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Medical Providers Win in Supreme Court on Statute of Limitations Issue

In New Jersey a medical provider dispute arising from a work injury can only be filed in the Division of Workers’ Compensation ever since the 2012 Amendments.  But the 2012 Amendments to the New Jersey Workers’ Compensation Act failed to answer one fundamental question:  how long does the provider have to bring a claim in the name of the injured worker?  Are medical providers bound by the same two-year rule that applies to claimants? The Supreme Court provided the final answer on February 3, 2020 in The Plastic Surgery Center, P.A. v. Malouf Chevrolet- Cadillac, Inc.

The case involved several claim petitions filed by The
Plastic Surgery Center more than two years after the employee’s accident.  The Judge of Compensation ruled that the
claims were out of time, but the Appellate Division reversed in favor of the
medical providers.  The Supreme Court
granted certification and heard the arguments last month.   In its decision the Supreme Court adopted
the reasoning of the Appellate Division wholesale. 

First the Court observed that before the 2012 Amendments,
medical provider claims were governed by the general six-year statute of
limitations which applies to contract claims. The Supreme Court agreed with the
two main arguments that the medical providers made to the Appellate Division.
The 2012 Amendments could not have been intended to restrict claims to two
years because the definition of claimant in the New Jersey Workers’ Compensation
Act would have to be expanded to include medical providers.

More importantly, the Court said:

Second, the two-year period simply doesn’t fit:  N.J.S.A. 34:15-51 requires that a petition for compensation be filed within two years of ‘the accident,’ but it is likely that an employee might be treated by a medical provider for a period greater than the two-year period following the accident or even not be treated by a particular medical provider until after two years elapsed from the work-related accident. . . . As a result, a provider’s legitimate claim might actually be extinguished before it even accrued.  . . . The appellate court declined to interpret legislative silence to produce such a result.

This represents a significant win for medical providers. The result basically guarantees that the number of medical provider claims will continue to rise sharply in the New Jersey Division of Workers’ Compensation.  New Jersey remains one of the few states without a medical fee schedule in workers’ compensation.  This decision emphasizes the need for employers to work with medical repricing companies which really know the New Jersey market for workers’ compensation treatment in respect to usual and customary charges.

The post Medical Providers Win in Supreme Court on Statute of Limitations Issue appeared first on NJ Workers' Comp Blog.

NJ Appellate Court Weighs in On Medical Marijuana Use and The Workplace

Recently, I have been getting more and more questions in my counseling practice regarding what employers must do when an employee or prospective employee advises that he/she is a medical marijuana user.

Unfortunately, there is a dearth of legal authority that a lawyer can presently consider in providing advice on this topic.  While New Jersey’s Compassionate Use Law decriminalizes marijuana for medicinal purposes, it is silent on the issue of job protection for such users. One thing that the law does say however is that employers need not accommodate worksite use of the drug by an employee.  But what about non-working time (or off site) use of marijuana, and how should that use affect the employee’s ability to continue working for an employer, especially one that bars illegal drug use among its employees under its workplace policies?

In late March, 2019, the New Jersey Appellate Division issued a significant decision that attempted to address what an employer’s legal duties are in the situations I just posed.  The decision analyzed how the Compassionate Use Law and the New Jersey Law Against Discrimination (“LAD”) potentially could interact with one another, and what consequent requirements might exist for employers by virtue of the interplay between these laws.

The Plaintiff in Wild v. Carriage Funeral Holdings filed a lawsuit alleging that his employment had been wrongfully terminated in violation of the LAD because of his then disability. Wild had been hired by Defendant Carriage Funeral Holdings in 2013 to serve as a funeral director. In 2015, Plaintiff was diagnosed with cancer. He was ultimately prescribed marijuana as part of his on-going cancer treatments. While such use is currently lawful under the state’s Compassionate Use Act it continues to be illegal under federal law.

Wild was involved in a work related auto accident in 2016 that was not his fault. Plaintiff was injured and taken by ambulance to the emergency room for treatment of his injuries. After arriving at the hospital, Plaintiff advised the treating physician that he had a license to use medical marijuana. The emergency room physician determined that Wild was not under the influence of marijuana, and concluded that a drug test was not required. After receiving prescribed pain medications, Plaintiff was sent home where he used both the pain medication and authorized medical marijuana.

Upon returning home, Wild’s father, who was caring for him at the time, was advised by the Defendant that Plaintiff was required to submit to a drug test due to his involvement in the auto accident. Wild’s father objected, disputing that the test was necessary given the physician’s determination that Wild was not under the influence at the time of the accident. Wild’s father also mentioned that Plaintiff was sure to test positive given his recent use of medical marijuana. Despite Plaintiff’s father’s protestations, the employer demanded the test be taken.  After Wild submitted to the drug test that evening, it not surprisingly was positive for drug use.

