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

Workers' Comp Blog

The New Jersey Workers’ Comp Blog is published by John H. Geaney, Esq. and focuses on covering all aspects of Workers’ Compensation law in the state of New Jersey.
View OTHER BLOGS

NJ Supreme Court Holds Insurer Has No Duty to Defend Against Intentional Harm Claims

In New Jersey, the Workers’ Compensation Act is the exclusive remedy for injured workers as stated in N.J.S.A. 34:15-8. An employee cannot bring a civil suit against an employer or a co-employee alleging bodily injury.  However, an exception arises in cases of intentional harm. In Laidlow v. Hariton Machinery Co., Inc., 170 N.J. 602 (2002), the Supreme Court clarified the test to decide when an employer’s conduct rises to the level of an “intentional wrong” under N.J.S.A. 34:15-8. This is known as the “substantial certainty” test.

A very recent Supreme Court decision squarely addressed the question whether an insurer is required to defend an employer against intentional harm claims. The Supreme Court of New Jersey in Rodriguez v. Shelbourne Spring, LLC, No. A-39-23, 2024 N.J. LEXIS 1173 (Dec. 12, 2024), found as follows:  (1) the insurer had no duty to provide coverage against the employee’s negligence based claims (including claims for gross negligence against the employer) because of the exclusive remedy bar under N.J.S.A. 34:15-8, and (2) the insurer had no duty to defend against Laidlow claims under the Employers’ Liability portion of the workers’ compensation policy.

The practical impact of this decision is that generally employers have no coverage for intentional harm lawsuits.  This is significant because there is a growing trend for intentional harm lawsuits to be filed in New Jersey.  There is no coverage under any portion of the New Jersey standard workers’ compensation policy.  There is also no coverage under EPLI policies or standard liability policies for intentional harm claims.  A few employers, like joint insurance funds, may still provide coverage for members by not adopting the C5 exclusion described below.

  1. PROCEDURAL HISTORY

The employer in this case, SIR, was an electrical contractor that employed the injured worker, Dionicio Rodriguez. Hartford, the insurer, issued a Workers’ Compensation and Employers’ Liability Policy to the employer. This is the standard policy that all employers have in New Jersey.  The plaintiff initially filed a claim petition for workers’ compensation benefits under Part One of the Hartford Policy which the insurer defended on the employer’s behalf. The plaintiff then filed a personal injury complaint in civil court against SIR, seeking money damages and naming his employer as a defendant.  The facts were that Mr. Rodriguez had been injured opening an electrical panel on a breaker.  He contended in his civil suit that his employer was substantially certain that this action would cause him severe injury because Mr. Rodriguez had not been trained to do what he contended was highly dangerous work.

The employer then forwarded the complaint to Hartford which disclaimed any duty to defend the employer in civil court. The employer filed a third-party complaint against its own carrier claiming that Hartford wrongfully disclaimed defense coverage. Hartford filed a Rule 4:6-2(e) motion to dismiss the employer’s third-party complaint, and the employer cross-moved for summary judgment. The trial judge granted Hartford’s motion and denied the employer’s cross-motion, concluding that the insurance policy expressly excluded coverage for intent-based claims.

The employer moved for reconsideration and filed a motion to amend its third-party complaint, contending for the first time that the policy’s enhanced intentional injury exclusion (EII exclusion) violated public policy. The judge denied reconsideration finding that Rodriguez’s allegations were Laidlow claims and that the policy excluded insurance coverage for intentional conduct by the employer. As to the motion to amend, the trial judge rejected the motion as moot finding that the amendment would be futile.

The Appellate Division affirmed the orders dismissing the employer’s third-party complaint, denying the employer’s cross-motion for summary judgment, and denying the employer’s motion to amend its third-party complaint.

The Supreme Court accepted certification and affirmed the decision. The Court relied on longstanding legal principles regarding the duty to defend arising from the contractual obligations under the language of an insurance policy. Rodriguez, at *12 citing Hartford Accident & Indem. Co. v. Aetna Life & Cas. Ins. Co., 98 N.J. 18, 22 (1984).  Here is what the Court concluded:

A. Under The Elective Provisions of the Workers’ Compensation Portion of the Policy, (Part One of the Standard Policy) the Insurer had No Duty to Defend Against Claims of Negligence, Gross Negligence, Recklessness, Intentional Harm or Substantial Certainty of Harm. 

Part One of the Hartford policy provided Workers’ Compensation insurance for “benefits” under Workers’ Compensation law. These are the everyday claims that are handled in the Division of Workers’ Compensation.    The policy says:  “[w]e will pay promptly when due the benefits required of you by the workers’ compensation law.” Id. at *20. Emphasis added. The Court explained that “benefits . . . required by a workers’ compensation law,” included medical benefits under N.J.S.A. 34:15-15; death benefits for dependents under N.J.S.A. 34:15-13; and temporary disability benefits, permanent total benefits, or permanent partial benefits under N.J.S.A. 34:15-12(a) to (c), regardless of fault. Part One of the Hartford policy incorporated by reference the requirements set forth in the Workers’ Compensation Act stating that “the Act covers employees’ accidental bodily injuries ‘arising out of and in the course of [their] employment, of which the actual or lawfully imputed negligence of the employer is the natural and proximate cause.’” N.J.S.A. 34:15-1.

B. The insurer has no duty to defend against intentional harm claims under standard Employers’ Liability insurance policies (Part Two) on account of the plain language of the exclusions set forth in the standard workers’ compensation policy

In Rodriguez, Part Two of the standard Hartford Policy set forth the exclusions of coverage for Employers’ Liability insurance, specifically section C5 which provided in relevant part: This insurance does not cover. . . . . [b]odily injury intentionally caused or aggravated by [the employer].”  Id. at *23. The Hartford Policy contained an additional “New Jersey Part Two Employers Liability Endorsement,” applying “only to the insurance provided by Part Two (Employers Liability Insurance).” This is the so-called EII exclusion, which states that: “[w]ith respect to Exclusion C5, this insurance does not cover any and all intentional wrongs within the exception allowed by N.J.S.A. 34:15-8 including but not limited to, bodily injury caused or aggravated by an intentional wrong committed by you or your employees, or bodily injury resulting from an act or omission by you or your employees, which is substantially certain to result in injury.” Id. at *23-24. Emphasis added.

The Court held that Part Two of the insurance policy imposed no duty on Hartford to defend the employer against Mr. Rodriguez’s intentional harm suit based on the unambiguous policy language.

C. Exclusions in Employers’ Liability Insurance are not against public policy when the language is unambiguous as in Rodriguez.

