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DOT Found Not Liable for Plaintiff’s Injuries When Plaintiff Struck by Car as Crossing Highway to Reach DOT Unimproved Parking Lot Across From American Legion

By: Betsy G. Ramos, Esq.

Plaintiff Daniel Mattos and his wife, Cary Mattos, parked their car on the DOT property to attend a St. Patrick’s Day event held at the American Legion, which was located across Route 206 in Frankford Township. Cary was struck and killed by a car driven by defendant Thomas Zoschak as she attempted to cross Route 206 to return to her parked car. The issue in Mattos v. Hotalen, 2018 N.J. Super. Unpub. LEXIS 1968 (App. Div. Aug. 22, 2018), was whether the DOT could be responsible for permitting the American Legion to use its unimproved lot as an overflow parking lot without providing warning signs, crossing guards, safety lighting, or patrol officers to assist in pedestrian crossing of Route 206 or require the American Legion to provide the safety measures.

The DOT moved for summary judgment before the trial court, arguing that it was immune from liability based upon the provision of N.J.S.A. 59:2-4 of the Tort Claims Act, which provides that “a public entity is not liable for any injury caused by adopting or failing to adopt a law or by failing to enforce any law.” Further, the DOT argued that it was not legally obligated to prevent the unauthorized use of its public property.

The trial court judge found that there were several issues of material facts related to whether the proximity of Route 206 to the DOT’s property constituted a dangerous condition, whether the DOT had notice of the dangerous condition, and whether it failed to remediate the dangerous condition. The DOT filed an interlocutory appeal, arguing that the motion judge failed to dismiss the plaintiffs’ claims based upon the immunity granted to public entities concerning the adoption or failure to adopt or enforce a law. In the alternative, the DOT argued that even if N.J.S.A. 59:4-2 applied (liability for dangerous condition of public property), the plaintiffs did not present sufficient evidence that the property was in a dangerous condition.

The Appellate Division noted that the plaintiffs had parked their car on an unpaved, grassy parcel of land that is part of the DOT’s property, located across from the American Legion. Route 206 is a 50 mile an hour road with no pedestrian crossing to allow those who park their car on the DOT’s property to cross Route 206 safely. Further, it found that the DOT maintained Route 206.

This accident happened at about 10:30 pm when the plaintiffs were attempting to cross Route 206 and were struck by a car by the defendant Zoschak. Plaintiff Cary Mattos sustained fatal head injuries and died at the scene.

The DOT property was an unpaved, grassy lot without any designated means of egress and ingress for vehicular or pedestrian traffic. There were no barriers or fences blocking access to the property and on the side of the property adjacent to Main Street, there was a worn down patch that had been used as an unauthorized entrance and exit onto the property. During depositions, the DOT investigator explained that it was illegal for persons attending events held at the American Legion to use the property as a parking lot. However, the DOT did not have any “no trespassing” signs on the property at the time of the accident.

Plaintiff’s theory of liability was based upon the DOT’s failure to take affirmative measures to prevent people from improperly using its lot as a de facto parking area for events held at the American Legion. Stated differently, the plaintiff was arguing that the DOT should be liable for the plaintiffs’ misuse of public property. If the cause of action against the DOT was proximately caused by a dangerous condition located on the property, the Appellate Division held that it would have a “modicum of substantive merit.” However, the plaintiffs decided to cross Route 206 at about 10:30 pm, wearing dark clothing, in an area of the road where the overhead lighting provided intermittent illumination. Hence, the Court rejected the plaintiffs’ arguments attempting to impose an affirmative responsibility on the DOT to facilitate the misuse of its property.

Further, the Appellate Division found that the DOT did have immunity under N.J.S.A. 59:2-4, which provided immunity for any injury caused by adopting or failing to adopt a law or failing to enforce any law. Accordingly, the Appellate Division reversed the trial judge’s denial of the DOT’s motion for summary judgment and found that the complaint should have been dismissed by the Law Division.

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Key Supreme Court Decision on Arbitration is Not Likely to Affect State Workers’ Compensation Laws

By: John W. Pszwaro, Esq.

