Self-Insured Employers and Workers' Compensation
The regulations governing workers' compensation in Connecticut provide selected employers with the ability to self-insure their liabilities. The applicable regulation states that:
[a]n employer who seeks exemption from insuring its risk under the Workers’ Compensation Act shall apply to the Chairman of the commission or his designee for the privilege of becoming an individual self-insurer. An employer who is approved to self-insure agrees to meet by cash payments, all obligations incurred by it under the Act as such become due and payable.
Regulation, Section 31-284-2. The Connecticut courts have explained this privilege as follows:
[O]ur Supreme court has stated that a workers' compensation employer that elects to self-insure is not an 'insurer' under title 38a of the General Statutes. See Doucette v. Pomes, 247 Conn. 442, 457, 724 A.2d 481 (1999). In that case the court said:
an employer that self-insures for workers' compensation purposes retains its own risk; it does not assume the risk of another. Moreover, it does not receive consideration. It is merely fulfilling its obligations under the Workers' Compensation Act to ensure that its workers will receive compensation under the appropriate circumstances.
Doucette v. Pomes, supra, 247 Conn. 456-57.
Braca v. Cigna Ins. Co., 2000 Conn. Super. LEXIS 2091, *10-11 (August 10, 2000). Self-insurance, therefore, permits well-funded employers to internalize much of the workers' compensation process, creating a separate system by which injured workers are required to receive medical treatment.
This system is not without its problems, and the Connecticut Workers' Compensation Commission understands that the process is not designed to be fair or impartial. See Figueroa v. Rockbestos Company, 2004 Conn. Wrk. Comp. LEXIS 26, *10 (July 20, 2004) ("[T]he dispute resolution process set forth in Admin. Reg. § 31-279-10(e) involves decisionmaking by both agents of the medical care plan and private, for-profit utilization review companies. The presumption of impartiality that accompanies a governmental decision is therefore absent under the regulatory process.").
Highlighting this lack of impartiality and structural fairness, the Connecticut Workers' Compensation Commission stating that "[w]e find it troubling that the review process set forth in § 31-279-10(e) so favors a party who already enjoys a superior bargaining position in the employment relation and the administration of compensation claims." Figueroa v. Rockbestos Company, 2004 Conn. Wrk. Comp. LEXIS 26 (July 20, 2004). The Commission continued, explaining further that:
the dispute resolution procedure created by Admin. Reg. § 31-279-10(e) does not require appellate-level rulings to be made by medical practitioners only. Instead, the chief executive officer of the medical care plan is placed in the role of ultimate factfinder. There is no requirement that such a CEO be a licensed medical practitioner. The regulation also contains no proscription that prevents the CEO from being affiliated with the employer in the event that the medical care plan is operated by the employer rather than an outside organization. The absence of these safeguards is a flaw inherent in the regulatory dispute resolution process. It creates the potential for a person with both no medical background and a vested interest in the employer or insurer to make the ultimate determination over whether a procedure should be authorized, rather than a qualified practitioner in the appropriate medical field of specialty.
Figueroa v. Rockbestos Company, 2004 Conn. Wrk. Comp. LEXIS 26, *12, (July 20, 2004). As a matter of fact, the chief executive officer of the medical plan who made the ultimate decision to deprive the injured worker of medical treatment in Figueroa was a human resources representative who previously justified the termination of medical treatment. About this decision-maker, the Workers' Compensation Commission stated as follows:
[T]he claimant took an appeal to the CEO of Rockbestos' medical care plan, Philip Borgia. As noted by the trial commissioner, Borgia is a human resources director with no formal medical training. There is also evidence in the record showing that Borgia, in his capacity as Rockbestos' Director of Human Resources, was previously involved in this case as an advocate for his employer. He apparently wrote a letter dated October 12, 2000 in which he . . . sought to terminate his workers' compensation. See Claimant's Exhibit K (report of Dr. Kruger). . . . A reasonable person might question whether such a factfinder could remain reasonably impartial.