The Court also concluded that the trial judge properly denied the employer’s motion for leave to amend its third-party complaint as futile. The employer moved for reconsideration and filed a motion to amend its third-party complaint, contending for the first time that the Hartford Policy’s EII exclusion violated public policy. The Court concluded that contrary to the employer’s contention, the EII exclusion did not violate public policy.

The Court went on to distinguish Rodriguez from companion cases Beseler and Delta Plastics. See Charles Beseler Co. v. O’Gorman & Young, Inc., 188 N.J. 542, 548 (2006); N.J. Mfrs. Ins. Co. v. Delta Plastics Corp., 188 N.J. 582, 582 (2006).  In these earlier cases, the Court considered C5 exclusions in Employers’ Liability policies that excluded coverage for bodily injury intentionally caused or aggravated by the employer. In those cases, the Court ruled that the C5 exclusions did “not unambiguously exclude injuries falling under the ‘substantially certain’ prong of the intentional-wrong exception recognized by Laidlow.” Beseler, 188 N.J. at 547.  Due to the “lack of express language excluding conduct substantially certain to result in injury,” however, the Court held that the C5 exclusions were ambiguous and thus ruled for the insured employers. Id. at 548.

Following decisions in Beseler and Delta Plastics, the Compensation Rating and Inspection Bureau (CRIB), amended the New Jersey Workers’ Compensation and Employers’ Liability Insurance Manual (Manual), N.J.S.A. 34:15-90.2(i), to include an updated New Jersey Part Two Employers Liability Endorsement. To restore the C5 intentional wrong exclusion while conforming with the Court’s directive that such an exclusion must be unambiguous, the new endorsement was amended. It provides that:[w]ith respect to Exclusion C5, this insurance does not cover any and all [*31]  intentional wrongs within the exception allowed by N.J.S.A. 34:15-8 including but not limited to, bodily injury caused or aggravated by an intentional wrong committed by you or your employees, or bodily injury resulting from an act or omission by you or your employees, which is substantially certain to result in injury. [CRIB Manual Amendment Bulletin #436, Exhibit 1, effective July 1, 2007.]

The New Jersey Department of Banking and Insurance (DOBI) approved the Manual Amendment Bulletin #436, which included the amended endorsement to the C5 exclusion, in a letter dated May 23, 2007. The Court in Rodriguez therefore concluded that the EII exclusion in the Hartford Policy contained language identical to the language approved by DOBI in 2007 and complied with the holding in Beseler by including “express language excluding conduct substantially certain to result in injury.” Rodriguez, at *31. The Court therefore concluded that the New Jersey-specific endorsement that bars coverage for intentional wrong claims did not violate public policy.

Hartford Insurance rightly won this case.  Where does this leave employers who are faced with intentional harm lawsuits?  In a perilous position!  When an intentional harm suit is filed against the employer,  alleging substantial certainty of harm or intentional harm, generally the employer has no ability to obtain insurance coverage.  Some employers, like joint insurance funds, may not have adopted the standard C5 exclusion, but almost all other employers will not have coverage, and this case makes clear there is no duty on the part of the carrier to defend the suit.

The fact is that most intentional harm suits get dismissed in New Jersey at some point in time, but usually not until a great deal of discovery has been completed.  Legal fees can be extremely high to defend such lawsuits, so even if the employer eventually wins, and then wins again on the appeal, it may feel like a pyrrhic victory to the employer because the legal defense costs must be funded entirely by the employer.  Such defense costs can amount to tens of thousands of dollars. Capehart Scatchard defends intentional harm lawsuits.  If readers have questions, Betsy Ramos, Esq., Chair of the Litigation Department, may be consulted.

The post NJ Supreme Court Holds Insurer Has No Duty to Defend Against Intentional Harm Claims appeared first on NJ Workers' Comp Blog.

Appellate Court Rules Employers Can Rebut COVID Presumption Even if Judge Initially Finds Claimant is an Essential Employee

Since Governor Murphy signed Covid legislation several years ago, there has been debate about the legal significance of having a Covid presumption. Some practitioners thought that if the Judge of Compensation should find before trial that the claimant is an essential employee, that means the employee has won the case and then moves on to the issue of permanency.  That is incorrect because the statute clearly provides that the employer has a right to rebut the presumption and prove that the employee was more likely exposed to Covid outside work.

The recent published case of Amato v. Township of Ocean School District, No. A-2542-23 (App. Div. November 25, 2024) has now provided clarity.  First, the Court found that the Judge of Compensation can decide as a matter of law before trial starts whether the claimant is an essential employee and is therefore subject to the statutory presumption of compensability.  In the Amato case the Judge of Compensation ruled that the decedent, a teacher, was an essential employee before trial testimony commenced. Next, the Appellate Division decided that the finding of the Judge of Compensation that the claimant is an essential employee does not prevent the employer from offering evidence that would rebut the presumption.   

Before explaining the facts in this case, it helps to understand how the New Jersey Covid presumption law works. Think of a football field.  In a normal workers’ compensation case, the burden is on the employee to move the ball past the 50 yard line.  Why only the 50 yard line?  Because the standard in workers’ compensation cases is “more likely than not.” That means more than 50%.  But in a Covid presumption case, the employer must move the ball past the 50 yard line.  If the ball has not crossed the 50 yard line at the end, respondent loses in a Covid presumption case. 

One question that is often asked is whether the New Jersey Covid presumption language has any practical impact.  In most cases the answer is no, but there is an exception discussed below.  The presumption certainly does not change the trial at all.  Petitioner testifies, lay witnesses may testify, followed by medical experts. A “more likely than not presumption” is the same standard in every workers’ compensation case.   In a typical non-presumption case, petitioner loses in a tie; but in a Covid case with an essential employee, respondent loses in a tie.  Ties almost never happen because the evidence usually tilts in favor of one side or the other.

The best advice for practitioners, adjusters and employers is to weigh the strength of the evidence on work exposure or non-work exposure.  If the evidence is strong that the petitioner was exposed to Covid at work, it does not really matter whether there is a presumption or not.  The petitioner is likely to prevail.  The same is true when the respondent has strong evidence that the petitioner has been exposed to Covid outside work.