According to Plaintiff, after the test results were received, a work supervisor initially advised him that despite the positive result he would be “fine,” but then that same supervisor subsequently advised Plaintiff that Defendant’s “corporate” objected to Wild’s marijuana use. Plaintiff was thereafter advised by letter that his employment had been terminated, not because of his drug use, but because he purportedly failed to provide proper notification to the company under its workplace policy which required that employees advise their supervisor about the taking of any medication that could adversely affect their ability to perform their assigned job duties safely.

In his lawsuit, Wild claimed, among other allegations, that his termination was in violation of the LAD because he had a disability and was legally treating that disability in accordance with his physician’s instructions and in conformity with the Compassionate Use Law.  The trial judge dismissed the case by way of an early motion to dismiss, finding that the Compassionate Use Law did not provide job protections for medical marijuana users based, in part, on the fact that the law does not compel on site accommodation of medical marijuana use by employees.

On appeal, a three member panel of the New Jersey Appellate Division held that Wild’s complaint was improvidently dismissed under the very liberal legal standard for allowing cases to avoid early court dismissal.  The Court determined that the Plaintiff’s pleading in the case sufficiently alleged the necessary legal elements of a disability claim to allow it to avoid an early case dismissal.  Accordingly, the dismissal of the case was vacated, and the matter remanded to the trial court for further proceedings. 

In the course of ruling that the dismissal of Wild’s case was not appropriate, the Appellate Division also rejected the argument raised by the Defendant that the absence of an affirmative obligation to accommodate off site employee use of medical marijuana under the Compassionate Use Act itself meant that such an accommodation was never required of an employer.  In rejecting this argument, the Court raised the possibility that under other already existing laws, such as the LAD, that accommodation obligation might in fact exist.  The Court noted in this regard that the lack of such an affirmative requirement in the Compassionate Use Law “does not mean that the LAD may not impose such an obligation.” Since Plaintiff never requested an accommodation to use medical marijuana in the workplace or on working time, the Appellate Division found that his claims should not have been dismissed so early in the case by the trial court. However, given the procedural posture of the case, the Court also never had to address specifically whether the LAD in fact legally required employer accommodation of an employee’s off site non-working time use of medical marijuana.

So what does this case mean for employers? On the one hand, the appellate court’s decision could be narrowly construed as merely holding that a case brought by a medical marijuana user who was fired for such drug use was improvidently dismissed too early in the ligation process given New Jersey’s liberal court rules that prevent dismissal in a case’s early stages in all but the most limited of circumstances.  Conversely, on the other hand, the case could also equally be read more broadly to be a declaration that, in some situations, the LAD may in fact require employers to accommodate employee use of medical marijuana outside of the workplace and during non-working hours.        

In light of the fact that the Court in Wild did not hold expressly that offsite use of medical marijuana is a mandated accommodation under the LAD, the issue remains an open one, and the progress of this case will be closely monitored to see how this issue develops at the trial court level. Nonetheless, given the legal uncertainty surrounding this potential accommodation issue, employers should proceed with extreme caution in this perilous area, where the need for competent legal counsel is now even more paramount than ever.

New Jersey Supreme Court Rules That Volunteer Firefighter Is Entitled To Maximum Temp Benefits Even Without Proof Of Employment Or Lost Wages

Jennifer Kocanowski, a member of the Finderne Fire Department in the Township of Bridgewater, was injured in March 2015 while carrying equipment in response to a multi-alarm fire.  She fractured her fibula, tore ligaments in her ankle, and injured her back.

Prior to the injury, Kocanowski had not worked for over a year.  She had previously worked in 2013 as a nanny and a home health aide but took a six month leave from volunteering to care for her ill mother after her father’s death.  She returned to volunteer firefighting in July 2014.  However, she did not resume her prior outside employment. Her injury left her with permanent partial impairment.

The issue presented in this case was whether the Township owed Kocanowski temporary disability benefits following her injury in March 2015.  Kocanowski argued that she was entitled to temporary disability benefits based on the maximum rate set forth in N.J.S.A. 34:15-75, the provision dealing with rates for volunteer firefighters and EMTs. The Township argued that she was not entitled to temporary disability benefits because she had no lost wage to replace.  The Judge of Compensation and the Appellate Division both held that Kocanowski was not entitled to temporary disability benefits at all since she had not worked in over a year prior to her injury and had no offer of employment.