In the recent decision of Epic Systems v. Lewis, 138 US 1612 (2018), the Supreme Court affirmed a preference for arbitration, ruling that agreements between employers and employees requiring individual arbitration are enforceable in employment contracts, even as a condition of the employment itself. Though the decision specifically addresses arbitration agreements limiting collective actions, the ruling could be extrapolated to validate other agreements between employers and employees. While this decision is unlikely to lead to arbitrations displacing New Jersey workers’ compensation statutory scheme, the Court’s dedication to arbitration could have indirect effects sooner rather than later.

Epic Systems v. Lewis

In Epic Systems the Supreme Court sought to settle the issue of whether arbitration agreements entered into as a condition of employment are enforceable. More specifically, the particular arbitration agreements at issue required individualized arbitration and banned collective judicial or arbitral proceedings such as class actions. The Supreme Court addressed three consolidated claims that “differ[ed] in detail but not in substance” as the Court noted. The example offered by the Court at the outset of the decision touched on the specific facts of one of the three cases: Ernst & Young LLP v. Morris.

In that case, Mr. Morris accepted employment with Ernst & Young and entered an agreement to arbitrate any disputes that may arise between him and the employer. The agreement specified that the arbitration must be on an individual basis. Different disputes with other employees would need to be heard in separate proceedings.

After his separation from employment, Mr. Morris raised wage and hour claims and alleged the employer violated the Fair Labor Standards Act (FLSA) for misclassification of employees, i.e. paying salaries without overtime. Mr. Morris sought to litigate this claim in federal court on behalf of a nationwide class. The employer argued that the employment agreement required all disputes be subject to arbitration and further required the dispute be brought by Mr. Morris alone.

Writing for the 5-4 majority, Justice Neil M. Gorsuch held that federal courts have long favored arbitration in light of its speed, simplicity, and inexpensiveness. Justice Gorsuch found no conflict with other federal laws and dispensed with the arguments that the class waivers in arbitration agreements violated Section 7 of the National Labor Relations Act (NLRA) which protects employees’ rights to engage in “concerted activities” in pursuit of their “mutual aid or protection.”

In upholding the validity of the arbitration agreements in all three consolidated claims, the Court held that employers do not violate the NLRA or the Federal Arbitration Act (FAA) by requiring employees to sign arbitration agreements that waive their rights to bring class action suits. The Court stressed that the FAA requires that arbitration agreements be enforced just like any other contract.

Though the specific facts of Epic Systems case do not relate to an agreement to arbitrate workers’ compensation claims, the Court’s analysis and commitment to arbitration agreements generally, forecast an application in a variety of disputes between employers and employees.

Effects in Employer/Employee Relationships

The Epic Systems decision has been generally regarded as a win for employers who may be more emboldened to include broad arbitration agreements in contracts of employment. Employers may feel more assured that, if contested, such agreements will be upheld as valid and enforceable. Of course, employers must weigh the potential benefits of arbitration such as expediency and lower litigations costs against the possible downside such as limited appellate rights.

That being said, surely this decision will impact the employer/employee disputes related to workplace conditions including those claims typically brought under the Fair Labor Standards Act, Title VII of the Civil Rights Act, and the Family Medical Leave Act as employees often seek to litigate these claims in a collective front.

Arbitration in New Jersey

The question we now face is how far the high Court might go to endorse arbitration agreements and whether that preference will change the landscape of employment contracts in New Jersey.

There is no question that arbitration is a favored means of dispute resolution in federal court. Pursuant to the Federal Arbitration Act, agreements requiring arbitration of certain disputes are to be enforced in the same manner and to the same extent as any other contractual provision. Indeed the FAA was passed by Congress “to reverse the longstanding judicial hostility to arbitration agreements … and to place arbitration agreements on the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991) (wrongful firing claim under ADEA subject to arbitration agreement).

Despite this clear directive under the FAA, in New Jersey, state courts have been fairly hostile to arbitration agreements and previously refused to enforce agreements that did not provide adequate notice of an individual’s right to sue, seek a jury trial, or file a class action law suit. Conversely, the Third Circuit has towed the line and has regularly upheld agreements to arbitrate.

Will Arbitration Replace Workers Compensation In New Jersey?

Despite the Supreme Court’s commitment to the validity of arbitration agreements and the FAA’s preference for arbitration as the favored means of dispute resolution, absent some legislative directive, it is unlikely that arbitrations will replace the workers’ compensation system in New Jersey.