It helps to consider examples of what might constitute strong or weak evidence. Scenario one: the petitioner, a nurse, during the Covid emergency was in Florida for two weeks with her family before she tested positive for Covid.  Scenario two: the petitioner’s entire family living in the same house during the Covid emergency got Covid well before the petitioner, a deli cashier, tested positive.  These are strong facts for respondent to rebut the presumption.  Next, let’s consider strong facts for petitioner.  Petitioner, a nurse who lives alone, never left the house during the Covid emergency before he got Covid  — except to work in the hospital.   Petitioner, a police officer, stopped motorists all day long during the Covid emergency and contracted Covid.  No one in the officer’s family had contracted Covid.  In these latter two scenarios, the facts are problematic for respondent and very helpful for petitioner. It should be noted that most of the existing Covid claim petitions in New Jersey were filed from 2020 to 2022.  Very few Covid claim petitions have been filed in the past year or so because Covid, like the flu, has become so prevalent in society.  The presumption ended when the Governor declared the end of the public health emergency in July 2021.  The public health emergency was later reinstated from January 11, 2022 to March 7, 2022.

There is one category of cases where the Covid presumption is extremely significant, and that is dependency cases. These are generally difficult for the employer to prevail on for one simple reason – there is no opportunity to cross examine the decedent.  Cross examination allows the employer to find out about non-work activities, other potential exposures, second jobs, exposure in public settings, first date of diagnosis, commencement of symptoms, etc.  The inability of the respondent to cross examine the decedent makes the Covid presumption very powerful for petitioner in a dependency case.

Getting back to the specific facts in the Amato case, the opinion does not say much.  All we know from the recent Appellate Division opinion is that decedent was a full-time teacher in an intermediate school.  The school reopened on February 8, 2021, and decedent returned to work.  She became ill and died on May 18, 2021, of respiratory failure due to Covid-19. Her husband filed the dependency case.  The Appellate Division decision does not address anything about when the decedent tested positive, when the decedent last worked, and whether the decedent traveled anywhere outside New Jersey.  That is because the respondent’s appeal focused on legal issues before respondent produced rebuttal witnesses.  To this practitioners’ knowledge, no trial testimony has taken place yet in the Amato case.

Here are the two main takeaways in Amato.  First, the Judge of Compensation has the right as a matter of law to rule on whether the petitioner/decedent is an essential employee before trial begins.  Second, the finding by the Judge of Compensation that the claimant is an essential employee before trial does not prejudice the right of the employer to produce evidence at trial in rebuttal of the presumption. The final paragraph in the Amato opinion is worth reading:  

Lastly, we note the presumption under N.J.S.A. 34:15-31.12 that an essential employee’s ‘contraction of the disease [was] work-related and fully compensable’ is rebuttable.  Thus, notwithstanding the judge’s declaratory finding that the decedent was an essential employee, respondent may introduce evidence to rebut the presumption that decedent’s contraction of COVID-19 was work related.

There are two other interesting aspects of the Amato case.  Respondent argued that a teacher is not an essential employee because there is no mention in the law specifically about teachers.  The Court affirmed the decision of the Judge of Compensation that teachers fall within the language of paragraph four in the Covid law:  “(4) … any other employee deemed an essential employee by the public authority declaring the state of emergency.”  The Court observed that the Department of Homeland Security issued guidance that kindergarten through twelfth grade teachers were included as essential employees.  The New Jersey Department of Health also issued similar guidance regarding teachers as essential employees.

Finally, the Amato opinion focused the majority of its analysis on an issue we seldom see in workers’ compensation court.  The issue was raised by respondent’s motion for the trial judge to recuse herself.  Respondent argued that the Judge of Compensation should have recused herself in this case since she was a sponsor of the Covid-19 presumption law in her prior capacity as a member the New Jersey State Legislature.  The Court said, “A compensation judge who formerly sponsored a bill enacted into law is not per se disqualified from presiding over cases implicating or interpreting that law.” The Court suggested that the standard to be used in such situations is whether a reasonable person would doubt the judge’s impartiality.  The Court supported the right of the Judge of Compensation not to recuse herself in this case. “We are satisfied that Judge Downey did not abuse her discretion in deciding a recusal was unwarranted in this case.  Her knowledge of the law and lawmaking was not extrajudicial knowledge but rather judicial knowledge that many judges take with them to the bench.”  

This the first published workers’ compensation opinion dealing with the New Jersey Covid presumption law.  It is also the only published recusal case in the Division of Workers’ Compensation in many decades.  For these reasons, the Amato decision is important for practitioners, adjusters and employers to know. Those readers who would like a copy of the decision can contact the undersigned.

The post Appellate Court Rules Employers Can Rebut COVID Presumption Even if Judge Initially Finds Claimant is an Essential Employee appeared first on NJ Workers' Comp Blog.

Everything You May or May Not Want to Know About Temporary Disability Benefits Under New Jersey Workers’ Compensation Law

There are many issues that arise regarding the payment of temporary disability benefits under the New Jersey Workers’ Compensation Act. This blog will cover some of the basic issues and some of the complex issues.

Q. When is an employee eligible for temporary disability benefits?

The employee must have lost more than seven days of time due to a work injury or occupational disease (not necessarily consecutive days) in order to receive payment of temporary disability benefits. Example: employee is injured on October 1st at work, does not complete that day of work, and the authorized treating doctor keeps the employee out until October 9th. This is more than seven days because N.J.S.A. 34:15-38 provides that you count as day one the first day that the employee cannot complete work. That would be October 1st. When a worker is out for any period of time, weekends and holidays that fall within that period of time are counted as lost days.

Q. What is the rate of payment in New Jersey?

The rate is 70% of wages subject to a maximum and a minimum rate. For 2024 injuries the maximum is $1,131 per week and the minimum is $302 per week. Temporary disability payments are not taxable.

Q. What if the employee works for a board of education?

School board employees have a unique provision that no other employees have in New Jersey. The Education Law under 18A:30-2.1 provides that full salary must be paid to school board employees who are injured under workers’ compensation for one year from the first date of lost time. The IRS takes the position that the entire full salary payment is not taxable when a school board employee is out of work due to a workers’ compensation injury.

Q. What if the employee works for a municipality, county or the State? 

Most public entities have collective bargaining agreements that provide for full salary payments in lieu of workers’ compensation. These are negotiated agreements which trump workers’ compensation law. Most of the CBA provisions have an end date to the full salary, perhaps six months or a year, but some do not. Practitioners need to review the relevant CBA.

Q. Is there any statutory end date for temporary disability benefits?

Yes, 400 weeks is the statutory limit.

Q. How does one calculate an average weekly wage and temporary disability rate for non-salaried employees?

This is by far the most complex issue when dealing with temporary disability benefits. One must bear in mind that N.J.S.A. 34:15-37 (which is the law that defines wages) was written in 1945. The economy was vastly different and many laws that we deal with routinely today did not exist. The statute provides for three basic rules which I will simplify:

  1. If the employee is paid by output (piecework), use an average of the 26 weeks preceding the date of accident.
  2. If the employee works a standard work week, take the hourly rate of pay and multiply by the hours worked. So, an employee who works 40 hours per week at $20 per hour has a wage of $800 per week with a temp rate of $560.
  3. If the employee works in a job that has fewer hours than the ordinary work week, use the actual hours worked by that employee times the hourly rate and calculate an average weekly wage.

