits and enjoy the exclusivity protections of the Act; versus potentially being exposed to civil lawsuits for your employees’ asbestos-related occupational diseases.

Defunct employers can elect to provide enhanced workers compensation benefits

In holding that Valley Farm’s insurers were liable for enhanced workers compensation benefits, the Court of Appeals focused on the “elect to accept” language in the statute, and the three aforementioned ways an employer can accept the enhanced mesothelioma benefits (and thus become immune from a civil action for personal injuries based thereon):  (1) "insuring their liability," (2) qualifyingas a self-insurer, or (3) becoming a member of a group insurance pool.   The Labor and Industrial Relations Commission held that this election required an affirmative act, possibly entailing the purchase of new insurance policies providing for the enhanced benefits.

The Court of Appeals disagreed, holding that the plain language of 287.200.4 does not require the employer to purchase a new policy and does not state when a policy covering these enhanced benefits must be purchased.   Rather, the court observed that because the workers compensation law required an employer to insure their entire liability under the workers compensation law, Valley Farms’ provision of workers compensation coverage back in 1984 retroactively satisfied the section 287.200.4 election requirements.  This is so even if the subject insurance policies did not provide for the enhanced benefits now contemplated by the statute.   The court reasoned that Missouri precedent had typically held that the insurer providing coverage at the time of last exposure (here 1984) was liable for workers compensation benefits, while the law in effect at the time of diagnosis (here 2014) governed the amount of the claim.  Given this precedent, the Court of Appeals had no problem holding Valley Farms’ insurers liable for enhanced benefits that were not contemplated in 1984. 

The Court of Appeals criticized the Labor and Industrial Relations Commission ruling, observing that the Commission’s requirement of an affirmative election would yield what it believed to be inconsistent results with regard to defunct employers or employers that had moved out of state.   As noted, defunct employers would always yield a rejection of enhanced workers compensation benefits for mesothelioma because they were not capable of making an affirmative election.

The court compared this result to the statute’s treatment of occupational diseases other than mesothelioma under section 287.200.4(2).  That section does not provide a similar election requirement for these other diseases.   The court reasoned that in the cases of defunct employers, mesothelioma sufferers may not be entitled to workers compensation benefits while the sufferers of other diseases would be.  The court found this potential disparate result untenable given the severity of mesothelioma compared to “other serious but less virulent occupational diseases due to toxic exposure.”

The Dissent

At the heart of the Court of Appeals’ majority opinion is the desire to protect sick employees who may be without civil recourse against a judgment-proof defunct employer.   But this appears to be a results-oriented decision that effectively removes any requirement that the employer make an affirmative election, despite express statutory language requiring the same.

In arguing that the Commission’s ruling was correct, the dissent observed that the majority was playing “temporal” games interpreting the phrase “by insuring” to include any past acts.   However, the phrase “elect to accept” connotes a present action.  By interpreting the statute to allow past acts to fulfill the present election requirement, the majority rewrote the statute.

The dissent also observed that the majority’s reading of the statute now allows one to make an election by simply relying on a past act or abstaining from a decision, both incompatible with the ordinary meaning of the phrase “elect to accept.”  The majority’s interpretation also presents a problem when viewed in the context of an employer that is still in business but that has failed to add enhanced benefits coverage to their workers compensation policy.  Per the majority analysis, that employer has still elected to adopt the enhanced benefits despite doing nothing.  Finally, the dissent noted that the majority’s reading would render 287.400.4(3)(b) meaningless, as an employer who previously had workers compensation insurance could not then reject the enhanced benefits available under (3)(a). 

While sympathizing with the majority’s concern that numerous employees could be without recourse against defunct employers who never made an election, the dissent noted that this was an issue that doubtlessly was analyzed and taken into account by the legislature.

Conclusion

Perhaps encouraged by the strong and well-reasoned Court of Appeals dissent, defendants are seeking transfer of the case to the Missouri Supreme Court.  The majority decision appears to take substantial liberties with the statutory language used by the legislature.  Under the majority's reasoning, the election contemplated by section 287.200.4 has two different meanings depending on whether the subject employer is still a going concern or defunct.   Regardless of the ultimate judicial outcome, the legislature may want to circle back and address the specific circumstances raised in Hegger

Coming Soon to Kansas City: Shorter Job Applications

June 6, 2019 | Teresa Hurla

The Kansas City, Missouri City Council has unanimously passed an ordinance banning private employers in the City from asking job applicants about their salary history.

