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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.
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The “Silk City”

It is a city conceived and created by one of the most famous Americans in history.  He is perhaps even more well known today than ever following the success of the eponymous Broadway show “Hamilton” created by Lin-Manuel Miranda.  Yet it is a city that surprisingly few New Jersey residents know much about.  The city is Paterson, located in Passaic County and founded by none other than the great Alexander Hamilton, who decided to make Paterson the first industrial planned community in the United States.  The city was named after the second Governor of the State of New Jersey, William Paterson, a lawyer and a jurist who was a signer of the US Constitution.  

Many of the cities that have workers’ compensation courts have experienced tremendous economic growth in the last two decades, including Jersey City, Newark, Camden, New Brunswick and others.  Paterson is a poor city.  Families have half the state average annual income, but the city may be on the verge of its own renaissance. The third largest city in the state, Paterson was founded in 1792 by Alexander Hamilton.  He could foresee what the Paterson Great Falls and its hydroelectric power could mean in developing much needed manufacturing in the United States.  Hamilton was a visionary. He and others who founded the “Society for Establishing Useful Manufactures” (S.U.M.) were in fact prophetic.  With the help of the S.U.M., Paterson did become a manufacturing powerhouse in the 19th century, manufacturing silk, locomotives, paper and firearms.  It was known for decades as the leading manufacturing center in the United States for silk:  hence the moniker, the “Silk City.”   It fell on harder times in the mid-20th century. 

As far as workers’ compensation courts go, Paterson is the only New Jersey comp court which is a few blocks from a National Park.  The Paterson Great Falls is part of the National Park System, and the Falls are the second largest by volume of water east of the Mississippi.  The waterfall views are simply spectacular.  More and more visitors come to see the Falls, and they visit the nearby Paterson Museum which displays the industrial history of the city, Garret Mountain Reservation, Lambert Castle and the recently renovated Hinchliffe Stadium.  All of these sites are close to workers’ compensation court.  On one visit I made to the Falls in 2017, a bus from a private school in Lakewood, N.J. brought high school students to the Falls.  I spoke with some of the students, and they were astounded that such a beautiful national park and falls were located in the center of North Jersey.

One of the strengths of the city is that it has great diversity with a large Latino community, black community, white community, and the largest Middle Eastern community in New Jersey, which is centered in South Paterson.  In fact, the Mayor of Paterson is of Middle Eastern heritage.  Each generation of immigrants that has settled in Paterson has left its mark over the centuries.  More residents of New Jersey and visitors to the state need to know about the unique history of Paterson.  They need to know about the many great Americans who lived or worked in the city, including Lou Costello, the famous comedien; Allen Ginsberg, a highly acclaimed poet raised in Paterson; Larry Dobe, who grew up in Paterson where he played high school baseball and along with Jackie Robinson helped break the color barrier in baseball while playing in the American League;  Michael Jace, a very talented actor, and William Carlos Williams, an immensely talented writer and poet who wrote the poem “Paterson,”  which consists of five books published between 1946 and 1958.  There are many, many more famous Patersonians.

From a personal standpoint, I am rooting for the Paterson renaissance, as my mother and her family lived in the city, my sisters were all born at St. Joseph’s Hospital, my father worked there for 40 years, in fact co-founding what was then the largest law firm in Passaic County located in 100 Hamilton Plaza, site of the present workers’ compensation court, and my grandfather was a Superior Court Judge in Paterson. 

If you have read this far, at this point you have undoubtedly begun to wonder, “John, what does this blog have to do with workers’ compensation anyway?”  Well, at first glance perhaps not much but maybe more than you might think.  There are only 15 venues where workers’ compensation cases are heard, and each court is located in a city or municipality with its own interesting and developing history.  The Division judges, court personnel, security professionals, thousands of lawyers around the state, adjusters, translators, stenographers, petitioners, respondents and many doctors regularly work in or visit the 15 workers’ compensation courts. They park their cars there, buy coffee there, make friends there, shop there, and dine in restaurants there. They may become in time part of the fabric of the communities that host the 15 workers’ compensation courts in the state.

One could say that we in the world of workers’ compensation play a small role individually but a larger role collectively in contributing to each of the cities and municipalities where the Division carries out its vital business.  As for the City of Paterson, don’t forget to put it on your bucket list. 

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Should Employers Pay for Both Lawyers in the Workers’ Compensation Case?

When a workers’ compensation case settles in the New Jersey Division of Workers’ Compensation for a percentage of disability, the employer pays for its own lawyer and most of the fee of the injured worker’s lawyer.  New Jersey may be the only state that has this practice.  Judges generally assess 60% of the legal fee of the claimant against respondent and 40% against the lawyer with the bizarre result that injured workers pay a paltry 8% of the total award for their own lawyer.  Practitioners are often astonished to learn that there is no legal basis for an employer to pay for the attorney for the claimant. No statute requires this outcome and no regulation requires this. 

Given that there is no legal requirement for this practice, when did this peculiar financial burden on employers begin?  Attorney Richard Rubenstein of Livingston, NJ has done a great deal of research into the history of the New Jersey Workers’ Compensation Act and was kind enough to share some of his research on this issue.  He found cases in the 1920s in which the entire counsel fee for the petitioner was paid by the employer, provided that the case was accepted at the outset by the employer.   Employers used to have a way of avoiding counsel fees, however. For many years after the New Jersey Act was passed, employers could make a settlement offer immediately prior to a hearing to defeat the entire counsel fee.  That practice was successfully challenged in a 1950 decision based on due process arguments. Attorney Rubenstein first found a reference to a 60/40 split around the year 1950.

Based on Attorney Rubenstein’s research, we know that judges began using discretion to assess 60% percent of the employee’s counsel fee against employers as far back as 1950.  The next question is why did this happen in the first place?  My own guess is that this practice reflected the reality that workers’ compensation rates prior to 1979 were abjectly low.  Even in 1979, an award of 50% permanent partial disability amounted to only $11,000!  The major change in rates began with the 1979 Amendments.  In 1980 an award of 50% permanent partial disability trebled to $36,900.  In 2023 an award of 50% permanent partial disability, by contrast, amounts to $220,000.  That is 20 times more than in 1979. Needless to say, inflation has not risen 2,000 percent in the past 43 years.

The 60/40 split is an anachronism and makes no sense today with workers’ compensation rates having risen so much over the past 40 years.  In 2022 alone, workers’ compensation rates rose 10% in just one year!  An award of 50% was $193,800 in 2021 but one year later the same award was valued at $213,000.  One can see from the sharp rise in workers’ compensation rates that the 60/40 split is no longer warranted.  Furthermore, it costs employers millions of dollars every year.  Injured workers can afford to pay their own counsel fees on orders approving settlement with a percentage of disability just as they already do on Section 20 settlements.  There remains no legal basis for the employer to pay any portion of the petitioner’s counsel fee.

