You may think the title overly dramatic. Perhaps. But, every day, we write many things which might, and much to our chagrin, be discoverable in a lawsuit. More and more, this involves emails, text messages, blogs, and quips on social networking sites. (It appears letter writing is becoming a lost art.)

With the more informal writing that is so prevalent, it is important that managers and supervisors are mindful of what they are writing. The email of a company manager about a former employee may come back to haunt you when that employee sues. The words of your managers can cause the company to be liable under many employment laws. Consider training (or at least cautioning) your managers about the need to scrutinize everything they write . . . before they hit “send.”

Finally, attorneys often see the word “Confidential” on company documents. While there are many valid reasons for this, it is important to remember that your business reasons for designating something confidential may not have any bearing upon whether that document must be disclosed to the opposing party in a lawsuit. This should be a reminder to us all to pay attention even to our most informal forms of communication to be sure we do not subject our employer to liability by being careless.

What seems cute and clever today may seem callous and ill-humored in front of a jury two years down the road. :)

By Kristen L. Brightmire, kbrightmire@dsda.com

This article is for all those Oklahoma employers out there who are subject to Oklahoma workers’ compensation laws for on the job injuries. Those of you who are not can skip to the next article. Oh wait, almost all employers are subject to workers’ compensation laws, so my suggestion, read on…

Typically, under the mandatory workers’ compensation system, an employer becomes immune to civil suit for its employee’s injuries. Translation, when one of your workers are hurt on the job, they get workers’ compensation benefits only and can’t sue you for their injuries in a regular court. This is often referred to as the “exclusivity of the workers’ compensation remedy,” or “workers’ compensation immunity.” Typically this immunity is insurmountable, and a worker is forced into the workers’ compensation system.

In a typical on the job injury there are but two questions: (1) was the worker injured? and (2) were they on the job at the time of the injury? However, unbeknownst to many employers, under certain circumstances there has always been a third question looming, the answer to which potentially destroys an employers’ workers’ compensation immunity. That third question asks: were you, the employer, substantially certain that the employee was in danger of being injured when they engaged in the act in question? If the answer to this question is "yes,” you may find yourself paying workers’ compensation payments and damages in a civil court of law.

It has always been the law in Oklahoma that in certain circumstances an employee injured on the job may be able to seek relief in civil court in addition to workers’ compensation court. However, for many years it was unclear just what set of facts would enable an employee to seek both workers’ compensation benefits and civil court remedies. However, in 2005 the Oklahoma Supreme Court clarified the exception to workers’ compensation immunity. This exception stems from a case wherein the plaintiff, Mr. Parret, was killed while replacing emergency lights in his employer’s facility. When he was killed, Mr. Parret was working on the emergency light system while it was still “hot” or energized. As it turns out, the evidence in the case showed Mr. Parret’s employer may have required him to work on the system while it was energized. Since even my eight year old knows to not work on a piece of equipment that has electricity running through it, it seemed likely to the Court that Mr. Parret’s employer was substantially certain that its employee could be injured if he worked on the system while it was hot.

The question posed to the Supreme Court in the Parret case was essentially: whether in order to circumvent the workers’ compensation exclusivity provisions the employer must have “intended” its employee be injured, or whether it was enough if the employer was “substantially certain” its employee would be injured. You guessed it, the Supreme Court of Oklahoma opted for the lower standard, holding that an employer who was “substantially certain” its employee would be injured if he performed the act in question may be liable for damages in a regular civil court if that employee is injured on the job. What is the big deal you ask? Two words: Punitive damages. That’s right folks, if you get tagged in a lawsuit like this, you are looking at potentially paying big bucks.

How does an employee prove you were substantially certain he would be injured? The Court requires that the employee put on evidence to show that you the employer actually and subjectively had knowledge the injury was substantially certain to occur. What does this mean? The employee must prove that (1) you intended for them to perform the act they were engaged in at the time of the injury, i.e. you intended for the employee to work on the electrical system while it was energized, and (2) you were “substantially certain” injury would result from them performing the act. The employee can prove this second prong by inferring the knowledge of the employer by the surrounding circumstances. Example: In the Parret case, the evidence showed, prior to Mr. Parret’s injury, many workers had been electrocuted when they worked on the lighting system while it was hot. [From those facts, they inferred that the employer knew that Mr. Parret was substantially certain to be electrocuted if he worked on the lighting system when it was hot.]

