Written by Danielle Banducci, Esq.
Edited by Rachel Riordan, Esq.
Can you ever win by losing a workers’ compensation claim? Certainly, we are all familiar with analyzing whether the time and expense of defending a particular claim or issue is worth the victory. However, a less frequent question is whether accepting a workers’ compensation claim, even with its attendant medical and wage-loss exposure, is worth keeping the case out of the courtroom in a civil suit against the employer.
Section 65.2-307 of the Virginia Workers’ Compensation Act provides for what is commonly known as the “Exclusivity Rule” – the proposition that if an injury comes under the purview of the Workers’ Compensation Act, the employee cannot sue the employer for that injury: “The rights and remedies herein granted to an employee when his employer and he have accepted the provisions of this title respectively to pay and accept compensation on account of injury or death by accident shall exclude all other rights and remedies of such employee…”
This is consistent with the policy concerns underlying the Act: making it easier and faster for employees to receive compensation from their employers for medical expenses and lost wages, in exchange for limiting the type and amount of recovery available.
In analyzing this rule, it is helpful to divide workers’ compensation claims into three categories. At one extreme, there are injuries that are clearly compensable under the Act. These cases easily trigger the Exclusivity Rule. At the other, there are injuries that clearly fall outside the Act’s scope (e.g., the injured worker is not an employee). These cases are not barred by the Exclusivity Rule, and the injured worker is free to pursue whatever other legal remedies are available to him or her.
However, in closer situations where a defense exists to compensability – for example, an “arising out of” defense – does a defense opinion in a workers’ compensation claim open the door for a lawsuit? Sometimes. In the case of Giordano v. McBar Industries, Inc., 284 Va. 259, 729 S.E.2d 130 (2012), an employee was performing work on a construction site when he was killed. His estranged wife filed a workers’ compensation claim, in which the estate was awarded funeral expenses, but she was denied further benefits as she was not found to be a dependent of the deceased; she also filed a wrongful death claim in Richmond Circuit Court, where she lost on a plea in bar because the court determined that the Workers’ Compensation Commission had jurisdiction over the claim and, therefore, the Exclusivity Rule applied. The plea in bar ruling was appealed to the Supreme Court of Virginia. On appeal, the wife argued that the Act did not apply to her because she was not a dependent of the deceased, and so the Exclusivity Rule would not apply either. The Court noted that “the applicability of the Act does not turn on the compensability of the claim. Rather, the compensability of the claim turns, in part, on the Act’s applicability.” Id. at 264. The Court held that when an injury “falls within the purview of Code Section 65.2-300, the exclusivity provision applies.” Id. The Giordano opinion specifically notes that “when the injury does not arise out of or in the course of the employment, the exclusivity provision does not apply.” Id.
Section 65.2-300 of the Act provides in part: “Every employer and employee, except as herein stated, shall be conclusively presumed to have accepted the provisions of this title respectively to pay and accept compensation for personal injury or death by accident arising out of and in the course of the employment and shall be bound thereby…” As this section only encompasses the “employer/employee,” “injury by accident,” “arising out of,” and “in the course of” aspects of compensability, the existence of another viable defense, such as the dependent issue in Giordano, intoxication, willful misconduct, etc., does not necessarily obviate the Exclusivity Rule. In these situations, the claimant may lose his or her workers’ compensation case and still be barred from a liability action. In other words, whether an unsuccessful workers’ compensation claim acts as a bar to other legal remedies hinges on why the claim is unsuccessful.
In summary: if a claim falls outside the purview of the Workers’ Compensation Act (defense based on: employer/employee status as defined in the Act, lack of injury/death, or arising out of/in the course of employment), then the Exclusivity Rule does not apply under any circumstances. If a claim is found not to be compensable based upon another defense, the Exclusivity Rule applies. If a claim is found to be or is accepted as compensable, regardless of potential defenses, the Exclusivity Rule applies.
One final observation: it is clear from the words of Section 307 that regardless of whether a defense may have existed to the workers’ compensation claim, once the parties have agreed, or the Commission has found, that the claim is compensable (and no further review is possible), the Exclusivity Rule bar is triggered and the employee cannot recover under another theory. See Snowden v. VEPCO, 432 F. Supp. 266 (E.D. Va. 1976) (“where an employee and his employer have accepted the provisions of the Act to pay and accept compensation on account of any personal injury, such will exclude all other rights and remedies of such employee on account of injuries sustained while in the performance of his duties.”) (internal quotation omitted).
Therefore, deciding whether to accept or contest a claim, it is always worth considering the value of avoiding a lawsuit (which could present a higher exposure than a workers’ compensation claim due to the availability of remedies such as pain and suffering or wage loss beyond 500 weeks) along with the defense costs of a jury trial against the employer.