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Hindsight is always 20/20 for Employers – The Supreme Court Gives Employers a Break on Penalty Benefits

Employers continue to catch a break when it comes to workers’ compensation penalty benefits.  On February 20, 2015 the Nebraska Supreme Court issued its opinion in Armstrong v. State of Nebraska, 290 Neb. 205 (2015).  In its ruling, the Court followed its previous penalty benefit precedent that allowed employers to stop paying benefits to an injured worker without having any evidence whatsoever to support its cessation of benefits to the employee.

Under Neb. Rev. Stat. § 48-125 and the applicable case law, an employer is supposed to pay a 50% waiting-time penalty if the employer fails to pay compensation within 30 days of the employee’s notice of disability and no reasonable controversy existed regarding the employee’s claim for benefits.  The focus of the Court’s decision in Armstrong is on the “reasonable controversy” requirement for penalty benefits.

In Armstrong, the employer stopped paying the injured worker temporary total disability benefits, despite the fact that it had no basis to do so.  Rather than penalize the employer for unilaterally discontinuing benefits without any justification, the Court followed its previous holding in Mendoza v. Omaha Meat Processors, 225 Neb. 771 (1987), wherein the Court held a reasonable controversy existed for penalty benefit purposes “even though the evidence showing the controversy was unknown at the time the employer refused benefits.”

The Court justified its holding stating that “[i]f an employer chooses to ignore the employee’s notice of disability, it does so at its own peril.  Should the employee’s claim be noncontroversial, the employer is subject to the significant waiting-time penalties in § 48-125.”  For employees, a penalty award at trial is most often too little, too late.

While the employer is allowed to deny benefits and gather evidence to justify its denial post hoc, the injured worker is left without medical care or indemnity benefits.  The problem compounds when one considers that an employer who receives an unfavorable decision at trial will most likely appeal, extending even longer the time an injured worker is without benefits.

If you or a loved one was injured at work and the employer has stopped paying benefits, contact Tabor Law and let us get started on your case right away.

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