Full Service Law Firm in Mt. Laurel Township, NJ | Capehart Scatchard

Awards

This matter arises from a contractual dispute between Gallen Contracting Inc. (“Gallen”) and Centurion Construction, Inc. (“Construction”).  Construction had hired Gallen to perform concrete work for an automobile dealership in Wayne pursuant to a written agreement.  The agreement required that the parties submit disputes to mediation, followed by binding arbitration if mediation failed.  The issue in Centurion Companies, Inc. v. Gallen Contracting, Inc., 2025 N.J. Super. Unpub. LEXIS 861 (App. Div. May 27, 2025) was whether the arbitration award entered against not only Construction but also Centurion Companies, Inc. (“Companies”), a similarly named but separate corporation, was properly entered or whether the award entered against Companies should have been vacated. 

After a dispute arose under the contract, Construction fired Gallen and Gallen sued Construction.  Gallen subsequently amended its complaint and identified defendant as “Centurion Construction Inc., a/k/a Centurion Companies.”  However, Gallen’s amended complaint failed to assert any specific allegations against Companies. 

Construction filed a motion to compel mediation and arbitration, which the trial court judge granted.  Thereafter, Gallen and Construction entered into a June 2018 arbitration agreement delineating plaintiff Gallen Contracting, Inc. and defendants, Centurion Construction, Inc. and Glen Poppee, individually, as the parties participating in the arbitration.  The arbitration agreement specifically provided a signature line for Centurion Construction, Inc. and the individually named defendant.  It did not contain any signature line for Centurion Companies, Inc.

The arbitration hearing took place, and the arbitrator awarded damages to Gallen under the contract in the amount of $408,645.  The arbitrator directed Gallen to prepare a consent order to memorialize the award.  After the issuance of the arbitrator’s letter opinion, Construction objected to the inclusion of “a/k/a Centurion Companies” in any order memorializing the award.  Construction requested that the arbitrator issue a corrected award, reflecting that the entry of the award was against Construction, not Companies.  Construction contended that the arbitrator made an evident mistake in his identification of the parties bound to the award.

The arbitrator rejected that request.  The arbitrator found that Companies played an active part in the work associated with the contract and concluded that he had the discretion to amend Gallen’s pleading under the court rules and rules of evidence. 

Thereafter, plaintiffs filed a verified complaint and order to show cause to vacate the award against Companies.  Plaintiffs argued that the arbitrator exceeded his powers because Companies was not a party to the contract, Companies did not agree to arbitrate, and Companies did not sign the arbitration award.  Plaintiffs argued that the arbitrator made an evident mistake in entering the award against both Companies and Construction.  Further, plaintiffs argued that the arbitrator exceeded his power and lacked authority to issue an award against an entity (not a party) on a claim never submitted.

The trial court determined that the arbitration award was entered in error against Companies because Gallen did not properly advise Companies of the notice of the claim against them and Companies did not have a fair opportunity to defend.  Thus, the trial court judge found that the arbitration award entered in the matter as to Companies was contrary to clearly established public policy.

This order was appealed to the Appellate Division.  Gallen argued that the trial court judge made a mistake in vacating the arbitration award entered against Companies.  The Appellate Division rejected that argument.

The Court noted that the arbitration agreement was clear and unambiguous.  It bound Gallen and Construction only.  Companies was not a party to the agreement, nor did it sign the agreement.  There was nothing in the arbitration agreement that indicated Companies agreed to mediate or arbitrate any disputes under the contract because Companies was not a party to that agreement.

The Appellate Division noted that the general rule is that an action on a contract cannot be maintained against a person who is not a party to it.  While there are some exceptions to that rule, the Appellate Division pointed out that Gallen failed to present any of these exceptions to the arbitrator in support of the entry of the award against Companies as a non-party to the contract and the arbitration agreement.

Further, the Appellate Division agreed with the trial judge’s conclusion that the arbitrator exceeded the scope of his authority by entering the award against Companies.  The arbitrator had acknowledged that Construction and Companies were two separate and distinct entities, as well as recognized that only Gallen and Construction had signed the contract.

Based upon these findings, the Appellate Division ruled that the arbitrator expanded the clear and unambiguous terms of the contract to Companies, a non-party.  The Court also agreed with the trial court judge that Gallen did not provide notice that it was asserting claims against both Companies and Construction.  The Appellate Division pointed out that an arbitrator may not issue an award in the absence of indicia that all parties to the arbitration have reasonable advanced notice of the claim.

Hence, the Appellate Division upheld the trial court’s decision to vacate the arbitration award against Centurion Companies, Inc. and affirmed the trial court’s decision. 

Plaintiff K.C. was a former student at a New Jersey high school and Defendant Christopher Doyle was her teacher at the same high school.  While in college, she received a message from a former classmate that her intimate photos were being shared on a website called Anon-IB. Investigation into the matter led K.C. to learn that the images, which she had shared with her boyfriend (whose phone had been stolen), were posted from Doyle’s IP address. K.C. sued Doyle, claiming a violation of the invasion of privacy statute, N.J.S.A. 2A:58D-1; intentional infliction of emotional distress; and common law invasion of privacy by intrusion on seclusion. In K.C. v. Doyle, 2025 N.J. Super. Unpub. LEXIS 415 (App. Div. Mar. 18, 2025), the issue before the Appellate Division was whether the trial court was wrong in denying Plaintiff’s application for attorney’s fees and costs due to a low jury award.

Following a jury trial, Doyle was found liable under the invasion of privacy statute and common law invasion of privacy and K.C. was awarded $10,000 in compensatory damages but no punitive damages. Thereafter, K.C. made an application to recover her attorney’s fees and costs totaling $245,667.74. This amount included a request for attorney’s fees, fee enhancement, and court costs. The trial court denied Plaintiff’s motion to recover these fees under the invasion of privacy statute. Plaintiff filed an appeal alleging that the trial court had abused its discretion in declining to award the attorney’s fees.