This topic is highly relevant today because there is currently a bill that would raise counsel fees for workers’ attorneys to 25% from 20%.  If the 60/40 split remains unaddressed in New Jersey, then employers will be paying 25% more in counsel fees for the injured workers’ attorney.  For example, an award on a percentage basis amounting to $50,000 will mean the counsel fee rises from $10,000 to $12,500.  Using a 60/40 split, the Judge of Compensation would require respondent to pay 60% of $12,500 or $7,500.  That amounts to 25% more than $6,000 if the counsel fee remains at 20%.

The rationale for the increase in counsel fees is that petitioner’s attorneys in workers’ compensation are much like their counterparts in civil litigation.   Their fee is contingent on success.  If there is no recovery, there is no fee.  That is true.  But here is where the argument falls apart.  Attorneys who practice in civil litigation are permitted to charge their clients one third of the first $750,000.  Meanwhile, injured workers only pay 8% of the award on an order approving settlement in workers’ compensation cases!  Consider this anomaly: sometimes an injured worker has both a workers’ compensation case as well as a civil third-party case.  What sense does it make that the same individual pays 8% for his or her attorney in the comp case but pays one third in the civil case?  In many situations, the workers’ compensation case has more settlement value than the civil case.  Workers are benefiting from dramatically higher rates but still paying an absurdly low percentage to their own attorneys.  Workers get the benefit of the skills of their lawyers and higher awards almost every year, but employers end up footing most of the legal bill.  Passage of the proposed bill raising attorneys’ fees to 25% should be conditioned on petitioners paying for their own attorneys in all cases, not just Section 20 settlements.  This is not 1950 or 1979.  Rates have skyrocketed, and there is no compelling argument that employers need to continue to subsidize injured workers by reducing their obligations to their own lawyers.

Judges have the power to decide what portion of the petitioner’s counsel fee is paid by the employer, if any, or by the injured worker.  The 60/40 split is an archaic convention and nothing more.  The Division should address this issue not just because employees can afford to pay their attorneys considering much higher permanency awards but also because the State needs employers.  New Jersey has the highest net outmigration of residents of any state in the nation. In 2022, 64,000 more residents left New Jersey than entered New Jersey.  They leave for many of the same reasons employers leave the state.  Among the reasons is that Florida and a few other states (Texas and Tennessee among them) have more friendly economic environments with no state income tax. Requiring injured workers to pay most or all of the fee of their own attorneys will save employers millions of dollars every year.  That may actually help the State retain employers.

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Navigating Cannabis Regulations and Employment Law in New Jersey

Legalization of Cannabis in New Jersey:

In November 2020, New Jersey residents voted in favor of the legalization of adult-use cannabis. The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“NJCREAMMA”) was subsequently enacted to regulate the cultivation, distribution, and use of cannabis in the state. While NJCREAMMA allows employers to randomly drug test, screen applicants, and do routine testing of current employees, it is limited to testing for marijuana use during work hours.In addition, in order to find misconduct of cannabis use by an employee, the “ordinary”[1] test(s) and the “expert” both have to find the employee was impaired during work hours – which is intricate in itself. Unlike alcohol, marijuana can remain in a person’s blood system for a long period of time. Intoxication experts will be dealt with in the forthcoming sections, but concrete guidelines have yet to be released by the New Jersey Cannabis Regulatory Commission (the “CRC”).

Further, many issues that may arise include but are not limited to disability discrimination and accommodation issues, drug testing rights and responsibilities, state and federal statutory and regulatory compliance matters, workplace safety questions, varied obligations pertaining to government contractors, intoxication “expert” requirements, workers’ compensation implications, and employee privacy protections.

Employee Rights and Employer Responsibilities:

    a. Workplace Drug Policies: Although cannabis is legal for adult use in New Jersey, employers retain the right to maintain a drug-free workplace. Employers can establish and enforce drug policies that prohibit cannabis use during work hours or on company premises. In today’s age, it is essential employers maintain clear and concise policies that align with the proposed guidelines from the CRC under NJCREAMMA.

    b. Drug Testing: Employers in New Jersey are still permitted to conduct drug testing for cannabis (and other substances) as part of their pre-employment screening or during random, post-accident, or reasonable suspicion testing. However, it is critical to ensure drug testing policies comply with existing laws and are applied consistently to avoid potential discrimination claims.

    c. Medical Marijuana: New Jersey’s Compassionate Use Medical Marijuana Act (“CUMMA”) protects qualified patients’ rights to use medical cannabis. Employers should engage in an interactive process with employees to determine the extent of ones’ use. Cannabis use during “on the clock” work hours remains forbidden, and a terminable employment action, under applicable state law. An employer is not required to accommodate medical marijuana use in the workplace, during work hours, or while operating, navigating or physically controlling a vehicle in the performance of job duties. Employers should consult with a legal professional if they find employee pushback under the state’s medical marijuana program.

    Off-Duty Cannabis Use and Employment:

    a. Non-Discrimination: The NJCREAMMA explicitly states that employers cannot take adverse employment actions against individuals based solely on their status as a cannabis consumer or their participation in the state’s legal cannabis program. This means that off-duty cannabis use, within the boundaries of the law, should not be grounds for hiring, termination, or discrimination – unless it would violate a federal law, contract, or funding agreement.

    b. Current Rights and Remedies: There is skepticism within New Jersey as to who can bring a cause of action under NJCREAMMA and what remedies are available. According to a recent decision from a New Jersey federal court, NJCREAMMA does not provide aggrieved employees with a private right of action and remedy. In this recent decision (which is pending on appeal), Zanetich v. Wal-Mart Stores East, Inc d/b/a Walmart, Inc., et al., the New Jersey District Court clarified that only the state’s Cannabis Regulatory Commission (CRC) – and not private citizens – has the authority to enforce NJCREAMMA.

    Specifically, in this matter, the plaintiff applied for a job at a Wal-Mart store in New Jersey. Wal-Mart offered him the job subject to successful completion of a drug test. However, after his drug test revealed the presence of marijuana in his system, Wal-Mart rescinded the job offer. As a result, the plaintiff filed a class-action lawsuit alleging two claims: (1) violation of NJCREAMMA and (2) failure to hire and/or termination in violation of New Jersey public policy. The defendants moved to dismiss the complaint, arguing that NJCREAMMA does not explicitly provide a private cause of action and that New Jersey common law does not recognize a cause of action based on an employer’s failure to hire. In short, the court agreed and called upon state lawmakers to “amend the statute to clearly evidence” an intent to create a private cause of action, “as it has previously done in many other employment related statutes.” The appeal will likely not be the final declaration and comment on this issue, and developments remain to be seen. But, for now, this is a victory for employers across the state.

    c. Impairment in the Workplace: While employers cannot discriminate against employees for off-duty cannabis use, they maintain the right to address impairment in the workplace. If an employee’s cannabis use affects their performance, compromises safety, or violates workplace policies, employers may take appropriate disciplinary action. With that being said, the CRC recently issued interim guidance of workplace impairment.

    d. The Guidance and “WIRE” Experts: NJCREAMMA, provides guidance on drug tests that include “scientifically reliable objective testing methods and procedures, such as testing of blood, urine, or saliva” anda “physical evaluation,” which must be conducted by a Workplace Impairment Recognition Expert (“WIRE”). The law gives the CRC the power to issue regulations establishing certification standards for WIREs, but none have been issued to date.