Figueroa v. Rockbestos Company, 2004 Conn. Wrk. Comp. LEXIS 26, *15 - 16, (July 20, 2004).
The Workers' Compensation Commission more recently recognized the due process concerns created by Connecticut's utilization review process. See Johnson v. State of Connecticut, 2017 Conn. Wrk. Comp. LEXIS 25, *15, n.9 (August 21, 2017) ("We note an incongruity in our statutes which we are not, as an administrative body, in a position to address. . . . While the General Assembly clearly intended to streamline decision-making for managed care plans, we question whether it intended to place limitations on the due process rights of claimants."). The Commission finds fault with the "the General Assembly . . . [having] devised a scheme for managed care plans which bars a claimant in our forum from having the right to cross-examine witnesses and present evidence to contest the respondent's determination (which, pursuant to Balkus v. Terry Steam Turbine, Co., 167 Conn. 170 [1974] would exist in an ordinary claim under Chapter 568)". Johnson v. State of Connecticut, 2017 Conn. Wrk. Comp. LEXIS 25, *17, (August 21, 2017). Additionally, the Workers' Compensation Commission raised the infirmity of a process which does not require the medical care plan to provide a reason for its denial or termination of medical treatment. See Johnson v. State of Connecticut, 2017 Conn. Wrk. Comp. LEXIS 25, *18, (August 21, 2017) ("We do not find that the respondent has an affirmative obligation under the statute to justify its deliberations in utilization review decisions; rather, the burden of persuasion and the burden of presenting the record of such proceedings in a case under § 31-279 C.G.S. rests with the claimant.").
As these explanations allude, this internalized process provides an employer with a right to review - and unilaterally withhold - medical treatment that has been prescribed as medically necessary. Further, this internal appeal process can only be reversed by the Workers' Compensation Commission if if the chief executive officer's decision was unreasonable, arbitrary or capricious. See Footnote 1. This heightened standard means, generally, that the chief executive officer's decision will be upheld even if the Workers' Compensation Commission would have decided the issue differently. See Figueroa v. Rockbestos Company, 2004 Conn. Wrk. Comp. LEXIS 26, *10 (July 20, 2004) ("By allowing modification of a CEO's decision regarding payment for recommended treatment only upon a showing that the decision was unreasonable, arbitrary or capricious, the drafters of Admin. Reg. § 31-279-10 presumably intended to grant substantial deference to the decisionmaker.").
Another element of the employer's superior bargaining position is the self-insured employer's ability to screen and pre-select the practitioners with whom an injured worker may receive treatment. See C.G.S. Section 31-279 ("Any employer . . . may establish a plan . . . for the provision of medical care that the employer provides for treatment of any injury or illness under this chapter. Each plan shall contain . . . [a] listing of all persons who will provide services under the plan".) Interestingly, while a self-insured employer may limit the practitioners with whom an injured worker must treat, the employer may hire any practitioner to challenge treatment prescribed by its pre-selected practitioners. In other words, a self-insured employer is legally authorized to both screen treating physicians in order to increase the likelihood of favorable opinions and then, if an opinion is unfavorable to its financial interests, hire other practitioners to challenge that opinion.
It is reasonable to conclude, based upon the foregoing, that the potential for inappropriate challenges, denials and terminations of prescribed medical treatment is heightened when an employer is a self-insured entity.
In reviewing allegations about a self-insured employer's conduct, a Connecticut judge said of Yale-New Haven Hospital, Inc. the following:
The court wishes to state that nothing herein is intended to disparage or trivialize the seriousness of plaintiff's allegations of wrongdoing. The allegations of litigation misconduct in connection with the workers’ compensation matter are extremely serious in nature . . . [and i]f they are true, it is virtually inconceivable that an employer would be able to perpetrate such wrongdoing with impunity . . .
Order, pg. 2 of 3. The judge ultimately struck the allegations, holding that workers' compensation exclusivity precluded the court from conducting a further review of the allegations, from making a determination regarding the merits of the allegations, or from providing relief.