Upon appeal, the Appellate Division agreed with Plaintiff. The court noted that the invasion of privacy statute provides that the court “may award” a plaintiff reasonable attorney’s fees and other litigation costs. The Court noted that while the statute does not require a court to award a plaintiff attorney’s fees, it does authorize a court to make such an award where appropriate.

Here, the Appellate Division found that the trial court made a mistake and relied on irrelevant factors to decide that Plaintiff should not be permitted to recover attorney’s fees and costs. According to the Court, there was no provision in the statute which prevented recovery of attorney’s fees based on the court’s view that the jury’s low award and refusal to award punitive damages was an indication of what the jury thought of the arguments the party made to the jury.

The Appellate Division disagreed with the trial court’s conclusion that the limited result that the jury gave to K.C. supported awarding no fees. The Court observed that a court should not reject a fee award based on the fact that the jury’s damages award was low or only award fees proportionately to the amount of damages a plaintiff recovered.

Further, the Court observed that Rule of Professional Conduct RPC 1.5(a) applicable to attorneys provides factors that should be considered in determining whether the fee sought was reasonable. According to the Appellate Division, the trial court failed to consider these factors, instead, considered matters outside the record including conjecture that the jury’s verdict suggested Doyle’s violation was minor. Additionally, the Appellate Division noted that the trial court failed to consider the certification submitted by K.C.’s attorneys, which included copies for time entries and expanded on the contingency fee arrangement between K.C. and her counsel.

Therefore, the Court reversed the trial court’s order denying Plaintiff’s application for attorney’s fees and remanded the matter back to the trial court. The Appellate Division ordered the trial court upon remand to conduct a review of the details provided by the attorneys and determine the amount of fees and costs to be awarded.

Plaintiff, Law Offices of Rajeh A. Saadeh, LLC, filed a lawsuit against its clients, defendants Barbara Hutton and James Hutton, for the legal work it performed for them for a collection matter, for which they failed to pay its fees.  While the trial court entered a default judgment against defendants for the amount of the unpaid legal fees, it awarded the plaintiff law firm only a fraction of the requested counsel fees.  The issue in Law Offices of Rajeh A. Saadeh, LLC v. Hutton, 2025 N.J. Super. Unpub. LEXIS 185 (App. Div. Feb. 5, 2025) was whether the trial court mistakenly exercised its discretion in awarding only a fraction of the requested counsel fees.

According to the retainer agreement entered into between the defendants and the plaintiff law firm, the agreement provided that the law firm would be entitled to recover the costs of collection in the event that legal process was necessary to collect the amount outstanding for fees incurred.  In this case, defendants failed to pay plaintiff $4,939.20 for legal services performed.  The plaintiff law firm sent a fee arbitration pre-action notice to defendants informing them of their right to request a fee arbitration regarding the owed fees.  When the defendants did not respond, plaintiff filed a complaint for the payment of its fees.  Again, defendants failed to respond and the plaintiff requested that the court enter a default.

In its fee application, the law firm sought the amount of fees owed $4,939.20 (incurred in the collection matter) plus $2,010.00 in legal fees for its work pursuing the owed fees, $115.50 in expenses and disbursements, and $660.00 in anticipated fees.  The plaintiff law firm submitted a certification of services to support its application.

However, the trial court awarded only a fraction of the fees requested.  The court awarded plaintiff $363.00 in counsel fees, $115.00 in costs but no fees for any “anticipatory” fees.  The trial court denied almost the entirety of plaintiff’s counsel fee application because the fee application used “blocked billed” time entries.  The court found that was improper.

This decision was appealed to the Appellate Division.  The Court noted that the trial court did conduct the appropriate analysis to determine whether the number of hours were reasonably expended, as well as the specific hourly rates claimed.  Here, the attorney’s hourly rate of $330.00 was found reasonable.  However, the trial court found four of the listed time entries unreasonable, striking almost all of the time because of the “block billing.” The court struck 5 hours and 54 minutes of the 7 hours plaintiff spent on the matter.

Block billing is a method by which each lawyer would enter the total daily time spent working on a case, rather than itemizing the time expended on specific tasks.  It is essentially a summary of the activities performed rather than detailing every task.

While the trial court found that methodology of billing was improper, the Appellate Division disagreed.  It found that such billing should be upheld as reasonable if the listed activities reasonably correspond to the number of hours billed.   It did note that some of the entries were vague and that may be a reason to exclude certain hours but it would not be a reason to exclude the entire entry.

 The Appellate Division found that “[t]he more appropriate approach would be to look at the entire block, compare the listed activities and the time spent, and determine whether the hours reasonably correlate to all of the activities performed.”  The Court did note that plaintiff listed each task performed in the block entry.

Thus, the Appellate Division concluded that the fee award here was a result of a mistaken exercise of the Court’s discretion.  It vacated the fee award made to plaintiff and remanded the matter back to the trial court to consider anew its determination as to the amount of counsel fees plaintiff was entitled.

Imagine a conversation in a restaurant between a customer who orders a three-course meal and the waiter, who brings the customer a bill after the first course.  “But I have not even finished dinner yet?” objects the customer.  The waiter responds, “you misunderstand, this bill is just for the procedure.  We had several cooks working on this meal.” At the end of the meal, the waiter then brings a second bill to the table, announcing “now this is the bill for your food.”

But isn’t that paying it twice! One might say that this hypothetical sounds absurd. Yet isn’t this what happens all the time in negotiations regarding awards for permanent partial disability benefits?   The employer is presented with a large medical bill from the surgeon for a low back fusion surgery early in the case, perhaps over $100,000. The carrier, third party administrator or employer then pays the medical bill.  Two years later, when permanency settlement negotiations ensue, the petitioner’s counsel tells the judge, “My demand is 40% permanent partial disability because this was a two-level fusion.”  That will mean a payment of about $145,000.  The response should be, “so what  – my client already paid that bill.”

