(Seattle, Washington – April 26, 2012) - During the IAIABC The Forum last week, workers’ compensation administrators and industry stakeholders came together for lively discussion of contemporary issues. Several federal court cases received significant attention during the Insurance and Self-Insurance Committee meeting. The outcome of these cases could impact state administered workers’ compensation systems, so regulators were eager to discuss and share. Here are two important cases to watch:
Paul Brown, William Fanaly, Charles Thomas, Gary Riggs, Orlikowski, Way vs. Cassens Transport Company, Crawford & Company, Saul Margules
The Sixth Circuit Court of Appeals recently released an opinion allowing the plaintiffs to pursue a RICO case in Federal Court against their employer and third party administrator. The plaintiffs have alleged that Cassens , a self-insured employer, through its TPA Crawford, conspired with its examining physician to deny Plaintiffs’ workers’ compensation benefits. The plaintiffs sued the defendants in 2004, seeking damages for workers’ compensation benefits that were improperly denied. RICO violations can be subject to large awards since damages, including interest, are tripled.
The implications of the case are potentially far-reaching. Review the Sixth Circuit Opinion.
Irving Tanning Company, Prime Tanning Co., Prime Tanning Corporation, Cudahy Tanning Company, WISMO Chemical Corporation, and Prime Tanning Company: Debtors
In November 2010, a national leather tanning company filed for bankruptcy in the US Bankruptcy Court in Bangor, Maine. The Debtors Plan of Reorganization sought to claim self-insurance security mechanisms, including a surety bond and letter of credit, for the general benefit of the creditors. The court directed all workers to file a notice of a workers’ compensation claim with the Bankruptcy Court by a certain deadline or be forever barred. This bar date was in spite of the statute of limitations in the state of injury.
In addition, the Debtors are seeking to discharge third party non-debtors, namely the Maine Self-Insurance Guarantee Association and the Missouri Private Sector Individual Self-Insurers Guaranty Corporation, from their obligations to pay outstanding workers’ compensation claims.
Both Maine and Missouri have filed several objections to the Debtors Plan of Reorganization. The parties are still awaiting a ruling from the February 28th hearing in Bangor.
Reliable security mechanisms are a critical aspect to self-insurance regulation. The outcome of this case has the potential for changing the US self-insurance landscape.
Review the IAIABC’s resource page on the Prime Tanning Bankruptcy case.