Goldstine v. Jensen Pre-Cast

OPINION

By the Court,

Young, J.:

The issue raised by this appeal is whether an employee who willfully makes false representations concerning his medical history on an employment application may be denied SIIS benefits when an industrial injury exacerbates the concealed, preexisting condition. While we wholly condemn such conduct on the part of the employee, we are unable to adopt, in the absence of legislative guidance, the rule of exemption proposed by the respondent.

The facts of the case are as follows: On August 5, 1983, the appellant, William Goldstine, applied for employment with respondent, Jensen Pre-Cast. A form required for the preemployment physical asked: “Have you ever had . . . back injury, back pain, backache or back brace?” Goldstine indicated that he had not. This representation was false. Goldstine had been in an automobile accident the previous year in which he had sustained a back injury. The employer would not have hired Goldstine if this fact had been known. Goldstine was hired, and two months later sustained an industrial injury to his back. The district court ruled that Goldstine was not entitled to SIIS benefits, due to his deliberate and willful misrepresentation.

The court below applied a test proposed by Professor Larson:

The following factors must be present before a false statement in an employment application will bar benefits: (1) The employee must have knowingly and wilfully made a false representation as to his physical condition. (2) The employer must have relied upon the false representation and this reliance must have been a substantial factor in the hiring. (3) There must have been a causal connection between the false representation and the injury.

1C Larson, Workmen’s Compensation Law, § 47.53.

It is true that such a rule would serve the useful purpose of discouraging employee fraud, and allowing the employer to rely on the integrity of the applicant in making its hiring decision. Respondent also argues that such a rule would ultimately reduce industrial injuries to employees, since a person physically unsuited to certain employment due to preexisting disabilities would not be placed in such employment, reducing the risk of re-injury. This may well be. However, we are persuaded that such a policy decision is properly considered by the legislature, rather than by this court. See SIIS v. Conner, 102 Nev. 335, 721 P.2d 384 (1986). The workmen’s compensation scheme fashioned by the Nevada legislature alters the common-law rights of the employer and the employee. The employee forfeits his common-law right to sue his employer for negligence, while the employer gives up most common-law defenses. See NRS 616.370. The purpose of the system is to provide compensation for industrial injuries. E.g., Breen v. Caesars Palace, 102 Nev. 79, 715 P.2d 1070 (1986). The removal of many employer defenses is designed to simplify and speed the administrative process. We view this scheme as a delicate balance between the interests of the parties, a balance which we, as a judicial body, are hesitant to disturb.

Further, an examination of the legislative scheme as a whole convinces us that, where a policy consideration advocates exclusion of coverage, the legislature is perfectly capable of implementing such policy. In fact, the legislature has already determined that no compensation shall be payable for industrial disease where the employee willfully and falsely represents that he has not previously suffered from such disease. NRS 617.400(1). The legislature has provided that, where an employee’s permanent disability is the result of a failure to report a preexisting injury, the employer may seek contribution from the state subsequent injury fund. NRS 616.427. The legislature has determined that compensation may be denied where the employee makes a misrepresentation in order to obtain industrial insurance compensation. NRS 616.675. Finally, the legislature has indicated that the terms of the statutes themselves must control the award or denial of benefits. NRS 616.370(2) states: “The terms, conditions and provisions of this chapter for the payment of compensation and the amount thereof for injuries sustained or death resulting from such injuries shall be conclusive, compulsory and obligatory upon both employers and employees coming within the provisions of this chapter.”

Thus, although we are aware that several jurisdictions have adopted the rule proposed by the respondent,¹ we join those courts which have held that such a rule is not properly adopted by the courts.²

For the reasons stated above, the judgment of the district court is reversed.

Mowbray, C. J., and Springer and Gunderson, JJ., concur.

1 Shippers Transport of Georgia v. Stepp, 578 S.W.2d 232 (Ark. 1979); Air Mod Corporation v. Newton, 215 A.2d 434 (Del. 1965); Martin Company v. Carpenter, 132 So.2d 400 (Fla. 1961); Hilt Truck Lines, Inc. v. Jones, 281 N.W.2d 399 (Neb. 1979); Martinez v. Driver Mechanbier, Inc., 562 P.2d 843 (N.M.App. 1980); Cooper v. McDevitt & Street Company, 196 S.E.2d 833 (S.C. 1973); Federal Copper and Aluminum Company v. Dickey, 493 S.W.2d 463 (Tenn. 1973).

2 See Still v. Norfolk & Western Ry. Co., 368 U.S. 35 (1961); Newport News Shipbuilding & Dry Dock Co. v. Hall, 674 F.2d 248 (4th Cir. 1982); Marriott Corp. v. Indus. Comm’n of Arizona, 708 P.2d 1307 (Ariz. 1985); Kraus v. Artcraft Sign Co., 710 P.2d 480 (Colo. 1985) (reversing Artcraft Sign Company v. McGrath, 679 P.2d 1103 (Colo.App. 1983), cited by respondent as adopting the rule); General Motors Corporation v. Hargis, 150 S.E.2d 303 (Ga.App. 1966); Teixeira v. Kauikeolani Children’s Hospital, 652 P.2d 635 (Hawaii App. 1982); Fontenot v. Cagle Chevrolet, Inc., 417 So.2d 1338 (La.App. 1982); Dressler v. Grand Rapids Die Casting Corp., 262 N.W.2d 629 (Mich. 1978); H. J. Jefferies Truck Line v. Grisham, 397 P.2d 637 (Okl. 1964).