FRANKFORT, Ky. (Legal Newsline) - An appeals court has found several problems with a $23 million Kentucky verdict against CSX and its chief medical officer, who were accused of defaming two West Virginia chiropractors they thought were fabricating worker injuries.
The 2022 Greenup County verdict included $21.4 million in punitive damages for Daniel Carey and Shannon Johnson, the subjects of a letter sent by CSX's Craig Heligman to a federal railroad agency, three insurance companies and two state chiropractic boards.
"In my professional medical opinion, both of these providers continued to keep employees off work for much longer than is medically appropriate," the letter said.
"These conditions would be considered minor musculoskeletal injuries that generally would resolve without any treatment, without more than a few weeks away from work, or with no more than a couple of weeks of chiropractic care.
"Therefore, their practices are also highly suspicious for excessive and inappropriate treatment."
Heligman had noticed a spike in Certificates of Ongoing Injury or Illness (COII) forms from Carey and Johnson in 2017. He'd received about 70 of them for employees at a Huntington, W.Va., mechanical facility, around the same time a furlough program had been announced.
Most were identical and said the employees had sustained musculoskeletal injuries outside of work and would need two months off to recover. During that time, the Railroad Retirement Board pays the furloughed employee 60% of his or her pay, and a private insurance plan through Aetna pays the rest.
Heligman found this suspicious, given the furlough program had just been announced. He wrote is letter in July 2017, and a month after the letter was disseminated, CSX told its employees and the chiropractors they would no longer accept COIIs from Carey and Johnson.
A defamation case dragged on for four years before a September 2022 trial. Heligman and CSX were hit with punitive damages of $10.7 million for each of the chiropractors, plus a total of $700,000 for defamation and $715,000 on tortious interference.
The appeals court struck that verdict and orded a new trial, one without Heligman. The defendants argued they were entitled to raise the defense of qualified privilege because of the societal interest in raising the COII issues, but the trial court said no because Heligman sent the letter to inappropriate entities.
The appeals court reversed, and CSX will get to raise the issue during a new trial.
"The RRB and Aetna both paid benefits to employees; therefore, they would be interested to know if these benefits were being unjustly provided," the court wrote.
"The other insurance companies would also be interested to know if their insureds were receiving unnecessary treatment, leading to unnecessary insurance payments to Drs. Carey and Johnson.
"Finally, the licensing boards of Kentucky and Ohio would be interested in knowing if two doctors that they license were engaged in unethical activity."
In the new trial, CSX can also argue it is entitled to judgment on the tortious interference claim because it had a legitimate reason to stop accepting COIIs from the chiropractors.
It also gets to shut out evidence of CSX's total value, should a punitive damages award be considered again, while Heligman will no longer be a defendant because he was not served the complaint properly.