Valuing a case for permanency based on the medical diagnosis or based on surgery having been performed is simply paying it twice.  The argument — “this was a two level fusion” is legally irrelevant.  The Supreme Court of New Jersey said in Perez v. Pantasote, 95 N.J. 105 (1984) that to obtain a permanent partial disability award, the employee must show proof of a lessening to a material degree of working ability.  Alternatively, the Court said, “Another criterion that may be considered in determining whether the injury is significant enough to merit compensation is whether the injury substantially interferes with other, nonwork-related aspects of the petitioner’s life.” In other words, an award must be based on factual evidence offered by the petitioner that this accident produced significant changes in work or in non-work activities.  Usually, people are back to work doing the same job at the time of settlement, so the focus shifts to the impact on non-work aspects of life.

Our Supreme Court has spoken clearly, yet how many times have we heard this same argument: “This case is worth more because there was a surgery two years ago to the shoulder,” or “this surgery was open and not arthroscopic.”   These arguments are red herrings: they do not address the legal test above. When it comes to awarding permanency, the focus should never be on the type of surgery that took place two years ago but rather on the present functional loss, if any,  of the injured worker.   Every case is different.  Some spine surgeries produce tremendous recovery for patients; some do not.  I know many people who have undergone fusion surgery and it has eliminated their pain and restored their function to pre-injury status.  Such a person would not be entitled to a substantial award of permanency. Others find that surgery failed, and at the time of settlement they have major life changes.  

So why is there so little attention paid to the words of our Supreme Court?  One reason is that practitioners were wrongly taught to value cases based on the type of surgery, operated or unoperated, open or arthroscopic. Prior to the Perez decision, that’s how workers’ compensation worked.  There were literally charts that practitioners used valuing cases based on diagnosis and surgery with operated surgeries being valued higher than unoperated surgeries – as if having a surgery meant one would have more changes in one’s life!  These myths continue until today.   Another reason for the tendency to compensate people for diagnoses as opposed to functional changes is that many of the doctors who do permanency examinations do not understand what the law requires.  Most of the IME reports we all read are just regurgitations of medical records that lawyers and adjusters already have read and have sent to the IME doctors.  This happens on both sides of the fence.  Many doctors do not ask anything about pre-accident level of function and post-accident level of function.  Some use meaningless canned phrases in every single report like “cold and damp weather aggravate discomfort.”

What should practitioners and judges be focusing on?  In a word, the facts.   Was the employee a weightlifter but now cannot lift weights? Did the employee have to quit his or her job because it was too physical in favor of a lower paying job?  Can the employee no longer enjoy his or her avocation of swimming because of a shoulder injury? Is the employee doing his or her job without any limitations and taking more overtime than before?  Was the employee doing well enough to add a second job?  Does the injured worker with a knee and shoulder injury now regularly go hiking and bowl in a league? These are the kinds of legal and factual considerations that drive the value of cases up or down for permanency purposes  — not whether there was or was not a surgery and not what the diagnosis was.

I would suggest to every practitioner that one should read the permanency exams closely.  Employers are required to pay only for proof of functional loss, which is proven not by operative records from 18 months ago but by current facts and sometimes current testimony.  What the medical records add is context:  if someone says he can no longer run but the injury is carpal tunnel syndrome, that assertion would make no sense.  But if the injury were a foot fracture, that would make sense.  Having a medical impairment may mean nothing at all, even if an MRI backs it up.  I have a lateral meniscal tear in my knee.  If it were from a work injury, I could present the MRI evidence of the tear, but I would not get a permanent partial disability award in New Jersey because I run at least four days a week.  The tear has not caused any change whatsoever in my life other than occasional pain. 

Arguing that a case is worth 30% because the petitioner had a rotator cuff tear and that’s what rotator cuff tears are worth is a gross misunderstanding of New Jersey law.  The equivalent would be a student demanding admission to Cornell University right after he took the SAT test because he took an expensive SAT prep course and everyone in his class who took that course has always been accepted.  The Cornell University Admissions Department will surely decline admission until it sees the results of the SAT test.   IME physicians must ask the relevant questions about the impact of the injury on one’s life.  Nothing is more important than that in the examination.  The obligation of the employee is to provide information about significant life changes caused by the accident.  In some cases, the employer may contest the allegations.  If an employee says he or she cannot run anymore because of the accident, the employer can offer evidence that the same employee recently ran several 5k races.      

Under the Perez case, objective evidence of an impairment is still required, like a positive MRI, but that is not enough to get a permanency award.  For an award of permanent partial disability, the focus must always be on proof of loss of function at work or at home at the time of the settlement.  Regardless of the type of surgery that took place and regardless of what the MRI showed,  if the employee is functioning well at the time of settlement and there are minimal life changes, then the award must be correspondingly low.  

There has never been any legal support for the argument that every fusion surgery is worth over 30% or every rotator cuff tear is worth 30%. These are myths that have cost New Jersey employers tens of millions of dollars over the years.  We do not compensate medical records:  we compensate real live people.  Every person is different: some people have great results with minimal life changes after surgery, physical therapy and pain medicine treatment and should receive much lower awards than those who have major life changes from an accident that continue to affect them negatively at the time of settlement.

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It is not widely known but the new 2022 workers’ compensation benefit rates are 10% higher than those in 2021! Yes, you read that correctly – 10% higher than in 2021.  That is the highest jump in benefit rates since the early 1980s. The annual percentage increase in maximum and minimum benefits from 1990 to 2021 was rather modest.  In the last 32 years the highest benefit rate increase was five percent.  Most were two to three percent a year, and in 2011 the maximum rate actually dropped slightly.

Consider this:  the minimum rate for temporary disability benefits in 2021 was $258; the minimum rate in 2022 will be $284 (10% higher).  The maximum rate for temporary disability and permanency benefits in 2021 was $969; the maximum rate in 2022 will be $1,065 (10% higher). 