Last year, KCMO passed a similar resolution banning the City from requesting salary history information from persons applying for city positions. Starting October 31, 2019, that ban will extend to all employers in Kansas City with six or more employees. The ordinance will ban employers from requesting salary history information, relying upon it, or discriminating against job applicants who do not provide it. “Salary history” includes “current or prior wages, benefits, or other compensation.” The ban applies to all conversations between employers and applicants, and includes public record searches. Violations will be punishable by a fine of as much as $500 or up to 180 days in jail.

Of course, the ordinance comes with exceptions. The ban does not apply to the following:

  • Applicants for internal transfer or promotion with their current employer;
  • An applicant’s voluntary and unprompted disclosure of salary history information;
  • Salary history inadvertently disclosed during an employer’s attempt to verify an applicant’s disclosure of non-salary related information or conduct a background check, so long as the information is not relied upon for purposes of determining the applicant’s compensation.
  • Employee positions for which salary, benefits, or other compensation are determined pursuant to procedures established by collective bargaining; and
  • Applicants who are rehired by an employer within five years of termination if the employer already possesses salary information from the applicant’s prior employment.

The explicit goal of the new ordinance is to help narrow the gender pay gap. While women nationwide earn roughly 80% of every dollar their male counterparts earn, women in Missouri and Kansas earn roughly 78% and 77%, respectively. In Kansas City, the gender pay gap is almost 22%, which is one of worst wage divides among major U.S. cities. 

The ordinance will undoubtedly benefit male applicants as well. Wage history has long been used by employers to set the compensation for new hires. However, requiring the disclosure of prior wages creates bias and can cause many applicants, both men and women, to feel stuck in their social class with a capped earning capacity. With the new ordinance, applicants’ wage history will no longer follow them into job interviews. Hiring will instead be about the job duties and the applicant’s skill set.

Kansas City is not the first to enact a salary history ban. In the last several years, many other states and municipalities have enacted similar bans, including California, Connecticut, Delaware, Hawaii, Massachusetts, Oregon, Vermont, New York City, Philadelphia, and San Francisco.

Related Services: Employment & Labor

Attorneys: Teresa Hurla

Supreme Court Holds Plaintiff's Failure to Include Allegations Later Sued Upon, in Her Charge of Discrimination, Is Not "Jurisdictional"

June 3, 2019 | David Eisenberg

We would have thought that every lawyer who took Employment Law 101 in law school learned that:

(1) A plaintiff who files a lawsuit alleging violation of a federal employment law statute like Title VII, or its state law counterpart, must exhaust administrative remedies by filing a charge of discrimination with the EEOC or the state equal employment agency;

(2) Failure to do so can lead to dismissal of the claim; and

(3) It is incumbent upon defense counsel to point out a Plaintiff’s failure to exhaust.

But perhaps the third point was not so obvious. On June 3, 2019, the U.S. Supreme Court in Fort Bend County v. Davis, affirmed a Fifth Circuit ruling, and held that where a Plaintiff alleged sexual harassment and retaliation in her EEOC charge, but did not properly include a claim for religious discrimination, the religious discrimination claim could still go forward, because the defendant has not raised her failure to include this in her charge as a defense, and rather waited until years into the litigation to first bring up the issue.

In a unanimous decision by Justice Ginsburg, the Court ruled that Title VII’s charge-filing precondition to suit is not a “jurisdictional” requirement that can be raised at any stage of a proceeding; rather, is it a procedural prescription that is mandatory and can lead to dismissal if timely raised, but subject to forfeiture if tardily asserted. In other words, it is a claim-processing rule that a plaintiff is required to follow, but whose breach must be properly asserted by a defendant.

Practice tip for defense counsel: Don’t be stupid. When a court case is filed, compare the charge of discrimination and the Complaint with the utmost care. If the Complaint alleges claims or conduct that were not within the scope of the charge, raise the defense that the plaintiff has failed to exhaust administrative remedies as to those claims.

Related Services: Employment & Labor

Attorneys: David Eisenberg

Subscribe
About Employment & Labor Law Blog

The BSCR Employment & Labor Law Blog examines topics and developments of interest to employers, Human Resources professionals, and others with an interest in recent legal developments concerning the workplace. This blog will focus on Missouri and Kansas law, and on major developments under federal law, and at the EEOC and NLRB.  Learn more about the editor, David M. Eisenberg, and our Employment & Labor  practice.

DISCLAIMER

The Employment & Labor Law Blog is made available by Baker Sterchi Cowden & Rice LLC for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. Your use of this blog site alone creates no attorney client relationship between you and the firm.

CONFIDENTIAL INFORMATION

Do not include confidential information in comments or other feedback or messages related to the Employment & Labor Law Blog, as these are neither confidential nor secure methods of communicating with attorneys. The Employment & Labor Law Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.