© Originally published in COMMUNIQUÉ (August, Vol. 27, No. 8), the official journal of the Clark County Bar Association. All rights reserved.

• Employer's Liability for an Employee's Intentional Acts
• What Personal Injury Attorneys Need to Know About Workers' Compensation Claims

Also featured in the latest edition:

• Bankruptcy as a Silver Bullet: Bankruptcy Actions Can Have Major Impacts on Plaintiff Personal Injury Claims
• The Self-Critical Analysis Privilege
• Avoiding Pitfalls in ADR (Part One): Points to Consider Before Mediating
• Trial By Peers Visits Nation's Capital

Employer's Liability for an Employee's Intentional Acts

By Kevin Diamond

. . . and then after the dealer dealt the first card he reached across the blackjack table and hit the guy right in the eye . . .

It sounds like the punch line of a joke, instead of a 1970 Supreme Court of Nevada case. You see, Anthony Antonacci was playing blackjack, and had a few drinks to sharpen his gambling skills. He lost his money, became angered, and "called the dealer an opprobrious name." Prell Hotel Corp. v. Antonacci, 86 Nev. 390, 392, 469 P.2d 399, 401 (1970). The dealer, without moving from behind the table, dealt each player a card, "and then just like this he hit him, very spontaneously, no warning of any kind. He just hit him." The Court held that since the dealer did not leave his position behind the blackjack table to accomplish the battery, "his willful tort occurred within the scope of the very task assigned to him, that of dealing '21'. In these circumstances the employer is responsible." I guess if the dealer beat the drunk up during a smoke break the employer would have been off the hook.

While the Antonacci case is somewhat amusing, the issue of an employer's responsibility for intentional acts of employees is a serious one. This issue arises all too often in Nevada. The assault and battery cases against establishments such as hotels, bars, and gentleman's clubs are common. They often arise out of the need to eject a patron, with the resultant allegations that the actions of the employee went too far, resulting in an intentional tort. There are a number of implications as a result of the claim against the employer, many of which go beyond the scope of this article (e.g., potential negligent hiring, supervision, training, etc.). Liability of an employer for an intentional tort is an important determination for a number of reasons, including the fact that most general liability commercial insurance policies do not provide coverage for intentional torts. Punitive damages, also not commonly covered, is another issue which often comes into play.

Acting within course of employment

Generally, an employer is only liable for an employee's actions if the employee is under the control of his employer, and acting within the course and scope of his employment. Molina v. Asher, 96 Nev. 814, 618 P.2d 878 (1980); National Convenience Stores v. Fantuzzi, 94 Nev. 655, 584 P.2d 689 (1978). For an employer to be liable for an intentional tort of an employee, the tort must occur within the scope of the task assigned to the employee. Rockwell v. Sun Harbor Budget Suites, 112 Nev. 1217, 925 P.2d 1175 (1996). The occurrence must be a foreseeable consequence of the employee's assigned job, and the employer is not liable if the employee substantially departs from his or her duties. Department of Human Resources v. Jiminez, 113 Nev. 356, 935 P.2d 274 (1997).

There are also two applicable Nevada statutes. NRS 41.745 states that an employer will not be held liable for the intentional conduct of the employee if the conduct: 1) was a truly independent venture of the employee, 2) was not committed in the course of the task assigned to the employee and 3) was not reasonably foreseeable per the nature and scope of employment. The statute further provides that conduct is reasonably foreseeable "if a person of ordinary intelligence and prudence could have reasonably anticipated the conduct and the probability of the conduct." See also Wood v. Safeway, Inc., 121 Nev. Adv. Op. 73, 121 P.3d 1026 (2005).

NRS 42.007 mandates that an employer will not be held liable for punitive damages as a result of an employee's conduct unless: 1) the employer had advance knowledge that the employee was unfit for the employment and employed him with conscious disregard for the rights and safety of others, 2) the employer expressly authorized or ratified the wrongful act or 3) the employer is personally guilty of oppression, fraud or malice.

Foreseeability element

The foreseeability element was discussed at length in Jiminez, supra. In Jiminez, the Supreme Court of Nevada held that an employer may be held vicariously liable for its employee's acts if the actual occurrence was a foreseeable consequence of the activity. For these purposes, "foreseeable" means that the employee's conduct was not so "unusual or startling" that it would be unfair to include loss resulting from it among the cost of doing business; however, the employer is not liable if the employee substantially departs from his duties for purely personal reasons. (While the Jiminez opinion was withdrawn based upon a voluntary stipulation to dismiss the case, Department of Human Resources v. Jiminez, 113 Nev. 735, 941 P.2d 969 (1977), the case is still illustrative of the Supreme Court of Nevada's position on these issues).

