Exclusive Remedy

85 O.S. §11
85 O.S. §12

1. Scope of Exclusive Remedy

This issue was discuss thoroughly by Justice Tom Colbert in the case of Sizemore v. Continental Casualty Company, 2006 OK 36, 142 P.3d 47.


SCOPE OF EXCLUSIVE REMEDY PROVISION


Employers are required by section 11 of the Workers' Compensation Act to pay compensation for "accidental personal injury sustained by the employee arising out of and in the course of employment." Section 12 makes such liability "exclusive and in place of all other liability of the employer … at common law or otherwise, for such injury, loss of services, or death" (emphasis added). Thus, the Legislature has limited the exclusive remedy of workers' compensation to an employer's liability for accidental injury arising out of and in the course of employment. Nothing in section 12's exclusive remedy provision extends common law immunity to an insurance carrier for its failure to act in good faith and deal fairly in payment of an award.

This action against the insurer is not controlled by the exclusive remedy provision of the Workers' Compensation Act. An insurance carrier's bad faith in failing to pay court-ordered benefits is not reasonably encompassed within the "industrial bargain" by which the worker "gave up the right to bring a common law negligence action against the employer and in return received automatic guaranteed medical and wage benefits. The employer gave up the common law defenses and received reduced exposure to liability." Parret v. UNICCO Serv. Co., 2005 OK 54, ¶ 20, 127 P.3d 572, 578. That "bargain" was imposed by statute upon the worker and the employer. An insurance carrier, who wears a totally different hat, is not and has never been a party to it.

"[T]he intent of the Work[ers'] Compensation Law is to make the insurance carrier one and the same as the employer as to liability and immunity." U.S. Fid. & Guar. Co. v. Theus, 1972 OK 9, 493 P.2d 433, 435. However, that liability and immunity extend only to accidental injury arising out of and in the course of employment. An insurance carrier is shielded from tort liability only to that extent. When an insurance carrier acts in bad faith by refusing to pay an award it is operating outside the tort immunity afforded by the exclusive remedy provision of section 12.

An insurer's refusal to pay a workers' compensation award fails to meet three of the section 11 elements of a valid workers' compensation claim. It is not (1) an accidental injury (2) arising out of and (3) in the course of employment. Although "accidental injury" is not defined in the Act, "compensable injury" is defined as "any injury or occupational illness, causing internal or external harm to the body, which arises out of and in the course of employment if such employment was the major cause of the specific injury or illness." Okla. Stat. tit. 85, § 3(13) (Supp. 2005). Refusal to pay an award does not "arise out of" the worker's employment because there is no causal nexus between the conditions under which the work was performed and the resulting injury. See Moore v. City of Norman, 1999 OK 39, 983 P.2d 436, 437. The refusal to pay does not occur "in the course of employment" because the time, place, and circumstances of the refusal are in no way connected to the worker's employment. See Odyssey/Americare v. Worden, 1997 OK 136, 948 P.2d 309, 311.

The Workers' Compensation Act provides a comprehensive scheme for providing medical care and wage benefits to injured workers. However, not every injury connected to work falls within the exclusive remedy provision of the Act. Some injuries are expressly excluded from the provisions of the Act. These include: (1) third party claims under section 44 of the Act; (2) a common law action under the penalty provision of section 12 against an employer who fails to secure compensation in the manner provided by section 61 of the Act; (3) certain exceptions to the Act, found in section 11, based on an employee's willful injury to self or another, failure to use a guard or protection furnished against accident, substance abuse, or horseplay; and (4) non-accidental injury which the employer knew was certain or substantially certain to result from the employer's conduct, See Parret, 2005 OK 54, 127 P.3d 572. Thus, it is evident from the text of the Act that "the common law" has not been entirely displaced or supplanted by the exclusive remedy provision. In fact, "[t]he common law, as modified by constitutional and statutory law, judicial decisions and the condition and wants of the people, shall remain in force in aid of the general statutes of Oklahoma …." Okla Stat. tit. 12, § 2 (2001). Section 12 does not bar a common law tort action against a workers' compensation carrier who will not pay an injured worker's award of compensation.


2. Exceptions

Davis v. CMS Continental Natural Gas, Inc., 2001 OK 33, 23 P.3d 288.

Harrington v. Certified Systems, Inc., 2001 OK CIV APP 53, 45 P.3d 430 (extensive discussion by Judge John Reif; note that death claims were not covered by the Act until a 1951 legislative amendment).

Travelers Ins. Co. v. L.V. French Truck Service, Inc., 1988 OK 76, 770 P.2d 551 (the immunity afforded an employer by the exclusive remedy provisions of the Act do not extend to liability imposed by 63 O.S. §984).

Dyke v. Saint Francis Hosp., Inc., 1993 OK 114, 861 P.2d 295 (dual persona doctrine discussed; when can a worker sue the employer for injuries caused while acting in some different capacity).

2.1. Excluded Employments

Domestic servants or casual workers in and about a private home or household, which had a gross annual payroll in the preceding calendar year of less than $10,000.
85 O.S. §2.1(1).

Workers covered by federal workers' injury acts such as, the Federal Employees' Compensation Act, the Federal Employers' Liability Act, the Longshoremen's and Harbor Workers' Act and the Jones Act. 85 O.S. §2.1(2).