Understand that Courts are aware, in most jobs, there is some danger associated with many tasks a worker is expected to perform. This exception is not designed to allow those injured workers’ access to the civil system. Rather this exception is designed to keep employers from requiring their workers to take on unnecessary risks time and time again. You may be wondering why we are just writing this article now if this test has been around since 2005. Recent court trends indicate that civil courts are allowing plaintiffs to pursue this exception, in Oklahoma and in other states, at least through discovery. What does this mean to you? Bottom line as always, money. Remember, while you may ultimately be successful in defeating a lawsuit brought under this exception, it can still cost you a lot of time and money in legal fees. Your efforts are best spent in avoiding a Parret lawsuit altogether.

Practical tips:

• Be aware that this exception exists;
  
  
• Make sure you always put safety first;
  
  
• Be aware, if you get taken to court by a worker alleging the Parret exception your entire operation including past accidents will be scrutinized;
  
  
• If the Parret exception applies, an employee can generally seek workers’ compensation remedies and civil remedies both.
  
  
• If a third party is responsible for injuring your employee, you may have a workers’ compensation lien against any recovery the employee gets from that third party. This situation may occur when an employer contracts with an outside entity to perform work on its premises and one of those workers injures your employee. Similarly this situation may occur when your employee sues you and another entity, say a manufacturer, for products liability alleging they were injured both because of your actions and the faulty product in question. However, you have to assert that lien to protect your rights, so talk to a lawyer if you think you may have these rights;
  
  
• Don’t expose workers to unnecessary risks. This seems obvious. However, in the Parret case, it was the employer’s failure to use OSHA mandated Lock Out/Tag Out procedures that caused the employee’s injury;
  
  
• If you know of a dangerous situation that is unnecessary, don’t ignore it.

By McLaine DeWitt Herndon, mherndon@dsda.com

A pair of recent ERISA decisions from the Tenth Circuit Court of Appeals (the court which hears appeals from Oklahoma federal district courts) – one holding in favor of a plan beneficiary, the other holding in favor of a plan administrator – serve as reminders to administrators of their obligations to beneficiaries when making benefit determinations under ERISA plans which grant the administrator discretion in administering the plan.

Benefit determinations must be reasonable and made in good faith.

If a benefit determination winds up in court, a plan administrator must be able to demonstrate its decision was reasonable. Moreover, the circumstances under which the decision was made may call into question the administrator’s good faith. That is what occurred in Phelan v. Wyoming Associated Builders, decided by the Tenth Circuit on July 31, 2009.

Case One: Scott Phelan, an employee of the Lock Shop, was diagnosed with bone cancer. He was covered by a healthcare plan of his employer, which was a member of a trade association that maintained a trust to provide health insurance benefits for its members’ employees. Just as Mr. Phelan was about to submit a large claim relating to his cancer treatment, the association terminated the Lock Shop’s membership in the insurance trust because it submitted a premium payment that was supposedly late and in the wrong form. Mr. Phelan’s claim was therefore denied.

The late payment which prompted cancellation was supposed to be “received” by the trust’s bank by December 20. On December 19 the Lock Shop sent a check by Federal Express to the trust’s bank, and was assured by Federal Express the check would be delivered to the bank in the morning of the 20th. Unfortunately, a severe snowstorm hit overnight, delaying all deliveries. The check made it to the bank by 3:15 on the afternoon of the 20th, but the bank had closed at noon, so the payment was not “posted” to the trust’s bank account until the 21st. The plan administrator interpreted the word “received” to mean actually posted in the trust account, not merely received by the bank.

Because the plan granted the administrator discretion in interpreting its terms, the administrator’s decision was governed by the arbitrary and capricious standard of review. Under this standard, the question for the court was whether the administrator’s decision was reasonable and made in good faith.

The factors a court evaluates to determine whether a decision is reasonable include (1) whether the decision resulted from a reasoned and principled process, (2) whether the decision is consistent with prior interpretations by the plan administrator, (3) whether the decision is reasonable in light of any external standards, and (4) whether the decision is consistent with the purposes of the plan. The Tenth Circuit agreed that the plan was ambiguous, and the administrator was “operating within the realm of reasonableness” in interpreting the word “received” to mean “posted.”

