January 2007 - Highlight

The Meaning of Notice in the Fourteen-Day Rule

In Pearson v. Freeport School Department (2006 ME 78), the Maine Supreme Court, sitting as the Law Court, affirmed a hearing officer's determination that the employer did not violate the 14-day rule (W.C.B. Rule, ch. 1, §1) for filing a Notice of Controversy ("NOC") 17 days after it had received a Petition for Award on two separate dates of injury. The employer had previously contested an injury claim ten months earlier, but only in regards to one specific claimed injury date.

The Court also held that the hearing officer properly determined that notice of injury is not synonymous with knowledge or notice of a claim for benefits that would implicate the 14-day rule and require an employer to pay or controvert the claim. The Pearson case supports the view that hearing officers have broad authority to determine whether an employer has properly complied with the purpose of the 14-day rule before levying the significant penalty contained in the rule.

The case began in May 2002 when Pearson, a teacher, advised her principal that she had been hospitalized for depression and believed that her symptoms had been aggravated by workplace stress. She subsequently requested an unpaid leave of absence for one year. The employer did not file a First Report of Injury or a NOC at that time. Seven month later, in January 2003, Pearson informed her school's business manager that she believed her leave of absence was necessitated by her depression, which she believed was aggravated by workplace stress. Within 14 days, the school filed a First Report of Injury and a NOC citing August 28, 2002, the last day she was paid under salary, as the date of injury.

On October 27, 2003, Pearson filed two Petitions for Award seeking benefits for two injury dates including the previously contested August 28, 2002 date of injury as well as a newly claimed March 19, 2002 date of injury. Both petitions presumably referenced a claim for benefits for workplace stress. The Freeport School Department did not file a new NOC on the August 28, 2002 date of injury but did file one on the March 19, 2002 date of injury on November 14, 2003, 17 days after the petition was filed. The school department acknowledged that the NOC was late and paid $50 in benefits for the 17-day period from October 29, 2003 through November 14, 2003.

At hearing, the school department argued that Pearson's claims were barred for late notice, while Pearson pursued her stress claim and her claim that the school department violated the 14-day rule for various reasons and owed her total benefits dating back to the date of her claimed incapacity. In response to the school department's late notice argument, the hearing officer determined that the conversation Pearson had with the principal in May 2002, concerning her mental condition and request for a leave of absence, was sufficient to place the school department on notice of a potential work-related injury. The school department did not appeal this finding.

However, as a result of the hearing officer's finding, Pearson then argued to the Law Court that by the fact that the school department had notice of her claim of injury in May 2002, the school had violated the 14-day rule by failing to pay or controvert her claim at that time.

The Court disagreed, explaining that notice or knowledge of an injury "does not equate to knowledge or notice of a claim that would give rise to a duty to pay benefits" citing the case of Carroll v. Gates Formed Fibre Products (663 A.2d 23, Me. 1995), a decision which interpreted the "early pay" system under the law in effect before 1993. The Court cited language in that decision requiring "some sort of claim or request by an employee" before an employer is obligated to pay or controvert a claim. That decision further stated, "It would be impossible for an employer to know how much to pay . . .without some indication of an employee's demand. And clearly there must be something to controvert before an employer can know what to file in its notice of controversy."

In this case, Pearson's informing her principal that work was aggravating her depression and requesting a year-long leave of absence was insufficient to constitute the "notice or knowledge of a claim for incapacity or death benefits" required by the 14-day rule.

The Court further determined that the school department had not violated the 14-day rule for failing to timely file a NOC in response to Pearson's Petition for Award alleging a March 19, 2002 date of injury. The hearing officer had held that the March 19, 2002 and August 29, 2002 claimed injuries were "actually one and the same" and constituted "one continuum" for the same injury. In essence, the hearing officer determined that the school department's initial NOC, filed in regards to the August 28, 2002 date of injury, was sufficient to controvert Pearson's claim for emotional stress, regardless of the multiple dates she later chose to assign in her petitions.

The Court determined that the hearing officer's treatment of two separately claimed injuries as "one and the same" a factual finding which was not subject to appellate review. Because both claimed injuries were "one and the same," the school department had not violated the 14-day rule when it filed the second and admittedly late NOC in response to the claimed March 19, 2002 injury date. The Court further stated that it would be inconsistent with the purpose of the 14-day rule if the school department had been penalized for filing a late NOC in response to the March 19, 2002 claimed injury because that NOC amounted to an "over-compliance" with the rule.

The Court's decision is significant for a couple of reasons. First, the Court has highlighted the fact that an employee needs to actually make a specific claim for benefits before an employer is obligated to pay or controvert under the 14-day rule. An employee's providing notice of an injury without a specific request for benefits will typically not present an employer with enough information for it to pay the claim or controvert it by filing a NOC. Despite this ruling, we recommend that employers investigate potential lost time claims and either pay or controvert if the circumstances lead them to the inference that a claim has or will be made.

The case is also important in that it has labeled the hearing officer's decision to treat two separately claimed injury dates as the same claim as a "factual finding." As factual findings are not subject to appellate review, the Court's decision has the effect of entrusting hearing officers with significant discretion in interpreting claims made by employees. Frequently, employees will file multiple petitions on multiple dates of injury at varying times over the course of litigation. If an employer fails to pay or controvert on each and every new petition, giving rise to a 14-day rule allegation, the employer may have solid defenses that it has complied with the purpose of the rule and should not suffer the significant penalty contained in the 14-day rule.

Regardless of the Court's holding, which we interpret as dulling the sharp edges of the 14-day rule, it is our highest recommendation that employers and insurers remain vigilant for claims for benefits and respond by paying or controverting within 14 days as required by rule. The language of the 14-day rule is unchanged and requires vigilance and responsiveness by employers.

We recommend that employers and insurers continue their practice of treating each and every date of injury as separate, requiring the filing of individualized First Reports of Injury as well as a Notice of Controversy when the claim is disputed. Even if multiple dates of injury appear to be "one and the same," we recommend treating each injury date as separate throughout the litigation process. As always, if questions arise with regard to a specific claim, employers and insurers are encouraged to discuss the appropriate response with counsel.

- Darby Urey, Esq.