First, New Jersey’s workers’ compensation scheme is statutory and Section 39 of the statute expressly declares that employers cannot limit an employee’s right to pursue workers’ compensation claims in New Jersey. Section 39 states that any “agreement, composition, or release of damages made before the happening of any accident” is contrary to public policy. This language appears specifically crafted to address agreements to arbitrate or agreements to completely waive the right to pursue a workers’ compensation claim.

However, the question remains whether the Federal Arbitration Act would supersede state law and allow arbitration to displace workers’ compensation claims. Indeed, two recent Supreme Court cases of AT&T Mobility v. Concepcion, 563 S. Ct. 333 (2011) and Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421 (2017) have upheld agreements to arbitrate in the face of contrary state common law and emphasized that the FAA permits arbitration agreements to be declared unenforceable ‘upon such grounds as exist at law or in equity for the revocation of any contract’, e.g. fraud, duress, unconscionability.

Nevertheless, not only would it be a stretch to conclude that the arbitration agreements could be used to circumvent an entire statutory scheme designed as remedial legislation, such a challenge might take a lifetime of litigation to obtain final judicial guidance on the issue.

Potential Indirect Effects in New Jersey

Even if New Jersey’s workers’ compensation system is not replaced with valid agreements to arbitrate, the preference for arbitration may have indirect effects. Such effects might be felt in third party litigation, typical of motor vehicle accidents and slip and falls, when an injured worker files a civil action in connection with the work-accident. As it currently stands, it is unlawful for employers to require waivers of third party claims. Vitale v. Schering–Plough Corp., No. 078294, 2017 WL 6398725 (N.J. Dec. 11, 2017) In Vitale, the New Jersey Supreme Court relied on Section 39 of the workers’ compensation statute to find that a waiver signed by an injured worker prior to the compensable accident was invalid. In light of the US Supreme Court’s decision in Epic Systems, it remains to be seen whether an agreement limiting third party claims to arbitration would be treated the same as an all-out waiver.

Another application of arbitration one may envision relates to employers with multi-state employees. Though Epic Systems dealt with arbitration agreements, it also underscored the Court’s preference to allow employers and employees to freely contract between themselves. Indeed the opening line of the majority decision reflects this philosophy when Justice Gorsuch asks “[s]hould employers and employees be allowed to agree that any disputes between them will be resolved through one-on-one arbitration?”  Applying this reasoning to multistate employees, it is not unimaginable for a court to validate choice of law or choice of venue agreements in employment contracts that commit to litigate work-related injuries in particular states and/or venues.

Conclusion

The Courts’ decision in Epic Systems does not directly threaten to undermine the workers’ compensation statutory scheme in New Jersey. However, the Court’s decision does represent a broader affirmation and commitment to the validity of arbitration agreements. It appears New Jersey’s workers’ compensation statute is on solid footing in its proscription of agreements subversive to the statute’s remedial purpose. However, it is unclear what indirect effects we can expect for employers and carriers alike.

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Parking Authority’s Operation of a Fee Based Jitney Service Did not Deprive it from Asserting Public Entity Snow Removal Immunity

By: Betsy G. Ramos, Esq.

Plaintiff Mildred Molino was walking in the Township of South Orange when she fell on an icy sidewalk adjacent to a municipal parking lot. The lot was owned by the Township and operated by the South Orange Parking Authority (“SOPA”). The issue in Molino v. Township of South Orange, 2018 N.J. Super. Unpub. LEXIS 1665 (App. Div. July 12, 2018) was whether SOPA was barred from asserting the common law snow and ice removal immunity because it charged for its jitney service.

It was undisputed that it had snowed the day before the plaintiff’s accident. Township employees had plowed, shoveled, and salted the parking lots and sidewalks, including the municipal lot owned by the Township and operated by SOPA. The plaintiff alleged that the Township and SOPA failed to properly remove ice and snow, causing plaintiff’s injury.

Both the Township and SOPA filed motions for summary judgment, each asserting a common law public entity snow and ice removal immunity. Plaintiff argued that SOPA’s  operation of a fee based jitney service for residents to the train station rendered it a commercial entity, not entitled to public entity immunity.

Although the trial court judge initially denied SOPA’s motion, upon reconsideration, the trial judge found that SOPA was acting as a public entity and, regardless of whether it ran a jitney service, it did not lose its public entity immunities. Having surplus funds did not convert SOPA into a commercial enterprise.