The Jiminez case involved allegations of sexual assault of a minor who was involuntarily placed in a state agency for sex offenders. In determining "course and scope of employment," the Court declined to require that the employee's actions be motivated by a desire to serve the employer. The Court created a new test which extended beyond the actual control of the employee and which included risks inherent in or created by the enterprise. The key question is whether the occurrence was a generally foreseeable consequence of the activity.

The Jiminez court emphasized the "unusual and startling" language of the foreseeability test, and cited Alma W. v. Oakland Unified School District, 123 Cal.App.3d 133, 176 Cal.Rptr. 287 (1981), a case where the conduct in question warranted a dismissal of the action against the employer. In the Alma W. case, a janitor at an elementary school sexually assaulted a young female student. The court stated:

Thus, while it might be foreseeable for a school custodian to become involved in a dispute over the manner in which he swept the floors or cleaned a classroom and for the dispute to end in someone being hit with a mop, the same statement cannot be made with reference to a rape. There is no aspect of a janitor's duties that would make sexual assault anything other than highly unusual and very startling.
(emphasis added).

In contrast, the Court in Jiminez emphasized that the claimed perpetrator had control over almost every aspect of these children's lives, was their counselor, and one even looked to him as a father figure. The children had troubled backgrounds, were vulnerable and the subject minor was mentally retarded. The Court concluded "That given this type of control, it is extremely unfortunate, but not 'starting or unexpected,' that Peters, or someone in his position, would misuse his authority by engaging in such behavior." Further, the court did not believe that the perpetrator substantially departed from his duties when he committed the assaults, since the assaults occurred during acts authorized by the State—during counseling of the children and bedchecks.

Employee's job title

An employee's job title, or lack thereof, is not always a determining factor in the vicarious liability analysis. Bigelow v. Bullard, 111 Nev. 1178, 901 P.2d 630 (1995). Two of Bigelow's managerial agents and an ex-security guard evicted a former employee of Bigelow, Susan Vaughn. In doing so, the ex-security guard pulled a gun on Vaughn after Vaughn tried to prevent entry into her residence, pushed it in her stomach, and said "you push me again, bitch, and I'll bash your face in." Bigelow appealed a trial court finding that the ex-security guard acted as its agent within the scope of employment. Vaughn successfully argued for employer liability by pointing out that not only did the ex-guard continue to reside at the apartment complex, but he continued to train security personnel. Also, on the day of the incident, the ex-guard was the first to enter the apartment. The Supreme Court of Nevada held that there was sufficient evidence to find that the guard acted on behalf of Bigelow.

Similarly, an employee's responsibilities, along with his or her discretion and actual authority, are of critical importance. The more responsibilities an employee has, and the more closely they are associated with the claims involved in the case, the more likely an employee will be considered a managerial agent. Cerminara v. California Hotel and Casino, 104 Nev. 372, 760 P.2d 109 (1988).

Punitive damages

In regard to punitive damages, our Supreme Court follows the Restatement Second of Torts, which states that an employer is liable for punitive damages based upon an employee's acts only if the employer authorized the act, the employee was unfit and the employer was reckless in hiring the employee, the employee was a manager and acting in that capacity, or there was ratification by the employer. The title or supervisory status of the employee is not determinative. Nittinger v. Holman, 119 Nev. 192, 69 P.3d 688 (2003). See also NRS 41.745 and NRS 42.007, supra.

In Smith's Food & Drug Centers, Inc. v. Bellegarde, 114 Nev. 602, 958 P.2d 1208 (1998), an employer was held liable for punitive damages for the malicious acts of its agents. In this case, however, liability was complicit, not vicarious, i.e., the employer authorized the tortious acts. Bellegarde was a shoplifter. A "key manager," normally in charge of cashiers, was acting store manager and not trained in shoplifting procedures. The acting manager thought she saw Bellegarde steal a pack of gum. Forty-five minutes later, Bellegarde was confronted by several employees, and the acting manager asked to search her purse. She agreed, but only if the police were present. When the police were called they refused to respond, but indicated that they would arrive if, after the search, the gum was found. A security guard attempted to take Bellegarde's purse, but she clutched it close to her body. The guard sprayed Bellegarde with pepper spray, and she was handcuffed.