The New Jersey Supreme Court issued its decision on February 19, 2019.  The decision focused on the legislative intent to encourage volunteerism in passing N.J.S.A. 34:15-75.  This statute reads:

“Compensation for injury and death, either or both, of any volunteer fireman . . . (or) emergency management volunteer doing emergency management service . . . shall:

  1. Be based upon a weekly salary or compensation conclusively presumed to be received by such person in an amount sufficient to entitle him (or her) or, in the event of his (or her) death, his (or her) dependents, to receive the maximum compensation by this chapter authorized. . .”

The Supreme Court reversed the decision of the Appellate Division:  “As such, we find N.J.S.A. 34:15-75 authorizes all volunteer firefighters injured in the course of performing their duties to receive the maximum compensation permitted, regardless of their outside employment status at the time of the injury.”

The Court rejected the argument of the defense that all claims for lost wages must meet the test set forth in N.J.S.A. 34:15-38.  Defense argued that the words “by this chapter authorized” at the end of N.J.S.A. 34:15-75 refers to the entire workers’ compensation statute.  The provision dealing with temporary disability benefits is N.J.S.A. 34:15-38.  That section requires temporary disability benefits be paid from the day the employee is first unable to work due to the accident up to the first working day that the employee is able to resume work.  Defense suggested that this petitioner could not meet the test in N.J.S.A 34:15-38 because she had no work.

The Court responded by pointing out the prior to the passage of N.J.S.A. 34:15-75 in 1952, volunteer firefighters who were unemployed were entitled to temporary disability benefits even though N.J.S.A. 34:15-38 existed.  The rules for all other employees were not applied to volunteers.  In essence, the Court ruled that the New Jersey Legislature clearly never intended statutory volunteers to be subject to the law that applies to all other employees in New Jersey.  The reason for this exemption was to encourage volunteerism.

The Court’s decision failed to address one important question raised in oral argument, namely whether this ruling would mean that an 18-year-old high school volunteer firefighter injured in 2019 with no outside employment would be entitled to $921 per week while receiving authorized treatment and attending full-time high school classes.  The decision in Kocanowski suggests that this high school volunteer must be paid $921 per week while actively treating until reaching maximal medical improvement, notwithstanding the obvious windfall to the student and the cost to the municipality.

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Court Applies Mode of Operation Rule to Injury in Supermarket Caused by Water on Floor Due to Melted Snow from Shopping Cart

Plaintiff Mindy Klarman was at Pathmark’s Lake Hopatcong supermarket on January 31, 2011 when she fell. She slipped on a puddle of water near the checkout, which came from snow off of the bottom of shopping carts, which had been brought into the store. In Klarman v. Pathmark Supermarket, 2018 N.J. Super. Unpub. LEXIS 2808 (App. Div. Dec. 24, 2018), plaintiff sued Pathmark Supermarket and Pathmark of Lake Hopatcong for her injuries. One of the issues on appeal was whether the trial court judge correctly charged the jury with the mode of operation rule.

Plaintiff had been at the store to purchase some items. It was a sunny day, but it had snowed the day before. There were piles of snow in the parking lot. Although plaintiff did not take a shopping cart, she noted that they were stored outside the store and throughout the parking lot.

Plaintiff grabbed her merchandise and went to the checkout to pay for her items. She slipped on a puddle of water and landed on her knee. She estimated the puddle was about 12 inches in diameter. She went to the hospital and learned that she had fractured her shoulder and her knee, which required surgery. She went to the hospital a second time to have the surgical staples removed from her knee. Thereafter, she had multiple rounds of physical therapy for the injuries to her shoulder and knee.

Despite the physical therapy, her weight bearing was still painful, although her knee had a good range of motion. She was diagnosed with arthritis under her kneecap and received gel injections to help alleviate the pain. Upon her final doctor visit, her shoulder had a good range of motion and was essentially resolved. However, her knee remained painful. Her doctor testified at trial that arthritis was a progressive condition and would cause increased pain when she engaged in physical activity. Moreover, she was not expected to fully recover from her injuries.

The jury found that the Pathmark supermarket was liable for the plaintiff’s injuries. It awarded her $1,530,000. The defendants appealed the verdict, claiming multiple trial errors, including the jury being charged on the mode of operation rule by the judge. When the judge “charges” the jury, he or she will instruct the jury on the law that they should apply in reaching their verdict. Under this rule of law, the plaintiff “would not have to prove defendants had actual or constructive notice of the alleged dangerous condition.”

On appeal, the defendants argued that the trial court judge should not have charged the jury in accordance with the mode of operation rule. The defendant contended that the jury should have been charged with “general negligence principles pertaining to injuries sustained by business invitees due to a dangerous condition of the businesses property.” However, the Appellate Division disagreed with this argument and found that the trial court judge correctly charged the jury with the mode of operation rule.

