NFIB

Legal Foundation Scores Big Win in Tennessee Supreme Court; Joins Other Cases

WASHINGTON, D.C. -- Workers' compensation costs have been a priority for small-business owners for several years. In fact, the cost of workers' compensation insurance has become the third most important issue to the small-business community, according to an NFIB study.

Accordingly, the NFIB Legal Foundation undertook the task of fighting the issue in America's courts. The Foundation joined three cases in 2005 and scored an important victory in the fight to reign in the cost of workers' compensation insurance.

The victory took place in a Tennessee Supreme Court case regarding the expansion of workers' compensation awards to include payments for "loss of enjoyment of everyday activities." A trial court had granted an employee a permanent disability award for a hearing loss he sustained while working at a factory in Tennessee. The award was granted based upon consideration of the statutorily required workers' compensation factors designed to determine the extent of loss of earning capacity: plaintiff's age, education, transferable job skills, and availability of employment, together with the impairment rating provided by the physicians and other testimony.

The employee appealed and was awarded additional money by the appellate court. The court modified the trial court's judgment by quintupling the disability award, based almost exclusively on an assumption that the employee had lost the ability to "enjoy everyday activities."

The Legal Foundation's win prevented this new standard from becoming a precedent in Tennessee and around the country. Had the court found in favor of allowing the loss of enjoyment award, then workers' compensation costs would have been quick to escalate.

In August, the Legal Foundation filed an amicus brief with the Montana Workers' Compensation Court opposing a challenge to a state statute passed by the Montana legislature in 1981. The challenger claims that the law is unconstitutional. That statute allows a reduction in workers' compensation benefits when a claimant becomes eligible for other forms of retirement compensation such as Social Security or a pension. If the court rules in favor of the claimants, the cost of compensating everyone collecting permanent disability now and in the future would increase.

Last spring, the Legal Foundation challenged an Arizona appeals court's ruling that the state's law allowing "no tolerance" drug and alcohol policies was unconstitutional. These laws allow employers who have these policies to deny workers' compensation benefits to employees who are injured on the job and test positive for illegal drugs or alcohol or refuse to take a drug test. The benefit of these policies is that they can lower workers' compensation premiums for employers.

The Arizona Supreme Court ultimately upheld the lower court's ruling. NFIB/Arizona State Director Michelle Bolton continues to work for a legislative fix to this serious problem.

Despite the setback in Arizona, it is clear that the NFIB Legal Foundation takes the problem of workers' compensation costs seriously, and will continue to fight this important issue on behalf of small businesses.