A Cautionary Tale for Workers’ Comp Insurers and Employers

What happens when a mistake occurs in a workers’ compensation case? This was the question at the heart of the recent Commonwealth Court decision in Reading Anthracite Co. v. Oxenrider. The case serves as a cautionary reminder to insurers and employers: while a judge has the authority to correct mistakes, they are not obligated to do so, especially if the evidence does not support it.

The history of Reading Anthracite is both tragic and complex, involving two sets of parties. On one side are Reading Anthracite Co. (RAC) and their insurer, the State Workers’ Insurance Fund (SWIF). On the other side are West Spring Energy LLC (West Spring) and their insurer, Rockwood Casualty Insurance Co. (Rockwood). Although RAC and West Spring are separate entities, RAC has a controlling stake in West Spring, which was formed to remove coal from RAC-owned mines.

Mr. Oxenrider, the decedent, was an employee of West Spring and worked as a heavy equipment operator. In the summer of 2017, RAC required a bulldozer operator for a new project, and Mr. Oxenrider was directed to report to RAC for an assignment starting on July 13, 2017. Tragically, he was involved in a fatal accident while operating the bulldozer for RAC on July 25, 2017.

Following the accident, West Spring, through its insurer Rockwood, issued a Temporary Notice of Compensation Payable (NTCP) on September 12, 2017, accepting liability on a temporary basis. West Spring began paying fatal claim benefits to Mr. Oxenrider’s widow. On October 24, 2017, the NTCP converted to a Notice of Compensation Payable (NCP), fully accepting liability for the fatal work injury and continuing to pay benefits. Over two years later, on December 12, 2019, Rockwood reaffirmed its liability through an agreement with the widow.

However, on February 21, 2020, a federal judge approved a settlement between RAC and the Mine Safety and Health Administration (MSHA), indicating that Mr. Oxenrider was working under RAC’s direct control and supervision, not West Spring’s. Armed with this settlement, West Spring filed Review and Joinder Petitions, arguing that the NCP contained a material mistake regarding the correct employer. They sought to correct the NCP and obtain reimbursement from RAC and SWIF for all benefits and expenses paid.

A Workers’ Compensation Judge (WCJ) has the authority to review and modify an NCP if it is proven to be materially incorrect. Direction and control are key factors in determining the employer of an injured worker under Pennsylvania Workers’ Compensation law. However, there are circumstances where a WCJ may find it inappropriate to amend an NCP.

The Commonwealth Court, after reviewing the controlling case law and the specific facts, affirmed the WCJ’s decision to deny the Review and Joinder Petitions. West Spring and Rockwood remained liable for the work injury. The court emphasized that a WCJ has wide discretion to consider the timeliness and manner in which an employer or insurer handles a claim.

The WCJ noted several critical points: West Spring paid Mr. Oxenrider’s wages during his assignment with RAC; his employment was never formally transferred to RAC; he remained a member of his union under West Spring; and there was no evidence that West Spring billed RAC for Mr. Oxenrider’s services. These factors supported the conclusion that an employment relationship existed between Mr. Oxenrider and West Spring at the time of his death.

Furthermore, the WCJ determined that West Spring and Rockwood thoroughly investigated Mr. Oxenrider’s proper employer when issuing the original NTCP and again when it converted. Rockwood’s agents consistently believed Mr. Oxenrider was an employee of West Spring. Two years later, West Spring and Rockwood acknowledged liability through an agreement with the widow. The Commonwealth Court upheld the WCJ’s decision, finding substantial evidence supporting the employment relationship between Mr. Oxenrider and West Spring.

This case serves as a reminder to all employers and workers’ compensation carriers. The Act affords an employer ninety (90) days to investigate a claim through the issuance of an NTCP. This ninety-day period should not be taken lightly. Serious efforts to review, inspect, and investigate the claim should be undertaken. Just as important, the employer and their carrier must be prepared to defend those actions if liability is later challenged in court. Ultimately, a WCJ has significant discretion to correct — or not — an NCP, and they can consider not only the length of time since the mistake was made but also all actions taken to investigate, accept, or deny the claim.