Sounds simple, right?  The problem is that there is an infinite variety of fact patterns that are encountered in cases. Judges and practitioners often use the 26-week payment period because that generally makes sense for long-term employees, even though it was designed for piecework workers when the law was passed in 1945. There are, however, some real problems with using the 26-week method.

  1. What if the employee only worked 5 or 10 weeks before the injury or even one day before the injury?  
  2. What if the 26-week period included four weeks of unpaid FMLA leave?  Does one exclude that period of time? Judges generally say yes, we should use 22 weeks then.
  3. What if the 26-week period included a one-time longevity payment for years of service that skews the amount of wages?
  4. What if the employee gets a large annual bonus that just happens to fall inside or outside that 26-week period?  Should that bonus be counted?
  5. What if the employee’s union settled a protracted negotiation with a large wage increase that is retroactive to a date three years ago when the accident occurred?  Does that get counted?

These issues and other variations are dealt with every day in workers’ compensation court. In resolving these disputes, it is important to remember the underlying principle:  temporary disability benefits are meant to compensate an injured worker for the amount of money he or she would have been paid but for the work injury or occupational disease. There are wage disputes in thousands of workers’ compensation cases each year, but these disputes are resolved in court without litigation in almost every case.

Q. On a related topic, what do wages include in the first place?

This statute is also very old. Wages generally are payments that are taxable to the employee, including commissions, overtime pay, tips, gratuities, bonuses, and lodgings furnished by the employer free of charge to the employee. N.J.S.A. allows only $25 per week for board and lodging to be counted toward wages. But again, this statute goes back to 1945 and there is currently a bill to amend this provision in the legislature. There is no mention in the statute about how to treat mileage reimbursement for use of one’s vehicle for work purposes, but this is not likely a “wage” because the IRS does not tax standard rate mileage reimbursement.

Q. When does the employer have a right to terminate temporary disability benefits in New Jersey?

Unlike most states, termination of temporary disability benefits in New Jersey does not generally depend on the return-to-work date. New Jersey is an MMI state, meaning that both medical and temporary disability benefits end at maximal medical improvement, even if the employee cannot return to his or her job. Sometimes an employee returns to work full duty before MMI is reached. The rule is that temporary disability ends on the earlier of return-to-work full duty or MMI. So, use whichever date occurs first.

Q. What is the rule on termination of temporary disability benefits based on a light duty return-to-work offer?

The law on terminating benefits based on a light duty job offer stems from an important case called Harbatuk. That case established that an employer can terminate temporary disability benefits on a light duty offer. If the employee refuses to accept the light duty job offer, the employer does not have to pay temporary disability benefits. The employer must show that it communicated the offer of light duty to the employee. When there are issues on light-duty return to work, they usually focus on whether the employee can safely perform the light duty job. The opinion of a treating doctor or the results of a functional capacity examination can be helpful. If the light duty job comes to an end before the employee has reached MMI or can return to work full duty, temporary disability benefits must be reinstated.

Q. What if the employee is treating but keeps missing therapy or medical appointments. Can the employer terminate temporary disability benefits in that event?

Yes, under N.J.S.A. 34:15-19, failure to cooperate with medical treatment allows the employer to terminate workers’ compensation benefits. Once the employee returns to treatment, benefits resume but the employer does not go back and repay the period of non-cooperation.

Q. Does the employer owe temporary disability benefits to a seasonal employee even when the seasonal employee would not have worked?

There are many seasonal employees in every state. Teachers have been considered seasonal employees by our Supreme Court as well as landscapers, employees of golf courses that are closed for the winter, and many other employees whose jobs depend on the weather. The general rule is that employers do not have to pay temporary disability benefits during the off season, so teachers will not be paid during the summer months when they would not have taught for the school. There is an important exception, however. The New Jersey Supreme Court makes clear in the Outland case, (which concerned a teacher), that if the employee can prove he or she would have worked another job in the summer but for the work injury, then temporary disability benefits must be paid. The burden of proof is on the employee. In that case, temporary disability benefits would be based on the actual wages for the secondary employment.

Q. Does New Jersey have “partial temp?” 

No, New Jersey does not have “partial temp” as the term is defined in other states. This usually refers to a situation where an employee has reached MMI and can return to work, but the new job now pays less than the employee used to earn before the accident. In other states there are often workers’ compensation laws that require the employer even after MMI to pay for a portion of the new job’s wage loss. New Jersey does not have any such law.

I have been asked many times if the following restricted hours scenario qualifies as partial temp. Frankly, the term “partial temp” does not appear in our statute. Consider a situation where the authorized doctor is treating an injured worker, Rebecca, and she has not yet reached MMI. Assume that Rebecca normally gets paid $25 per hour for a 40 hour week for a total of $1,000 per week. She gets paid $700 per week in temporary disability benefits while out of work. After Rebecca has spine surgery, the treating doctor recommends that she phase into her job and work just four hours per day for four weeks. Her employer then pays her $20 per hour for four hours per day or $500 per week (half pay). Rebecca’s lawyer argues that she is entitled to be compensated for the 20 hours she could not work because of the restriction placed on her by the authorized doctor. The issue for the Judge of Compensation to decide will be whether these 20 lost hours are considered payable as temporary disability benefits.

There is no published case on this precise issue. The key to the resolution of this issue will be the court’s interpretation of N.J.S.A. 34:15-38. This statute reads that temporary disability includes days lost and any fraction of days thereof that the employee is unable to work due to the accident. Rebecca will argue that she is owed $350 per week in temporary disability benefits. (70% times $500). She will argue these lost hours count toward temporary disability as defined in New Jersey. Judges who have encountered this situation have recommended payment by the carrier or employer for the half days that the employee cannot work. Once MMI is reached, however, Rebecca would have no argument if her new job resulted in a lower wage.

Q. Does New Jersey allow employers to stop temporary disability benefits when an employee is fired for cause?

Yes, the leading decision is Cunningham v. Atlantic States Cast Iron Pipe Co., which involved termination of an employee who violated his “last chance” agreement. The petitioner had previously injured his knee at work and was under active treatment for his knee when he was fired. After his termination his treating doctor saw petitioner, and the doctor issued a note stating petitioner was unable to work. The petitioner filed a motion for temporary disability benefits and the Judge of Compensation ruled in his favor. The employer appealed, and the  Appellate Division reversed in favor of the employer. The Appellate Division ruled that petitioner had no wages to replace because he had been terminated for cause. Other cases have followed the rule in Cunningham. There are no published cases that address termination of temporary disability benefits when a downsizing or mass firing of employees occurs.