    In September of 2022, the CRC issued its impairment guidance with a sample Reasonable Suspicion Report Form (“Form”) – which can be found here. However, they stated, for now, employers need not use a WIRE to conduct a physical evaluation to determine suspected cannabis use or impairment during work hours (this is solely because the WIRE certification standards have yet to be published or established). The standards should be coming down from the CRC in the imminent future.

    At this time, an employer should know they are still prohibited from taking adverse action solely because an employee has cannabis metabolites in their system, but should always consult with a lawyer to discuss the specifics of the matter. Moreover, employers should be proactive and begin using the sample report Form (employers are permitted to use their own form if they wish to do so), update their employee policies in accordance with the CRC guidance, and begin training or hiring employees who can determine cannabis intoxication during work hours.

    Employer Obligations and Workplace Safety:

    a. Safety-Sensitive Employees: Employers have a responsibility to ensure a safe working environment, particularly in safety-sensitive positions such as operating heavy machinery or handling hazardous materials. “Safety-sensitive” generally means that a position involves some aspect of a heightened danger that requires an employee’s full and unimpaired skills and judgment to safely execute his or her job. New Jersey effectively prohibits employers from taking adverse action against employees or job applicants based solely on a positive marijuana test, even if the position at issue would otherwise qualify as safety-sensitive.

    If an employee is found to be impaired by cannabis at the time of a workplace accident (safety-sensitive or otherwise), the employer may have substantive grounds to contest a workers’ compensation claim and the related fault issues. These intoxication issues concerning a workplace incident should always been discussed with a lawyer well-versed in the space.

    b. Federal Employees/Contracts: Moreover, the interim guidance from the CRC notes that certain employers may be required by federal contract or law to follow specific protocols related to determining reasonable suspicion and drug testing and they are expressly permitted to continue doing so. Additionally, employers must incorporate, and comprehend, the soft guidance in a manner that complies with federal anti-discrimination laws, federal positions, or other federal regulations.

    i. Note on Federal Contracts: N.J.S.A. 24:6I-52b(1)(b) specifically provides that if it is determined that any of the provisions set forth in that section of the law result in a provable adverse impact on an employer subject to the requirements of a federal contract, then the employer may revise their employee prohibitions to be consistent with federal law, rules, and regulations. As such, employers may be required by federal contract or law to follow specific protocols related to determining reasonable suspicion and drug testing and are permitted under N.J.S.A. 24:6I-52 to continue to do so.

    c. Reasonable Suspicion: Lastly, employers have the right to address employee impairment and can take action if there is reasonable suspicion that an employee’s cannabis use is affecting their job performance or safety. However, it is crucial to handle such situations delicately and follow established protocols to avoid potential legal pitfalls. As discussed above, the ordinary blood, urine, and saliva tests are not permissible on their own to determine impairment because of the discrepancy between use and intoxication, and how long THC remains detectable in the body. This is how cannabinoid use differs from alcohol use and detection.

    As the sample Form outlines, the following are some of the factors/indicators that should be considered when one presumes reasonable suspicion of cannabis use of another: red/bloodshot eyes; flush/pale/sweaty face; dry mouth; disheveled appearance; agitated/insulting speech; uncharacteristically talkative; sleepy/stupor; anxious/fearful; loss of inhibition; and swaying/stumbling/staggering. It is clear these indicators remain highly subjective and suggestive, and will likely bring a slew of additional obstacles to the legal playing field.

    Similarly, the drug testing method now recommends a blood, urine or saliva test along with a physical evaluation of the employee to determine (and prove) current impairment. At this time, until WIRE standards are published, it is recommended that employers designate an “interim staff member” or contractor to assist with determinations of suspected cannabis use. It is also strongly encouraged to document evidence/proof of impairment in the workplace to support the use of a drug test to confirm reasonable suspicion.

    As New Jersey embraces the legalization of cannabis, employers and employees must navigate the evolving landscape of cannabis and employment law. It is understandable that many employers are left trying to make sense of how to comply with CREAMMA and this “optional” interim guidance.  Once the CRC issues concrete guidance and publishes the standards and qualifications for WIREs, then employers (and employees) should become well-rounded and highly educated on these regulations. Understanding the rights and responsibilities associated with cannabis use in the workplace is essential for maintaining a productive and legally compliant work environment.

    In sum, by adhering to pertinent state laws, establishing clear drug policies, and ensuring fairness and consistency, employers can strike a balance between employee rights and workplace safety in the era of legalized cannabis. Understanding the nuances of cannabis-related employment laws is vital to ensure compliance and foster a harmonious working environment for all parties involved.

    Disclaimer: The information provided in this attorney blog post is for general informational purposes only and should not be considered as legal advice or a substitute for professional legal counsel. No attorney-client relationship is established by accessing or reading this blog post, and any communication or information exchanged through this platform is not confidential or privileged. The content presented here is solely for informational purposes and should not be attributed to any affiliated entity, organization, or company. The accuracy, completeness, and applicability of the information presented in this blog post cannot be guaranteed, and readers are advised to consult with a qualified attorney regarding their specific legal issues or concerns.

    Reprinted with permission from the June 26, 2023 issue of New Jersey Law Journal. © 2023 ALM Media Properties, LLC. Further duplication without permission is prohibited.  All rights reserved.

    [1] The “ordinary” test(s) refer to those that have been administered over the years to detect and establish intoxication of persons. These tests often include the standard blood, urine, and/or saliva tests.

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    Recording and Taping IMEs in New Jersey Workers’ Compensation

    The rules for recording and taping IMEs in New Jersey became much clearer with the June 15, 2023, New Jersey Supreme Court ruling in DiFiore v. Pezic, (Nos. A-58/59/60-21) (087091). While the case involved three separate civil court defense exams, there is no reason that the principles set forth in this consolidated decision will not be applied to workers’ compensation cases.

    The basic rule in this case is that if the examinee (petitioner) wishes to record or tape an examination, counsel for petitioner needs to make a request of respondent. Although the case does not discuss physician recording of examinations, it would seem that the same rule should apply to physicians.  The Supreme Court reviewed the three separate cases where objections were made by the defense to allowing third parties to attend an IME or to record an IME. The Court said, “We therefore hold that if a plaintiff seeks to bring a neutral third-party observer to a Rule 4:19 exam (defense medical examination), or to audio or video record the exam, plaintiff’s counsel should notify defendant. If defense counsel opposes the third-party observation or recording, the parties should meet and confer in an effort to reach agreement.  Failing an agreement, defendant can move for a protective order under Rule 4:10-3 to bar the observation or recording.”

    In the three cases at issue in DiFiore, two involved objections to bringing a third party to the examination and one involved recording a psychological examination. One plaintiff had a cognitive disorder, and another had a language barrier. In the case involving a neuropsychological exam, the neuropsychologist refused to conduct the examination if it would be audio-recorded. A protective order was sought in that case. The Supreme Court said that the burden of seeking a protective order is on the defendant, not on the plaintiff.

