1. Cost Containment Strategy: Utilizing The Misrepresentation Defense (N.C.G.S. § 97-12.1)

2. Today’s presentation will focus on Cost Containment during the beginning of the claim  Initial or background investigation ► Initial or background investigation BEFORE there is a Workers’ Compensation claim – Initial or background investigation BEFORE the Employee-Employer relationship is finalized

3. As part of the June 14, 2011, Legislative Reform, North Carolina Employers now have an additional defense available for workers’ compensation claims arising on or after June 24, 2011 - if they do their homework BEFORE an alleged work accident happens.

4. physical condition to the Employer at the time the Employee is entering into the employment relationship, and the Employee alleges a work injury with a causal tie or connection to the misrepresentation. An Employer may plead an affirmative “Misrepresentation Defense” when an employee intentionally misrepresents his/her N.C.G.S. §97-12.1

5. An Employer bears the burden of proving each and every element of the “Misrepresentation Defense” by a preponderance of the evidence.

6. What does “by a preponderance of the evidence” actually mean? By the greater weight of the evidence this preponderance is based on the more convincing evidence and its probable truth or accuracy and not the amount of evidence. Simply put, it means more likely true than not.

7. Pursuant to NCGS §97-12.1, an Employer must prove ALL of the following elements to succeed on the defense: 1)The Employee knowingly and willfully made a false representation as to the Employee’s physical condition; 2)The Employer relied upon one or more false representations by the Employee and that reliance was a substantial factor in the Employer’s decision to hire the Employee; and 3)There was a causal connection between the false representation and the Employee’s injury or occupational disease.

8. To satisfy the first and second elements of the Misrepresentation Defense, an Employer may gather information on a prospective Employee’s physical condition to determine whether he/she can safely perform the job BEFORE finalizing the employment relationship. Timing is vital.

9. When can an Employer ask about the prospective Employee’s physical condition?

10. To preserve the Misrepresentation Defense AND to ensure compliance with employment laws/regulations such as the Americans with Disabilities Act, an Employer should ask about the Employee’s physical condition to determine whether he/she can safely perform the job:

11. 1)At the time of hire; 2)At the time of receiving notice of the removal of conditions from a conditional offer of employment; or 3)During the course of a post-offer medical examination. 3)During the course of a post-offer medical examination.

12. The key to successful implementation of the Misrepresentation Defense is a top-notch hiring program.

13. Comprehensive Hiring Program – What Does One Look Like? Comprehensive Hiring Program – What Does One Look Like?

14. An Employer may find it useful to: 1)Prepare accurate Job Descriptions detailing with specificity the essential functions and physical demands of their positions. ** Have the prospective Employee sign off on the Job Description, thus confirming both his/her understanding of the requirements and functions of the position, as well as his/her affirmative representation that he/she is physically capable of performing the essential functions of the job - with or without reasonable accommodation;

15. 2)Utilize a Post-Offer, Pre-Hire Questionnaire to ask for information such as prior work injuries, medication usage, work restrictions, surgeries, and permanent partial disability ratings. ** The time to utilize this tool is once a conditional offer of employment has been extended. Successful completion of the Post-Offer, Pre-Hire Questionnaire is a condition precedent to the employment offer being finalized.

16. 3)Utilize a Post-offer, Pre-Hire Physical to determine the prospective Employee’s fitness for duty. ** Much like with the Post-Offer, Pre-Hire Questionnaire, the time to utilize this tool is once a conditional offer of employment has been extended. Successful completion of the Post-Offer, Pre-Hire Physical is a condition precedent to employment being finalized.

17. By utilizing these practices, an Employer is clarifying the nature of the position and the importance of securing an Employee who is able to perform the essential functions and responsibilities of the job.

18. These practices give a prospective Employee the opportunity to reveal that he/she is physically capable of performing the job, and the Employer’s reliance on these disclosures is inferred and expected.

19. As for the third and final element of “The Misrepresentation Defense,” an Employer must prove there is a causal connection between the alleged work injury and the physical conditions falsely represented to the Employer by the Employee at the time of his/her hire.

20. Specifically, the question is whether the Employee’s undisclosed physical condition increased his/her risk for injury.

21. By developing a comprehensive hiring program, not only will an Employer ensure prospective Employees are physically capable of performing the job, but an Employer also protects itself against potential future workers’ compensation claims should a prospective Employee misrepresent his/her physical abilities.