In another matter, the Connecticut Workers' Compensation Commission recognized the destructive impact of a self-insured employer's lack of candor, while also recognizing that it was unable to provide a remedy for such conduct. In making this decision, the trier of fact explained that "'. . . the respondent's actions in this claim . . . demonstrate an alarming lack of candor that is most likely actionable in another forum, the Workers' Compensation Commission unfortunately lacks the jurisdiction necessary in order to hold the respondents accountable for their troubling actions.' See Conclusion, P D." Murray v. Town of Stratford, et al., 2013 Conn. Wrk. Comp. LEXIS 53, *4, 2013 Conn. Wrk. Comp. LEXIS 53 (December 11, 2013). On appeal the Compensation Review Board upheld this decision but acknowledged that there are limitations to a trier of fact's authority in the face of such conduct. The Workers' Compensation Commission explained the limits of its authority as follows:
[W]hat occurred here provides a cautionary tale. As to the law, the Workers' Compensation Commission is a tribunal of limited jurisdiction. . . . [T]here are instances where determinations that seem to be outside the scope of the Workers' Compensation Act's subject matter jurisdiction are permitted. Such determinations are generally limited to instances where such interpretations are 'incidentally necessary to the resolution of a case arising under that act.' . . . We do not discern any legal basis for concluding that the trial commissioner had the requisite subject matter jurisdiction [in this matter].
Murray v. Town of Stratford, et al., 2013 Conn. Wrk. Comp. LEXIS 53, *4 - 5, 2013 Conn. Wrk. Comp. LEXIS 53 (December 11, 2013).
The Connecticut Workers' Compensation Commission, therefore, expects both injured workers and employers to act with candor and to be truthful in their representations. As it has explained, a lack of candor and honesty creates the potential for abuse and risks rewarding evasiveness, dishonesty and perjury. See Snyder v. Gladeview Healthcare Center, 2013 Conn. Wrk. Comp. LEXIS 11, *12 (February 27, 2013) ("We are troubled by the implications of this reasoning wherein a party that failed to exercise candor before the tribunal would be benefited. While the truth may work to a party's disadvantage in an individual dispute, fidelity to veracity is a prerequisite to any system of justice. A lack of candor can never be equitable.
Presumably aware of these risks, the Connecticut Workers' Compensation Act does endeavor to penalize misconduct. This concept was recently affirmed by the Appellate Court when it affirmed the rights of both injured workers and employers to pursue remedies pursuant to C.G.S. Section 31-290c. The Appellate Court stated that:
[o]ur Supreme Court has explained that § 31-290c ‘criminalizes the behavior of a person who makes a claim or obtains an award based in whole or part on a material misrepresentation or intentional nondisclosure of material fact, and it also confers the right to bring a cause of action for statutory theft pursuant to General Statutes § 52-564.’ Leonetti v. MacDermid, Inc., supra, 310 Conn. 217-18; see also Dowling v. Slotnik, 244 Conn. 781, 815, 712 A.2d 396, cert. denied sub nom. Slotnik v. Considine, 525 U.S. 1017, 119 S. Ct. 542, 142 L. Ed. 2d 451 (1998). Likewise, it applies to an employer that prevents or attempts to prevent the receipt of benefits or reduces or attempts to reduce the amount of benefits based on a material misrepresentation or intentional nondisclosure of a material fact. See, e.g., Desmond v. Yale-New Haven Hospital, Inc., 138 Conn. App. 93, 100, 50 A.3d 910 (plaintiff claimed that defendants prevented, or attempted to prevent, receipt of benefits or reduced or attempted to reduce amount of benefits by casting workers’ compensation claims in false light by making certain misrepresentations), cert. denied, 307 Conn. 942, 58 A.3d 258 (2012).
Reid v. Speer, 209 Conn. App. 540, 549 (2021).