The Appellate Division agreed. Charging a fee for its jitney service did not render SOPA a commercial enterprise. The Court found that collecting parking fees and operating a jitney service did not deprive SOA of its common law snow and ice removal immunity. It was operating within the bounds as a public entity and used the revenue raised through its parking fees and jitney service to defray the cost of its regulation. As a result, SOPA would be immune from liability for the injuries plaintiff suffered when she slipped on ice.

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Can a Plaintiff Recover for Injuries Due to a Fall in a Pothole on a Public Roadway?

By: Betsy G. Ramos, Esq.

Potholes are a fact of life in New Jersey. They can pop up almost overnight, which makes it difficult for a plaintiff to be able to pursue a claim for a personal injury against a public entity due to an injury suffered from stepping in a pothole. Typically, a plaintiff is unable to show that the public entity had actual or constructive notice, as required under the Tort Claims Act to pursue such a claim.

Postorino v. County of Passaic, 2016 N.J. Super. Unpub. LEXIS 1729 (App. Div. July 25, 2016) is a good example of a pothole case in which notice was an issue for a pedestrian fall due to a pothole. The plaintiff Michael Postorino, Fire Chief for the City of Paterson, was leaving the scene of a fire and stepped into a pothole covered with water on Grand Street. He suffered a left knee injury and filed suit against the County of Passaic, who was responsible for the maintenance of the street.

To be able to successfully pursue a personal injury claim against the County, pursuant to the Tort Claims Act, N.J.S.A. 59:4-2, the plaintiff had to prove that the pothole constituted a dangerous condition and that the County had actual or constructive notice of the condition prior to his accident. Constructive notice would exist if the plaintiff could show “that the condition existed for such a period of time and was of such an obvious nature that the public entity, in the exercise of due care, should have discovered the condition and its dangerous character.” N.J.S.A. 59:4-3(b).

There were no facts to establish that the County had actual notice of the pothole. The trial court found that there was no actual or constructive notice of the pothole and granted summary judgment to the County. The issue on appeal was whether the County had constructive notice of the pothole. The Appellate Division pointed out that constructive notice can be proven based upon the length of time a dangerous condition existed and its appearance. Further, if there were prior accidents at the same location of the dangerous condition, that could establish constructive notice.

In Postorino, there were no proofs to show how long the pothole had existed before the accident. According to the County, Buildings and Roads employees travelled in the approximate vicinity of the accident location on a weekly basis and would have reported such a pothole or had it filled had it been noticed. Other potholes on Grand Street had been identified the day before by a county inspector to be filled in. However, no specific potholes were identified and, regardless, that would not have allowed sufficient time to fill it in before the accident.

There was no record of prior accidents involving this accident or other potholes in the same area, which could have provided notice to the County. The plaintiff presented no expert testimony to opine on the duration of the pothole prior to the accident. Thus, because the plaintiff was unable to establish notice of the pothole, the Appellate Division affirmed the order, granting summary judgment to the defendant County.

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Township Found Not Liable for Injury Caused by Fall in Pothole

By: Betsy G. Ramos, Esq.

Plaintiff Anthony Scafidi (“Scafidi”) was injured due to a fall in a pothole in the road alongside the sidewalk on Stuyvesant Avenue in Lyndhurst, New Jersey. He sued the Township, claiming that the pothole constituted a dangerous condition of public property. In Scafidi v. Township of Lyndhurst, 2018 N.J. Super. Unpub. LEXIS 925 (App. Div. April 20, 2018), the plaintiff argued that he had met the requirements of the Tort Claims Act to be able to recover for his injuries against the Township.

Scafidi had been visiting a friend who lived on Stuyvesant Avenue and was walking home when the accident occurred. He accidentally dropped his house keys in the street. When he stepped off the sidewalk to retrieve his keys, his left foot stepped into a pothole, causing him to fall. He suffered a fracture, necessitating surgery to his foot.

One year after the accident, he retained an expert, who inspected and measured the pothole at 4 ¼ inches deep. The expert did not record the length or width of the pothole. He opined that the pothole had formed over a period of years, specifically within a 3 to 5 year duration.