    The practice of seeking a protective order is not likely to spread to workers’ compensation given that there are about 100,000 active claim petitions in the Division and literally hundreds of thousands of IMEs done each year by a fairly limited number of physicians.  Judges are already handling enormous numbers of cases daily, so parties will simply work out the requests to record.   Many IME doctors already assume that recording is frequently being done without a request being made. There may also be IME doctors who are now recording examinations as well without a request being made. The rule of this case is that a request must be made to record; otherwise, the recording will not be evidentiary. This rule will almost certainly be applied to physicians as well as examinees.  The Supreme Court and the Appellate Division in DiFiore noted that the advent of smart phones makes it easy to unobtrusively record an examination.   

    While some may long for the old days when recording examinations was unheard of, those days are long gone. There may be positives that emerge from the practice of seeking consent to record. The rumor mill is often busy with comments that a certain doctor only spent one minute conducting the medical examination, or a certain claimant told the IME doctor that he or she had no complaints whatsoever. Recorded exams done by consent will provide answers and slow down the rumor mill. The Division should consider some basic rules for all practitioners to follow in requesting consent to record either by the physician or examinee or both.

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    A Practitioner’s Guide to Benefits Provided Under New Jersey Workers’ Compensation

    There are three types of benefits provided by employers to employees in NJ workers’ compensation, in those cases that are accepted and not being questioned: 1. Medical benefits (a major benefit to employers in New Jersey is that the employer directs the medical care); 2. Temporary disability (“TTD”), which is for wage loss while an employee is placed out of work by the authorized treatment provider; and 3. Permanency benefits, representing an amount awarded to the employee for functional loss. These benefits are explored in more detail below.

    1. Medical Benefits: Pursuant to N.J.S.A. 34:15-15, the employer directs the medical care and pays for reasonable and necessary care. This is a major benefit to employers in New Jersey because it means that the employer chooses the doctors and facilities the employee treats with. Pursuant to Section 15, an employer can direct medical care and provide medical benefits on a without prejudice basis without admitting liability. This right to direct care is a big advantage to employers in New Jersey, and is not always the case in other jurisdictions. Of particular advantage to employers also is N.J.S.A. 34:15-19, which states that an employer can require an employee to be examined at reasonable place and time in the state of New Jersey; an employee’s failure to attend exams is a basis for termination of TTD benefits.
    2. TTD benefits: Medical benefits and TTD are connected. TTD benefits are wage replacement benefits paid to the employee while the employee is placed out of work by the authorized physician. Pursuant to N.J.S.A. 34:15-14, no TTD is owed until the employee has been out of work for seven days; after the seventh day, TTD is owed and is retroactive to the first day out of work; the seven days of out work do not need to be consecutive. TTD can be stopped when the employee can return to gainful employment (not necessarily the former job) OR when the employee has reached a medical plateau (MMI). TTD may also be terminated if there is no evidence of actual wage loss, if there is non-compliance with treatment, and if light duty is offered and rejected by the employee. N.J.S.A. 34:15-16 states that permanency begins consecutively with TTD and after TTD ends. This means that under Orders Approving Settlement, which are permanency Awards paid over a certain number of weeks, the permanency payments are retroactive to the first day after the last day of TTD issued.
    3. Permanency: These benefits are defined under N.J.S.A. 34:15-36. In order to be eligible for permanency benefits, an employee must show that the work injury resulted in objective medical evidence which restricts the function of the body or its members or organs AND a lessening to a material degree of working ability OR a substantial impact on non-work aspects of life (i.e., significant changes in lifestyle). Under Section 36, an impairment must be disabling for an award to be rendered. Regarding the material impact on working ability or activities of daily living, the employee’s level of function pre-injury and post-injury needs to be compared. Just as Section 36 states, “injuries such as minor lacerations, minor contusions, minor sprains, and scars which do not constitute significant permanent disfigurement, and occupational disease of a minor nature such as mild dermatitis and mild bronchitis shall not constitute permanent disability,” those injuries which only have minor impact on working ability or non-work aspects of life shall not constitute permanent disability.

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    Supreme Court Decision Provides Overview of NJ Insurance Fraud Prevention Act and the NJ Workers’ Compensation Fraud Act

    Liberty Insurance v. Techdan, LLC, (A-52-21) (086219), decided on February 15, 2023, is a case that practitioners, employers, third party administrators and insurance carriers should be aware of. It is the only New Jersey Supreme Court case which provides a comprehensive analysis of the New Jersey Insurance Fraud Prevention Act (IFPA) and the New Jersey Workers’ Compensation Fraud Act.

    The main allegation in the case filed by Liberty Insurance was that Techdan, LLC and Exterior Erecting Services, Inc. misrepresented the relationship between their two companies and provided fraudulent payroll records in order to lower their workers’ compensation premiums.  Techdan was indicted for second degree theft by deception, and one of the company’s principals entered a guilty plea on Techdan’s behalf.

    The fraud took place many years ago.  Liberty Insurance issued a workers’ compensation policy to Techdan from March 12, 2004 to March 12, 2007.  During its underwriting and audit process, Liberty alleged that the defendant companies misrepresented their relationship between Techdan and Exterior and provided Liberty’s auditors with fraudulent payroll records in order to reduce the premiums charged by Liberty Insurance.   

    After the criminal matter resolved with a plea agreement for second degree theft by deception, Liberty Insurance pursued a civil action under the IFPA and under the NJ Workers’ Compensation Fraud Act.  Liberty Insurance argued that the Court should pierce Techdan’s corporate veil and Exterior’s limited liability company veil to impose personal liability on the officers and directors of the companies.

    The trial court ultimately found that all defendants should be jointly and severally liable for treble damages under the IFPA.  The result was that an award of $756,990 was trebled to $2,270.970, as the IFPA (unlike the New Jersey Workers’ Compensation Fraud Act) provides for treble damages.  The trial court also entered judgment for trebled attorney fees in the amount of $2,768,018.  Costs were also trebled in the amount of $290,048.

    In the Supreme Court opinion, several aspects of the decision were appealed, one of which was whether joint and several liability should apply under the New Jersey Comparative Liability Law.  Those aspects of the case are not relevant to the focus of this blog and will not be addressed here.  Suffice to say that the Supreme Court found that the trial court should have charged the jury to allocate percentages of fault among the various defendants.

    The two fraud acts have different primary emphasis but one key area of overlap.  The Insurance Fraud Prevention Act found at N.J.S.A. 17:33A, focuses on alleged fraudulent written and oral statements made by businesses to obtain a policy of insurance or in connection with a claim made to the Unsatisfied Claim and Judgment Fund.

    The New Jersey Workers’ Compensation Fraud Act, found at N.J.S.A. 34:15-57.4, focuses mostly on an individual’s false or misleading statements concerning any fact that is material to a claim for workers’ compensation benefits for the purpose of wrongfully obtaining those benefits.

    The area of overlap involves the kind of fraud alleged in Liberty Insurance.  Both laws prohibit misclassification of employees for the purpose of evading the full payment of benefits or premiums under the New Jersey laws.