The Appellate Division noted that under the Supreme Court Prioleau v. Kentucky Fried Chicken, Inc., 223 N.J. 245 (2015) case,  the mode of operation rule is utilized to address the risks of certain businesses whose operations involve customer self-service. When this rule applies, “business invitees who are injured while engaging in customer self-service are entitled to an inference of negligence and need not prove that the business owner had actual or constructive notice of the dangerous condition that caused the accident.”

The court would consider whether the plaintiff showed that he or she suffered an injury in a self-service setting “where customers independently handle merchandise or come into direct contact with product displays, shelving, packaging, and any other aspects of the facility that may present a risk to the invitee.” The Appellate Division noted that self-service operations of the business “may extend beyond the produce aisle and other facilities traditionally associated with self-service activities.”

Here, it it was undisputed that the defendant supermarket was a self-service operation and that the plaintiff was injured in an area affected by the market’s self-service operation. She had slipped and fallen due to a puddle of water on the floor, near the checkout section of the store. The store manager testified that the customers brought shopping carts into the store and the courts were laden with snow, which had fallen earlier. Once inside the store, the snow melted and collected on the puddle on the floor.

With respect to measures taken to alleviate the situation, the store manager testified that mats were placed on the floor. However, the store did not have a regular protocol for inspecting the premises to make certain that there was no accumulation of water from snow brought into the store from shopping carts by customers. Also, the store only had one porter who was not required to address such conditions on a regular basis.

The Appellate Division rejected the argument that the mode of operation did not apply because it did not result from the handling of merchandise or the placement of products. The court found that, under the Prioleau case, the rule can apply to any aspect of the self-service business, “when the customer sustains an injury due to the manner in which the customer or employee handles merchandise or equipment.” The court noted that it was undisputed that the shopping carts were the store’s equipment and “that they were an essential aspect of defendants’ self-service business model.”

As the manager explained, it was the supermarket’s mode of operation to allow shopping carts to remain outside the store, which carts would be unprotected by snow. Further, the store allowed customers to bring carts laden with snow inside. It did not have any policy for removal of any accumulated snow from the carts before the customers brought them inside the store. Here, “the potential for customers to track snow into the building was contingent upon defendant’s business model, which involves the use of shopping carts in the market’s self-service operation.” Hence, the Appellate Division did find that the mode of operation was correctly applied and it was not an error for the trial judge to charge the jury with this rule of law.

Appellate Division Approves Suit By Comp Carrier Against Third Party Tortfeasor Even Where Injured Worker Had A Verbal Threshold Policy

One of the most significant cases to be decided by the Appellate Division with respect to subrogation rights was issued on December 4, 2018 in New Jersey Transit Corporation v. Sanchez, A-0761-17T3 (App. Div. December 4, 2018).  The case will have an impact on how employers deal with a very common scenario in New Jersey.

David Mercogliano was injured in a motor vehicle accident during the course of his employment. NJ Transit owned the vehicle driven by Mercogliano and paid workers’ compensation benefits to Mercogliano in the amount of $33,625.70 (comprising $6,694.04 in medical benefits, $3,982.40 in temporary disability benefits, and $22,949.26 in permanent partial disability benefits).  Mercogliano did not sue the driver of the other vehicle, Sanchez, or the owner of the vehicle, Smith.  Instead, NJ Transit filed a subrogation action pursuant to N.J.S.A. 34:15-40(f) against the third party defendant carriers.  That provision allows the workers’ compensation carrier or employer to file a suit after one year against a tortfeasor, if the tortfeasor has not filed suit.

The trial judge ruled against NJ Transit on the ground that the verbal threshold barred any such subrogation claim since Mercogliano himself could not meet the verbal threshold because he did not sustain a permanent injury as defined by N.J.S.A. 39:6A-8(a).  In essence, the trial court held that NJ Transit stood in the shoes of Mercogliano.   NJ Transit appealed.

In a decision that will surely lead to the filing of more subrogation suits, the Appellate Division reversed in favor of NJ Transit.  This decision has been published, so its impact will be great. First, the Appellate Division observed that the verbal threshold contained in so many drivers’ automobile policies does not apply to economic loss.  Rather, it applies to non-economic loss.  The Court said that an “injured worker may recover medical expenses from the third-party tortfeasor and N.J.S.A. 39:6A-12 does not apply,” citing Lambert v. Travelers Indemnity Co. of America, 447 N.J. Super. 61 (App. Div. 2016).  Since Mercogliano could have sued the tortfeasor to recover medical expenses, the Court reasoned that it follows under Section F of the workers’ compensation subrogation statute that the workers’ compensation employer could sue after the one-year waiting period.

