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Worker’s Compensation Mental Injury Standards in Wisconsin: Supreme Court Rulings

design-desk-display-313690“I could put 20 more people to work tomorrow,” the president of a mid-sized construction company told me recently. “But I can’t find 10 qualified people. I can’t even find 10 unqualified people.”

If that sounds familiar, be warned: The breaking point could be expensive.

Consider the case of Etha Schillinger and the rapid growth of Swiss Colony, Inc. Swiss Colony, now Colony Brands, Inc., is a classic American success story. According to the company’s website, founder Ray Kubly pioneered mail-order cheese sales, starting with just 50 holiday shipments, in 1926. By 1941, there were 100 seasonal employees, and “by 1948, the Milwaukee Road had to send an extra boxcar to Monroe daily from early December until Christmas to handle the demand for cheese,” the website says.

Schillinger began working for Swiss Colony in 1955, and by 1961—the year the company introduced its popular line of Petits Fours—­she was promoted to purchasing agent. She was responsible for purchasing all of the food products and packaging materials. With $2 million in sales that year, the job was tolerable. But Petits Fours, an ever-diversifying catalogue of mail-order holiday gifts, and the introduction of retail stores (for which Schillinger also performed purchasing tasks) fueled a decade of tremendous growth. By 1971, sales totaled more than $13 million, and Schillinger began to feel the strain.

In the spring of that year, Schillinger said she began to feel “rattled, disorganized, and less able to withstand the mounting pressures of her job.” By this time, she was reporting to a new Director of Materials, a man by the name of Ted Schneider, who would later be described in testimony as “emotionally cold.”

On October 29, 1971, after an incident of “abrupt, brusque criticism” by Schneider, Schillinger suffered an emotional breakdown. She sought medical treatment for exhaustion, depression, insomnia and weight loss, and was admitted to the hospital where she remained until mid-November. She underwent extensive psychological treatment and was in and out of the hospital over the next several months. She was ultimately diagnosed as schizophrenic. She resumed work intermittently at various light duty tasks, but never returned to her job in purchasing.

Mental Injury Standards Established by Supreme Court Cases

In Wisconsin worker’s compensation practice, mental injuries, suffered in the absence of a physical injury, are not compensated unless the mental stresses and strains causing the mental injury are out of the ordinary. The standard was established in a case brought by a contemporary of Schillinger’s, Mary Tauscher.

Tauscher worked as a guidance counselor at Brown Deer High School. In 1971 she was presented with a list of recommendations from the student council; among them was her removal from the school staff. Tauscher suffered an emotional breakdown and period of disability and sought worker’s compensation benefits. In “School District No. 1 vs. Industry, Labor and Human Relations Department,” the Wisconsin Supreme Court wrote:

“Here the emotional stress is no greater than the many differences and irritations to which all employees are subjected and is not an accident compensable under workmen’s compensation. The mere receipt of a partially blacked-out list of suggestions prepared by the student council which asked for her dismissal could not be deemed to be so out of the ordinary from the countless emotional strains and differences that employees encounter daily without serious mental injury. Rather, it is our opinion that the critical remarks advanced by the students of Brown Deer High School is but an occurrence encountered by numerous other employees in their day-to-day employment.”

But the court went on:

“We do not believe that an average man who, after being criticized and berated by an employer or whomever for a significant period of time, suffers a mental injury should be denied compensation.”

Wisconsin’s mental injury standard was further clarified by the Supreme Court’s 1989 ruling in Probst v. Labor & Industry Review Commission. In that case, the claimant ran a successful business supply company that came upon difficult financial times. The nuance in the Probst case was that the courts focused on the type of job duties that employees in similar situations face, rather than the stresses and strains which Probst actually endured.

“The Probst decision has been cited repeatedly to support the proposition that you must compare similar employment settings in order to establish exposure to unusual stress,” said Bob Zilske, a Brookfield defense attorney who specializes in worker’s compensation. “In other words, you do not compare neurosurgeons to garbagemen to establish relative stress levels.”

The Takeaway: The Boss Makes the Difference

What then, of Schillinger’s day-to-day stresses and strains?

When her own case was heard by the Supreme Court—two years after “School District”—Schillinger’s treatment by the “emotionally cold” Schneider was a key factor.

The Supreme Court wrote in its opinion:

“Ruth Gibbons, Schillinger’s assistant, testified that Schneider was negative, brusque, and belittling, especially to women, and that he challenged and belittled any decision Schillinger would make. Gibbons also stated that this attitude upset Schillinger and made her unsure of herself. Schillinger testified that Schneider was abrupt and overly critical of her, and that she would make statements she knew were correct and he would contradict them. She stated that this was very frustrating and disheartening.”

Bizarrely, one of Schillinger’s treating psychologists lived next door to Schneider and testified to his demeanor. The psychologist described Schneider as “a very aggressive man, somewhat cold in his dealings with other people, emotionally cold … brusque, very challenging, very critical.”

That testimony convinced the Supreme Court that Schillinger had endured constant criticism, and was berated and belittled by her immediate supervisor. The court found that the treatment was enough to give rise to an occupational accident, and awarded benefits.

The case should be instructive to employers today, according to James O’Malley, administrative law judge and Director of the Legal Services Bureau of the Worker’s Compensation Division of the Wisconsin Department of Workforce Development.

“At a time when business needs to do more with less, it is important for supervisory personnel to be mindful of the consequences this has on the workforce and the potential for generating valid worker’s compensation claims,” O’Malley said. “Employers should train supervisory personnel to recognize and appreciate the employees working in challenging jobs. Supervisory personnel should be trained to appropriately motivate and discipline employees by avoiding unwarranted and constant unreasonable criticism—belittling and berating such as occurred in the Swiss Colony case.”

In order to protect your employees and your company from expensive claims of this type, it’s important to consider wellness and stress management resources. In our next issue, Integrated Risk Solutions Benefits Practice Leader John Gallagher will discuss how wellness programs and employee assistance programs can help your business generate a healthier culture.