A Seemingly Important Win for Wisconsin Worker’s Compensation Insurance Carriers and Employers

July 11, 2017

On its face the decision of the Wisconsin Supreme Court in Flug v. LIRC, 2017 WI 72 (decided on June 30, 2017), is a clear, important win for the employer side in common injuries that involve pre-existing degenerative conditions.  The general circumstances presented in Flug are familiar.  In that case, a forty-three year old retail store supervisor was changing merchandise prices with the use of a hand-held scanner, a device of negligible weight.  Although she had never before experienced severe, sudden pain in her neck that radiated down her right arm, she did have that experience while scanning shoe boxes located above the level of her head.  Diagnostic tests revealed the presence of pre-existing degenerative arthritis in her cervical spine.

The employee’s course of treatment led to surgery, a discectomy in the cervical spine.  After the surgery her pain subsided and her lifting restrictions were gradually lifted.  Her post-surgical permanent partial disability rating to the body as a whole, however, was rated at 22 percent.

The employer initially conceded and paid for medical expenses and temporary total disability indemnity.  After the employee had her surgery, however, the employer obtained an independent medical evaluation (“IME”).  According to the IME report, nothing more than a temporary neck strain resulted from the shoe scanning incident, but not the need for surgery (and its attendant permanent partial disability rating to the total body) to remove a disc in the arthritic cervical spine. 

Prior to the Supreme Court ruling, the administrative law judge (“ALJ”), the Labor and Industry and Review Commission (“LIRC”), and the circuit court had ruled in favor of the employer.  By contrast, the Wisconsin Court of Appeals had ruled partially in favor of the employee by remanding the case to LIRC for further hearing to determine whether the employee had undertaken the invasive surgical procedure in good faith. 

In a 4 to 3 decision authored by Justice Kelly, a majority of the Wisconsin Supreme Court held that “[b]ecause Ms. Flug’s surgery treated her pre-existing condition, not her compensable injury, her claim must be disallowed.”  The majority further held that “. . . an employee is not eligible for benefits under Wis. Stat. § 102.42(1m) if the disability-causing treatment was directed at treating something other than the employee’s compensable injury.”

Chief Justice Roggensack thoroughly analyzed her view of the deficiency of the majority opinion in her dissenting opinion.  Pointing out that the IME report was obtained only after the employee had undergone surgery, Justice Roggensack concluded:

Post-hoc examinations like Dr. Soriano’s are not relevant when determining whether Flug acted with a good faith belief at the time she undertook surgery that it would alleviate the pain she had suffered since her work-related injury on February 14, 2013.  Flug’s good faith belief is her state of mind at the moment when she undertook the invasive treatment.  And, it is her state of mind at the time she undertook surgery that the majority opinion avoids discussing.

In a separate and equally persuasive dissenting opinion, Justice Ann Walsh Bradley highlighted that LIRC had concluded in clear error that the employee had not suffered any work-related injury.  “There is a reason that the court of appeals issued an unpublished opinion here.  And it likely is the messy record, which certainly does not represent LIRC’s finest hour.”  Both dissenting opinions would send the case back for further hearing before the ALJ to decide the issue of the employee’s good faith or lack thereof.

Worker’s compensation insurance carriers and self-insured employers will likely redouble their efforts to seek post-surgical IMEs in cases that involve pre-existing arthritis.  They may press for recoupment of benefits paid after a retroactively-determined healing date.  Some employees might be deterred from seeking invasive treatment they otherwise would have pursued; others may be more inclined to undergo invasive treatment and proceed to hearing. 

The import of Flug might not be as great as might appear from the majority’s decision.  It is likely lawyers for workers who, like Ms. Flug, had a clearly compensable injury initially will lay a careful evidentiary record of the employee’s subjective good faith in undergoing surgery.  What information did the employee have at that time?  What information was learned only after-the-fact of surgery?  What were the considerations, pro and con, for deciding to undergo an invasive procedure?  With a careful record established it is unlikely that LIRC would again erroneously conclude that no work-related injury had occurred.  Thereafter, it would be up to the courts to decide whether Flug will stand as a black-letter ruling on the one hand, or whether it may be distinguished on the facts on which it is based, on the other.

To some extent Flug will become superseded.  The facts in Flug are based on a 2013 date of injury.  For injuries occurring on or after March 2, 2015, health care professionals (both treating and IME examiners) will be required to consider “other factors” (such as pre-existing degenerative arthritis) and allocate disability ratings between such other factors and those caused by work-related injuries or conditions. Yet even then it remains to be seen how Flug will be interpreted.

Consider, for example, a work-related injury occurring after March 2, 2015.  Suppose the agency’s findings include that (1) it was pre-existing arthritis in the cervical spine that necessitated surgery rather than lifting a lightweight scanner overhead at work; (2) the employee thoroughly considered the pros and cons of undergoing surgery on her cervical spine and concluded in her good faith belief that it was for the purpose of relieving her pain from the work-related injury; and, (3) a bad surgical outcome, paralysis, occurred.  Would Flug be applied to deny compensation under that circumstance?  Or would Flug be limited to instances in which no work-related injury occurred (as LIRC erroneously concluded in Flug)?  This would appear to be an issue for the Wisconsin Supreme Court to decide.

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