At trial, the jury did not find that punitive damages were warranted against the corporate employees, but they imposed punitive damages against Smith's. The Court cited Section 909 of the 2nd Restatement of Torts, and reasoned that "complicity liability" for punitive damages existed due to the actions of the acting store manager. She was unaware of the store's shoplifting policies and not trained in handling these issues. She was given full discretion to run the store, and the actions of the security guard were at her direction. The Court also took into consideration the fact that Smith's never punished or reprimanded the employees involved in the incident. In contrast, in the Nittinger case, supra, the Supreme Court did not find the employee in question to be a managerial agent, as there was no evidence that the employee had the authority to deviate from the established policy, or that he had any discretion/ability to exercise independent judgment. The court found that the employee merely had the authority to implement the hotel's policy and to see that it was enforced.

As can be seen by the foregoing, this issue is not a simple one. To determine whether an employer may be found liable for an employee's intentional acts, a detailed review of the facts of the case, along with an analysis of both statutory and case law, must be performed.

The moral of the story: Make sure that if one of your client's employees wants to punch someone, that they do it on his or her own time.

Kevin Diamond grew up in Las Vegas and is a civil litigation attorney at Thorndal, Armstrong, Delk, Balkenbush & Eisinger. He also teaches a graduate law course at UNLV's College of Hotel Administration.

What Personal Injury Attorneys Need to Know About Workers' Compensation Claims

By Virginia L. Hunt

People injured while working sometimes have a personal injury claim in addition to an industrial insurance claim. This commonly occurs when an employee has a motor vehicle accident while working, and the accident was caused by a third party who is not the employer or a co-employee. This dual claim situation may also occur when a product defect causes an injury at work, or a slip and fall accident occurs to an employee someplace off the employer's premises. An injured worker might also have a tort action against a subcontractor responsible for the accident if the subcontractor is not a statutory co-employee and the exclusive remedy defense does not apply.

If the personal injury attorney does not also handle workers' compensation claims, the attorney should clarify the scope of the representation in the written fee agreement. The attorney may also want to advise the client to obtain separate representation on the workers' compensation claim, or tell the client that information and assistance is available free from the Nevada Attorney for Injured Workers. If the client follows the recommendation to obtain an attorney on the industrial claim, let that attorney and the industrial insurer know that you are retained on the third party personal injury claim.

All personal injury attorneys should be aware of some of the basic provisions of the Nevada Industrial Insurance Act (NRS Chapter 616).

Time limits for filing an industrial claim are very short

An industrial insurance claim begins when the injured worker completes the upper portion of a Claim for Compensation (C-4 form), and a treating physician completes the bottom portion. The physician sends a copy to the industrial insurer and to the employer. The claim is deemed filed when it is received by the insurer. A claim must be filed within 90 days of the date of the accident. NRS 616C.020.

An injured worker is also required to give his employer written notice of the injury as soon as practicable, but within 7 days after the accident. NRS 616C.015. While there is an excuse provision in the law for late injury reporting and/or late claim filing, insurers usually deny claims that are not reported and filed immediately. NRS 616C.025.

Medical providers must ask whether injuries are work-related so that the required C-4 claim form is completed. When the injured worker tells the provider not to submit a claim form, then changes his mind, the injured worker will have difficulty getting the doctor to complete the form, and the industrial insurer will probably deny the late claim. Workers' compensation hearings and appeals officers are not sympathetic to claimants who purposefully do not file an industrial claim at the outset, and then try to file a claim when their personal injury attorney discovers minimal insurance limits or a problem with liability on the third party claim.

Time limits for filing appeals are also short

Workers' compensation appeal times are jurisdictional, mandatory, and very short. Whenever the industrial insurer takes adverse action, the injured worker is advised of a right to file an appeal to a Department of Administration hearing officer within 70 days of the date of the determination letter. NRS 616C.315. Injured workers who do not receive a reply to a written request sent to the insurer must also file an appeal within 70 days of sending the written request. The only statutory exception allowed for filing a late appeal is if the injured worker convinces a hearings or appeals officer that the insurer did not properly send the determination letter with a request for hearing form included.

The appeal time from an adverse decision of a hearing officer to the next level of appeals before a Department of Administration appeals officer is only 30 days. NRS 616C.345. If an injured worker does not have an attorney, the injured worker may request free representation from the Nevada Attorney for Injured Workers at the appeals officer level after first attending the initial hearing before the hearing officer alone.

Advise the client of the consequences of not filing an industrial claim

There are cases where it would benefit the client if it were determined that the injury did not arise out of the course and scope of employment so that the exclusive remedy defense does not defeat a personal injury lawsuit against the employer. There are also cases where the personal injury attorney might carefully conclude that because the industrial insurer will have a substantial subrogation lien on a potentially large third party recovery, it may be better never to establish a workers' compensation claim.