What does this mean? First, it means that a high wage earner will be compensated for lost time at $1,065 for each week of lost wages before reaching MMI, not $969 as in 2021.  It also means that payouts for permanency awards will be dramatically higher, requiring employers and carriers to raise reserves sharply.  The first 90 weeks will be rated at $284, or 10% more than current 2021 rates.  An award of 15% currently amounts to $23,220.  That is because 90 weeks times $258 equals $23,200.  An award of 15% at 2022 rates will be $25,560, a 10% increase.  Those are the lower awards, but when you get to high percentage awards, the dollars will be much more impactful on employers and carriers.   An award of 50% will cost almost $20,000 more than in 2021.  In 2021 that award would be $193,800.  Add 10% more for the same disability award in 2022.

That’s not all.  This hike in benefit rates also raises counsel fees rather sharply. That is another cost employer and carriers will bear.  On a percentage award, like 30% permanent partial disability, counsel for petitioner generally get a 20% fee.  For example, a 30% award in 2021 amounts to $56,934 for a fairly high wage earner.  The counsel fee would be 20% of that award or $11,386.  Now that fee will rise by 10%.  Since respondent pays 60% of the petitioner’s attorney’s counsel fee on an order approving settlement, the rate hike means employers are going to pay quite a bit more money in counsel fees for petitioners’ attorneys.   It is also worth noting that this means injured workers will have to pay more in dollars to their attorneys.

Why the massive rate hike in workers’ compensation benefits? Rates in New Jersey are tied to the increase in the statewide average weekly wage. The Department of Labor must have calculated that the statewide average weekly wage is up 10%.   Inflation has been jumping in many sectors of the economy, and that fact is driving wages higher.  There is a big shortage of workers in New Jersey and most states.  This in turn fuels wage inflation, and higher wages translate to higher awards.

There is a built-in flaw in the New Jersey Act.  Remember that annual rates are adjusted according to the increase or decrease in the statewide average weekly wage.  The focus is on wages.  Yet many injured workers get back to work after an injury and do the same job with no impact at all on working ability or wages.  They can get an award by proving a material impact on non-work activities. So if an injured worker testifies at settlement that there is no impact on earnings or working ability (only an impact on activities of daily living), why should employers be paying 10% more in 2022 than 2021 for the same injury?   That award appears to be for functional loss only.  It does not make sense for a worker to get an award of $44,154  (25% of partial total) for an operated rotator cuff injury in 2021 with no impact on wages, but get an extra $4,400 for the same rotator cuff injury occurring in 2022.  

Next consider the injured worker who has a very physical job and can no longer do that job due to the work-related rotator cuff tear.  Suppose that worker has to take a lower paying job. If so, wages will be impacted for many years, perhaps for the rest of the working life.  The worker’s family will be directly affected.  That’s the person for whom the weekly rate hike was intended.  In addition, every Judge of Compensation will likely award a higher percentage of disability in that scenario.  Those are the two ways to put more money into the pocket of a worker whose wages are truly impacted by an injury.

While hikes in weekly benefits are good news for injured workers, what about the impact on employers and carriers? This year’s 10% benefit rate hike is very bad news for employers who have not been able to raise prices during the pandemic.  Their revenues are declining or static while the cost of business is rising sharply, and the cost of workers’ compensation is a big part of that increase.  Some employers have had to close down, or they have seen their revenues plummet due to the impact of the coronavirus.  The timing could not be worse for those employers.  The public sector will also be affected by this large percentage hike in weekly benefit rates.  When public employers pay more in workers’ compensation benefits, taxpayers are actually footing the bill through higher property taxes in a state with enormously high property taxes to begin with.

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What happens when an order is entered against an employer to pay a workers’ compensation award and then respondent appeals the decision? Does respondent have to pay benefits pending appeal?  If it does have to pay benefits during the appeal period, what happens if the Appellate Division reverses the award?  Can respondent get a court order for repayment of benefits and counsel fees paid during the appeal?

These are very important questions for practitioners, employers, carriers and third party administrators.  An answer was provided in Malone v. Pennsauken Bd. of Educ., No. A-3404-18T3 (App. Div. July 28, 2020). The case involved a full trial in which petitioner, a custodian, claimed that his need for bilateral total knee replacements was caused by the physical stresses of his job over several years.   Malone won a substantial award of $109,214 in permanency benefits and $7,638 in temporary disability benefits, and his lawyer received a counsel fee of $21,840.  The Board appealed and argued that there was no reliable evidence showing that the knee pathology and knee replacements were work related.

Naturally, the Board did not want to pay the award while the appeal was pending since appeals can take a very long time.  The Board therefore sought what is known as a “stay” of the award pending appeal.  In essence, that is a request by the employer for permission to suspend payments until a decision comes down on appeal.  The request for a stay was denied by both the Judge of Compensation and by the Appellate Division.  That meant that the Board had to pay the award during the many months of the appeal period.  Although the Judge of Compensation denied the request for a stay, she did alert petitioner to the potential need to reimburse the award in the event of a reversal of her decision:

I’m going to deny the motion to stay. I do believe your argument is that in the event the Appellate Division does overturn my decision that it would be difficult for you to recoup your money. Petitioner needs to be aware of the fact that those monies would, in fact, have to be repaid in the event that the Appellate Division reverses my decision . . .

On appeal, respondent persuaded the Appellate Division to reverse the award of all benefits by arguing that petitioner failed to prove that petitioner’s bilateral knee conditions were work related.

Following the successful appeal, the Board next filed a motion with the Judge of Compensation seeking an order requiring petitioner and his attorney to repay the Board of Education all the funds that had been paid pursuant to the reversed order. The Judge of Compensation denied the Board’s motion stating that she did not believe she had the power to do this:

I do believe that once the case is appealed, the Appellate Division, if they accept it, they have jurisdiction. In this case, the decision was reversed, it was not remanded. The issue of repayment was not addressed by the Appellate Division. But I have no statutory authority to do anything with the Malone matter at this point in time, because the Appellate Division still, in my mind, has jurisdiction over this matter.

