Indiana: Recent Decision Shows the General Strength of the Exclusivity Defense

Last week, at the 21st Annual National Workers’ Compensation and Disability Conference® & Expo, in Las Vegas, I was happy to be part of a panel discussion regarding the “Future of Exclusivity.” Among the questions that we discussed related to a perception, among some employers and practitioners, that the exclusive remedy defense is slowly–or not so slowly–fading away. Indeed, as we discussed last Wednesday afternoon, there has been some erosion in the exclusivity defense. About a dozen states, for example, allow plaintiffs to show something less than true intent when it comes to tort actions filed against employers alleging “intentional injury.” Others point to the limited success enjoyed by a few plaintiffs who have filed RICO actions against employers, physicians, and third-party administrators in the Eleventh Circuit [see Jackson v. Segwick Claims Mgmt. Servs., 2012 U.S. App. LEXIS 22557 (Nov. 2, 2012).

Successful or not, at the conference I argued that considering the many other changes that have been seen during the past 100 years of state workers’ compensation Acts, the exclusivity defense has been remarkably resilient. A case handed down by the Court of Appeals of Indiana while I was in Las Vegas [Amerisafe Risk Servs., Inc. v. Wadsack, 2012 Ind. App. LEXIS 560 (Nov. 9, 2012)] illustrates my point. There the appellate court held, on exclusivity grounds, that a state trial court erred when it refused to grant summary judgment to a workers’ compensation carrier and a case worker who had been sued by the surviving spouse of a woman whose death, claimed the plaintiff, was caused by the defendants’ “extreme and outrageous conduct” in handling a workers’ compensation claim involving not the woman herself, but rather the couple’s son.  

Background

Matthew Wadsack (“Matthew”) is the son of the late Hazel Wadsack (“Hazel”) and Ronald Wadsack (“Ronald”). Matthew was electrocuted and severely burned while working for a tree service firm when a tree limb came into contact with a power line. He was nineteen years old at the time. Matthew was hospitalized and induced into a coma for an extended period of time. Not long after he was hospitalized, Hazel and Ronald (the “Wadsacks”) were appointed as temporary guardians of Matthew.

Amerisafe was the worker’s compensation insurer for the tree service and Riggs was assigned to handle Matthew’s claim. In their complaint, the Wadsacks allege that Riggs “intentionally or recklessly undertook a course of extreme and outrageous conduct that was designed to deny Matthew of the worker’s compensation benefits he was entitled to … and deprive Matthew from receiving [necessary] medical care,” as well as to interfere with the Wadsacks’ obligations as guardians. The Wadsacks also claimed that Riggs’s actions caused them to suffer extreme emotional distress and that Hazel died as a result of that distress. Amerisafe moved to dismiss pursuant to Indiana Trial Rule 12(B)(1), alleging that the trial court had no subject matter jurisdiction. Following a hearing, the trial court denied the motion without explanation or issuing findings of fact. Amerisafe appealed.

Derivative Nature of the Parents’ Claim

The Wadsacks argued that the Worker’s Compensation Board did not have jurisdiction because their claims were not on behalf of Matthew, or based directly on his injuries, but instead are based on the handling of Matthew’s claims. The appellate court disagreed. The court observed that he exclusivity provision of the Worker’s Compensation Act excluded all other remedies. It specifically extended to personal representatives and next of kin. Ind. [Code § 22–3–2–6.2]. Moreover, the exclusivity provision included a bad faith provision granting the Board exclusive jurisdiction to determine whether an insurance carrier had acted in bad faith or had committed an independent tort in settling claims [Ind. Code § 22–3–4–12.1(a)]. The Board’s jurisdiction to hear claims of bad faith extended not only to the injured employee, indicated the court, but to his personal representatives and next of kin [see also Larson’s Workers’ Compensation Law, § 101.03].

Constitutionality

The Wadsacks argued that requiring them to have their claim heard by the Board would unconstitutionally deprive them of a remedy pursuant to the open courts provision of the Indiana Constitution. The appellate court disagreed. The Board’s decisions were subject to review by the Indiana Courts under essentially the same conditions as applied to ordinary civil actions.

The trial court did not have subject matter jurisdiction over the case, concluded the Court.

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