    It is interesting to compare the two laws in terms of remedies.  Both allow civil actions, but the New Jersey Workers’ Compensation Fraud Act allows the Judge of Compensation to make findings on fraud,  order the dismissal of a case or a particular claim for fraud, and order repayment of benefits plus simple interest.  The IFPA provides for treble damages to the prevailing party but treble damages are not available in the NJ Workers’ Compensation Fraud Act.  Both the IFPA and the NJ Workers’ Compensation Fraud Act provide for an award of reasonable costs and attorney fees to the prevailing party.

    The New Jersey Workers’ Compensation Fraud Act states in Section 34:15-57.4 b. “Any person who wrongfully obtains benefits or evades the full payment of benefits or premiums by means of a violation of the provisions of subsection a. of this section shall be civilly liable to any person injured by the violation for damages and all reasonable costs and attorney fees of the injured person.”

    The Workers’ Compensation Fraud Act also adds that if a person receives benefits “to which the person is not entitled, he is liable to repay that sum plus simple interest to the employer or carrier or have the sum plus simple interest deducted from future benefits payable to that person, and the division shall issue an order providing for the repayment or deduction.”  

    The burden of proof in a fraud case brought by an employer, third party administrator or carrier is on the moving party.   When an employer brings a motion for a potential finding of fraud under the New Jersey Workers’ Compensation Fraud Act, there are two key elements of proof:  1) proof of a false or material misrepresentation, statement or submission concerning a material fact; and 2) proof that the misrepresentation, false statement or submission was made for the purpose of wrongfully obtaining workers’ compensation benefits.

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    A Practitioner’s Guide to Prior Injuries and Credits

    Practical Advice in New Jersey Workers’ Compensation

    Pursuant to N.J.S.A. 34:15-12(d), “if previous loss of function to the body, head, a member or an organ is established by competent evidence, and subsequently an injury or occupational disease arising out of and in the course of an employment occurs to that part of the body, head, member or organ, where there was a previous loss of function, then the employer or the employer’s insurance carrier at the time of the subsequent injury or occupational disease shall not be liable for any such loss and credit shall be given the employer or the employer’s insurance carrier for the previous loss of function and the burden of proof in such matters shall rest on the employer.”

    Essentially, this provision provides that if an employee has a prior relevant injury which resulted in prior loss of function to the same body part injured in the work injury, Respondent is entitled to a credit (which results in money off the overall Award) for the prior injury or pre-existing disabling medical condition. Of particular note, the burden rests on Respondent to demonstrate and prove a prior injury and prior loss of function. Proper medical and factual discovery and investigation is extremely important in this regard, as evidence of prior functional loss can save Respondent from incorrectly paying for, and assuming liability for, pre-existing issues.

    Respondent must demonstrate through medical discovery and medical records that the employee has a prior, relevant medical issue and that the prior issue was disabling in order to successfully argue for a credit. It is most helpful when an accurate and detailed history is taken from the employee at the outset of treatment following a work injury.

    In some situations, the credit entitlement is easier to demonstrate, and not all prior issues are necessarily applicable to Respondent’s credit entitlement.

    Below are hypothetical situations where Respondent may, or may not, be in a position to argue for a credit on permanency.

    Scenario 1: Robert has a work injury of January 1, 2022 to the lumbar spine and a lumbar spine MRI shows herniations at L3-L4 and L4-L5. Robert has a prior workers’ compensation Award for 15% partial total from a work accident of January 5, 2019 for the lumbar spine for a bulge at L4-L5.

    Here, Respondent is entitled to a credit for the prior bulge at L4-L5. The credit is likely to be 15% partial total for this aspect/ level of the case, as the prior workers’ compensation Award was for 15% partial total for the lumbar spine for a bulge at L4-L5.

    This can result in significant savings to Respondent, as for example, an Award of 30% partial total at 2022 rates is $62,568.00. An Award of 30% partial total, credit 15% partial total is $37,026.00.

    Scenario 2: Charlie has a work injury of January 1, 2022 to the lumbar spine and a lumbar spine MRI shows herniations at L3-L4 and L4-L5. Robert has a prior non-work related injury to the lumbar spine, and a prior MRI revealed a prior bulge at L4-L5.

    This is similar to Scenario 1, other than the fact that Charlie’s prior injury was not work related, and there is no prior workers’ compensation Award for this prior injury. However, Respondent is still entitled to a credit, which is somewhat more negotiable than the credit applied in Scenario 1, for Charlie’s prior issues in the lumbar spine and at L4-L5.

    Scenario 3: Peter has a work injury of February 14, 2022 where he injures his right shoulder, neck, and right arm. Prior to the work injury, on December 24, 2021, petitioner underwent a right shoulder surgery. Other than the prior right shoulder surgery, petitioner has had no prior medical issues or injuries.

    Here, Respondent is entitled to a credit as to the right shoulder aspect of the claim. Regarding the neck and right arm, if Peter truly has no relevant prior history, Respondent is not entitled to a credit for these aspects of the claim.

    Employers should keep in mind that potential credit entitlement can depend on a number of factors including length of time since any prior injuries or issues, strength of any medical evidence documenting prior issues, and prior functional loss. There does not need to be a prior workers’ compensation Award, or any prior settlement, for Respondent to successfully argue for a credit entitlement.

    However, it remains important to be sure that prior discovery, medical records, information, and investigation obtained by Respondent is provided to Respondent’s medical experts and examiners so that the defense experts can properly assess prior issues and accurately apportion treatment/ permanency to the accident and to pre-existing issues, if applicable. It is also important for Respondent’s experts need to take a detailed history of the employee during the examination in order to determine any pre-existing issues and properly assess causation. Without a medical expert opining as to the existence of pre-existing issues and their current disabling effect, it can be much more difficult to argue for a credit. Providing the discovery to Respondent’s experts is just as important as Respondent obtaining the discovery. In order to successfully argue for a credit for a prior issue, in most cases, Respondent needs to proffer a medical opinion discussing the pre-existing disabling injury or medical issue.

    Supreme Court Finds Non-Waivable Duty on the Part of Insurance Brokers to Provide Notice of Available Coverage for LLC Members

    When coverage is denied under a workers’ compensation policy for an LLC, one can be almost certain that a finger will be pointed, rightly or wrongly, at the insurance broker.  The more severe the injury, the more likely the potential for a civil suit.  This was the situation in last month’s decision in Holm v. Purdy, New Jersey Supreme Court No. A-39-21 (Dec. 13, 2022).  Brokers will be interested in this case because it is a case of first impression and will change procedures with respect to those who work with members of an LLC.

    The case arose from the death of member of an LLC.  As many know, an LLC must elect to obtain coverage for its members.  Otherwise, there is no workers’ compensation coverage for the members of the LLC.  The employees of an LLC, of course, are covered under workers’ compensation.

    Holmdel Nurseries LLC had two members, Robert and Walter Friedauer, brothers in the business. Robert’s sons, Michael and Christopher, became full-time employees in the business after college.

    When workers’ compensation coverage first became available in New Jersey for members of an LLC, Holmdel Nurseries elected to obtain coverage for Robert and Walter. Sometime later, the LLC decided against renewal of coverage due to the cost of workers’ compensation insurance.