The Court flatly disagreed with the reasoning of another published Appellate Division case, namely Continental Insurance Co. v. McClelland, 288 N.J. Super. 185 (App. Div. 1996).  The Court noted that the Continental case has not been followed by other court decisions in recent years.  The Court highlighted the fact that NJ Transit was seeking to recover benefits paid to Mercogliano for economic loss (medical expenses and wage loss), not noneconomic loss.  The Court said:

To be clear, Mercogliano’s automotive insurer paid him no benefits and incurred no costs, and the workers’ compensation carrier does not seek reimbursement from Mercogliano’s automotive insurer.  On the contrary, NJ Transit seeks reimbursement from the negligent third-party tortfeasors pursuant to Section 40.  If successful, NJ Transit’s workers’ compensation carrier would be reimbursed by the tortfeasors, subject to their right to indemnification from their own automotive insurers.  Therefore, allowing NJ Transit to pursue reimbursement does not conflict with AICRA’s collateral source rule, N.J.S.A. 39:6A-6.

This case provides a road map for employers to pursue tortfeasors for reimbursement of medical and temporary disability benefits paid in workers’ compensation arising from car accidents where the injured worker cannot sue due to a verbal threshold policy.

One key question is whether this decision is limited to payments of medical and temporary disability benefits as opposed to permanency benefits.  William T. Freeman, Esq. of Brown & Connery, whose colleague Shawn C. Huber, Esq. argued the case successfully for NJ Transit, notes that the Court cited language in Lambert that is very broad:  “As long as the employee’s injuries were caused by a third-party and not the employer, the WCA gives the workers’ compensation carrier an absolute right to seek reimbursement from the tortfeasor for the benefits it has paid to the injured employee.”  This language certainly supports the view that permanency benefits may be sought.

On the other hand, the NJ Transit opinion did not really focus on permanency benefits.  The Court initially framed the issue to be decided as follows: “In this appeal, we consider whether a workers’ compensation carrier can obtain reimbursement of medical expenses and wage loss benefits it paid from tortfeasors who negligently caused injuries to an employee in a work-related motor vehicle accident, if the employee would be barred from recovering non-economic damages from the tortfeasors because he did not suffer a permanent injury.”  Future cases will no doubt settle the question whether this important decision includes the right to sue for permanency benefits.

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Appellate Division Reverses Order Denying Motion to Dismiss NJCRA Claims against New Jersey DEP Employees on the Basis of Qualified Immunity

In the recent precedential opinion of Radiation Data, Inc. v. N.J. Dep’t of Envtl. Prot., 2018 N.J. Super. LEXIS 149 (App. Div. Nov. 2, 2018), the Appellate Division highlighted the importance of resolving a public employee’s assertion of qualified immunity on a motion to dismiss for failure to state a claim that was filed under the New Jersey Civil Rights Act.  In doing so, the Appellate Division sent a clear message to lower courts that a perceived need for discovery is not an excuse for dodging the pure legal question of whether a right is “clearly established,” and that courts must remember that qualified immunity is not just a defense to liability but is also an immunity from suit, including the burdens attendant to litigation.

Radiation Data, Inc. (“RDI”) filed a claim under the New Jersey Civil Rights Act, N.J.S.A. 10:6-2(c), against several employees of the New Jersey Department of Environmental Protection (“NJDEP”) for allegedly violating RDI’s constitutional rights as administrative enforcement litigation proceeded in the Office of Administrative Law.  Beyond claiming that NJDEP did not pursue enforcement actions against other radon companies for the same kinds of violations, RDI alleged that several NJDEP employees refused to respond to RDI’s telephone calls and emails regarding business and compliance matters, channeled communications between the adverse parties through counsel, prohibited RDI from hand-delivering a license renewal form to the NJDEP’s offices, made several threatening remarks to or about RDI, refused to meet with an RDI representative, and uttered an anti-Semitic slur about the President of RDI.  The issues in this precedential opinion were: (1) whether RDI’s substantive due process claim against the NJDEP employees should have been dismissed on the basis of qualified immunity; and (2) whether RDI’s equal protection claim against the NJDEP employees should have been dismissed on the basis of qualified immunity.  The trial court, on a motion to dismiss pursuant to Rule 4:6-2(e), answered both questions in the negative, so the NJDEP employees appealed.

On leave to appeal granted, the Appellate Division found that the trial court “misapplied principles of qualified immunity from suit” in denying the NJDEP employees’ motion to dismiss.  The trial court essentially held that consideration of qualified immunity had to wait until summary judgment.  But the Appellate Division wrote that “the trial court must exercise its discretion in a way that protects the substance of the qualified immunity defense . . . so that officials are not subjected to unnecessary and burdensome discovery or trial proceedings.”  Indeed, “unless the plaintiff’s allegations state a claim of violation of clearly established law, a defendant pleading qualified immunity is entitled to dismissal before the commencement of discovery.”  Thus, since “qualified immunity is not simply immunity from a final judgment, but is immunity from suit,” and since “[t]he claims of constitutional deprivation [we]re ripe . . . for dismissal on immunity grounds,” the Appellate Division “discern[ed] no need to withhold immunity-based dismissal, pending discovery.”

