The New Mexico Supreme Court reversed a lower courts decision on a workers’ compensation death claim this week and in so doing inadvertently demonstrated that an insurance company’s denial of a claim should be based on the most relevant defense. In this particular case, the widow of a police officer had been seeking workers’ compensation benefits for the death of her husband. Kevin Schultz drowned while saving a child in a river during a church outing. He was acting as a chaperone to the group in another jurisdiction, and was off duty at the time. 

His employer, the Pojoaque Tribal Police Department, and the insurance company, New Mexico Mutual, denied her claim, primarily on the basis that she had not filed for benefits within the allowable time frame. As a secondary reason, they determined that his death was not within the course and scope of his employment as a police officer. Lower courts supported that contention.

The New Mexico Supreme Court, in a 5-0 decision, said “not so fast”. The basis of their reversal was rooted in the timeliness of the initial filing of benefits, which was the primary reason for denial. Apparently the widow, Cheryl Schultz, testified that the delay was due to the police departments promises that “they were taking care of all the paperwork”, a claim that the Police Chief could neither confirm nor deny. Based on that consideration, the Supreme Court determined that the denial, based on a procedural filing violation, was not valid, and returned the case to lower courts for reconsideration.

This case amply demonstrates the need for having, and selecting, the right and justifiable reason for denying a claim. In this case, the insurance company, in my view, had it, but they opted for whatever reason to primarily rely on a flimsy procedural defense. Admittedly, it is a tragic story, as a good man died while saving the life of a small child. That still doesn’t mean he was on the job, or even within the course and scope of his employment. Critics of that view say that benefits should be awarded, as he was acting as a public servant when he dove into the river to save a life. The case even saw a statement from the lieutenant governor of Pojoaque Pueblo, who wrote “that the tribal government considered Schultz’s death to be in the line of duty.” It stated that “Schultz acted the way a police officer should have, no matter that he technically was not on his beat or in uniform.”

Balderdash.

That view seems to assume that no other chaperone, one who happened to be a plumber for instance, would have attempted to save that child. Are we to believe that anyone who happens to perform a similar function to that required of their job while off duty is entitled to benefits if injured? I have a neighbor who is a professional carpenter. He currently is replacing his own roof. If he falls off of that roof while performing home maintenance, should we assume his employer and their insurer are “on the hook” because he was acting as a carpenter should have? 

This is a case of tragic loss that is now turning on pure emotion. While no one wants to see the widow hurt, I cannot logically see the extension of protection with the umbrella of round the clock coverage under workers’ comp. It is outside the responsibilities of the insurer in our current industry models. Someone on his own personal time did something heroic. That happens more than we realize. Most people do not get the benefit of round the clock coverage based on their job title. 

The insurance company now has, in my view, an uphill battle in pursuing this reason to deny benefits. The employer they represent certainly is not making it any easier. The Pojoaque Tribal Police Chief submitted Schultz’s name to the National Law Enforcement Officers Memorial in Washington, DC, which now lists his name. It only honors law enforcement officers who die in the line of duty. The Chief successfully made the case that “Officer Schultz died while performing the act of a selfless policeman.”

The second lesson here I suppose, is that an insurer needs to work closely with the employer they represent. The employer participated in the denial of benefits, but has possibly shot itself in the foot with their actions outside the case. 

I happen to be traveling to New Mexico this weekend, as part of my multi-stop trek westward towards RIMS in Los Angeles next week. I will be visiting my father in Farmington. My commute from Albuquerque will take me through both the Jicarilla Apache and Navajo reservations, where I will rest comfortably knowing the tribes have fully trained forces who will “perform the acts of selfless policemen” – although truth be told I’ve never seen anyone there except the State Patrol, usually around the town of Cuba. And of course the Cuba city police, who have all had speed radar guns permanently attached to their right hands. But I digress…..

While the final result remains to be seen, there is a lesson here. If you have a fair and just reason for denial, and multiple possible defenses in the case, choose the right one, not the easy one. The easy one will often prove flimsy and more difficult to defend. The right one may be emotionally more challenging, but in the end, it is still the correct one to pursue.

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