DTCI: Revisiting Supplemental Awards under the Indiana Worker’s Compensation Act

By Aaron J. Brock

Brock

Attorneys engaged in defending workers’ compensation claims in Indiana may occasionally encounter a situation in which a claimant chooses to maintain claims in multiple states arising out of the same incident or injury. In general, jurisdiction before the Indiana Worker’s Compensation Board is proper where the Board finds a contract of employment was made in Indiana or a contract providing for performance in Indiana. Under I.C. § 22-3-2-20, the Indiana Worker’s Compensation Act is applicable regardless of whether the injury by accident or death occurs outside Indiana, provided the employment contract has the requisite relationship to Indiana. Jurisdiction may therefore be appropriate in multiple states in several situations, most commonly where the accidental injury occurs in a state different from that in which the worker resides or the employer is located. An injured worker may elect to pursue claims in multiple states where the underlying facts fall at the margins of either state’s jurisdictional requirements or to preserve the claim against statute of limitations. Increasingly, however, injured workers seek to take advantage of states providing more favorable benefits in hopes of larger recovery. Potential issues in practice may arise where injured workers pursue claims in multiple states, implicating res judicata and collateral estoppel concerns.

Indiana law does not necessarily prohibit supplemental recovery

Under Indiana law, payment or settlement of a workers’ compensation claim under the statutes of another state does not bar a claim for workers’ compensation benefits under the Indiana Worker’s Compensation Act. See Brenon v. First Advantage Corp., 973 N.E.2d 1116 (Ind. Ct. App. 2012). In Brenon, Omega Insurance Services hired Brenon, a Wisconsin resident, to perform investigative services wherever Omega conducted business. Id. at 1117. The worker was injured in an automobile accident in Indiana while traveling on an assignment with the employer. Id. Subsequently, the worker filed a workers’ compensation claim in Wisconsin, which the employer challenged on several grounds, including whether the Wisconsin Worker’s Compensation Division had jurisdiction over the worker’s claim. Id. Ultimately, the employer negotiated settlement agreements with two of its workers’ compensation carriers to settle the worker’s Wisconsin claim. Id. at 1117.

Before accepting the settlement agreements in Wisconsin, the worker filed an application with the Indiana Worker’s Compensation Board seeking benefits from the employer for the same motor vehicle accident. Id. at 1118. The employer moved to dismiss the Indiana claim, asserting that the Indiana claim was barred by res judicata and/or claim preclusion by settlement of the workers’ compensation claim in Wisconsin. Id. The single hearing member concluded that the worker was barred from pursuing a workers’ compensation claim in Indiana by the doctrine of collateral estoppel, and the full board affirmed the single hearing member’s decision. Id. The full board also indicated that voluntary payments made by an employer and/or workers’ compensation carrier without the employee’s knowledge or understanding do not bar the employee from making a claim for the same injury under the law of another state Id. at 1119 (citing Industrial Track Builders of America v. Lemaster, 429 S.W.2d 403 (Ky. 1968)).

The court in Brenon shifted its analysis to whether an award in one state precludes subsequent recovery in another state under the Full Faith and Credit Clause of the United States Constitution. In Brenon, the court adopted the generally accepted view under the Full Faith and Credit Clause that “unless the statute or decisions of the first award expressly disallowed a later award in another state which has an adequate interest in the subject matter such an award may be made if credit is given for payments on the first award.” 973 N.E.2d at 1121 (citing Lemaster, 429 S.W.2d at 406). This approach was seemingly mandated by Industrial Commission of Wisconsin v. McCartin, 330 U.S. 622 (1947) (holding that “[o]nly some unmistakable language by a state legislature or judiciary” of the rendering state would preclude a supplemental award under the Full Faith and Credit Clause).

Finding no judicial opinions or statutes in Wisconsin or Indiana that prohibit workers’ compensation claims in multiple states arising out of the same injury, the Brenon court turned its analysis to clauses in the settlement agreements that resolved the Wisconsin claims. These settlement agreements released Omega and two of its workers’ compensation carriers from claims in Wisconsin and Florida, while specifically “preserving Brenon’s right to pursue his worker’s compensation claim in Indiana.” Id. at 1122. Indeed, the court in Brenon noted that the employer could have sought to include a provision in the Wisconsin settlement agreements that would have precluded the worker from pursuing the Indiana claim. Id. Because the Wisconsin claim was settled before adjudication of the issues and given the reservation of rights clauses contained in the settlement agreements, the court reversed the Board’s dismissal of the worker’s claim. Id.

Full Faith and Credit Clause issues

As noted above, Indiana follows the McCartin approach that the Full Faith and Credit Clause precludes a worker from recovery in multiple states only where the judicial opinions or statutes of the first state contain “unmistakable language” restricting further recovery. See Brenon, 973 N.E.2d at 1121. Four years before McCartin, the United States Supreme Court held that the Full Faith and Credit Clause precluded a worker who had received a worker’s compensation award for injuries received in one state from seeking compensation in another state, where the original award was made explicitly in lieu of any other recovery. See Magnolia Petroleum Co. v. Hunt, 320 U.S. 430 (1943). McCartin represented a significant shift in analyzing the Full Faith and Credit Clause as it related to supplemental workers’ compensation awards by considering the intent of the statutes and judicial decisions in the state of the first award.