    For many years, the brothers retained Daniel Purdy as the broker for the LLC and for themselves personally.  When the LLC decided against maintaining workers’ compensation coverage for themselves as members, the policy stated, “Workers’ Compensation Members Excluded.”

    In the Spring of 2012, Michael Friedauer and Christopher Friedauer purchased Walter Friedauer’s 50% interest in Holmdel Nurseries.  The sons were no longer employees in the business but now members of the LLC.  On July 12, 2012, a company meeting took place.  Purdy said he learned for the first time that Michael and Christopher were no longer employees and had become members of the LLC.  He admitted that he did not tell the sons that they were no longer covered under workers’ compensation by changing status from employees to members.  Nor did he tell the brothers that the LLC could elect to purchase workers’ compensation insurance for them.

    On February 15, 2015, tragedy struck.  Michael Friedauer encountered his brother at the nursery.  He was covered in snow and appeared not to be himself.  Christopher said he had fallen and hit his head.  Christopher told his brother than he fell so hard that he saw stars.  Michael later that day looked for his brother and found him sitting dead in a truck on work premises.  Christopher’s wife filed a dependency claim petition on her behalf and on behalf of her two children asserting that her husband’s death arose from work.  The workers’ compensation carrier denied coverage as the LLC had not elected to provide coverage for the members.

    A civil suit was filed by Christopher Friedauer’s widow against the broker Purdy asserting an act of professional negligence.  Robert and Michael Friedauer asserted that they did not know that they were not covered as members for workers’ compensation purposes and said that they would have elected coverage had they known it was available.

    The trial court ruled against the widow and held that the broker had no duty to inform members of their right to elect workers’ compensation coverage. The Appellate Division reversed and the Supreme Court took certification. 

    The starting point for the Supreme Court was an analysis of N.J.S.A. 34:15-36:

    Notwithstanding any other provision of law to the contrary, no insurer or insurance producer . . . shall be liable in an action for damages on account of the failure of a . . . limited liability company . . . to elect to obtain workers’ compensation coverage for a . . . limited liability company’s members . . . unless the insurer or insurance producer causes damage by a willful, wanton or grossly negligent act of commission or omission. . .

    The Supreme agreed with the conclusion of the Appellate Division and held:  “In accordance with N.J.S.A. 34:15-36, we hold that an insurance broker for an LLC, charged by the LLC to obtain workers’ compensation coverage on its behalf, has a non-waivable duty to provide notice that such coverage is available to LLC members who can actively perform services on behalf of the LLC – but that such coverage is available only if the LLC elects the coverage when the policy is purchased or renewed. Because it is foreseeable that the failure to provide such notice may harm an LLC member’s dependents, the broker’s duty extends not only to the LLC, but also to LLC members eligible for workers’ compensation coverage under N.J.S.A. 34:15-36.”

    The Supreme Court remanded the matter to the trial court to determine whether the defendant ‘caused damage by a willful, wanton, or grossly negligent act of commission or omission.’

    The post Supreme Court Finds Non-Waivable Duty on the Part of Insurance Brokers to Provide Notice of Available Coverage for LLC Members appeared first on NJ Workers' Comp Blog.

    Appellate Division Reverses Award of 20% Counsel Fee on Order for Medical and Temporary Disability Benefits and Permanency Benefits

    There are only a few appellate level cases dealing with counsel fees in the New Jersey Division of Workers’ Compensation.   In Garzon v. Morris County Golf Club, A-1100-21 (App. Div. December 23, 2022), the Appellate Division embraced an approach that petitioner’s attorney’s counsel fee should be based on considerations of reasonableness and not automatically set at 20%.

    The case dates back six years. Petitioner suffered injuries on December 15, 2016 to her neck, back and left hand tripping over a box in the kitchen where she prepared and served food.  Temporary disability benefits commenced but stopped on December 29, 2016 when petitioner traveled to Colombia for a two-week vacation. 

    Petitioner filed a claim petition and a motion to compel payment of temporary disability benefits from December 29, 2016 to January 24, 2017.  Petitioner also opposed respondent’s termination of the care provided by treating physician, Dr. Joseph Fodero.  Petitioner relied on a letter written by the adjuster to Dr. Fodero, asking the doctor why he extended petitioner’s disability when petitioner had left the country on vacation.  The adjuster asked the doctor to reconsider his opinion. 

    Dr. Fodero responded that the petitioner already had swelling before she left for vacation and the vacation “had no bearing on her care.”  Dr. Fodero added that the adjuster was “more concerned with the fact that you would need to pay for the lost time than with her treatment and well being.”  On February 15, 2017 the adjuster advised petitioner that Dr. Fodero was no longer authorized to treat, appointing a new treating facility.

    During the trial on the first motion, petitioner testified that Dr. Fodero did not recommend physical therapy before she traveled to Colombia.  She said that the doctor approved her travel plans and did not require treatment while she was away.  She further stated that the Golf Club was closed from December 24, 2016 to March 4, 2017, so she could not have worked.

    Following petitioner’s testimony, the Judge of Compensation registered his concerns that the adjuster was “playing doctor” and considered her actions “completely inappropriate.”  The parties then resolved the issues surrounding the motion.  The Golf Club agreed to pay temporary disability benefits from December 29, 2016 to January 24, 2017 in the amount of $1,880.84.  Counsel fees on the motion were deferred until the conclusion of the case. An Order was entered confirming these terms on April 17, 2017.

    A new issue developed in late August 2018.  The treating physician imposed permanent work restrictions on August 23, 2018.  The Golf Club then stopped temporary disability benefits.  There is no comment in the decision whether the doctor found petitioner to be at maximal medical improvement.  Another conference ensued, and respondent agreed to restore the temporary disability benefits.  However, payments were not immediately restored, leading to a second motion. This motion was filed to enforce the April 17, 2017 Order.  Temporary disability benefits were restored as of March 1, 2019.   A June 3, 2019 Order was entered confirming that the Golf Club was then providing temporary disability benefits and reserving the issue of fees and penalties until the end of the case.

    Counsel for petitioner submitted an affidavit in support of his counsel fee application, stating that he had expended 25 hours on this matter and that if the time was converted to an hourly rate, he would be entitled to $500 per hour.  The Appellate Division commented that there was no invoice detailing work performed by counsel.  Respondent’s counsel opposed the fee application.

    On October 19, 2021, the Judge of Compensation entered an order approving the settlement for a percentage amounting to $164,577.  Arguments were placed on the record in regard to petitioner’s fee application and the request for penalties. 

    The Judge of Compensation approved a counsel fee of $32,915, or 20% of the award and assessed this entirely against respondent.  The Judge explained that “it has been a struggle for petitioner the entire time right up until the commencement of the trial to get the protection that she’s entitled to under the law under the Workers’ Compensation statute.”

    With regard to the initial motion which petitioner filed for benefits while she was in Colombia, the Judge disagreed with the decision of the carrier to stop benefits and held that a penalty was warranted equal to 25% of the amount of the withheld benefits under N.J.S.A. 34:15-28.2.  The Judge of Compensation also awarded a counsel fee on the motion for Medical and Temporary Disability Benefits of $78,000 based on $61,008 paid in temporary disability benefits and $329,172 in medical benefits paid in the case (approximately $390,000 paid before permanency benefits).