The Township filed for a summary judgment, asserting that it was entitled to immunity under the Tort Claims Act. It argued that the plaintiff failed to prove that the pothole was a dangerous condition, that the Township had actual or constructive notice of the condition, that the Township’s actions as to the pothole were palpably unreasonable, or that plaintiff suffered a permanent injury. The judge granted the motion and the plaintiff appealed. On appeal, the plaintiff argued that there were issues of fact which should have precluded the motion from being granted.

The Appellate Division noted that potholes and depressions are common features of roadways. Not every defect in a highway is actionable. The Court found that the Township’s inaction in repairing the pothole was not palpably unreasonable. Had the plaintiff not dropped his keys, he would not have stepped into this portion of the roadway. This area was not one designated as a pedestrian crosswalk and a car would have driven over the pothole without incident. Hence, the Court agreed that the Township’s failure to repair this pothole was not palpably unreasonable. Thus, the Appellate Division affirmed the trial court’s dismissal of this lawsuit.

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Police Officer Who Could Not Drive Failed In His Disability Discrimination Suit

Jeremy Christensen worked as a patrol officer for the Warner Robins Police Department in the State of Georgia.  He completed a required 12-week certification training program.  However, he experienced shooting pains and leg cramps while driving on September 2, 2013. Nonetheless, he finished the program and began a one-year probationary period required for all new city employees.

Christensen experienced more shooting pains on October 8, 2013, and his hands shook uncontrollably.  Another officer had to drive him home from work.  He was advised to get a medical release from his physician, which he obtained from Dr. Al-Shroof.  However, the doctor did not clear petitioner to drive, so Christensen was assigned to a light-duty desk position in the Criminal Investigations Division. Eventually, Dr. Al-Shroof cleared petitioner to work with no restrictions except for a continued restriction against driving.

The City documented four specific disputes with Christensen during the one-year probationary period, the most serious of which was that Christensen only entered 10 of 270 supplemental reports to the CID’s electronic case management program in 2014.  As a result of these four disputes, the City terminated the employment of Christensen for unsatisfactory performance.

Christensen sued alleging disability discrimination.  The City in turn argued that Christensen was not a qualified individual under the ADA because he could not drive, and driving was admittedly an essential job function for a patrol officer.  Christensen disagreed and argued that he was able to work light duty for 10 months, and that he was qualified to perform the light duty position.  He seemed to argue that he was entitled to indefinite light duty.  The Court disagreed.  “The City accommodated Christensen’s disability by giving him light duty work that did not require him to drive. . . . That accommodation did not enable him to perform the essential function of a patrol officer; he still could not drive.”

Christensen further argued that the City could have continued him on light duty, and its past efforts to accommodate his driving restriction showed that the City could make long-term accommodations.  The Court again disagreed.  “Further, the City’s past accommodations, which exceeded the requirements of the ADA, do not bind the City to anything outside the requirements of the ADA.” The Court also agreed that the City offered valid, non-discriminatory reasons for terminating Christensen’s employment.

For these reasons, the Court granted the City’s motion for summary judgment.  The case shows that the elimination of an essential job functions is never required.  Christensen had to prove he could perform all the essential job functions.  The Court said that the mere fact that the City tried to accommodate Christensen for a lengthy period of time could not be held against the City.  This case can be found at Christensen v. City of Warner Robins, GA., 2018 WL 1177250 (D. GA 2018).

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Borough’s Alleged Premature Enforcement of a CO Ordinance Does Not Constitute a Substantive Due Process Violation

By: Voris M. Tejada, Jr., Esq.

In Reed v. Scheffler, 2018 U.S. Dist. LEXIS 71032 (D.N.J. April 27, 2018), Plaintiff sued the Borough of Palmyra (the “Borough”) and its Housing Official alleging, inter alia, violations of substantive due process as a result of the enforcement of certain ordinances in connection with the sale of Plaintiff’s mother’s home.  Prior to the sale, Plaintiff contacted the Borough to inquire as to whether any inspections were required before the home could be sold.  Plaintiff noted he had a buyer who was interested in purchasing the property “as is,” and who was interested in a “quick sale.”  The Borough’s Housing Official advised Plaintiff, consistent with an ordinance previously enacted by the Borough, that an inspection and issuance of a certificate of occupancy (“CO”) were required prior to the sale of any residence in the Borough.