That left respondent with only one more option:  to return to the Appellate Division.  The Court cited N.J.S.A. 34:15-57 stating that every Judge of Compensation “. . . shall have power to modify any award of compensation, determination and rule for judgment or order approving settlement and to provide for the commutation of any such award, determination and rule for judgment or order approving judgment.”

The Appellate Division disagreed with the Judge of Compensation and held that the statute vests the Judge of Compensation with the authority to enter a judgment against Malone and his attorney for the amounts the Board paid to them under the order which had been reversed. 

This is a very important decision because there really are few appellate decisions, if any, in workers’ compensation that address whether a Judge of Compensation has the power to order a petitioner or his/her attorney to repay benefits after an appeal. 

Congratulations to Capehart partner, Adam Segal, Esq., in winning the appeal of the award and then winning the argument that a Judge of Compensation can in fact order a petitioner to repay benefits when an award is reversed.

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On May 12, 2020, the Supreme Court of New Jersey addressed whether an employer can maintain a subrogation action to recoup workers’ compensation benefits paid for economic loss where (1) its employee is barred from maintaining an action against the tortfeasors due to his election of the limitation-on-lawsuit option in his personal automobile policy; (2) the employee’s losses were covered by workers’ compensation benefits; and (3) the employee neither sought nor received personal injury protection (“PIP”) benefits.  In N.J. Transit Corp. v. Sanchez, 2020 N.J. LEXIS 520 (N.J. May 12, 2020), an equally divided Court answered that question in the affirmative.

On December 2, 2014, David Mercogliano, while acting in the course of his employment, was driving a vehicle owned by his employer, New Jersey Transit (“NJT”), when he was rear-ended by a vehicle being driven by Sandra Sanchez and owned by Chad Smith.  Mercogliano sustained minor injuries for which he received treatment, and was medically cleared to return to work without restriction two months after the accident.

At the time of the accident, Mercogliano was insured under an automobile policy for which he had elected the limitation-on-lawsuit option provided for under the Auto Insurance Cost Reduction Act (“AICRA”).  Under AICRA, when the limitation-on-lawsuit option has been selected, a person injured in a car accident cannot recover noneconomic damages against the person legally responsible for the accident, unless his injury falls into one of the categories specifically enumerated in AICRA.  Here, there was no dispute that Mercogliano’s injury did not fall within any of the specified categories, and that he thus could not recover for noneconomic injury against Sanchez or Smith.

NJT’s workers’ compensation carrier paid Mercogliano $33,625.70 in workers’ compensation benefits, including medical benefits, temporary indemnity benefits, and permanent indemnity benefits.  With his losses covered by workers’ compensation benefits, Mercogliano neither sought nor received PIP benefits under his personal automobile insurance policy.

In its capacity as Mercogliano’s employer and subrogee, NJT filed a complaint against Sanchez and Smith seeking to recoup the workers’ compensation benefits it paid to Mercogliano.  NJT relied on N.J.S.A. 34:15-40(f), a provision of the Workers’ Compensation Act which authorizes employers who have paid workers’ compensation benefits to injured employees to assert subrogation claims against the persons legally responsible for those injuries.  Here, NJT alleged Mercogliano’s injuries resulted from the negligence of Sanchez in causing the accident, and also asserted a vicarious liability claim against Smith as the owner of the vehicle and as Sanchez’s employer.

Sanchez and Smith moved for summary judgment dismissing NJT’s complaint. They claimed that NJT could not assert a subrogation claim because AICRA prevented Mercogliano from pursuing a third-party action against them, given his election of the limitation-on-lawsuit option in his personal insurance policy.  Sanchez and Smith further argued that because Mercogliano would have been eligible for PIP benefits had he not qualified for workers’ compensation benefits, AICRA barred NJT’s claim for reimbursement. 

In response, NJT argued that because its subrogation claim was based entirely on workers’ compensation benefits paid for economic losses (medical expenses and lost wages), and because Mercogliano received no PIP benefits, AICRA did not bar its suit against Sanchez and Smith.

Analyzing the legislative history of AICRA, along with the collateral source rule set forth therein, the Court found that the Legislature intended to allocate the burden for injuries incurred during the course of employment to employers and their workers’ compensation carriers.  As such, where an injury is compensable under both the Workers’ Compensation Act and AICRA (via PIP benefits), the Workers’ Compensation Act provides the primary source of recovery of medical expenses and lost wages.  In this scenario, the PIP carrier is relieved of the obligation to pay those benefits, such that PIP benefits are neither collectible nor paid.

Here, NJT paid workers’ compensation benefits for Mercogliano’s economic losses.  As a result, Mercogliano neither pursued nor received PIP benefits.  Under these circumstances, AICRA’s prohibition on the admission of evidence of PIP benefits “collectible or paid” was not implicated, as PIP benefits were neither collectible nor paid.

The Supreme Court found that the Workers’ Compensation Act reflects the Legislature’s clear intent to allow employers and carriers that have paid workers’ compensation benefits to assert subrogation rights against third-party tortfeasors.  The Court found no evidence that when the Legislature enacted AICRA, it intended to bar employers and insurers that have paid workers’ compensation benefits for economic loss from seeking reimbursement from third-party tortfeasors where the employee’s losses were covered by workers’ compensation benefits and he neither sought nor received PIP benefits.  An equally divided Court thus affirmed the Appellate Division’s decision to allow NJT to pursue its subrogation claim against Sanchez and Smith.

There are few appellate division cases on the odd-lot doctrine in workers’ compensation, and there are next to none on lack of proficiency in English as a sole factor for odd-lot unemployability.  For this reason it is worth reviewing the recent decision in Avendano v. Target Corporation, A-1609-18T2 (App. Div. December 17, 2019).  

