Defending workers compensation claims from employees who have not disclosed previous injuries may have just become a little more complicated for employers and insurance carriers in Georgia.

The Georgia Court of Appeals last week found that a long-standing defense against paying an injury claim does not always apply if the employer learns of a previous injury and does nothing about it before the worker is injured again.

“In the fraudulent-inducement-to-contract context, a party’s failure to rescind or repudiate the agreement after learning of the fraudulent representation acts as a waiver of that defense,” a three-judge panel of the court wrote last week in McKay vs. Inalfa Roof Systems.

Inalfa’s willingness to retain Sharron McKay in the assembly operator position, after learning of her prior back injury and false representation about it, “waives its right to use the Rycroft defense to deny McKay workers compensation benefits for the subsequent injury she suffered.”

The Georgia Board of Workers’ Compensation, an administrative law judge and a trial court had erred in relying on the Rycroft defense to uphold the roofing manufacturer’s denial of a late-2021 injury claim by McKay, the appeals court said. It’s the first time a Georgia appellate court has addressed the unusual circumstances.

“We have found no Georgia authority on this issue, nor have we been persuaded by the authorities from other jurisdictions cited by the parties, none of which are exactly on point,” the appeals court noted.

For more than 35 years, employers in Georgia have utilized the Rycroft defense, so-called after a 1989 state Supreme Court decision. Some other states allow similar defenses, with different caveats.

In Georgia, the Rycroft doctrine has allowed businesses to defend themselves against workers compensation claims if it can be shown that the employee, before getting hired, willfully failed to mention previous injuries. The employer must show three factors:

• The employee must have knowingly and willfully made a false representation about his or her physical condition.
• The employer must have relied upon the false representation and this reliance must have been a substantial factor in the hiring.
• There must have been a causal connection between the false representation and the injury.

McKay did not tell Inalfa Roof Systems, which makes vehicle sunroof and other systems, about a 2012 four-wheeler accident that left her with fractured ribs, a broken wrist, a dislocated shoulder, a strained cervical ligament, and an acute compression fracture in her spinal cord. By 2020, when she applied for a job at Inalfa’s plant outside of Atlanta, she had no lingering problems from the crash, one of her attorneys, Elliot Bourne, noted.

In a questionnaire that asked about pre-existing injuries, McKay answered ‘no.’ She also underwent a physical examination by a doctor.

The assembly operator job required McKay to lift and carry up to 50 pounds and stand for up to 12 hours. In June 2021, she said she injured her back on the assembly line, and was taken to a hospital in an ambulance. A treating physician found that the woman had aggravated a previous injury.

McKay was out of work for more than three months, recuperating. Shortly after she returned in September 2021, she was injured again. This time, she acknowledged that she may have aggravated the issues caused by the 2012 four-wheeler accident. Still, she filed compensation claims for both 2021 injuries.

Inalfa denied both claims.

Crucially, McKay’s lawyers appealed only the Sept. 14 injury claim denial.

“They were smart to drop the first claim from the appeal,” said Thomas Holder, a Georgia workers compensation claimants’ attorney who was not involved in the case.

The appellate court noted that the June injury “squarely falls within the Rycroft defense,” since McKay had misled the employer about her previous back injuries. But her attorneys successfully argued that the rationales identified by the Rycroft decision do not support applying the defense to the Sept. 14 injury, “because by the time that injury occurred, Inalfa had learned about her pre-employment injury and her false representation about it and, despite that knowledge, had retained McKay in her position as an assembly operator.”

The court ruling is important to workers because, otherwise, a previously injured employee would never be able to confess, after hiring, about an old injury, without facing termination, Holder and Bourne explained. Fessing up could at least encourage the employer to put the worker in another position requiring less physical strain. Otherwise, the worker would never be allowed another workers comp claim at that employer, ever again, Bourne said.

But the decision could complicate hiring for some employers, or could prompt action if a company later discovers information about a previous injury. The federal law, the Americans with Disabilities Act of 1990, bars employers from discriminating against workers with disabilities and forbids asking questions about previous injuries – until after the initial hiring process. A more thorough vetting process designed to catch previous conditions may be disallowed.

Georgia, like most states, more than two decades ago dropped its workers compensation subsequent injury fund, which encouraged employers to hire veterans and other workers with previous injuries that could be re-aggravated on the job.

One of the insurance attorneys in the Inalfa case did not respond to questions by late Monday.

*This article was originally published by Insurance Journal, CM’s sister publication. William Rabb is Insurance Journal’s Southeast Editor.