McCartin involved a worker who suffered an injury in Wisconsin, where he worked, arising out of an employment contract he entered in Illinois. 330 U.S. at 623. The worker continued to pursue a claim in Wisconsin after entering into an agreement settling the Illinois claim — which agreement, like Brenon, included a provision specifically preserving any rights the worker may have under the worker’s compensation laws of Wisconsin. Id. at 624. Ultimately, the McCartin court found that because nothing in the Illinois statute was designed to preclude a supplemental award under the laws of another state, Wisconsin was free to grant a supplemental award under its own laws under the Full Faith and Credit Clause. Id. at 627-28.

The United States Supreme Court subsequently re-examined the issue in Thomas v. Washington Gas Light Co., 448 U.S. 261 (1980). The Thomas plurality held that a “[s]tate has no legitimate interest within the context of our federal system in preventing another [s]tate from granting a supplemental compensation award” and that the Full Faith and Credit Clause should “not be construed to preclude successive workmen’s compensation awards.” 448 U.S. at 286. Three justices concurred with the plurality decision, concluding that the relevant state statute lacked the “unmistakable language” required by McCartin, while two Justices dissented and argued that the straightforward Magnolia approach should be followed. The precedential value of Thomas remains unclear. Under Brenon, the “unmistakable language” requirement laid out in McCartin remains the law in Indiana.

Most cases applying the McCartin approach have found the statutory text lacking the “unmistakable language” necessary to restrict extraterritorial recovery. See, e.g., Thomas, 448 U.S. at 274. Indiana’s Worker’s Compensation Act provides:

The rights and remedies granted to an employee subject to IC 22-3-2 through IC-22-3-6 on account of personal injury or death by accident shall exclude all other rights and remedies of such employee, the employee’s personal representatives, dependents, or next of kin, at common law or otherwise, on account of such injury or death, except for remedies available under IC 5-2-6.1

I.C. § 22-3-2-6. This provision — which by its own terms provides the exclusive remedy excluding “all other rights and remedies” whether “at common law or otherwise” — does meet the unmistakable language of McCartin. See Brenon, 973 N.E.2d at 1121 (finding no judicial opinions or statutes in Indiana prohibiting claims in multiple states). Several states, including Iowa and Tennessee, have codified an “election of remedies” approach whereby the pursuit of a workers’ compensation claim in another state precludes and/or limits the available recovery of the forum in which supplemental recovery is sought. Adopting such an approach in Indiana would ease caseload burdens while also avoiding inconsistent and conflicting decisions from other jurisdictions.

Res judicata and collateral estoppel concerns

Both McCartin and Brenon involved claims that were settled with the relevant state board’s approval, thereby avoiding any in-depth analysis into res judicata and collateral estoppel concerns raised by successive awards. Given the lack of uniformity among the state statutes and judicial decisions implementing each state’s respective worker’s compensation system, it is evident that states are bound to reach different results when the same claim is litigated in multiple forums. As the Brenon court recognized, res judicata and collateral estoppel principles do not apply absent a full and fair opportunity to litigate the claim — which is not met where the matter is settled without a full adjudication of the issues.

Reservations of rights provisions

Under Indiana law, it appears that an employer may preclude an injured worker from pursuing a workers’ compensation claim in Indiana by including a provision to that effect in a settlement agreement related to an out-of-state claim. See Brenon, 973 N.E.2d at 1123. The Brenon court indicated that the employer could have sought to include a clause in the settlement agreements in which the worker would agree to abandon his Indiana claim but did not address whether such a provision would be enforceable under Indiana law. Id. It is an open question whether such provisions are enforceable under I.C. § 22-3-2-15, which requires board approval of settlement agreements resolving claims under the act. Nonetheless, a settlement agreement containing a provision precluding supplemental claims in other states provides valuable support in the defense of successive claims involving the same injury.

Practice pointer

Indiana law does not necessarily prohibit an injured worker from pursuing a worker’s compensation claim in Indiana after recovery in another state. As a matter of policy, limiting the availability of supplemental awards would provide employers and insurance carriers with certainty that they would not be haled into an alternative forum for a separate proceeding arising out of the same set of facts. Under current Indiana law, however, the settlement of a workers’ compensation claim in one state does not foreclose the worker from asserting a claim in another state arising out of the same operative facts — at least where the settlement agreement specifically preserves the right to pursue recovery in another forum.•

Aaron J. Brock is an associate at the Van Valer Law Firm in Greenwood and the publications chair of the DTCI Worker’s Compensation Section. Opinions expressed are those of the author.