    With regard to the 2019 motion to enforce, the Judge found that the respondent erred in stopping temporary disability benefits unilaterally without the Court’s permission in August 2018.  A penalty was assessed in the amount of 25% of $5,564.17 or $1,391.04. 

    In regard to petitioner’s prior affidavit regarding the second termination of benefits in August 2018, the Judge noted that counsel expended 25 hours and awarded $12,500 in counsel fees.

    Lastly, an additional penalty was assessed in the amount of $5,000 to be paid into the Second Injury Fund pursuant to N.J.S.A. 34:15-28.2(b).  The Judge commented that this penalty was appropriate because of the “reckless conduct in the way the Club treated this petitioner and unilaterally worked to deny the petitioner the benefits the petitioner was entitled to under the statute.”

    Respondent appealed all of the counsel fee awards and argued that the fee awards were excessive and unfair.   The Appellate Division noted that there was no appeal of the penalties assessed against respondent.

    The Appellate Division reversed all the fee awards.  The Court focused on the language in N.J.S.A. 34:15-64 (a) which provides that a Judge of Compensation may “allow to the party in whose favor judgment is entered . . . a reasonable attorney fee, not exceeding 20% of the judgment.”  The Court quoted Quereshi v. Cintas Corp., 413 N.J. Super. 492, 500 (App. Div. 2010) for the proposition that “an attorney for a petitioner can anticipate up to 20%, but may receive less, if the judge of compensation finds an award less than 20% is reasonable.”

    The thrust of the Court’s holding is that fee awards must be reasonable. The Court looked to non-workers’ compensation cases for the principle that the Judge of Compensation must consider “the number of hours reasonably expended multiplied by a reasonable hourly rate.”  The Court cited Quereshi: “When a petitioner’s attorney requests a substantial fee, albeit not in excess of the allowed 20%, the fee request must be supported by an affidavit of services that demonstrates the extent of the attorney’s efforts, including the time expended and ‘the extent of his expertise and experience. . . ..’” (citations omitted).  The Court noted that Collas v. Raritan River Garage, Inc., 460 N.J. Super. 279 (App. Div. 2019) “cautioned against a reflexive application of a twenty-percent award without full analysis.”

    The Appellate Division found that the Judge of Compensation “did exactly what we have cautioned against: he engaged in a ‘reflexive application’ of the twenty-percent maximum set forth in N.J.S.A. 34:15-64(a) and failed to make a ‘full analysis’ of petitioner’s fee submission.”  The Court vacated the award of $32,915 in counsel fees with respect to the permanency award.  The Court also vacated the award in counsel fees of $78,000 on the Motion.  In regard to fees on a successful motion, the Court said as follow:

    In N.J.S.A. 34:15-28.1, which is the applicable statute for an award of fees in connection with a motion regarding a delay or refusal to pay temporary disability benefits, the Legislature said nothing about awarding fees equal to twenty percent of the benefits obtained through the motion.  Instead, the Legislature clearly provided for an award of ‘any reasonable legal fees incurred by the petitioner as a result of an in relation to such delays or refusals.’

    The Court stressed that “the Club paid benefits immediately after the accident, agreed to limit what ultimately had to be tried, and interrupted benefits payments based only on petitioner’s trip to Colombia and on information that her treating physician had imposed permanent restrictions.  Those circumstances do not bespeak a maximum award.”  

    This case is not a reported decision.  It is therefore not binding on Judges of Compensation or on other appellate panels.  It should not be read as requiring that in every case counsel for petitioner must provide an affidavit or invoices detailing hours expended.  In actual practice, workers’ compensation attorneys who represent injured workers are much like personal injury attorneys in not being permitted to bill by the hour.  Both practice areas are based on contingent fees.  If petitioner obtains no recovery, there is no fee paid to his or her counsel.  Sometimes the awards are very small and the counsel fee, if converted to an hourly rate, could be well under $100 per hour.  It would make no sense in smaller cases to require counsel to submit evidence of hours expended.  

    Where this case is on sounder footing concerns substantial fees awarded on successful motions for medical and temporary disability benefits, particularly where motions are resolved by consent order with little or no testimony required.  No one can predict the total amount of benefits that will be incurred after an Order for Medical and Temporary Disability Benefits is entered.  The variables are whether there is surgery, whether the surgery succeeds or fails and requires a second surgery, whether there are pain management issues, hospitalizations, injections, expensive medications, and other such complicating factors. 

    The costs incurred after the entry of an Order for benefits may turn out to be a few thousand dollars or a few hundred thousand dollars, but if the costs are a few hundred thousand dollars, a 20% fee could be higher than the fee on the ultimate permanency award.  That is exactly what happened in the Garzon case.  The counsel fee on the motion was more than twice as high as the counsel fee for the award of permanency at the end of the case.  In such a situation, the Court argued that there needs to be some analysis of the hours expended on the motion and on the whole case before defaulting to the 20% fee.

    The post Appellate Division Reverses Award of 20% Counsel Fee on Order for Medical and Temporary Disability Benefits and Permanency Benefits appeared first on NJ Workers' Comp Blog.

    Explosion in Employee’s Personal Vehicle Held Compensable Based on Special Mission

    One of the most interesting workers’ compensation cases in a long time is Van Sciver v. Jersey Mechanical Contractors, Inc., No. A-3525-20 (App. Div. November 15, 2022).  There are layers of legal issues in this case, which involved a very serious accident injuring Mr. Van Sciver when a tank filled with acetylene gas exploded.

    Mr. Van Sciver worked for a family owned business with its main office in Farmingdale, New Jersey, a small borough in Monmouth County near Howell Township.  The business provides mechanical contracting services at various jobsite locations.  Petitioner started working with the company in October 2019 and belonged to a union.  At the time of the injury he was a second–year apprentice pipe fitter and truck driver working from 7:00 a.m. to 3:30 p.m.  A large part of his job was to make deliveries to the company’s jobsites of tanks of acetylene gas (B-Tanks). These were used to solder pipes.

    Petitioner’s Supervisor, Mr. Butler, advised him on September 29, 2020 to exchange two empty B-Tanks for full ones at a store which serviced B-Tanks.  He also had to deliver one full B-Tank to a jobsite in Livingston, N.J. and deliver paychecks to Jersey Mechanical employees at five jobsites. One of those jobsites was in Bordentown, N.J. After arriving in Bordentown, petitioner met the job-site foreman, Mr. Catavan, who asked if petitioner was delivering a full B-Tank.  Petitioner advised Catavan that he had not been so instructed.  Catavan said he would communicate with petitioner’s supervisor because Catavan had been expecting a B-Tank that day, having made a request to the supervisor, Butler, the day before.

    Petitioner finished his day by returning the company truck to Farmingdale.  Without being instructed to do so, petitioner proceeded to load a full B-Tank into the hatchback of his personal vehicle.  His plan was to drop if off to Catavan the next day in Bordentown.