Feel free to email the undersigned with any questions not addressed in this blog.

The post Everything You May or May Not Want to Know About Temporary Disability Benefits Under New Jersey Workers’ Compensation Law appeared first on NJ Workers' Comp Blog.

Acting Governor Signs Legislation Increasing Counsel Fees to 25% in Workers’ Compensation Cases

On Thursday, August 22, 2024, Acting Governor Nicholas Scutari signed legislation increasing counsel fees for petitioners’ attorneys from 20% to 25%.  This change in the law is codified in N.J.S.A. 34:15-64. The statute now reads as follows:  “The official conducting any hearing under this chapter may allow to the party in whose favor judgment is entered, costs of witness fees and a reasonable attorney fee, not exceeding 25 percent of the judgment.”

This new counsel fee legislation affects both parties and petitioners’ attorneys. The New Jersey Division of Workers’ Compensation has historically assessed against employers the obligation to pay 60% of the fee of the injured worker.  Injured workers pay 40% of the fee of their own attorney in New Jersey.  While this practice is not codified in any law or regulation, the 60/40 split between employer and injured employee on counsel fees has been followed by judges for well over 70 years.

What does this mean in actual practice?  Consider a hypothetical award of 35% permanent partial disability for a high wage earner.  At 2024 rates, such an award would amount to $110,880.  Assume the Judge of Compensation awards a counsel fee of 25% on a judgment for 35% permanent partial disability:

  Total Counsel Fee at 25%:       $27,720
Assessed against respondent:     $16,632
Assessed against petitioner:        $11,088

Compare this to a counsel fee of 20% on an award of 35% permanent partial disability before August 22, 2024:

 Total Counsel Fee of 20%:         $22,176.00
Assessed against respondent:     $13,305.60
Assessed against petitioner:        $8,870.40

For Section 20 settlements, the law remains the same.  Injured workers pay the entire counsel fee, now 25% instead of 20%. On a Section 20 settlement of $100,000 a petitioner now pays $25,000 as opposed to $20,000 prior to August 22, 2024.

Undoubtedly, this increased counsel fee percentage will be applied to any Order for Medical and Temporary Disability Benefits.  The law does not specifically mandate that a judge must award 25%, but neither did prior law mandate a percentage of 20%.  In actual practice, the maximum percentage is usually assessed.  

The question on everyone’s mind is when does this law take effect?  Most legislation that passes in New Jersey sidesteps this question. This piece of legislation is quite clear: “This act shall take effect immediately and shall apply to all claims pending on or after the date of enactment.”  That means it applies to all cases currently pending in the Division of Workers’ Compensation or filed after August 22, 2024. It does not matter that the case was filed years ago. The key word is “pending.”  If the case settled a month ago, it is no longer pending.  If it is open and unresolved, it is pending.

The post Acting Governor Signs Legislation Increasing Counsel Fees to 25% in Workers’ Compensation Cases appeared first on NJ Workers' Comp Blog.

Appellate Division Affirms Dismissal of Insured’s Claim Against Its Carrier for Coverage of Intentional Harm Lawsuit Alleging Bodily Injury

Intentional harm lawsuits can be harrowing for employers to defend because the allegations are generally not covered under the workers’ compensation policy.  This was the situation posed in Tejada v. 74 Industries, A-2643-021 (App. Div. July 12, 2024).  As the readers know, there are two parts to a workers’ compensation policy.  One part is the elective provisions that apply to all claim petitions filed in the Division of Workers’ Compensation.  The other part is referred to as the Employer’s Liability section of the policy and pertains to civil lawsuits arising from work injuries filed by employees against their employers.

Ms. Tejada was a sewing machine operator who was hospitalized for treatment related to an infection allegedly caused by insect bites at work, leading to open sores and swelling in her right leg. She filed both workers’ compensation claims for these injuries.  Ms. Tejada settled the workers’ compensation claim petition filed in the Division for $25,000 on a Section 20 basis for her physical injuries.  She also filed a lawsuit against her employer for bodily injury caused by alleged acts of intentional harm concerning her insect bites and some other issues. The civil lawsuit was filed before the $25,000 Section 20 settlement took place in the Division.  When the Section 20 claim was put through in the Division, there was no mention on the record or in the final papers of the pending civil lawsuit filed by Ms. Tejada against her employer alleging intentional harm.

In the civil lawsuit, Ms. Tejada alleged a breach of duty to keep the employer’s premises safe, a failure to respond to plaintiff’s complaints, and the creation of a virtual certainty of harm in allowing dangerous and hazardous conditions created by giant flying insects embedded in the fabric handled by employees. These insects were alleged to have bitten Tejada and other employees at work. She also alleged in her civil complaint that 74 Industries threatened her with adverse employment action if she had left the job site to obtain prompt medical treatment for her insect bites.

When 74 Industries received Ms. Tejada’s civil complaint, they tendered it to NJM, its workers’ compensation carrier. However, NJM declined to defend the civil complaint because of the allegations of intentional harm.  74 Industries then brought a counterclaim against NJM to compel NJM to defend the civil lawsuit filed against it under the Employer’s Liability section of the policy.  The trial court ruled in favor of NJM and held that the NJM policy excluded coverage for alleged intentional wrongs.  74 Industries appealed and made three arguments:

  1. NJM’s duty to defend was triggered by NJM’s representation of 74 Industries in the workers’ compensation claim;
  2. NJM had a duty to defend because there was ambiguity in the policy;
  3. Public policy considerations warranted a defense by NJM.

The Appellate Division found no merit in the argument that NJM had a duty to defend simply because of the Section 20 settlement. Essentially, the Court rejected this argument because there was no mention of the pending civil lawsuit when the workers’ compensation claim was resolved in the Division.  Section 20 was simply a release of all claims arising out of the formal claim petition in the Division. Furthermore, NJM or the petitioner did not express intent to resolve or defend other claims outside this claim petition.

The second argument was more complicated.  The NJM workers’ compensation policy had two exclusions under C5 and C7.  74 Industries argued that they conflicted.  The C5 exclusion stated that their insurance does not cover bodily injury intentionally caused or aggravated by 74 Industries.  A C5 endorsement added that the insurance policy does not cover all intentional wrongs by the insured “or bodily injury resulting from an act or omission” by 74 Industries. The Court interpreted that this provision is both clear and unambiguous.  However, 74 Industries argued that the C5 exclusion was undermined by the C7 exclusion, which said that “NJM will defend any claim … where bodily injury is alleged.”

