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When is fraud in the application a valid defense that would allow an insurance company to refuse to pay workers’ compensation benefits?
Insurance companies will do everything possible to deny or limit your workers’ compensation claim – including accusing you of lying on your employment application, intentionally injuring yourself, and lying to the Workers’ Compensation Commission.
In Brailey v. Michigan, the insurance company refused to pay Brailey’s claim for his on-the-job back injuries for all of these reasons, and the Workers’ Compensation Commissioner agreed with them and denied Brailey’s claim even though the evidence did not support the insurance company’s allegations…
Below, we will discuss why the SC Court of Appeals reversed the Commissioner’s denial of benefits and what the insurance company must prove to establish that a petitioner’s benefits should be denied when they claim:
What is “fraud in the application?”
In Cooper v. McDevitt and Street Co., the SC Supreme Court held in 1973 that workers’ compensation benefits can be denied when a worker makes a false statement in their employment application, but only when three factors have been met:
Brailey had suffered a back injury at a previous job (approximately twenty years before the current injury), but he did not disclose this on his job application – he did not even list the previous employer where the injury happened.
The Commissioner denied Brailey’s claim based in part on “fraud in the application,” finding that all three factors were met. The Court of Appeals, however, pointed out that, although 1) Brailey made a misrepresentation on his application, and 2) his current employer may have relied on that application, 3) there was zero evidence for the Commissioner to conclude that there was a causal connection between the false representation and the current injury because:
There was no testimony to contradict Brailey’s doctor’s testimony that the Michelin accident caused his injury, and the Commissioner, in effect, substituted his or her own medical opinion for that of Brailey’s doctor (“when the Commission bases its finding on its own medical opinion, rather than the opinion of a medical provider, the finding is unsupported by substantial evidence in the record”).
In addition to “fraud in the application,” the insurance company raised three additional defenses to justify refusing to pay Brailey’s benefits. The Commissioner agreed with all of them, and the Court of Appeals reversed on all grounds, including a claim that Brailey’s injury was not an accident, that he intentionally injured himself, and that Brailey’s claim should be denied based on his credibility.
In Capers v. Flautt, the SC Court of Appeals defined “accidental injury” as “an unlooked for or untoward event that the injured person did not expect, design or intentionally cause.”
The insurance company claimed, and the Commissioner agreed, that, because Brailey had a back injury twenty years ago at a different job, he should have anticipated that he would injure his back again, and, therefore, his current back injury was not accidental.
The Court of Appeals reversed because:
SC Code § 42-9-60 says that you can’t get worker’s compensation benefits if you were intoxicated or if you intentionally injured or killed yourself or another person:
No compensation shall be payable if the injury or death was occasioned by the intoxication of the employee or by the wilful intention of the employee to injure or kill himself or another. In the event that any person claims that the provisions of this section are applicable in any case, the burden of proof shall be upon such person.
The insurance company argued, and the Commissioner agreed, apparently without evidence, that this code section applied. The Court of Appeals reversed because there was “no evidence that Brailey began working at Michelin with the willful intention to hurt his back.”
The final ground on which the Commissioner denied Brailey’s benefits was that he lacked credibility and provided “vague” and “rambling” responses.
The Court notes that credibility can be a valid reason for denying a petitioner’s claim when “credibility constituted a ‘reasonable and meaningful basis’ for the Commission’s decision.”
When the only evidence is an MRI and the uncontradicted expert medical opinion of a neurosurgeon that supports awarding benefits, however, the Commission can’t just ignore the evidence and substitute their own opinion.
If you have been injured on the job in SC, call your Myrtle Beach workers’ compensation attorney at Axelrod and Associates immediately for a free consultation to determine your next steps.
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