But simply finding the interpretation made by the plan administrator was reasonable did not end the inquiry. In addition, the decision must be made in good faith. To this end, the court noted that the trust was experiencing financial difficulties. The trust had paid almost $4.5 million in claims in the past year, while collecting only $3.3 million in premiums. Two claims alone – including Mr. Phelan’s – accounted for $1.2 million in claims paid. Under these circumstances, the court noted that “while [the trust’s] interpretation of the policy language might have been within some objective zone of reasonableness, it would most certainly not be reasonable to adopt this reasoning as a rascally pretext for avoiding the expensive claim of one of its beneficiaries.” The court held the decision was motivated by bad faith – solely to avoid paying a claim – and therefore overturned it.

Thus, plan administrators must be aware that choosing one reasonable interpretation over an equally reasonable alternative for the sole reason to deny an expensive claim does not amount to the good faith plan administrators owe their fiduciaries. In making their decision, plan administrators should document the good faith reason one alternative was chosen over another in case the decision winds up in court and good faith becomes an issue.

An administrator can take steps to reduce the importance of a conflict of interest.

Case Two: The weight to be given a conflict of interest – when the administrator of the plan is also responsible for paying benefits – was addressed last year by the United States Supreme Court which stated a court should take into account a combination of factors in reviewing a decision, of which a conflict of interest is one. In the words of the Supreme Court, a conflict “should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the benefits decision . . . [and] should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy . . . .” The Tenth Circuit applied the Supreme Court’s conflict analysis in Holcomb v. UNUM Life Insurance Co. of America, decided August 11, 2009.

In May 2003 Barbara Holcomb began receiving long-term disability benefits under a plan administered and insured by UNUM. The plan provided for 24 months of benefits when the employee is limited from performing her regular occupation, and benefits after 24 months when the employee is unable to perform the duties of any gainful occupation.

In February 2005 UNUM notified Ms. Holcomb the 24 month period was about to expire, and it would be reviewing her file to determine if she qualified for additional benefits. After UNUM determined she did not qualify for additional benefits, Ms. Holcomb administratively appealed. UNUM then requested an independent, board certified doctor review Ms. Holcomb’s file, and requested Ms. Holcomb undergo an examination by an independent neuropsychologist. Based upon these reviews, UNUM denied Ms. Holcomb’s appeal.

The Tenth Circuit concluded UNUM did not abuse its discretion in denying further benefits to Ms. Holcomb. The court noted that UNUM took steps to reduce its inherent conflict of interest by hiring two independent doctors, and therefore did not rely solely on its own physicians and nurses. Based on UNUM’s actions, and in accordance with the Supreme Court’s decision, the court gave little weight to the conflict of interest factor.

The Tenth Circuit’s decision in Holcomb demonstrates that a conflict of interest does not have to weigh against the plan administrator. If an employer or administrator takes active steps to reduce potential bias and to promote accuracy – for example, “walling off” those responsible for claims determinations from those interested in firm finances, or putting in place management checks that penalize inaccurate decision making regardless of who benefits from the inaccuracy – the conflict of interest should not weigh as heavily, and perhaps not at all, as a factor when the court considers whether the benefit determination was reasonable and made in good faith.

By Jon E. Brightmire, jbrightmire@dsda.com

TULSA COUNTY BAR ASSOCIATION HONORS DSDA ATTORNEYS

On August 20, Sam Daniel and Doug Dodd were honored at the Annual TCBA luncheon. Mr. Daniel received an award for his 50th year as a member of the TCBA. Mr. Dodd was awarded both the highly prestigious Neil Bogan Professionalism Award as well as the President’s Award.

BEST LAWYERS NAMES 20 DSDA ATTORNEYS

Doerner Saunders is proud to announce that 20 of its attorneys have been named as Best Lawyers in their practice areas. Additionally, Doerner Saunders was named # 1 in Oklahoma in First Amendment Law.

The listed Doerner Saunders attorneys are, in alphabetical order:

William C. Anderson
Bet-the-Company Litigation, Commercial Litigation
wanderson@dsda.com

