New Hampshire Insurance v. Logan

Citations: 13 Ark. App. 116; 680 S.W.2d 720; 1984 Ark. App. LEXIS 1899Docket: CA 84-122

Court: Court of Appeals of Arkansas; December 5, 1984; Arkansas; State Appellate Court

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Melvin Mayfield, Judge, addresses an appeal from New Hampshire Insurance Company regarding a Workers’ Compensation Commission decision related to Martin Logan's workplace injuries. Logan injured his right leg on August 15, 1979, while employed by Affiliated Food Stores, leading to a knee replacement and ongoing medical treatment. At the time of the injury, Maryland Casualty Company was the insurance carrier, which accepted the injury as compensable, covering medical expenses and some temporary total disability, but did not pay for permanent partial disability by July 12, 1981.

On that date, Logan sustained a second injury, requiring surgery on both knees, with potential for further surgery. By this time, New Hampshire had taken over as the employer's insurance carrier. After Maryland refused to cover medical expenses related to the new injury, stating it believed the issues were due to the second injury, New Hampshire began paying Logan’s medical bills but sought reimbursement from Maryland and requested a hearing. 

During the September 21, 1982 hearing, New Hampshire argued the second injury was a recurrence of the first, seeking liability from Maryland for expenses related to both injuries, or, alternatively, a prorated liability. Maryland contended there was a new injury and cited the statute of limitations to deny liability. The administrative law judge noted Logan was unrepresented at the first hearing and advised him of his right to counsel, leading to a recess.

At a subsequent hearing on January 17, 1983, the law judge ruled that Maryland was responsible for all benefits related to the August 1979 injury up to the second injury date, including 50% permanent partial disability. The July 1981 injury was classified as an aggravation or recurrence of the first injury, with both insurance carriers liable for benefits post-July 12, 1981. Maryland was also ordered to reimburse New Hampshire for payments made that were inconsistent with this ruling. The Workers’ Compensation Commission upheld the law judge's decision, and the appeal focuses on the determination that New Hampshire disputed all benefits after the second injury date, with commendation for its provision of medical benefits to Logan.

Appellant contends that if it is deemed to have controverted appellee’s claim by seeking repayment from Maryland, it would discourage carriers from acting responsibly in the future. Appellant disputes the Commission's justification that it forced appellee to hire an attorney, asserting that its dispute with Maryland did not jeopardize appellee’s interests. Citing Aluminum Co. of America v. Henning, appellant argues that the rationale for awarding attorney's fees in controverted claims does not apply to its case. Conversely, appellee counters that without legal representation, he could suffer substantial harm if appellant's arguments were successful, potentially leaving him with no recourse. The appellee emphasizes the primary liability of the employer for workers’ compensation, as outlined in Ark. Stat. Ann. 81-1305 (Repl. 1976). 

The determination of whether a claim has been controverted is factual and should not follow a rigid standard. The Henning case establishes that the assessment should be based on the specific circumstances of each case, with Commission findings upheld unless there is substantial evidence against them. The court agrees that the actions of the two carriers provide substantial evidence to support the Commission's finding of a controverted claim. However, it acknowledges appellant's concern that a ruling against it may reduce incentives for carriers to provide necessary medical benefits. Importantly, the court clarifies that appellant did not controvert medical expenses paid prior to the first hearing on September 21, 1982, and finds no evidence to support a contrary conclusion. The award is affirmed with modifications, and the case is remanded for further proceedings. Judges Cloninger and Corbin concur.