With respect to RDI’s equal protection claim, the Appellate Division wrote that it was based on the “class-of-one” theory, which required proof that RDI was both intentionally and irrationally treated differently from others who were similarly situated.  The Appellate Division found that the NJDEP employees were entitled to qualified immunity on the selective enforcement claim because the regulatory action was “multi-dimensional” and because RDI, the largest radon mitigation business in New Jersey, was not similarly situated to other such businesses.  The Appellate Division also found that the NJDEP employees were entitled to qualified immunity on the disparate treatment claim because they had a rational basis to limit and channel RDI’s contacts given “the contentious adversarial context . . . existing while the administrative case was pending.”  Further, the Appellate Division found that “RDI had no ‘clearly established right’ to dictate how [the NJDEP] was to communicate with RDI while the hotly-contested litigation was ongoing.”  Indeed, “[g]overnment must retain the discretion to respond to private parties in a manner it finds most efficient and effective.”

The Appellate Division reached the same conclusion with respect to RDI’s substantive due process claim, which was grounded on an alleged violation of the right “to engage in common occupations of life ‘free from unreasonable governmental interference.’”  While a substantive due process violation is only actionable if the official conduct was “arbitrary, or conscience shocking, in a constitutional sense,” the Appellate Division found that NJDEP’s decisions “to pursue regulatory violations against RDI and to channel communications through counsel as the administrative case became increasingly contentions do not ‘shock the conscience.’”  Thus, “[t]he conduct alleged by RDI did not infringe upon any ‘clearly established’ constitutional rights of RDI.”

Workers’ Compensation Injury Leads to Indefinite Suspension On Account Of Refusal Of Injured Worker To Submit to Medical Marijuana Drug Testing

Daniel Cotto worked as a forklift operator at Ardagh Glass in Bridgeton, N.J.  On November 1, 2016, Cotto hit his head on the roof of a forklift at work.  He was advised to see Premier Orthopedics in Vineland, N.J. for a medical examination, and a Premier Orthopedics doctor placed Cotto on light duty work with a follow-up appointment set for December 8, 2016.  The Safety Department asked Cotto to submit to a breathalyzer and urine test in order to return to work.  Cotto explained that he was taking prescription medications, including medical marijuana under the New Jersey Compassionate Use of Medical Marijuana Act (“CUMMA”).  He was also taking prescription Percocet and advised the company that he could not pass any urine or drug test.

Cotto alleged that he was told he could no longer work at Ardagh Glass because he could not operate machinery while on narcotics.  Cotto argued that he revealed his prescription medications to the company when he was hired.  His doctor had given him a note stating he could operate machinery while using these drugs.  The company advised that it was not concerned about his use of Percocet but was concerned about his use of marijuana.

Cotto was not fired but he was placed on an indefinite leave.  He was not permitted to return to work until he could pass a drug test.  Cotto’s doctor wrote that Cotto had lifting restrictions because of medical conditions, but Cotto maintained that he could perform the essential functions of the job.  He sought a “reasonable accommodation,” specifically asking that the company waive any requirement that he pass a drug test for marijuana.

Eventually Cotto filed a law suit asserting disability discrimination and failure to make reasonable accommodations.  Ardagh Glass moved to dismiss the complaint because CUMMA does not mandate employer waiver of a drug test.

Initially the federal court agreed that Cotto plead enough to satisfy coverage under the New Jersey Law Against Discrimination.  His back and neck pain met the standard of the NJLAD.  The Court also noted that Cotto appeared to be qualified to perform the essential functions of the job, having done it for five years.  Ardagh, however, maintained that Cotto could not show that he could operate machinery while using marijuana.  The company noted that use of Percocet was not illegal, but marijuana use was illegal under federal law.

The Court next reviewed CUMMA and said, “The New Jersey legislature found that ‘modern medical research has discovered a beneficial use for marijuana in treating or alleviating the pain or other symptoms associated with certain debilitating medical conditions.’”  The Court added that CUMMA provides an affirmative defense to patients who are properly registered under the statute and subsequently arrested and charged with possession of marijuana.  The Court commented that the decriminalization of medical marijuana does not shield employees from adverse employment actions.