The Appellate Division concluded that one must read the C7 exclusion in the context of the entire contract of insurance, which made clear that intentional harm claims alleging substantial certainty of bodily injury were excluded from coverage.  The C7 exclusion ruled out coverage for:

Damages arising out of coercion, criticism, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination against or termination of any employee, or any personnel practices, policies, acts or omissions.

The Court also reviewed a separate C7 endorsement, which provides that NJM “will defend any claim, proceeding, or suit for damages where bodily injury is alleged.” However, the same provision also reserved NJM’s right to investigate and settle and stated that it “will not defend or continue to defend after the applicable limits of insurance have been paid.” The policy also limited any legal costs incurred by 74 Industries.

74 Industries focused on the language of the above endorsement regarding the defense of bodily injury claims.  74 Industries said this language contradicted the C5 exclusion.  The Appellate Division disagreed and stated that the C7 endorsement must be read in the context of the entire insurance policy, specifically the language excluding coverage for intentional harm claims for bodily injury.  The Court concluded, “Again, based on the plain language, the endorsement provides only that C7 exclusion will not be used to deny coverage for bodily injuries, such as ‘the emotional injuries accompanied by physical manifestations’ explicitly noted by the Schmidt court.”  The Court added, “. . . it does not create new coverage for all bodily injuries outside C7 circumstances referenced in the exclusion.”  The Court also noted that Ms. Tejada never asserted or alleged employment discrimination or retaliation, unlike the Plaintiff in Schmidt v. Smith.  As for the allegation that Plaintiff was threatened with adverse employment action if she left the job site to treat, the Court found that this was equivalent to “coercion,” for which the C7 exclusion precluded coverage.

Finally, the Court flatly dismissed the public policy argument. The Court said that New Jersey courts have consistently held that exclusions for intentional wrongs in insurance policies are legally valid.

This case is significant for workers’ compensation carriers, employers, and practitioners.  In reality, there has been an increase in lawsuits filed by employees in recent years against their employers under the employer’s liability portion of workers’ compensation policies (also known as Coverage B).  The law has not changed much since Millison v. E. I dupont de Nemours & Co, 101 N.J. 161 (1985), which remains the leading case and creates a very high bar for plaintiffs to prove intentional harm claims and surmount the exclusive remedy contained in N.J.S.A. 34:15-8.  Having said that, this does not seem to be stopping employer liability lawsuits from being filed in increasing numbers.  Depending on the allegations made by the employee in the employer’s liability claim, the employer may or may not have insurance coverage.  Some specific counts may be covered, as well as other counts in the complaint for which there is no coverage.  However, when the allegations are pure bodily injury from alleged intentional acts, as in this case, the stakes are very high for employers since workers’ compensation policies generally exclude coverage for the alleged wrongful acts of employers.

The post Appellate Division Affirms Dismissal of Insured’s Claim Against Its Carrier for Coverage of Intentional Harm Lawsuit Alleging Bodily Injury appeared first on NJ Workers' Comp Blog.

Court Finds Petitioner Cannot Prove Work-Related Need for Breast Reconstruction Surgery

A misunderstanding of a key fact can doom an expert opinion.  That was the situation in V.S. v. Spectrum360, No. A-0710-23 (App. Div. June 24, 2024). The petitioner, a special education teacher, was working on July 26, 2021, when a student kicked her in her left breast.  Petitioner felt pain, tenderness, extreme redness and blood clotting in her left breast.

A medical examination on the date of the incident was consistent with a contusion to the left breast.  V.S. had undergone breast augmentation surgery in 2011.  Since then, petitioner admitted that she had gained a “significant amount of weight,” which augmented her breast size.  Petitioner’s board certified plastic surgeon, Dr. Boris Volshteyn, suspected that V.S. “sustained a fracture of the silicone implant on the left side.”  He sent her for an MRI on September 30, 2021.  Dr. Volshteyn said that the MRI “demonstrated significantly increased folding of the implant on the affected left side compared to the right side.”  He attributed the changes in her left breast to the work incident and recommended breast reconstruction surgery and removal and replacement of both breast implants to repair what he thought was a slow leak rupture of the left breast implant.

Petitioner filed a motion for medical treatment seeking breast reconstruction surgery. Respondent sent petitioner for a second opinion with Dr. Beverly Friedlander, a board certified plastic surgeon.  In a key distinction between the two plastic surgeons, Dr. Friedlander noted that petitioner did not have silicone implants, contrary to what Dr. Volshteyn had assumed.  Rather she had saline implants. She pointed out that if Dr. Volshteyn had been correct that petitioner had suffered a rupture or puncture of the left breast when kicked by the student, a deflation in the breast would have occurred rapidly with a saline implant.  When a saline implant is compromised, she said its contents will leak and reabsorb into the body quickly.  But that had not happened in this case.  Even petitioner agreed that there was no material difference in size after the accident between the left and right breasts. 

The experts also disagreed on the interpretation of the MRI results.  The MRI of the left breast showed evidence of folds in the left breast.   Dr. Volshteyn attributed this to the work incident, arguing that the MRI demonstrated “significantly increased folding of the implant on the affected left side compared to the right side.”  Dr. Friedlander read the same MRI but she did not notice in her examination any rippling in the left breast.  She added that ripples in breast implants are actually quite common.  She said that all breast implants ripple, and that if an implant is underfilled, the ripples are even more observable.  In her opinion, one implant was inflated more than the other implant, leading to surface irregularities. She concluded that the folds that showed on the MRI had nothing to do with the work injury.

The Judge of Compensation denied the petitioner’s motion, finding that Dr. Friedlander was more credible than petitioner’s expert.  The Appellate Division affirmed the dismissal.  It said, “The judge found Dr. Volshteyn erroneously believed V.S. had silicone – not saline – implants and that mistake regarding the composition of the implants undermined his overall opinion.” The Court felt that there was sufficient credible evidence for the Judge of Compensation to find Dr. Friedlander more credible in that petitioner’s left breast implant was intact and had not ruptured contrary to the opinion of Dr. Volshteyn.

As for petitioner’s complaint of more pain in her left breast after the accident, the Court noted that Dr. Friedlander had an explanation for this.  Petitioner had chronic pain related to a 2007 motor vehicle accident as well as lupus/rheumatoid arthritis.  Dr. Friedlander also said that petitioner had a history of discomfort in both breasts related to her significant weight gain since the time of her 2011 augmentation.

The post Court Finds Petitioner Cannot Prove Work-Related Need for Breast Reconstruction Surgery appeared first on NJ Workers' Comp Blog.