Yale-New Haven Hospital, Inc. recently, however, rejected this proposition, asserting that both: (a) the making of material misrepresentations of fact and (b) the intentional withholding of material facts are protected legal strategies. More specifically, Yale-New Haven Hospital, Inc. claimed that it is privileged to make false and malicious statements so long as it is attempting to reduce or terminate an employee's workers' compensation benefits - because such conduct is "related" to the claim.
As argued by Letizia, Ambrose and Falls, P.C., the attorney hired by Yale-New Haven Hospital, Inc. to defeat a long-standing workers' compensation claim:
[t]he litigation privilege provides absolute immunity from civil liability for statements or conduct in the course of judicial proceedings as long as [those statements] are in some way pertinent to the subject of the controversy. Simms v. Seaman, 308 Conn. 523, 534 (2013). Absolute litigation immunity applies to judicial and quasi-judicial proceedings, including administrative proceedings. Id. 539 . . . Moreover, the doctrine of absolute immunity applies to litigation conduct even if undertaken for improper motives and to statements even if made falsely, deliberately and maliciously. Id. 536-37 (absolute privilege applied to attorney who allegedly deliberately concealed material evidence from the plaintiff and incorrectly portrayed the plaintiff's former spouse as economically disadvantaged) . . .
Desmond v. Yale-New Haven Hospital, Inc., et al., Docket No. X06-UWY-CV24-6075921-S (Entry No. 113.00, pg. 26). See Footnote 2. In sum, the argument is that an employer is protected from - and may benefit from a trier of fact's reliance upon - false statements and failures to disclose material facts, even when such conduct is deliberate and malicious.
Of course, not every Court is willing to tolerate a fraud upon the proceedings. See Footnote 3. And, as noted above, the Workers' Compensation Commission does not tolerate such conduct. Separately, the legislature has indicated its unwillingness to tolerate this behavior, having enacted C.G.S. Section 31-290c of the Workers' Compensation Act to provide criminal and civil actions as appropriate.
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Footnote 1: "Administrative Regulation § 31-279-10(f) states, 'The necessity and appropriateness of medical and health care services recommended by providers of a medical care plan shall not be subject to review by a Workers' Compensation Commissioner until the plan's utilization review and dispute resolution review and appeal procedures, as described in subsection (e), have been exhausted. The decision of the chief executive officer of the plan relating to payment for such medical and health care services shall be subject to modification only upon showing that it was unreasonable, arbitrary or capricious.'" Byrd v. Bechtel/Fusco, 2004 Conn. Wrk. Comp. LEXIS 24, *6, 2004 Conn. Wrk. Comp. LEXIS 24 (July 14, 2004).
Footnote 2: The Connecticut Supreme Court explained the litigation privilege as follows: "[T]he benefit of encouraging defendants to speak candidly in judicial proceedings outweighs the risk of a defendant abusing the privilege by lying under oath." Tyler v. Tatoian, 164 Conn. App. 82, 92 (2016). Now, the Connecticut Supreme Court clearly did not condone lying by parties or their attorneys. This is why the litigation privilege does not protect liars in all contexts. See Tyler v. Tatoian, 164 Conn. App. 82, 93 (2016) ("'Parties and their counsel who abuse the process by bringing unfounded actions for personal motives are subject to civil liability for vexatious suit or abuse of process.' (Footnote omitted.) DeLaurentis v. New Haven, supra, 220 Conn. 264.").
Footnote 3: "'False testimony in a formal proceeding is intolerable. We must neither reward nor condone such a flagrant affront to the truth-seeking function of adversary proceedings.' (Internal quotation marks omitted.) ABF Freight System, Inc. v. N.L.R.B., 510 U.S. 317, 323, 114 S.Ct. 835, 127 L.Ed. 2d 152 (1994). As this Court clearly set forth at the start of and at the end of the sanctions hearing, it will not condone nor tolerate willful false testimony designed to perpetrate some fraud on this Court." Yoranidis v. Exxon Mobil Corp., 2024 Conn. Super. LEXIS 809, *3 (April 26, 2024).