NEBRASKA COURT OF APPEALS ADDRESSES THE FACTUAL BASIS FOR CLAIM DENIAL

In Perez Yax v. Packers Sanitation Servs., the Nebraska Court of Appeals addressed what type of evidence may create a reasonable basis for the denial of workers’ compensation benefits and what actions may be considered “willful negligence.”  The opinion was not selected for permanent publication, and thus is not binding precedent for other Nebraska courts, but it can still be cited when it “has persuasive value on a material issue.”   Neb. Ct. R. App. P. 2-102(E).

In Perez Yax, the employee suffered a crush injury to her left index and middle fingers while cleaning a running conveyor belt. The employee claimed that she lost her balance while pulling a hose that got caught in the belt with her right hand and used her left hand to steady herself on the belt, which then got caught. The employer conducted an investigation, culminating in a report containing an alternative version of events. The report stated that the employee’s hand got caught when it slid down to the belt after she placed her hand on the belt’s framework to balance herself while pushing meat scraps out from under the belt. The report also stated that the employee was “unaware” of how close she was to the conveyor belt. The employer terminated the employee and denied workers’ compensation benefits due to willful negligence by violating a specific safety rule of the employer (requiring employees to stay an “arm’s length” away from running equipment and to shut down and lock out equipment when employees get closer than an arm’s length). At trial, the employee sought and was awarded indemnity benefits, medical expenses, waiting time penalty, attorney fees, and interest. The trial court awarded the waiting time penalty, attorney fees, and interest on the basis that the employer had no reasonable basis to deny workers’ compensation benefits, and the employer appealed this portion of the award.

The employer’s denial of benefits was based on its investigation report, which in turn, in the absence of eyewitnesses or usable video, was reportedly based on the employee’s statement, an inspection, information from similar accidents, and demonstrations (on a different conveyor belt). The trial court determined that the investigation report differed from the employee’s statement and that its findings were speculation not supported by facts, which provided no reasonable basis for denying the claim. The trial court also noted that the investigation report’s finding that employee was unaware of how close she was to the conveyor belt showed at most ordinary, not willful, negligence.

The Nebraska Court of Appeals upheld the trial court’s finding that the employer did not meet its burden to prove willful negligence and did not have a reasonable basis in fact or law to deny workers’ compensation benefits. The Court of Appeals found that the trial court did not clearly err when it found that the statements of “lost awareness” or was “unaware” were, at most, evidence of momentary inadvertence or ordinary negligence. The Court then reiterated that with no finding of intentionality, the five factors in Guico v. Excel Corp., are not applicable. The rule violation has to be intentional.

If you have questions about willful negligence or violation of safety rule and its affect on compensability, or any other questions regarding Nebraska workers’ compensation, please reach out to Tom Shires or Cameron Azimi at (402) 475-1075.