Agricultural and horticultural workers for employers who had a gross annual payroll in the preceding calendar year of less than $100,000.00 cash wages for agricultural or horticultural workers., 85 O.S. §2.1 (3); Virginia Lay Lawn Service v. Cain, 1994 OK CIV APP 5, 868 P.2d 1322; Sport O'Kings Farms v. Thomas, 1990 OK CIV APP 75, 797 P.2d 1016. Agricultural employees who are not engaged in operation of motorized machines are excluded employees even if employer's payroll equals or exceeds $100,000.00 annually. 85 O.S. §2.2; Whitworth v. Melvin West/West Dairy, 1990 OK CIV APP 35, 798 P.2d 228.

Any person who is a licensed real estate sales associate or broker, paid on a commission basis. 85 O.S. §2.1(4).

Persons who provide services in a medical care or social services program, or who participe in a work or training program, administered by the Department of Human Services (not including nursing homes). 85 O.S. §2.4.

An employer with five or less total employees, all of whom are related by blood or marriage to the employer, is exempt from the Worker's Compensation Act. 85 O.S. §2.6.

An employee of a youth sports league which qualifies as a 501(c)(3) or 501(c)(4)
tax-exempt organization. 85 O.S. §2.7.

One of the chief exceptions to the exclusive liability of workers' compensation for a work-related disability is when the disability is excluded from workers' compensation coverage. Harrington v. Certified Systems, Inc., 2001 OK CIV APP 53, 45 P.3d 430. Examples include certain farm workers, carbon monoxide poisoning, death claims prior to 1951 (when they were covered by legislative enactment), recreational and social activities occurring on or after July 1, 2005, and child labor in hazardous occupations.

Prisoners in work programs or community service, 57 O.S. §§ 227, 228; Stanley v. City of Oilton, 1999 OK CIV APP 74, 996 P.2d 942.

2.2. Uninsured Employers

If an employer has failed to secure the payment of compensation for his injured employee, as provided for in this title, an injured employee, or his legal representatives if death results from the injury, may maintain an action in the courts for damages on account of such injury, and in such action the defendant may not plead or prove as a defense that the injury was caused by the negligence of a fellow servant, or that the employee assumed the risk of his employment, or that the injury was due to the contributory negligence of the employee . . .
85 O.S. §12

2.3. Willful Acts of the Employer

Davis v. CMS Continental Natural Gas, Inc., 2001 OK 33, 23 P.3d 288.

Harrington v. Certified Systems, Inc., 2001 OK CIV APP 53, 45 P.3d 430.

2.4. Substantial Certainty Test

Parret v. UNICCO Serv. Co., 2005 OK 54, 127 P.3d 572.
Craft v. Graebel-Oklahoma Movers, Inc., 2007 OK 79, 178 P.3d 170.

2.4.1. Election of Remedies

A seriously injured worker will usually seek or accept medical assistance and temporary compensation through the employer's workers' compensation insurance carrier. In that event has the worker exercised an election that will preclude his pursuit of tort remedies against the employer using the substantial certainty test?

Once an injured worker proceeds in the Workers' Compensation Court against his uninsured employer and secures an award, an action to recover damages in tort for the same injury is barred by waiver through a prior election of the other remedy. Pryse Monument Co. v. District Court of Kay County, 1979 OK 71, 595 P.2d 435.

"[A]n employee who has two remedies for the same injury and has prosecuted one of them to conclusion (securing an award or judgment), is barred from resort to the other remedy." Dyke v. Saint Francis Hosp., Inc., 1993 OK 114, ¶20, 861 P.2d 295, 302; Pryse Monument Co. v. District Court of Kay County, 1979 OK 71, ¶2, 595 P.2d 435, 436-437. 4 "This rule, which in essence erects a res judicata bar, is applicable to compensation claimants who may also press a tort remedy." Dyke, 1993 OK 114, ¶20, 861 P.2d at 302. "The law provides but one method to avoid the [election of remedy] bar" — by action "in a district court suit to set aside the workers' compensation] award for extrinsic fraud" — and "[b]arring this relief, which is the sine qua non of a later tort redress, the award must be given its full res judicata effect." Dyke, 1993 OK 114, ¶21, 861 P.2d at 302.
Griffin v. Baker Pertolite Corporation, 2004 OK CIV APP 87, 99 P.3d 262

However, this issue has been addressed directly in the New Mexico case of Salazar v. Torres, 2007 NMSC 19, 158 P.3d 449. When Phillip Salazar was severely burned, he received workers' compensation benefits from employer's insurer and later settled his claim for indemnity benefits (PPD in Oklahoma). Two days later he filed a direct action against the employer contending his injuries were the result of the employer's intentional, willful and tortious misconduct (in New Mexico this is called a Delgado action). The Supreme Court held that the worker should have a reasonable time to determine whether he has a feasible Delgado action; and in the meantime he should be allowed to receive workers' compensation benefits. To hold otherwise would deprive a worker of his Delgado rights due to the economic necessities imposed by his injuries.

2.5. Insurance Carrier Bad Faith

In Brown v. Patel (an uninsured motorist bad faith case) Justice Edmondson referred to the Sizemore case stating: "[s]imilarly, we recently explained that a bad-faith action could be based upon an insurer's refusal to satisfy statutory obligations imposed upon or resulting from the insurance contract. Sizemore v. Continental Casualty Company, 2006 OK 36, 142 P.3d 47 (refusal to pay workers' compensation award)."

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