Following Plaintiff’s contact with the Borough, an inspection of Plaintiff’s mother’s home was scheduled.  The inspection revealed 33 code violations at the property, which violations were required to be abated prior to the issuance of a CO.  While Plaintiff abated the violations, he alleged he spent tens of thousands of dollars in doing so, and also lost his buyer due to the resulting delay.  Plaintiff ultimately sold his mother’s home at an increased price to a different buyer.

Following the sale of the home, Plaintiff began searching the Borough’s website for additional information concerning the relevant ordinance.  During his search, Plaintiff came across a post indicating enforcement of the relevant ordinance had been delayed to a date two months after his initial communication with the Borough.  Plaintiff then initiated suit, alleging, inter alia, violations of substantive due process as a result of (1) the Borough’s enforcement of an ordinance which Plaintiff claimed was not then in effect; (2) the Housing Official’s failure to inform Plaintiff that under the terms of the ordinance, a CO was only required prior to the reoccupation of the home, rather than the mere sale of the home; and (3) the Housing Official’s failure to inform Plaintiff about the option of obtaining a temporary CO, which, under certain circumstances, would have allowed the originally planned sale to go forward while the code violations were being abated.  The Borough and its Housing Official were represented by Capehart Scatchard in the ensuing litigation.

The Court noted that to prove a substantive due process claim, a plaintiff must prove (1) that he was deprived of a protected property interest; and (2) that a state actor acted with a degree of culpability which shocks the conscience.  Addressing Plaintiff’s first argument, the Court found that the relevant ordinance was in effect at all relevant times, as a post on the Borough’s website was not sufficient to override the formal process by which the ordinance had been adopted, and by which its effective date had been set.  Moreover, the Borough had enforced the relevant ordinance against other homeowners during the relevant time period.  The Court further noted that even if the enforcement of the ordinance was on hold when Plaintiff initially sought to sell the property, his claim would still fail, as the Borough’s action was not sufficiently egregious to be “conscious-shocking.”  It was undisputed that the Housing Official was never informed of any delay in the enforcement of the ordinance, and thus acted in good faith in enforcing same.  In addition, the ordinance served an important public purpose in promoting decent housing to all Borough residents.  Under these circumstances, Plaintiff’s first due process argument was without merit.

Addressing Plaintiff’s second argument, the Court noted Plaintiff provided no proof that the original buyer would have proceed with the sale without a CO, thereby agreeing to undertake the repairs of the 33 code violations himself after the sale and prior to moving in.  Indeed, the only detail Plaintiff provided about the falling-through of the initial sale was the buyer’s statement that he just was not interested in the property anymore.  Because there was no evidence the original buyer would have proceed with the sale without a CO, the Court rejected Plaintiff’s second argument.

Addressing Plaintiff’s third and final argument, the Court found there was no evidence the Housing Official had an independent duty to inform Plaintiff about the possibility of obtaining a temporary CO where Plaintiff did not inquire about same.  Moreover, there was no evidence that a temporary CO would have saved the initial sale of the home.  The ordinance made clear that the issuance of a temporary CO was a matter of discretion which could only be exercised under certain circumstances.  In addition, Plaintiff again failed to provide any evidence that the initial buyer would have consummated the sale with a temporary CO, assumed responsibility for abating the 33 code violations, and submitted to a re-inspection.  Plaintiff’s claim that the Housing Official failed to inform him about the option of obtaining a temporary CO thus did not rise to the level of a substantive due process violation.  Having rejected each of Plaintiff’s three arguments, the Court granted summary judgment in favor of Defendants.

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Rules Regarding Future Payments Under Permanency Awards and Commutations

New Jersey adjusters sometimes ask why future benefits under an order approving settlement with a percentage of disability cannot be paid in a lump sum to the injured worker.  In other words, why is there a requirement that future payments be paid out over a period of many weeks or even many years? This question goes to the foundation of the New Jersey system.  The New Jersey Act is social legislation, and Judges of Compensation are required to look out for the best interests of injured workers.  There is a legislative conviction that dependable weekly payments of permanent partial or total disability are almost always in the best interest of injured workers.  The right to reopen workers’ compensation cases is extended until two years from the last payment, (which benefits the employee), and the insistence on weekly payments avoids the temptation to risk a large sum of money in an exercise of bad judgment, perhaps gambling or betting on a hot stock.