    Petitioner drove home to Mt. Laurel, where he lived.  He passed Bordentown but did not stop at Bordentown because it was too late in the day.  The next day petitioner got up and drove to work, passing Bordentown again and forgetting to stop there.  After passing Bordentown on the highway, petitioner received a text message from the company owner’s nephew, Mr. Dietrich, asking him if he could pick Dietrich up and take him to work.  Dietrich lived near Farmingdale but could not drive due to a foot injury.  Petitioner agreed to pick up Dietrich.

    Shortly after receiving the text message, petitioner heard a hissing noise in his vehicle.  He then remembered he had the B-Tank in the hatchback of his car.  He stopped on the side of the road, opened all the windows, exited his car and began to open the hatch when the B-Tank suddenly exploded.  Petitioner suffered serious injuries and was in a coma for eight days.  He underwent multiple surgeries and lost the use of his eye.  Petitioner eventually filed a claim petition and motion for medical and temporary disability benefits.  Jersey Mechanical denied the claim and argued that the injury did not arise from employment in part because petitioner was on his way to work when the accident happened.

    At trial, evidence was offered that petitioner had been told not to use his personal vehicle for company business.  The Union Agreement prohibited the use of personal vehicles for company business.  Petitioner had received training on handling B-Tanks and had been advised that B-Tanks should not be stored in confined spaces. 

    The Judge of Compensation ruled that the B-Tank “was a workplace instrumentality of” Jersey Mechanical.  The judge also ruled that petitioner had been asked to pick up Mr. Dietrich while he was on his way to work.  The judge further found that petitioner had an objectively reasonable basis in fact for believing that he really needed to pick up Dietrich given that Dietrich occupied a high-level position in the company.   The case was found compensable on the theory that petitioner was injured while performing a special mission based on the theory of compulsion.

    Jersey Mechanical appealed and argued that there was no special mission in this case and that petitioner was never asked nor directed to deliver the B-Tank outside working hours or in his personal vehicle. Jersey Mechanical also argued that petitioner deviated from his job duties by loading the B-Tank in his personal vehicle. The employer also attempted to argue on appeal (but not at the Compensation Court trial) that petitioner willfully failed to make use of proper personal protective devices causing his injury.  Neither the Judge of Compensation nor the Appellate Division was impressed with this argument. It is not clear what proofs respondent offered as to the willful failure to make use of proper personal protective devices.

    The Appellate Division agreed with the Judge of Compensation that petitioner had a reasonable basis to believe that he needed to pick up Dietrich given Dietrich’s high position in the company.  That brought the case within various “compulsion” decisions which have held that when an employee is compelled to perform a certain activity, that activity becomes compensable.  The Court also considered the fact that the accident only happened because of the presence of the B-Tank in petitioner’s vehicle.  The Court analyzed the issues as follows:

    Nevertheless, the B-Tank’s presence in petitioner’s personal vehicle is a relevant consideration in examining the special mission to pick up Dietrich.  The explosion would not have happened without the B-Tank being in petitioner’s personal vehicle.  The compensation judge found, however, that petitioner’s sole motive in placing the B-Tank in his vehicle was to facilitate a delivery for his Employer. The compensation judge also found that the B-Tank was an instrumentality of the Employer.  Consequently, that no one directed petitioner to place the B-Tank in his personal vehicle does not take the accident outside of the special mission to pick up Dietrich.

    The case raises several provocative issues:

    1. Was the Court correct that it even mattered that petitioner was on a “special mission” to pick up Mr. Dietrich given that the accident only happened because of a hazard inside petitioner’s car?
    2. Would this case have been found compensable even if petitioner had been driving to work given the highly dangerous B-Tank in a confined space?
    3. Was petitioner’s conduct a major deviation along the lines of Money v. Coin Depot Corp.?

    The answer to question number one is important because virtually all the special mission cases involve hazards outside the petitioner’s own vehicle while performing the special mission:  another car striking the vehicle or dangerous icy road conditions.  There are no special mission cases involving a hazard inside the petitioner’s own vehicle.  In this case there is a strong argument that it made no difference legally whether petitioner was driving toward Farmingdale for work or to pick up Mr. Dietrich because the explosion (the gas leak started within petitioner’s vehicle) was going to happen when it happened, regardless of where petitioner was going.  The special mission in picking up Mr. Dietrich did not add any risk at all.  He was still headed in the same direction on the same road.  The explosion occurred before petitioner picked up Mr. Dietrich.  In essence, the Court found this case compensable because of the text message request to pick up Mr. Dietrich, which caused no immediate change in the travel route and which had nothing to do with the highly dangerous risk of a gas leak within the petitioner’s own car.   

    The second question would have been an interesting one for the Court to have addressed. Could the Appellate Division have ruled that the B-Tank was an instrumentality of the employer, and therefore the extreme hazard posed by the presence of the B-Tank in the car – and subsequent explosion – arose from work, even if petitioner was driving to work?

    It is truly rare for an injury on the way to work to be found compensable. But there is one unreported Appellate Division case where a drive to work was found compensable due to extreme hazards.   

    In Minter v. Mattson, No. A-1916-15T4 (App. Div. May 10, 2018), Mr. Minter called out of work due to a heavy snow storm.  The director of the food service company contacted another employee and told him to pick up Minter on the way to work even though Minter had called out of work.  Minter decided to get in his colleague’s car and go to work because he thought he would be fired if he did not.  On the ride in, the roads were treacherous with icy conditions. The co-employee lost control of his vehicle and Minter was severely injured in a head-on car accident.  The Appellate Division found that the ride to work was work related as to Minter because he felt compelled to go even though he had called out of work.

    If an employee who worked in a pet store which sold snakes was asked to drive some snakes to or from work, and one of the snakes got loose and bit the driver employee, causing severe injury, would that injury be compensable based on the unusual nature of the hazard?  There are no published cases in New Jersey addressing this kind of fact pattern.  

    The third question is also most interesting. Did Mr. Van Sciver’s action in loading a B-Tank in his private vehicle against company rules and without direction from anyone at the company constitute a major deviation?  In the Money case the Court held that petitioner’s actions in playing Russian Roulette in his armored car vehicle constituted a major deviation from employment when Mr. Money shot and killed himself.   The widow’s dependency case was therefore dismissed.  In this case, the Court did not feel petitioner’s actions constituted such a major deviation from employment. 

    There are also cases where a personal risk disqualified the employee from compensation, such as Coleman v. Cycle Transformer. There the petitioner got a permanent wave solution the night before work, and then lit a match at work the next day causing her hair to ignite with resulting burns.  The Supreme Court denied the case because petitioner created the risk of igniting her hair outside work with the permanent wave solution.  In this case the petitioner testified that he only loaded the B-Tank in his vehicle because the Bordentown site supervisor wanted a B-Tank, although petitioner forgot about dropping it off the next morning.  That seems to take it outside the rule in Money, where petitioner knew fully well that he was putting his life on the line by playing Russian Roulette. This case is unreported, meaning courts need not follow the rule of the case, but the facts of the case raise many interesting questions for practitioners to consider.

    The post Explosion in Employee’s Personal Vehicle Held Compensable Based on Special Mission appeared first on NJ Workers' Comp Blog.

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