In this case, Avendano suffered serious injuries.  She received an award of 55% permanent
partial disability credit 15% for previous loss of function and then reopened
the case to obtain an award of 75% credit 55%. 
About six months later she reopened the case a second time claiming that
she was totally and permanently disabled under the odd-lot doctrine in part
because she struggled with the English language and therefore could not find
work.  The odd-lot doctrine may permit a
judge to find total and permanent disability where an employee obtains an award
of permanent partial disability of 75% or more but is unemployable due to
factors like advanced age, language difficulties and limited job skills.

The trial consisted of testimony by petitioner as well as
testimony by vocational experts on both sides, but there was no medical
testimony for reasons not made entirely clear in the decision.  Petitioner stressed on direct examination
that she does not speak or understand English. 
She testified through an interpreter. 
She said that it is very hard for her to read or write English.  She did admit on direct examination that she
enrolled in college to learn English but stated that she did not complete the
course.

The cross examination of petitioner won the case for
Target.  Petitioner admitted that she
told the IME doctors for Target that she had attained a level two proficiency
in English as a second language classes. 
She admitted that she was evaluated by the Target IME doctors without a
Spanish interpreter.  She admitted that
she passed the citizenship test in English test nine years prior to her
testimony.  She also admitted receiving
an accounting degree in her native Columbia before coming to the United States.

The Judge of Compensation observed that petitioner answered
some questions before the court interpreter finished translation.  The Judge of Compensation did not find
petitioner to be credible in her assertion that her lack of knowledge of
English contributed to her total and permanent disability.  The judge was also unimpressed with
petitioner’s vocational expert because the expert would not change his position
on totality even when confronted with evidence that petitioner obtained an
intermediate proficiency level in English. 
The judge noted as well that the petitioner’s vocational expert failed
to review petitioner’s testimony before testifying in court and failed to
review certain medical reports.

For these reasons the Judge of Compensation rejected the application for total and permanent disability and left the award at 75%.  Avendano appealed, and the Appellate Division affirmed.  “In determining whether a petitioner is totally disabled under the odd-lot doctrine a judge of compensation may therefore consider the petitioner’s education, training, age, background and substantial ‘unlikelihood of finding employment, absent a charitable employer.’”   The court elaborated on the aspect of difficulty with the English language as a basis for application of the odd-lot doctrine.  “Relevant here, inability to understand the English language can provide the basis for application of the odd-lot doctrine.”

The case is worthy of review because the decision recognizes that inability to understand the English language can provide the basis for an award of total and permanent disability where the injured worker has an award of 75% or higher.  This may be the only modern appellate level case that has specifically focused on lack of proficiency in English as a basis for the odd-lot doctrine.  Unfortunately for petitioner, her testimony did not persuade the judge that she actually had a serious problem understanding the English language given the admissions she made on cross examination.

The post Court Rules That Inability To Understand The English Language May Form the Basis For Total Disability Under The Odd-Lot Doctrine But Also Finds Petitioner’s Proofs To Be Lacking appeared first on NJ Workers' Comp Blog.

There are surprisingly few appellate division cases focusing on the employer’s obligation to provide continuing opioid treatment.  Martin v. Newark Public Schools, A-0338-18T4 (App. Div. October 4, 2019) is therefore one case practitioners should study closely. 

The case involved a reopener of an award for Samuel Martin of
15% permanent partial disability for aggravation of a pre-existing lumbar disc
herniation and bulging disc.  Several
years after the award was entered, respondent stopped paying for ongoing
Percocet prescriptions.  Petitioner then
filed a motion for medical benefits seeking reimbursement for continued prescription
opioid medication that he was paying for himself.

The initial award occurred in November 2014. The treating
physician, Dr. Patricio Grob, oversaw petitioner’s treatment from 2011 to
2017.  Petitioner was using opioids for
much of this time.  In a note from his
June 2016 examination of petitioner, Dr. Grob said that Percocet was
controlling Mr. Martin’s pain poorly. He added that “prolonged narcotic use
would not manage his radicular complaints … and can complicate recovery.”   Dr. Grob did suggest surgery, but petitioner
declined surgery due to an unrelated blood condition which might cause
complications. 

In Dr. Grob’s final medical note dated September 13, 2017,
he wrote, “I would recommend an attempt
to wean from Percocet and if we are unsuccessful, Martin would then need to
consider having a discussion with a pain management specialist to see if there
is any palliative standpoint that may be needed from a chronic management of
Martin’s discomfort.”
  It was the
opinion of Dr. Grob that Percocet was not relieving Martin’s condition and
would never improve it. 

On January 8, 2018, Martin saw Dr. Harris Bram, a pain
medicine physician, for a one-time evaluation in support of petitioner’s motion
for medical benefits.  Dr. Bram noted
that petitioner’s MRI showed disc desiccation at L4-5 and L5-S1, and a disc
herniation at L5-S1.  Dr. Bram noted that
petitioner self-reported that Percocet abated his pain by about 60% and that he
was more active on the medication. 
However, Dr. Bram also reviewed petitioner’s history and noted that
petitioner reported his Percocet provided only “small pain relief.”

Dr. Bram found only a few positive physical findings on physical
examination.  Martin’s lower extremities
were neurologically intact and his gait was normal.  Nonetheless, Dr. Bram found petitioner had
low back pain, lumbar radiculopathy, and sacroiliitis.  He said “it
was reasonable that Martin be on opioid medication on a long term basis for his
pain.  I thought that was reasonable for
him
.”

The Judge of Compensation found that Dr. Grob was more
persuasive than Dr. Bram, who was a one-time evaluator. The Judge commented
that Dr. Bram “did not provide any medical evidence that such treatment will
permit the petitioner to function better.” The Judge also found no evidence
that continued opioid medication would relieve Martin’s pain.