If an adjuster were to mistakenly advance, for example, 100 weeks of future payments in one lump sum, this would amount to an impermissible commutation.  There is a procedure under N.J.S.A. 34:15-25 for employees to obtain a commutation of future payments, but an application must be filed with the Director of the Division for judicial permission to commute an award. Usually the Judge of Compensation who approved the settlement hears the commutation request.  The statute reads, “Compensation may be commuted . . . at its present value, when discounted at five per centum (5%) interest, upon application of either party, with due notice to the other, if it appears that such commutation will be for the best interest of the employees or the dependents of the deceased employee, or that it will avoid undue expense or undue hardship to either party. . .”

There are few published cases on commutations, but generally judges focus on whether there is an undue hardship on the injured worker or family or a compelling need that may justify a lump sum commutation.  One example comes from Harrison v. A & J Friedman Supply, Co., 372 N.J. Super. 326 (App. Div. 2004) where the applicant, a dependent spouse, applied for a commutation of a dependency award because the building she resided in was in default to the City of New York, giving her the opportunity to purchase her Manhattan residence for $370,000.  She could obtain a mortgage for about half that amount, but she needed to commute future permanency payments to raise the balance of the purchase price.

The Judge of Compensation reviewed the New Jersey Administrative Code provisions on commutations.  The relevant code provision provided, “No award for total disability or dependency benefits shall be commuted.”  The Judge of Compensation therefore denied the application, and the petitioner appealed.  The Appellate Division disagreed with the administrative code provision.  It said, “A plain reading of this statute, spurred by the absence of any limit on the types of compensation benefits that may be commuted, suggests that the discretion to permit commutation was intended to encompass all types of benefits, including the total disability and dependency benefits specifically referenced in N.J.A.C. 12:235-6.3 (d).”  The Court held that under certain circumstances a commutation may be made in dependency and total and permanent disability cases.

The Court did not order the commutation but it sent the case back to the Judge of Compensation for further proceedings.  “Certainly, upon remand, the parties should be afforded an opportunity to present information regarding the appellant’s financial status, her ability to maintain her lifestyle in the absence of the weekly benefits, the value of the property appellant is desirous of purchasing, the availability of funds other than the dependency benefits, and the availability of other financing that might render commutation unnecessary.”  As one can see from reading this quotation, commutations are not simple matters.  Judges must analyze many different issues and develop an understanding of the injured workers’ financial status before making an informed decision.  It is a case by case analysis often requiring substantial testimony. In actuality, there are surprisingly few commutation requests annually in the Division.

This legislative preference for weekly payments of permanency benefits also explains why annuity companies are less involved in New Jersey than in other state workers’ compensation systems.  In many states, an annuity company may offer an injured worker a stream of payments changing over time, perhaps increasing in future years at a higher rate. But in New Jersey payments must be made according to the statute.  If an award is entered for 60% permanent partial disability, it is paid out over 360 weeks at one set rate.  If an annuity company were to contract with the employer to make those 360 weeks of payments, the annuity company would be required to make the payments at the rate established in the court order.  The annuity company could not vary the rate or increase the rate while shortening the period of payments or make any other material change without the permission of a Judge of Compensation.

Over all, the New Jersey system makes good sense, even though injured workers may sometimes be disappointed that their payments must be spread out over many weeks.  Settlements by lump sum payments do happen frequently in New Jersey, of course, under N.J.S.A. 34:15-20, but these settlements are only available where there is a genuine issue of causation, liability, jurisdiction or dependency.  A smaller percentage of cases is settled under Section 20 than on a percentage basis under N.J.S.A.  34:15-22.

The New Jersey system is designed to provide protection for injured workers and their families by creating a steady and dependable stream of tax free payments over a period of weeks or even years, depending on the severity of the injury and its impact on the employee’s work or non-work life.  Permission to apply for a commutation is potentially available to any recipient of a percentage disability award paid out over future weeks, but the employee must prove to the Judge of Compensation that such a commutation is in his or her best interest.

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Audience Quiz: Two New Jersey Comp Brain Teasers

Today’s blog contains two interesting workers’ compensation quizzes, which were asked at the April 19, 2018 Millennium Seminar in Mt. Laurel, N.J.  We invite readers to email responses.  Next week the winning answers will be announced.

Question One:

Jane Friedman is a CPA for Best Accountants.  She left her office to visit a client one day.  On the way to the client another car sideswiped her vehicle, causing her serious bodily injuries.  Her employer’s workers’ compensation carrier paid $100,000 in workers’ compensation benefits.  Jane negotiated a third party settlement for the policy limit of $100,000 with the other driver’s carrier without hiring an attorney.