Sam G. Bratton II
Bankruptcy and Creditor-Debtor Rights Law
sbratton@dsda.com

Elise Dunitz Brennan
Health Care Law
ebrennan@dsda.com

Jon E. Brightmire
Appellate Law, Commercial Litigation
jbrightmire@dsda.com

Lawrence T. Chambers, Jr.
Corporate Law
lchambers@dsda.com

H. Wayne Cooper
Corporate Law
hwcooper@dsda.com

Kevin C. Coutant
Land Use & Zoning Law, Real Estate Law
kcoutant@dsda.com

Sam P. Daniel
Commercial Litigation, Family Law
sdaniel@dsda.com

S. Douglas Dodd
First Amendment Law
sddodd@dsda.com

Tom Q. Ferguson
Commercial Litigation
tferguson@dsda.com

G. Michael Lewis
Bet-the-Company Litigation, Commercial Litigation, Personal Injury Litigation
mlewis@dsda.com

Linda C. Martin
Environmental Law
lmartin@dsda.com

David McCullough
First Amendment Law, Gaming Law
dmccullough@dsda.com

Gary M. McDonald
Bankruptcy and Creditor-Debtor Rights Law
gmcdonald@dsda.com

James C. Milton
Commercial Litigation
jmilton@dsda.com

Michael Minnis
First Amendment Law
mminnis@dsda.com

Leonard I. Pataki
Bankruptcy and Creditor-Debtor Rights Law
lpataki@dsda.com

William F. Riggs
Corporate Law
wriggs@dsda.com

Robert E. Spoo
Intellectual Property Law
rspoo@dsda.com

Varley H. Taylor, Jr.
Tax Law
vtaylor@dsda.com

For more information, click here.

August 31, 2009 (Reminder)

Effective Monday, August 31, 2009, direct observation for all DOT Return-to-Duty and Follow-Up drug testing became mandatory.

Be sure to check-out the DOT website here for updates to the following downloadable documents:

What Employees Need to Know About DOT Drug and Alcohol Testing

What Employers Need to Know About DOT Drug and Alcohol Testing

DOT's Direct Observation Procedures Poster

Urine Specimen Collection Guidelines

The Substance Abuse Professionals Guidelines

Drug and Alcohol Testing Rule [49 CFR Part 40]

September 8, 2009

All federal contracts awarded after this date will require contracting entities to enroll in and use E-Verify to confirm the work authorization of certain employees. The effective date of this rule has been postponed several times. However, on August 26, 2009, the United States District Court for the District of Maryland declined to vacate the rule despite objections based on arguments that it was not properly promulgated and impractical for employers. Under the rule, employers who contract with the federal government after September 8, 2009 will be required to enroll in E-Verify and use it to verify the employment authorization of all new employees and any existing employees classified as "assigned to the contract." Specific guidelines designate during which time period in the hiring process the verification must be performed and what employers should do in case of a negative verification response. Employers should ensure compliance with such guidelines in order to both comply with the new rule and avoid allegations of discrimination. If you need any assistance, contact Hilary L. Velandia at hvelandia@dsda.com.

September 15, 2009

H. Wayne Cooper and Jeffrey C. Rambach, in conjunction with Henderson Financial Group will be presenting BusinessKillers, a seminar which is designed to provide business owners the tools to assess how well they have protected their company from the 6 biggest mistakes that can kill a business. The topics to be addressed will include business valuation issues, income and estate tax planning, disability and retirement. Program will begin at 11:30, and a light lunch will be served. For more information, or to register, please contact Camme Davis at (918) 591-5254 or cdavis@dsda.com.

September 17, 2009

Rebecca M. Fowler will be speaking on the Americans With Disabilities Act at the Annual Meeting of the Oklahoma Association of Electric Cooperative's Human Resource Organization. For more information, contact Rebecca at rfowler@dsda.com.

September 18, 2009

Kristen L. Brightmire will be presenting on the subject of Muddled Waters in Our Own Back Yard: The Expansion of the Public Policy Tort and What it Means for Oklahoma Employers and Employment Lawyers. The seminar, Law of the Workplace: The Changing Landscape of Employment Law, will be held at the Renaissance Hotel in Tulsa, Oklahoma. For more information, or to register, please go to www.okbar.org.

September 22, 2009

James R. Bullard will be speaking on Red Flag Compliance for Healthcare Providers at the Oklahoma Association of Health Care Providers Annual Fall Fair at the Renaissance Tulsa Hotel and Convention Center. For more information, or to register, please click here.

September 24, 2009

Jim Milton will participate in a panel discussion on "Water Contracting and Rural Water Issues" at the Oklahoma Municipal League Annual Conference at the Tulsa Convention Center. Please click here for more information or to register.

September 25, 2009

Kristen L. Brightmire will be presenting on the subject of Muddled Waters in Our Own Back Yard: The Expansion of the Public Policy Tort and What it Means for Oklahoma Employers and Employment Lawyers. The seminar, Law of the Workplace: The Changing Landscape of Employment Law, will be held at the Oklahoma Bar Center in Oklahoma City, Oklahoma. For more information, or to register, please go to www.okbar.org.

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