The attorney may want to document the strategy decision with the client, making sure that the client understands what the downside is of not pursuing an industrial claim. The client should know that an accepted industrial claim pays all approved medical care immediately, pays 66 2/3 of the injured worker's average monthly wage while the injured worker is off work, pays a settlement for a permanent impairment, and may provide the client with vocational retraining. Accepted industrial insurance claims involving serious injuries also afford lifetime reopening rights for future medical care.

Three cases provide some guidance on the subject of election of remedies. In Barjesteh v. Faye's Pub, 106 Nev. 120, 787 P.2d 405 (1990), the injured employee sued the employer for an intentional tort while receiving medical benefits and temporary total disability benefits after filing an industrial claim. The tort action was not dismissed because the employee hadn't received a permanent partial disability award yet. In Arteaga v. Ibarra, 109 Nev. 772, 858 P.2d 387 (1993), and in Advanced Countertop Design, Inc. v. Second Judicial District Court, 115 Nev. 268, 984 P.2d 756 (1999), the court again focused on an injured worker's receipt of a permanent partial disability award as the operative act in determining whether a tort action against the employer was still viable. However, a reference to the doctrine of judicial estoppel in the Advanced Countertop case suggests that there could be pitfalls in proceeding with both an industrial claim and a tort claim against an employer even before a permanent partial disability award is offered.

Industrial insurers have medical provider lists

Personal injury attorneys should know that an industrial insurer will only authorize medical care with providers on that insurer's provider list. If the client starts treating on a lien basis with a doctor chosen by the personal injury attorney, the industrial insurer may not accept that doctor's disability certificates, and the insurer will not pay the doctor's bills if the doctor is not on the provider list. The client will then have to pay the medical lien from the third party recovery when the industrial insurer could have paid all medical bills as they were incurred and at a discounted rate.

Insurers' provider lists change frequently. An injured worker has the right to obtain a copy of the provider list from the insurer. The insurer has three days from the receipt of a written request to provide the list to the injured worker or his representative. NAC 616C.030. Within the first 90 days of the claim, the injured worker has the right to change to another physician on the provider list. NRS 616C.090. It is difficult to compel an industrial insurer to authorize care with a provider who is not on the list.

Subrogation liens must be paid

Ideally, the client's workers' compensation attorney will notify the personal injury attorney when the compensation claim is closed and there is a subrogation lien total so that the personal injury claim can be resolved. NRS 616C.215 gives the industrial insurer a statutory subrogation lien on any recovery by way of settlement or judgment from the third party tort feasor, and from the employer's policy of uninsured or underinsured vehicle coverage. The lien includes the total amount of the compensation paid on the claim, including all medical expenses, temporary total disability benefits, the permanent partial disability award, and any vocational rehabilitation benefits.

The subrogation lien does not extend to the injured worker's own uninsured or underinsured policy or the injured worker's own medical payments auto insurance. See, Rubin v. State Farm, 118 Nev. 299, 43 P.3d 1018 (2002), and Silvera v. EICON, 118 Nev. 105, 40 P.3d 429 (2002).

NRS 616C.215 requires the personal injury attorney to notify the industrial insurer in writing before initiating an action against the third party, and to notify and pay the industrial insurer its lien within 15 days after receipt of any recovery. The attorney and third-party insurer are jointly and severally liable for payment of the subrogation lien. Note that a personal injury complaint must be filed within the two-year statute of limitations regardless of whether the compensation claim is still open.

The personal injury attorney should inform the client that the personal injury recovery will affect the client's lifetime right to reopen the industrial claim if the client's injury ever worsens and more treatment is necessary. The personal injury attorney is responsible for negotiating with the industrial insurer as to full or partial payment of its lien from the third party recovery, and negotiating how much any future compensation will be reduced by the client's recovery from the third party. It is a good practice to consult with the client's workers' compensation attorney when it is time to negotiate the subrogation lien particularly if it appears that reopening of the claim will be necessary in the future.

It is beyond the scope of this article how to negotiate the subrogation lien to the client's advantage and how to apply the formula for determining the industrial insurer's share of costs and attorneys' fees as set forth in Breen v. Caesars Palace, 102 Nev. 79, 715 P.2d 1070 (1986). The personal injury attorney who is new to compromising subrogation liens will want to consult with more experienced personal injury attorneys and be familiar with EICON v. Chandler,117 Nev. 421, 23 P.3d 255 (2001).

Virginia L. Hunt primarily represents injured workers, litigating contested workers' compensation cases at all levels of appeals. She served as an appeals officer, and was Chief Legal Counsel for the State Industrial Insurance System (SIIS), Las Vegas office, before it was privatized as Employers Insurance Company of Nevada (EICON).