The Court’s decision today is a narrow one, as it must be for the narrow issue presented by Plaintiff’s complaint.  Plaintiff’s discrimination claims turn entirely on the question of whether he can compel Ardagh Glass to waive its requirement that he pass a drug test.  It is plain that CUMMA does not require Ardagh Glass to do so.  We therefore find that Plaintiff has failed to show that he could perform the ‘essential functions’ of the job he seeks to perform.  Ardagh Glass is within its rights to refuse to waive a drug test for federally-prohibited narcotics.

Regarding Cotto’s argument that other injured employees with restrictions had been permitted to work light-duty positions, the Court said that Cotto failed to show that similarly situated employees asked for the specific accommodation he asked for, namely a drug test waiver.

The case can be found at Cotto v. Ardagh Glass Packing, Inc., No. 18-1037 (D.N.J. August 10, 2018).  It is the first decision of its kind in New Jersey on the issue of whether an employer must make a reasonable accommodation of waiving a post-injury drug test for an employee covered under CUMMA.

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The End of Voluntary Offers in New Jersey?

On June 21, 2018 the New Jersey Assembly passed Senate 2145, which is a bill long lobbied for by counsel for injured workers.  The measure passed by a 2-1 margin and now goes to the Governor for signature, the Senate already having passed the bill.  The legislation makes a significant change in removing the incentive for employers to make voluntary offers of permanent partial disability without having to pay a counsel fee on the amount offered.  The original legislation was passed in the 1920s and has stood the test of time – until now.

The law for the past 90 years was simply this: any offer of permanent partial disability made within 26 weeks of the last active medical treatment or return to work date to injured workers was not feeable.  Neither the petitioner nor the employer paid a fee on the amount of a valid voluntary offer.  Counsel fees to attorneys for petitioners were based only on amounts paid to injured workers in excess of the amount of the voluntary offer.  Injured workers benefited by receiving payments while their case was pending in the Division.  Those funds might help tide the worker over while the ultimate settlement was negotiated. The incentive to employers in making these payments was clearly avoidance of paying a counsel fee on the amount offered.

Under the new law to be signed by the Governor, a petitioner’s attorney is entitled to a fee on all amounts received by the injured worker if the attorney can prove an established attorney – client relationship pursuant to a written agreement prior to the date of the voluntary offer.  In other words, the claimant’s attorney gets a fee on all payments of permanency made after the date of the written engagement letter.

Counsel for petitioners have long argued that the voluntary offer rule, also known as the bona fide offer rule, was inherently unfair because attorneys may have put in a great deal of time and effort on a case only to have their fee reduced by a substantial voluntary offer made within 26 weeks of maximal medical improvement or return to work, whichever is later.

It will be interesting to see how employers react to this legislative change.  Some practitioners predict the end of voluntary offers except in truly rare cases.  The incentive to employers for the past 90 years was to save on counsel fees by making early offers of permanency.  Petitioners’ counsel as well as judges often request that employers make voluntary offers, recognizing that employers benefit by not paying a counsel fee on such early offers and that employees benefit by getting funds when they really need them. That incentive is now for the most part gone.  Arguably, the new legislation hurts petitioners as much as employers. The winners are petitioners’ attorneys, who have fought for many years for this change in the law.

One practical problem for employers is this:  an employer who is considering making a voluntary offer after the Governor signs this legislation has no way of knowing whether the injured worker has a signed agreement with counsel.  There is no obligation to reveal this information on the part of the injured worker.  Whether one has retained an attorney or not is confidential.  Of course, if the employer or carrier has received a letter of representation prior to the offer being made, the employer will know that any voluntary offer would be feeable.  In that situation, voluntary offers will almost never be made. But injured workers may or may not have counsel in the background.  So there may be situations where an offer is made, and the employer will only find out at the end of the case whether the offer is feeable.   An employer may think it is making a non-feeable voluntary offer only to be proven wrong at settlement when a valid attorney agreement is produced.

The post The End of Voluntary Offers in New Jersey? appeared first on NJ Workers' Comp Blog.

Court Finds Insurance Company Properly Cancelled Policy of Insurance for Non-Payment of Premiums

Selective Insurance Company (“Selective”) was sued by the plaintiffs Car Craft Auto Corp. and the Estate of Jesus Santiago t/a Car Craft Auto due to Selective’s cancellation of Jesus Santiago’s (“Santiago”) commercial insurance policy.  Santiago had been insured from February 19, 2011 through February 19, 2012.  Selective prepared and sent to Santiago an invoice for the renewal of the policy for the next policy period, which Santiago did not pay.  The issue on appeal in Nowakowski v. Selective Way Insurance Co., 2017 N.J. Super. Unpub. LEXIS 3054 (App. Div. Dec. 12, 2017) was whether Selective’s failure to produce proper documentation that the insured had received the cancellation notice would void the cancellation of the policy when the insured admitted receipt of the cancellation notice.

