Workers' Compensation/Statutory Definition of "Injury"
Appeal of Raymond Letellier , No. 2010 - 795
(Decided December 15, 2011)

Facts:

The claimant was the co-founder of Steelelements, Inc., and he served as manager of plant operations, oversaw sales, engineering and customer relations.  In March 2007, a fire destroyed the plant and production was temporarily relocated while the facility was being rebuilt.  The final cost of rebuilding exceeded budget projections, and the business closed in 2009.  The claimant then filed for personal and business bankruptcy.

Prior to the business closing, the claimant sought treatment at Concord Psychiatric Associated for stress, and he attended follow up counseling thereafter.  The claimant then developed hypertension and major depression, which his medical providers related to the failure of his business as well as other life stressors.  The claimant filed a mental stress workers’ compensation claim, which was denied. 

At the first level hearing, the hearing officer found that the claimant failed to show that he suffered an injury that arose out of and in the course of his employment.  The hearing officer determined that the claimant was a victim of economic reality, which he stated was far outside the realm of the Workers’ Compensation Statute.  The claimant appealed.

The CAB found that the claimant met his burden of medical and legal causation, and that stress and depression qualify as compensable occupational injuries within the meaning of the statute.  The CAB ordered medical benefits to be paid, including psychological treatment.  The carrier filed a motion for rehearing, and the claimant filed a motion requesting an order for indemnity benefits.  Both motions were denied.  Both parties appealed to the New Hampshire Supreme Court.

Held:

Affirmed in part, vacated in part.

The primary issue before the Court was the statutory definition of the term, “injury”.  Pursuant to RSA 281-A:2, XI, and injury is compensable if it is an “accidental injury…or occupational disease…arising out of and in the course of employment…”  While in some cases, mental injuries and major depression caused by work-related stress may qualify as compensable injuries, the statute does not permit compensation for any “mental injury” caused by “any disciplinary action, work evaluation, job transfer, layoff, demotion, termination, or any similar action, taken in good faith by an employer.”

In interpreting the statutory definition of the term, “injury”, the Court looks to the plain and ordinary meaning, and that which can be implied fairly therefrom.  The Court interpreted, “any disciplinary action, work evaluation, job transfer, layoff, demotion, termination, or any similar action”, stating that these events may be precipitated by a number of factors, including poor performance, insubordination, or economic conditions, and are therefore excluded from the definition of “injury” because they are normal and expected conditions of employment life. 

Although business failure is not specifically listed, the legislature made it clear that this list was not exclusive by including the words, “any similar action”.  Therefore, the Court further interpreted this language stating that, “like the listed exclusions, the possibility of a business failure is a normal condition of employment, and is also precipitated by poor company performance or general economic conditions.  The Court stated that a business failure is indistinguishable from the specific exclusions. 

The claimant’s argument that the exclusion did not apply because the business failure was not an action taken by the employer was disputed by Court when it stated that the fact of a business failure implies some action by the employer – “a business has not failed until the employer shuts the business down.  Just as an employer’s decision to lay off employees due to economic conditions may result in mental injury, so too an employer’s choice to shut down a business due to economic conditions may result in mental injury.”

The Court further held that interpreting the phrase, “any similar action” not to exclude business failure would lead to an absurd result that employees who are laid off due to business failure, thus precluded from coverage for mental injury and receiving benefits, while the owner of the failed business would be eligible for benefits.  Thus, the Court held that business failure constitutes “any similar action”.

The Court held that the failure of the claimant’s business caused the stress that resulted in his severe and disabling depression.  There is nothing to suggest that the failure of the business in this case involved bad faith on the part of the employer.  Therefore, “business failure” comes within the statutory exclusion of “any similar action, taken in good faith by the employer.” 

The Court did not address any further arguments, as this holding was dispositive of the issues.

Regards,

Stephen J. Schulthess

603-634-4300
mailto: sschulthess@gss-lawyers.com