Federal Court Rejects Intentional Harm Burn Case Filed Against Auto Repair Shop and Holds Only Remedy Lies in Workers’ Compensation Court

Plaintiff Eric Lopez was badly burned working for Corozal Auto Repair Inc.  Lopez filed a civil suit against his employer alleging that the conduct of his employer amounted to intentional harm.  The employer argued that Lopez could not sue and that his only remedy was in the New Jersey Division of Workers’ Compensation.

Plaintiff alleged three specific sets of actions by the Auto Repair Shop and its owner amounted to intentional harm.  First, he noted that the burns he suffered stemmed from the placement of a drip pan under a car.  Gas was dripping from a car that needed repairs, so the shop owner put a drip pan under the car.  The next day, the shop owner asked the plaintiff Lopez to help him push the car into a garage bay.  As they were pushing the car, a spark ignited probably from the jack propping up the car.  That led to a fire, which spread to the plaintiff causing serious burns.  Plaintiff argued that the shop owner’s placement of the drip pan under the car to collect the leaking gas was an intentional wrong.

Next, plaintiff argued that the shop owner’s response to the fire in spraying windshield wiper fluid on plaintiff was an intentional harm.  When the fire broke out, the shop owner panicked, according to the defendant’s version of facts.  He grabbed something liquid, which turned out to be windshield wiper fluid, and poured it on plaintiff.  The windshield wiper fluid accelerated the fire because it was a Category 3 flammable liquid.

Lastly, the plaintiff argued that the owner’s failure to have proper fire suppression equipment violated relevant fire codes.  The New Jersey Fire Code required repair garages to have fire extinguishers at a certain distance, no less than 30-50 feet. There was only one fire extinguisher where there should have been more. This was a likely violation of the New Jersey Fire Code.

The federal district court reviewed the extensive New Jersey case law on intentional harm and noted that plaintiff must meet the “substantial certainty” test.  The court noted that even an injury stemming from gross negligence is insufficient to satisfy the intentional wrong exception.  The court quoted from Richter v. Oakland Bd. of Educ., 246 N.J. 507 (2021) for this proposition:

  1. The employer must know that his actions are substantially certain to result in injury or death to the employee, and 2) the resulting injury and the circumstances of its infliction on the worker must be a) more than a fact of life in industrial employment and b) plainly beyond anything the Legislature intended the Workers’ Compensation Act to immunize.

With respect to the argument concerning the placement of the drip pan to collect leaking gas, the court said that “… knowing that placing a drip pan creates ‘a danger of fire’ is not the same as knowing that placing a drip pan creates a ‘substantial certainty’ of injury or death.”  The court reasoned that not all fires lead to injury or death.  Further, just knowing that there is some danger is not the same as having substantial certainty that the danger will occur.  In this case, the court observed that the shop owner was exposed to the very same risk.  The fire just happened to engulf the plaintiff Lopez but could just as easily have engulfed the shop owner as both men were pushing the car into the bay. It made no sense to the court that the shop owner would have taken this action knowing it was substantially certain to injure himself. 

With respect to the argument about the windshield washer fluid, the court considered the deposition testimony of the shop owner, who said that when he saw his employee covered in flames, he just reached for the first liquid that he could find.  The court found that this effort to provide quick assistance was not in any way consistent with the argument that the shop owner poured the flammable liquid on his employee with substantial certainty that it would injure him.  The court agreed that this was a mistake, and a negligent one, but certainly not undertaken by the owner in a split second with intent to harm.  The court reflected on the landmark case of Millison v. E. I. duPont de Nemours & Co., 101 N.J. 161 (1985), which noted that any level of intent short of “virtual certainty” would not be enough to establish intentional harm.

Concerning the lack of sufficient fire suppression equipment, the court considered that this would amount to a likely violation of the New Jersey Fire Code.  The court said that “… fire code violations are like other safety code violations:  standing alone, in the absence of other relevant factors, fire code violations do not count as intentional wrongs for purposes of the New Jersey Workers’ Compensation Act.”  The court relied on Van Dunk v. Reckson Associates Realty Corp., 210 N.J. 449 (2012) for the proposition that a violation of a safety code is just one factor in proving an intentional harm claim.

The court said, “There is no proffered evidence, for example, of awareness that one fire extinguisher was not enough; of prior fires; of prior safety complaints; of failed inspections; of other safety issues; of deception of safety regulators, or of a generally casual or reckless culture with respect to workplace safety.”

For these reasons, the federal court dismissed the civil lawsuit and found that the only remedy of the plaintiff was to file a claim petition in the Division of Workers’ Compensation.

This case can be found at Lopez v. Corozal Auto Repair Inc., No. 21cv17366, 2024 U.S. Dist. LEXIS 80642 (D.N.J. May 2, 2024)

The post Federal Court Rejects Intentional Harm Burn Case Filed Against Auto Repair Shop and Holds Only Remedy Lies in Workers’ Compensation Court appeared first on NJ Workers' Comp Blog.

Plaintiff’s Civil Suit Was Barred Against Her Co-Employers and Failed to Meet Sufficient Allegations of Intentional Harm

An employee can work for two companies at the same time.  When that occurs, the employee cannot sue either company civilly because N.J.S.A. 34:15-8 provides that workers’ compensation is the exclusive remedy for an injured employee.  The intentional harm exception is narrowly construed in New Jersey. That is the lesson in the case of Donnerstag v. Winchester Garden, No. A-1916-22 (App. Div. May 9, 2024).

The facts were quite simple in this case.  Petitioner worked in 2013 as a live-in caregiver for Brenda White, who was a resident of Winchester Garden.  Petitioner began to experience health issues during her years of employment, and she associated them with mold that she saw on the premises.  She quit her job in 2021 because she was convinced that mold exposure was causing respiratory issues.  She also knew that no remediation had been done on the mold problem.

Donnerstag brought a civil lawsuit against Winchester Garden in July 2020.  In August 2023 she moved to amend the complaint to add Synergy Homecare as a co-defendant.  She claimed that she only learned through discovery years later that Synergy was her actual employer and that Winchester was only the managing company of Synergy.

There were many procedural problems with the case, but the most interesting aspect of the decision was the criticism by the court of the deficiencies in the civil complaint.  “As the judge recognized, Donnerstag’s proposed amended complaint was futile because it alleged negligence claims against Winchester and Synergy – her identified employers.”  The Court pointed out that the complaint was very clear in alleging that Winchester was the managing company for Synergy and Donnerstag was an employee of Synergy.  She alleged that the two companies were vicariously liable for her respiratory injuries but she only pleaded basic negligence in her civil complaint.