22. How Has the Industrial Commission Interpreted/Applied The Misrepresentation Defense (N.C.G.S. §97-12.1)? 9 Deputy Commissioner Decisions, 3 Appealed to the Full Commission, And Only 1 Appealed to the Court of Appeals

23. 7 Decisions Held The Misrepresentation Defense Barred Benefits 2 Decisions Held The Misrepresentation Defense Did Not Apply/Did Not Bar Benefits Deputy Commissioner Decisions:

24. All 3 decisions held The Misrepresentation Defense barred benefits Full Commission Decisions:

25. The Court of Appeals affirmed the Opinion and Award of the Full Commission, which held The Misrepresentation Defense barred benefits. Court of Appeals Decisions:

26. Purcell v. Friday Staffing (August 2014) Plaintiff appealed decision denying her benefits under The Misrepresentation Defense Big Question – Did the IC utilize the proper causation standard?

27. 8/6/1999 – Plaintiff suffered a prior work-related back injury Plaintiff underwent a microdiscectomy Plaintiff assigned 7% PPD rating to her back Plaintiff assigned restrictions of no lifting greater than 20 pounds but was encouraged to find sedentary work Plaintiff reached settlement via clincher agreement for $50,000.00 Plaintiff worked for subsequent employers and continued to receive treatment for her back Important Facts of the Case

28. 1/23/2008 – Plaintiff told her PCP she was seeing a neurosurgeon and might need back surgery 5/28/2010 – Plaintiff applied for employment through defendant, a company that fills the labor needs of its clients, employers Important Facts of the Case (cont.)

29. “Friday Essential Functions Questionnaire” AND “Medical History Questionnaire” Plaintiff represented she COULD: – Lift more than 50 pounds; – Carry more than 50 pounds; – Frequently bend, pull, push, kneel, squat, and twist; – Stand for long periods of time; and – Sit for long periods of time Employment Application Process

30. Plaintiff represented that she NEVER: – Filed a workers’ compensation claim; – Suffered any injury or undergone surgery; or – Received treatment or consultation about back pain or possible back injuries. Employment Application Process (cont.)

31. Plaintiff began working as an assembly line worker, where she was required to constantly lift trailer arms weighing between 20 – 25 lbs On July 18, 2011, Plaintiff alleged she injured her neck and back down into her foot due to constantly twisting and bending over to pick up trailer arms from a pallet while working on the assembly line. Plaintiff was hired, and Defendant-Employer matched her with a company that manufactures automotive parts

32. Defendants denied the compensability of Plaintiff’s claim on a Form 61 Both the Deputy Commissioner AND the Full Commission denied Plaintiff’s claim pursuant to The Misrepresentation Defense Plaintiff appealed to the Court of Appeals

33. The Court of Appeals held that when requiring a “causal connection” to satisfy the third element of N.C.G.S. §97-12.1, Defendants must show that the undisclosed or misrepresented injury, condition, or occupational disease increased the risk of the subsequent injury or disease.

34. In the Purcell case, the Court held the Industrial Commission did not err in denying Plaintiff’s claim based on N.C.G.S. §97-12.1, as the evidence revealed Plaintiff was exceeding her work restrictions when she injured her back. Expert testimony revealed that Plaintiff was at an increased risk of injury if she exceeded her restrictions, thus satisfying the “causal connection” requirement set forth in N.C.G.S. §97-12.1. In the Purcell case, the Court held the Industrial Commission did not err in denying Plaintiff’s claim based on N.C.G.S. §97-12.1, as the evidence revealed Plaintiff was exceeding her work restrictions when she injured her back. Expert testimony revealed that Plaintiff was at an increased risk of injury if she exceeded her restrictions, thus satisfying the “causal connection” requirement set forth in N.C.G.S. §97-12.1.

35. Top Notch Hiring Programs:  Employment Application Certifications  Post-Offer, Pre-Hire Questionnaires Takeaways From Decisions Holding The Misrepresentation Defense Barred Benefits

36. IF it is important for the prospective Employee to be able to physically perform the job, find out during the hiring process if he/she can actually do the job Tight drafting of Post-Offer, Pre-Hire Questionnaires Takeaways From Decisions Holding The Misrepresentation Defense Did NOT Bar Benefits