New Hampshire: Mental Injury Following Business Failure Is Not Compensable Injury

As is the case in a majority of states, mental injuries, including major depression caused by work-related stress, may qualify as compensable injuries in New Hampshire [N.H. Rev. Stat. Ann § 281-A:2, XI (2010)]. However, the New Hampshire statute does not permit compensation for any “mental injury” caused by “any disciplinary action, work evaluation, job transfer, layoff, demotion, termination, or any similar action, taken in good faith by an employer” [emphasis added]. In Appeal of Letellier, 2011 N.H. LEXIS 188 (Dec. 15, 2011), the Supreme Court of New Hampshire, in a split decision, recently held that the failure of a business employing the workers’ compensation claimant was such a “similar action taken in good faith by the employer.” Accordingly, the court reversed an award by the state Compensation Appeals Board (“CAB”) that had granted reimbursement for medical bills and expenses. 

Claimant was a co-founder of the business, serving as manager of plant operations. In March 2007, a fire destroyed the manufacturing plant and production was temporarily relocated while the facility was rebuilt. The final cost of rebuilding far exceeded projections and the business floundered. It closed in October 2009 and claimant filed for personal and business bankruptcy. Claimant developed hypertension and major depression, and several doctors attributed his ailments to the business failure. His workers’ compensation claim was denied by the carrier and also by a hearing officer. The CAB overturned the hearing officer’s decision, finding that Claimant had established both medical and legal causation, and that stress and depression qualified as compensable occupational injuries within the meaning of the statute.

The court indicated that layoffs, demotions, terminations, or similar actions may be precipitated by a number of factors, including poor performance, insubordination, or economic conditions and that the Legislature saw fit to exclude such circumstances from the definition of the term “injury” because they are “normal and expected conditions of employment life.” While a business failure was not among the specifically enumerated exclusions, the Legislature made clear that the list was not exclusive by including the words “any similar action.” According to the high court, business failure was indistinguishable from the specifically enumerated exclusions; the plain meaning of the phrase “any similar action.” Claimant’s injury fell within the statutory exclusiion and the award of medical bills and expenses was in error.

Chief Justice Dalianis, joined by Justice Hicks, dissented.  The Chief Justice observed that the CAB did not find that the claimant’s occupational stress and resulting depression were due to any action taken in good faith by the employer [emphasis supplied by the Chief Justice] and that the CAB found only that “the failure of the claimant’s business caused the stress that resulted in his severe and disabling depression.” Chief Justice Dalianis indicated that the plain language of the statutory provision at issue did not bar recovery for a mental injury, here, cumulative occupational stress and depression, caused by the failure of a business.  Rather, the statute excluded from the definition of “injury” only those mental injuries that result from good faith personnel action.

The justice continued that the majority reasoned that although business failure was not among the specifically enumerated exceptions to the word “injury,” it constituted “any similar action” because the possibility of business failure was a “normal condition of employment.”  Such reasoning omitted from the exclusion the requirement that the injury be caused by an action of the employer taken in good faith against the employee.  According to the chief justice, the CAB did not find that the claimant’s occupational stress and depression were due to actions taken in good faith by the employer, and, particularly without a transcript, the court could not make such a finding in the first instance.  The chief justice indicated that the majority had ignored the cumulative nature of the claim, that the stress was caused by the fact that claimant’s business was failing, not by its ultimate failure [emphasis by the chief justice].

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