Petitioner appealed and argued that the Judge misapplied the standard governing an application for palliative care.  The Appellate Division first noted that treatment is compensable if competent medical testimony shows that it is “reasonably necessary to cure or relieve the effects of the injury.” Hanrahan v. Twp. of Sparta, 284 N.J. Super. 327 (App. Div. 1995). The Court added that the Hanrahan case required that the treatment would “probably relieve petitioner’s symptoms and thereby improve his ability to function.”  The Court finally reflected that the Hanrahan decision concluded that there may be a point at which “the pain or disability experienced by the worker is insufficient to warrant the expense of active treatment.” Hanrahan at p. 336.

The Appellate Division suggested that Dr. Grob was in a much
better position to opine on reasonable and necessary treatment in this case
because he had treated petitioner for six years and had concluded that Martin’s
pain had not been alleviated with medication or therapy. Petitioner argued that
Dr. Grob had referred petitioner for pain management. The Court disagreed, “It
was Dr. Grob’s medical opinion that if petitioner was unsuccessful in weaning
himself from prescription opioid medication, Martin ‘would then need to
consider having a discussion with a pain management specialist.’”  The point the Court was making was that the
referral would only be needed if petitioner could not wean himself off opioid
medication.

The Appellate Court was not impressed with the testimony of
Dr. Bram because there were few objective physical findings on examination and
no testimony that continued opioid use would reduce Martin’s pain symptoms and
return him to better function.  The Court
did not believe it was sufficient to order continued opioid medication with a
mere assertion by Dr. Bram that continued opioid use was “reasonable.”

One other side issue in this case is worth noting as
well.  Shortly before Dr. Grob was
scheduled to testify at trial, petitioner’s counsel sought an opportunity to
interview Dr. Grob ex parte.  Dr. Grob
was not returning phone calls from petitioner’s counsel about a meeting.  The Judge of Compensation allowed the
interview but only if respondent’s counsel was present since respondent’s
counsel had made clear that Dr. Grob would be his witness in the motion
trial.  The Judge of Compensation denied the
request for an ex parte interview without respondent’s counsel.  Petitioner’s counsel argued that  his client had a patient-physician privilege
and therefore he should have the right to an ex parte interview.

The Appellate Division found that the Judge of Compensation exercised proper discretion in requiring that both counsel be present for the interview.  This ruling is significant because it is the appellate case in workers’ compensation that comments on such an issue.

This case is very interesting for a number of reasons.  Paying for opioid medications – even after awards are entered – occurs with greater frequency in the last decade.   There seems to be a great deal of disagreement on when such continued opioid use is required past the point of MMI.  This case suggests a very practical solution:  there must be proof that the opioid medications are providing curative relief and proof that the continued use of opioids is improving the function of the injured worker.  This emphasis on function comes from the Hanrahan case.  In this case the surgeon made clear that opioid use would not improve function, would not relieve pain and might even create more complications.   The problem in this case was that petitioner could not present proof of improvement of function caused by continued opioid use over the many years the petitioner had been on Percocet.

The post Appellate Court Affirms Judge of Compensation in Ruling That Continued Opioid Use Would Neither Reduce Pain Nor Improve The Injured Worker’s Function appeared first on NJ Workers' Comp Blog.

In 1979, the New Jersey Legislature made sweeping changes to the Workers’ Compensation Act.  Among those was the creation of a sliding scale on the Schedule of Disabilities found in N.J.S.A. 34:15-12c.  The legislative intent was to award greater compensation to the more seriously injured worker.  To accomplish this intent, the pertinent language in Section 12c says: “When a claim petition alleges more than one disability, the number of weeks in the award shall be determined and entered separately for each such disability and the number of weeks for each disability shall be cumulative when entering the award.”

Initially judges of compensation as well as appellant panels had mixed interpretations of the above section.  The issue was resolved in 1984 with the New Jersey Supreme Court decision in Poswiatowski v. Standard Chlorine Chemical Co, 96 N.J. 321 (1984).  Poswiatowski was actually a consolidation of three cases and the other two are: Fagan v. City of Atlantic City and Smith v. United States Pipe and Foundry Company.

In Poswiatowski, the petitioner fell in 1981 fracturing his back and left foot and received an award of 20% permanent partial disability for the back, 40% of the foot and 10% permanent partial disability for the neuropsychiatric component.  The trial court, believing that the award should be entered separately, gave $6,924 (120 weeks @ $59) for the back, $4,328 (92 weeks @ $47.04) for the foot and $2,820 (60 weeks @ $47) neuropsychiatric for a total of $13,172.  Petitioner argued that the total of the weeks should dictate the rate, and he should have been awarded 272 weeks at 50% SAWW (State Average Weekly Wage) or $33,456.  The Appellate Division affirmed and the Supreme Court granted certification.

In the Fagan case, the petitioner, a public health nurse, was assaulted and robbed during the course of her employment.  She
suffered a concussion, fractured nose, facial scarring, sinus disorders, headaches, facial numbness and recurring nightmares.  The compensation court awarded her 7 ½% permanent partial disability (45 weeks) for the fractured nose, 7 ½% permanent partial disability (45 weeks) for severe contusions of the scalp, lips and mouth with numbness, and 15% permanent partial disability (90 weeks) for the post traumatic nightmares.  That totaled 180 weeks (30% permanent partial disability) at an average rate of $57.30 or $10,314.  The Appellate Division reversed and modified the award to $8,460. ($2,115 nose + $2,115 contusions and numbness of face plus $4,230 nightmares).  Again, the Supreme Court granted certification.

