Court strikes down regulation on compensability of psychological conditions

The North Dakota Supreme Court on Thursday ruled that a workers compensation insurer exceeded its authority in promulgating a regulation that deprived a worker of benefits for the psychological conditions he developed after an accident left him quadriplegic.

A delivery driver for Core Mark International Inc. fell off a loading ramp while working and fractured his cervical spine, rendering him quadriplegic. The company’s insurer Workforce Safety and Insurance approved benefits for his physical injuries but later denied mental health-related diagnoses, according to case No. 20240135.

Under North Dakota law, a psychological condition is compensable if it “is the physiological product of the physical injury” as compared to “all other contributing causes combined.”

WSI has issued its own regulation interpreting North Dakota’s statutes as requiring a psychological condition to be “directly caused by a physical injury” for compensability. This regulation also defines a contributing cause as including circumstances “that generally accompany work-related injuries,” such as loss of function, disruption to lifestyle and compromised ability.

An independent medical examiner hired by the insurer identified the causes of the man’s psychological condition as “significant grief related to the loss of sensory and motor function sustained as related to the subject cervical spinal cord injury” and “the significant overwhelming stress of dealing with the psychological sequelae of chronic pain and loss of motor and sensory function.”

After receiving this report, WSI again denied psych benefits.

At a hearing before an administrative law judge, the medical examiner testified that the man’s condition is “100%” the result of the “work injury and spinal cord damage,” but later clarified that the depression was the result of “his emotional reaction to the overwhelming stress,” not the injury itself.

The ALJ issued an order affirming WSI’s decision denying benefits on account of its own rules.

In reversing, the North Dakota Supreme Court said “legislature has not specifically authorized WSI to promulgate rules regulating the proof required to establish compensability for a mental or psychological condition,” the court said, concluding that the insurer’s regulation is invalid.

“Based on our review of the record, a reasoning mind reasonably could determine the ALJ’s findings concerning the cause of (the worker’s) psychological condition were proven by the weight of the evidence,” the court added.

WorkCompCentral is a sister publication of Business Insurance. More stories here.