Miss. Supreme Court: No Sanctions for Insurer that Fought Septic Tank Order

In a workers’ compensation case that has been called “highly unusual,” Employers Insurance Co. of Wausau has avoided having to pay for a new septic tank, a new central air system and vehicle insurance for an injured worker.

The worker died while the case was on appeal, and the Mississippi Supreme Court found that part of the case was rendered moot by the death. But the issue of sanctions and attorneys fees leveled against the insurer was not.

The sanctions were necessary, the claimant’s lawyer had said, because the carrier had deliberately thwarted and delayed efforts to refurbish the paralyzed worker’s home in ways that were medically necessary.

In Gamma Healthcare and Employers Insurance Co. of Wausau vs. Estate of Sharon Grantham, the court last week upheld a state appeals court, which had reversed the Mississippi Workers’ Compensation Commission. A Mississippi attorney said the commission’s finding, which ordered the employer/carrier to pay for major household systems and sanctioned the carrier for appealing the commission’s ruling, raised eyebrows in the state because it appeared to have had no legal precedent.

The comp commission’s decision “is without parallel in any jurisdiction and carries the workers’ compensation law well beyond the ‘sufficiently well balanced’ bargain that makes the workers’ compensation law constitutionally valid,” wrote Oxford, Mississippi, attorney Reed Martz, in his brief on behalf of the employer and insurer.

“An extension of the workers’ compensation law to this extent ‘would stretch the workers’ compensation statute beyond its intended meaning,'” Martz added.

In the end, the Supreme Court did not address the underlying issue of whether an insurer should replace aging infrastructure systems for a paraplegic claimant. But it did decide that the appeals court correctly relied on federal rules to render part of the case moot, due to the death of the claimant. It also found the comp commission had erred by deciding on its own that the insurer should not have appealed the case and must pay the claimant’s attorney fees.

The case began in 2015, when Grantham was severely injured in a work-related automobile accident, leaving her paralyzed. The employer/carrier began paying benefits and medical treatment. But within a year, disputes arose over the extent of modifications needed to the woman’s home.

An administrative law judge ordered Employers Insurance Co. to pay for some significant modifications, to provide Grantham with a wheelchair-accessible van and to pay for part of the insurance on the van.

In 2017, Grantham asked the ALJ to appoint a case manager to assist with the recurring disagreements between the claimant and the insurer on home modifications. The judge agreed. The case manager, a nurse, recommended evaluations that found that Grantham needed a new septic system and new HVAC system, which had stopped working properly.

The insurer argued that those expensive repairs were beyond the scope of the workers’ comp law and that the system were beyond their useful life before Grantham’s work injury occurred.

Employers Insurance Co. attorneys also argued that accepting the case manager’s recommendations had violated the insurer’s due process rights because the case manager was not qualified to make the decisions and she had not been cross-examined.

The full Mississippi Workers’ Compensation Commission upheld the ALJ and went a step further. In a sua sponte order, it sanctioned the carrier’s appeal to the commission as being “without reasonable grounds” or medical evidence and had caused an unnecessary delay in benefits. The commission ordered the insurer to pay attorneys’ fees of $200 an hour for 20 hours of work.

Meanwhile, while the matter was on appeal to the state Court of Appeals, Grantham died in 2019. Grantham’s estate conceded that the employer was no longer obligated to pay for the septic and HVAC systems and van insurance, and the appeals court dismissed that part of the litigation.

But the appeals court found that the sanctions order against the insurer was not moot. It held that the E/C had reasonable grounds for an appeal, and it reversed the commission’s order on attorney fees. The state Supreme Court agreed in its Feb. 27 opinion.

Grantham’s estate “argues that this allows parties to ‘escape’ sanctions and that the Commission’s authority to sanction ‘has lost any deterrent effect.’ We disagree,” the justices wrote. “The employer/carrier are not escaping sanctions; rather, as pointed out by the Court of Appeals, ‘parties should not be sanctioned for making reasonable legal arguments in support of their positions.'”

The majority opinion was written by Justice James Kitchens. The chief justice, Michael Randolph, wrote a strong dissent. He noted that Grantham had been forced to repeatedly face off against the insurer on home modifications, and that the insurer’s contractor had failed to make all changes recommended by an independent medical evaluation.

Randolph also said that the insurer did not provide any medical evidence as to why the home repairs were not related to her injury or that they were not necessary for a paraplegic. Grantham, on the other hand, produced two medical opinions noting that functioning septic and HVAC systems were medical necessities.

Three other justices joined the chief justice in his dissent.

The attorney for the deceased claimant, Steven Funderburg, could not be reached for comment Monday. But his brief in the appeal sheds light on the years of legal wrangling that led up to the comp commission’s unusual decision.

“The record demonstrates that Grantham had to repeatedly move to compel orders from the Mississippi Workers’ Compensation Commission providing relief that has been recognized by the commission and Mississippi appellate courts as available to paralyzed workers for decades,” Funderburg wrote.

“It is in this context of a paralyzed woman being knowingly subjected to raw sewage and knowingly without reliable air conditioning or heat that the commission’s decision to include sanctions must be viewed,” his brief continued. “Without question, the continued delay and denial by Wausau (the insurer), unsupported by any medical opinion, caused unreasonable delay. Sadly, the delay has now worked in Wausau’s favor as Sharon Grantham has passed away and will never have the modifications that were ordered. That does not mean that the Commission was in error when the modifications were ordered or when sanctions were imposed.”

Topics Carriers Mississippi