In Smith, petitioner received a significant crush injury to his right forearm resulting in numerous surgeries for vascular, orthopedic and cosmetic injuries together with skin grafts from petitioner’s abdomen and right thigh.  The compensation court awarded 23% permanent partial disability (138 weeks @ $66) for the combination of the right hand and right leg (apportioned 50% of the hand and 5% of the leg), 10% permanent partial disability (60 weeks @ $47) for the cosmetic scarring of the abdomen and 12 ½% permanent partial disability  (75 weeks @ 47) for neuropsychiatric residuals for a total of $15,468.  Petitioner argued that he was entitled to 273 weeks at 50% SAWW or $33,759.  The Appellate Division agreed with petitioner, finding that the compensation court’s interpretation was “inconsistent with the purposes of the 1980 amendments.”

The Supreme Court stated “(W)e believe that the Smith case best illustrates the method most consistent with statutory purpose.” The court added,  “We hold that the weeks of compensation awarded for one accident’s multiple injuries that establish a single compensable disability should be cumulated, not separated, in computing the award.”

The Supreme Court went on to explain, “(O)f course, if the compensation judge uses the schedule as an aid in determining the extent of the award, such may be regarded as a reasonable finding if expressed in terms of permanent partial disability. Orlando v. F. Ferguson & Son, supra, 90 N.J.L. at 553, 102 A. 155. But the point of the Smith panel is to focus on the nature of the injury. The method of calculating permanent partial disability to two or more major body members under N.J.S.A. 34:15-12(c)(20), -12(c)(22), has not been affected by the 1980 amendments. The compensation court is not to determine the scheduled number of weeks for each injury separately; rather, it is to look at the effect of the injuries and to make a reasonable assessment of the extent of the combined disability in terms of a percentage of permanent and total disability. This requires the court to make a judgment about the extent of impairment resulting from the combined injuries without being limited by the statutory schedulesSee Cooper v. Cities Serv. Oil Co., supra, 137 N.J.L. at 182, 59 A.2d 268; Orlando v. F. Ferguson & Son, supra,  90 N.J.L. at 557, 102 A. 155; Vishney v. Empire Steel & Iron Co., supra, 87 N.J.L. at 483-84, 95 A. 143.”

In further support the Court said: “(B)ut under the new schedule of benefits set forth in N.J.S.A. 34:15-12(c), the difference is of great significance. If the weeks due the injuries are added together when entering an award, more money is awarded. By the 1979 amendments, L. 1979, c. 283, § 5, the Legislature not only increased the weekly rate for permanent disability from a maximum of $40 to a maximum of 75% of statewide average weekly wage (SAWW), but also created a sliding scale of weekly dollar payments ranging from $47 where the adjudicated disability requires payment for 90 weeks or less, up to $82 for the last six weeks of disability for which 180 weeks of payments are required. Over 180 weeks of entitlement, there is a dramatic increase in weekly dollars payable. From 181 up to 600 weeks, disability is compensated from a low of 35% of SAWW (for disabilities drawing entitlement of from 181 to 210 weeks), to a maximum of 75% of SAWW (for disabilities falling within the 421- to 600-weeks bracket.)1 See **1259 Gothelf v. Oak Point Dairies of N.J., 184 N.J.Super. 274, 445 A.2d 1170 (App.Div.1982).”

Based on this logic, the Supreme Court reversed the appellate division decisions in Poswiatowski and Fagan and affirmed the decision of the appellate division in Smith.

Now let’s consider how stacking affects reopener claims and new accidents.  Where an injury results in an award encompassing more than one body part, and the petitioner seeks to reopen that award under N.J.S.A. 34:15-27 for review and/or modification of the prior award, the petitioner need not allege an increase in disability to all affected body parts.  Since the original award set the overall disability for the accident, an increase of disability to one part is added to the overall award. In effect, the prior award becomes the base.

For example, let us assume that petitioner receives an award for injury occurring in 2017 to his or her lumbar spine and left shoulder.  The award is for 35% permanent partial disability apportioned 20% to the low back and 15% to the left shoulder (210 weeks x $418 = $85,260 assuming wages sufficient for maximum rates in 2017).  In 2019 petitioner files an application for review and/or modification alleging an increase in disability to the left shoulder. The judge of compensation finds an increase in disability of 7 ½% of the left shoulder, taking into consideration the overall disability to the petitioner in 2019.  The overall award must be increased to 42½% permanent partial disability apportioned 20% (unchanged) to the low back and 22 1/2% of the left shoulder. Because it is an extension of the original award, the award must be paid at the rates in effect for the year of the accident, which is 2017. (255 weeks x $522 = $133,110 less credit for the prior award of $85,260) The award calculation is made by going back to the beginning of the original award and changing the rate to $522 and paying the accrued weeks at the increased rate of $104 per week and the balance of the non-accrued weeks at the full $522.

In contrast to the example above, stacking does not occur with a new accident to one of several previously awarded body parts. Suppose our petitioner above received the original award of 35% permanent partial disability and then had a new accident in 2019 causing increased disability to the left shoulder only.  The Judge of Compensation finds an overall disability to the left shoulder to be 22 1/2% permanent partial disability.  That is 7.5% higher than the prior shoulder apportionment of 15%, but the new award is only based on the shoulder, not the low back.  In effect, the shoulder can be separated from the previously stacked award.  So the new award would be 22 ½ % permanent partial disability for the left shoulder minus a credit of 15 % preexisting with no mention of the back at all.  The new award would equal 135 weeks x $271.33 or $36,630 credit $22,140 (15% @ the 2019 rate) or $14,490.  Obviously, if the new award had been stacked on the prior back/shoulder award, it would have resulted in a great deal more money.

Notice in this example of the new 2019 accident impacting only the shoulder, that the rates must be those for 2019 for both the new award AND the credit. Obviously the new award should command 2019 rates since the new injury occurred in 2019, but the credit also jumps to 2019 rates, unlike the situation noted above for reopeners.

The post Stacking Injuries to Multiple Body Parts Resulting From The Same Accident and The Impact on Reopeners and New Accidents appeared first on NJ Workers’ Comp Blog.

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