How much does the workers’ compensation carrier get back from the third party recovery?

Question Two:

Standard Oil has a large refinery in New Jersey with a full-time occupational physician on site.  One day Bill Bryson, a laborer, sees the company physician, Dr. Fortunato, for treatment of a work-related foot injury.  Dr. Fortunato notices that the foot appears red and swollen and gives Bill anti-inflammatories.  He tells Bill to come back in three days.  Two days later Bill is rushed to the ER by his wife with a diagnosis of necrotizing fasciitis or “flesh eating disease.”  To save his life the hospital has to amputate his foot.

Bryson files a civil law suit for medical malpractice against Dr. Fortunato.  What is Dr. Fortunato’s best defense to the civil law suit?

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Appellate Division Rejects Reopener of High Percentage Award

New Jersey employers like reopener claims about as much as homeowners like back-to-back blizzards.  The general view is that employers have virtually no defenses and have to pay more with each reopener. The truth is that employers can win reopener cases where the petitioner’s expert cannot really prove the petitioner’s condition has worsened since the prior award.  Garces v. Mid-State Lumber Corp, A-4199-15T4 (App. Div. April 10, 2018) provides a good example.

Petitioner suffered two compensable accidents on October 16, 2009 and December 11, 2009 leading to an order approving settlement for 66.67 percent partial permanent disability described as orthopedic and neurologic in nature for residuals of a herniated disc L3-4 and L4-5 status post lumbar laminectomy and fusion.  Respondent received a credit of 27.5% for previous disability.

On June 15, 2013, some fifteen months after entry of the award of 66.67% petitioner filed to reopen his case.  Petitioner testified in the reopener, and he produced two experts.  Dr. Becan was petitioner’s orthopedic expert, and Dr. Peter Crain was petitioner’s psychiatric expert.  The treating surgeon, Dr. Carl Giordano, saw petitioner and concluded petitioner needed no further treatment.

Dr. Becan saw petitioner twice, once in 2011 before the first award and again in 2014 for the reopener examination.  He raised his estimate to 90% of partial total.  On the reopener exam he wrote that petitioner’s disability had increased by 20% of partial total. When asked about the objective findings that supported the increase, he said petitioner “walked with a guarded and antalgic gait pattern,” “had a noticeable limp on the right,” and “was unable to heal or to walk on his right leg.”  He also found “right-sided sacroiliac joint tenderness.”  He noted restrictions when he put petitioner through various maneuvers like straight leg raising.

On cross examination, Dr. Becan conceded that many if not most of his restrictions were the same as they were in 2011.  The two reports were compared, and it turned out that petitioner’s range of motion tests were actually better in 2014 than in 2011.  Petitioner’s muscle strength testing of the quadriceps and hamstring was better.  The right ankle jerk reflex had improved.  Backward extension was the same, and straight leg raising improved.

The Judge of Compensation examined the two reports closely and concluded that Dr. Becan’s findings on the new 2014 examination were not worse at all.  He further noted that while Dr. Becan said petitioner could not return to work, the doctor did not know what petitioner’s job duties were.  The Judge concluded that Dr. Becan had simply offered a net opinion, which is an opinion not supported by any evidence.  The Judge also noted that petitioner’s psychiatric expert, Dr. Crain, had done the same thing.  He also failed to offer any objective evidence of worsening.

The Judge of Compensation dismissed petitioner’s reopener claim and petitioner appealed.  The Appellate Division made short work of the appeal and commented that there was sufficient credible evidence to support the dismissal of petitioner’s case.

The case illustrates an important point.  In valuing a reopener claim, practitioners often focus on the percentage increase that the expert for the claimant offers.  But the better way to value a reopener case is to look beyond the mere estimate of increased disability and compare the pre- and post- award reports side by side.  If the actual measurements, range of motion and findings are the same or better on reopener, it doesn’t matter that the claimant’s doctor raised his or her estimate.  The percentage of increase in an IME means nothing if the actual test results appear to be the same.   There are other ways to win reopeners as well, such as proving that a new non-work event or new employment has worsened the petitioner’s condition.  All of these approaches do give respondents a fighting chance in defending reopeners.

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