🔒CT Supreme Court ruling rattles workers’ compensation system; CBIA warns of major employer cost increases

A recent state Supreme Court decision overturned more than three decades of practice in the state’s workers’ compensation system, and according to the state’s largest business lobby, the ruling threatens to significantly increase costs for employers.

The attorney for the plaintiff in the case, however, says the court’s decision just “affirms existing law.”

The issue is complex, but the Connecticut Business & Industry Association says the Supreme Court’s ruling essentially gives administrative law judges wider discretion to award richer workers’ compensation benefits for longer periods of time to individuals who have been diagnosed with permanent injuries. That could have significant financial consequences for employers, both public and private, CBIA says.

The ruling is so significant that state lawmakers are already reacting with a potential legislative fix.

The case

The state Supreme Court issued its decision on March 18, in the case of Gardner vs. the state Department of Mental Health and Addiction Services (DMHAS).

The plaintiff in the case — Beulah Gardner, a forensic treatment specialist formerly employed by DMHAS — had injured her left wrist in April 2016, while restraining a patient at the Whiting Forensic Hospital in Middletown.

According to court records, following a couple of surgeries and restrictions imposed by her surgeon, DMHAS informed Gardner in October 2019 that she was no longer able to perform her job, which included restraining patients. She was told she could transfer to another, less physically demanding job with another state agency, resign or seek a disability retirement.

Later that month, at the request of DMHAS, Gardner was examined by a surgeon who concluded she had reached maximum medical improvement and could no longer perform her job, court records state.

Maximum medical improvement is when an injured worker has reached the maximum possible recovery from their injury, considering all available medical treatments.

Given her surgeon’s opinion, DMHAS sought to convert Gardner’s workers’ compensation payments from temporary partial disability benefits — which equal her full average weekly compensation (minus state and local taxes) and can be collected for up to 520 weeks — to permanent disability benefits, which provide 75% of her weekly compensation.

Gardner chose to appeal, seeking to maintain the temporary partial disability benefits for a longer period of time. However, an administrative law judge denied that appeal, while also rejecting her attorney’s claim that state law allows the judge discretion to award her the higher-paying temporary partial disability payments in lieu of the permanent disability benefits, after she had reached maximum recovery.

Gardner appealed the judge’s decision to the Compensation Review Board and then the Appellate Court, which supported the administrative law judge’s decision. While the board agreed with Gardner’s claim that the state Supreme Court had issued a ruling in a 1943 case that an administrative law judge has the discretion to award either temporary or permanent partial disability benefits, it concluded that changes to the law approved by the state legislature in 1993 eliminated that discretion.

However, in its March 18 decision, the state Supreme Court overturned the Appellate Court, stating it had incorrectly interpreted the 1993 change to state law, and that an administrative law judge still has discretion on what benefits to award, even when a patient has reached maximum recovery.

The case was remanded to the administrative law judge for further proceedings.

Reforms undone

Reaction to the ruling from the business community included shock and concern.

In a post on its website, the Connecticut Business & Industry Association called it a “landmark decision” that “reinstated certain benefits to levels nearly equivalent to those before the 1993 workers’ compensation reforms, effectively unravelling decades of progress creating a well-functioning system.”

The CBIA post noted that in the 1990s, in response to rising costs, the state legislature reformed the workers’ compensation system “to balance fairly compensating claimants and maintaining the affordability of benefits.”

The reforms included reducing compensation benefits for total disability, partial disability and death by 5% to 75% of an employee’s average weekly wage after federal and state taxes. The changes also abolished cost-of-living adjustments for certain cases and trimmed other benefits.

The reforms were successful, CBIA added, noting that “premium rates declined 11 consecutive years through 2025.”

Businesses in Connecticut received a 6% decrease in workers’ compensation rates for 2025. The trend of rates declining for more than a decade reflected a continued decline in workplace injuries and filed claims, the state Insurance Department said.

The Supreme Court ruling, however, will significantly increase “the value of many workers’ compensation awards and settlements,” CBIA states, “leading to substantially higher costs for the state, municipalities, businesses and nonprofit employers.”

Chris Davis, CBIA’s vice president of public policy, said that under the system in place since the 1993 reforms, once an injured worker hits maximum medical improvement, they are then determined to be eligible for permanent partial disability, allowing them to collect up to 75% of their wages moving forward.

“So, the impact of this (decision) makes it available for someone to kind of get those (larger) temporary benefits and extend them out for that full 10 years (520 weeks),” he said, “rather than having them be cut off and converted to the partial permanent disability once you hit that medical improvement rating.”

Davis pointed to a report from the National Council on Compensation Insurance (NCCI), which noted that the court ruling could increase workers’ compensation costs in the state by 41%, in part because it would affect more than just future workers’ compensation claims.

The decision “may also impact existing claims that are open or eligible for reopening,” the NCCI report states. “Therefore, an unfunded liability may exist due to the potential for retroactive implications related to additional costs for such claims that were not contemplated in the premiums charged for policies written prior to this court decision.”

Davis said the concern is that insurance companies have not built the decision into their rates.

Since the Supreme Court decision takes effect immediately, he said, “we’ve already seen situations where settlements have been rescinded and renegotiations have been reopened based off of the ability to get … more years’ worth of temporary benefits rather than being switched over to the permanent benefits.”

‘Biggest misconceptions’

Despite that, the attorney who represented Gardner said the results of those cases are not a foregone conclusion.

“I think one of the biggest misconceptions is that this is going to lead to an automatic entitlement to 520 weeks of benefits, which is far from the case,” said Justin Raymond, an attorney with The Dodd Law Firm in Cheshire.

Raymond said it was generally believed that workers who filed claims “were barred from even pursuing this kind of claim,” even though that was not true.

But, while the judge can use discretion to decide whether to award temporary benefits of up to 520 weeks, that doesn’t mean it will always happen, he said.

“It isn’t an automatic entitlement,” Raymond said. “The burden still rests with a claimant to prove their case.”

Regardless, the fact that it’s now an option has the business community, municipalities and the legislature scrambling, Davis said.

“We’re working closely with the Connecticut Conference of Municipalities (CCM) on a legislative fix, and the state has a huge liability here as well,” Davis said.

He said CBIA has also had conversations with members of the legislature’s Judiciary Committee, which has already introduced substitute language in a bill intended to resolve the issue of an administrative law judge’s discretion.

“This is a major issue for employers,” Davis said.