This case was brought by Deborah Koeppel a/k/a Deborah Nowakowski (“Koeppel”) as the Executor of the Estate of Jesus Santiago who passed away prior to the suit being filed.  Koeppel acted as Santiago’s operation’s manager and was responsible for Car Craft’s insurance needs.  She testified in this matter that she knew a new premium payment was due but payment was not made on purpose.

Car Craft had been insured from February 19, 2011 through February 19, 2012.  On or about February 28, 2012, Selective prepared an invoice for the renewal of the policy for an additional year and notified the plaintiffs that a renewal premium was due on March 19, 2012.  Koeppel testified that Santiago knew the premium was due on that date.

When the premium payment was not received, on March 24, 2012, Selective issued a cancellation notice to plaintiffs.  The notice indicated that coverage would continue without lapse if full payment was received prior to April 10, 2012.  Koeppel testified that she and Santiago received the cancellation notice and intended not to make the payment.  She was candid in her deposition that “we were letting all policies lapse.”  Selective thereafter cancelled the policy when the requisite premium payment was not made.  On April 14, 2012, a fire occurred at Car Craft.  Not surprisingly, Selective declined insurance coverage on the fire loss due to non-payment of premiums.

Plaintiffs sued Selective, claiming improper cancellation of the policy, as well as some other grounds, which the Appellate Division rejected, without any discussion on appeal.

Plaintiffs argued that Selective failed to strictly comply with the applicable statutory and regulatory provisions as to the cancellation of the policy.  The Appellate Division noted that the cancellation of an insurance policy must strictly comply with the statutory requirements of N.J.S.A. 17:29C-10.  However, under New Jersey case law, an insured need not actually receive a cancellation notice for it to be effective, provided that the statutory proof of mailing has been satisfied.  As the Court noted, “the determinative factor is the mailing of a notice, not its receipt.”  Plaintiffs argued that Selective did not produce a certified mail return receipt card and, hence, there was not strict statutory compliance.

For purposes of this appeal, the Appellate Division accepted that contention in reaching its decision.  However, the Appellate Division pointed out that courts have not required such compliance when the insured admits receipt of the cancellation notice.  In this case, the plaintiffs did admit they purposely declined to pay the premiums.  Koeppel conceded that the failure to pay the premiums meant Santiago and Car Craft were out of insurance and that she understood the policy was no longer paid.  Koeppel candidly admitted that plaintiffs deliberately decided not to pay the premium and let the policy lapse.

The Appellate Division found that, based upon this testimony, that plaintiffs were uninsured on the date of the loss because they intentionally let the policy lapse.  Hence, the Court affirmed the trial court’s decision, granting Selective Insurance Company summary judgment, dismissing the Complaint.

Federal Court Rejects Civil Law Suit By Injured Employee

Brian Sims suffered a terrible injury working for Express Scripts, Inc. (hereinafter ESI) on August 24, 2015 when his hand was caught in an industrial machine, leading to the amputation of his left hand and wrist.  He brought a civil law suit against his employer alleging willful and intentional conduct.  Express Scripts moved to dismiss the complaint as barred by the exclusive remedy rule in the Division of Workers’ Compensation.

In evaluating the motion to dismiss the complaint, the Court noted that plaintiff did allege that the conduct of defendants was intentional by altering or removing safety features or permitting the non-existence of safety features.  The Court said, “Plaintiff makes only conclusory statements that ESI acted ‘knowing with substantial certainty’ that injury would result from its actions; he alleges no facts or circumstances to support that claim. . . “  The Court added that plaintiff failed to indicate what specific safety features were missing, who altered or removed them, and how these safety features might have prevented Plaintiff’s injury.  The Court said, “Plaintiff’s mere recital of a requirement of the ‘intentional wrong’ exception cannot survive ESI’s motion to dismiss.”

The Court said it was not enough to just allege that a safety guard was missing:  “Here, Plaintiff has not identified what specific safety device was allegedly removed or altered and for what reason, nor that ESI was ‘substantially certain’ that injury to its workers would occur as a result of such conduct.”   The Court noted that removal of a safety device standing alone does not equate to “intentional wrong.”

The Court granted ESI’s motion to dismiss without prejudice, allowing plaintiff one more opportunity to provide a factual basis for the alleged intentional harm allegations.

This case underscores a strong theme in New Jersey case law, namely that it remains extremely difficult to surmount the exclusive remedy hurdle in this state.  It is not enough to file a complaint that provides the magic words regarding substantial certainty to cause injury.  One must provide factual support for the allegations or risk having the case dismissed.

This case can be found at Sims v. VC999 Packaging Sys., D. N.J. (January 24, 2018).

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