The Court pointed out that it is extremely difficult to get past the exclusive remedy provision in New Jersey.  The only exception is an intentional harm case, but the Court emphasized that the New Jersey Supreme Court has interpreted intentional harm to reflect a “substantial certainty standard.”  It cited Laidlow v. Hariton Mach. Co., 170 N.J. 602, 613 (2002) for this proposition:  “. . . [a]n intentional wrong is not limited to actions taken with a subjective desire to harm, but also includes instances where an employer knows that the consequences of those acts are substantially certain to result in such harm.”

The Court viewed the amended complaint liberally but still found that there was insufficient support for a count alleging intentional harm.  The complaint sounded more in negligence than in intentional harm.  The Court therefore affirmed the decision of the trial court to bar the amended complaint and dismiss the suit. 

The post Plaintiff’s Civil Suit Was Barred Against Her Co-Employers and Failed to Meet Sufficient Allegations of Intentional Harm appeared first on NJ Workers' Comp Blog.

Court Dismisses Claim of Petitioner Who Was Shot During Course of Employment

There are very few cases in the New Jersey Division of Workers’ Compensation involving injuries to employees who are shot at work. Avery v. Next Mile, LLC/DSP, No. A-2506-22 (App. Div. May 23, 2024) presents several interesting issues.

Petitioner, Mr. Avery, worked for Next Mile, which acted as a subcontractor for Amazon.  On August 27, 2020, Avery reported to work in a parking lot over which Amazon exercised some control.  Avery got there an hour early, waiting for delivery assignments from a dispatcher.  He said he was wearing “Amazon clothing.”  While he waited, he sat on the rear bumper of a delivery truck.

Petitioner testified that about 15-30 minutes after his arrival, he saw a person wearing a mask and an Amazon vest approach him.  This individual stood two arms’ lengths away from him and proceeded to point his gun at Avery, shoot him, and then flee the scene. The shooter took nothing from Avery and did not attempt to harm anyone else in the parking lot.

Petitioner was admitted to the hospital.  Following his discharge, he fled to the State of Massachusetts out of fear for his life.  He then returned to New Jersey for two days.  In December 2020, petitioner went grocery shopping and saw two individuals in the grocery store wearing ski masks. He was convinced these individuals were trying to kill him, so he fled this time to the State of Florida.

At trial petitioner admitted on cross examination that he had had an argument on the phone one or two weeks before the shooting with a former Amazon employee, Mr. Blocker, regarding some money that petitioner owed Mr. Blocker for purchasing credit cards.  Petitioner further admitted that he and Blocker had no issues arising from work when they worked together.

Supervising Judge of Compensation, the Honorable Robert D. Thuring, heard petitioner’s testimony and found petitioner to be lacking in credibility.  He noted inconsistencies in petitioner’s testimony regarding his version of events.  The Judge found that the shooting did take place during the course of petitioner’s employment but that it did not arise from his employment.  He therefore dismissed the case. The Judge of Compensation explained his reasoning as follows:

Petitioner testified that he had no issues with [Blocker] while they were both working for respondent and the purchase of the credit card from [Blocker] had nothing to do with the petitioner’s employment with respondent.  Furthermore, the shooting appears to have been a targeted act and was just as likely to have occurred outside the workplace.  I find that it is more likely than not that the shooting was related to the credit card purchase from [Blocker].  Even if the shooting was unrelated to [Blocker], the record is still void of any evidence connecting the incident to the petitioner’s employment with the respondent.

Petitioner appealed and argued that the Judge of Compensation should have placed the burden of proof on respondent to disprove that the shooting arose from employment.  Counsel for petitioner argued that neither the police nor respondent had been able to identify the shooter.  Petitioner urged the Court to follow the line of cases in idiopathic claims that shift the burden of proof to respondent.  In idiopathic defenses in New Jersey, the employer must prove that the injury was more likely caused by a personal condition.  The Appellate Division rejected this argument and said that this case had nothing to do with a preexisting physical condition.  The physical injury was clearly caused by the shooting. Instead, the Court relied on a line of cases that pertains directly to work assaults.  “When an assault on an employee is purely the product of a personal relationship against him by the ‘assailant’ . . . and the assailant is not a ‘fellow-employee, and there is no more connection between the assault and the employment than that it occurs while the employee is at work, recovery is not allowed.’ “ Pittel v. Rubin Bros. Bergen, Inc., 59 N.J. Super. 531, 536 (App. Div.1960).

The Court held that the burden of proof in this case rested on petitioner to show more likely than not that the shooting arose from work.  The decision is instructive for several reasons.  No one knew the identity of the assailant, but the Judge of Compensation and the Appellate Division concurred that petitioner failed to prove a work connection to the shooting.  The Appellate Division said, “In addition to issues of credibility with petitioner’s testimony, the judge’s findings were supported by facts in the record:  petitioner was singled out and shot in a parking lot where several other individuals were also present, the incident was not theft-related and no one else was approached or injured.”

The case underscores the point that the burden of proof really does make a difference in many cases and that not every injury that happens at work arises from work.

This case was successfully tried in the Division of Workers’ Compensation by Capehart shareholder, Ashley Fiore, Esq., and was successfully argued in the Appellate Division by Capehart shareholder, Brian Berkoff, Esq.

Paying It Twice

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.

The post Paying It Twice appeared first on NJ Workers' Comp Blog.

Awarded Best Blog 2016!

Capehart Blogs

Duty of Care
Ongoing Storm Rule Upheld Due to Plaintiff’s Inability to Establish Clear Endpoint to Precipitation
NJ School Law
N.J. Supreme Court Rules That Logs of Government-Related Emails From Elected Officials’ Personal Accounts Are Subject to Disclosure Under OPRA
Evidence
Court Determines Plaintiff’s Evidence of Black Ice “Conjecture” in Dismissing Complaint
Subscribe to Blog Updates

Categories

Tags
Alternative Energy Alternative Energy - Solar Alternative Energy - Wind Appellate Division automobile accident automobile insurance Burlington County Bar Association Cannabis Law Charity constructive notice coverage data privacy discovery dismissal Diversity & Inclusion Committee duty of care employees employers Employment Law evidence insurance Liability Litigation Litigation Quarterly Lorman Millennium Seminars NBI negligence New Jersey Workers' Compensation Act New York Law NJ Law notice Pennsylvania Law personal injury Public Entity Newsletter Real Estate and Land Use school law slip and fall statute of limitations summary judgment Taxes Tort Claims Act trip and fall Workers' Compensation Workers' Compensation Newsletter

NWCDN Member