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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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Light Duty – Harbatuk v. S&S Furniture Systems Insulation

In addition to terminating temporary disability benefits on maximal medical improvement, an employer can terminate such benefits when the employee can return to work light or modified duty under Harbatuk v. S & S Furniture Systems Insulation, 211 N.J. Super. 614 (App. Div. 1986). The basic rule which emerges from Harbatuk is this:  the employer has to offer a light-duty job to the employee in order to terminate temporary disability benefits. If the employee rejects the light-duty offer, the employer can still terminate temporary disability benefits. Obviously, the light-duty job has to be one that is safe for the employee to perform. A functional capacity exam (FCE) can be of real assistance in determining whether the employee can safely perform the light-duty job.

Light duty is not defined in the New Jersey Workers’ Compensation Act. A better term would be transitional duty since an employee may resent the implication that the temporary duty is “light.” Another term used is “temporary alternative duty” or “modified duty.” Whatever the terminology, the light-duty phase is the bridge between being out of work and full duty.

Intentional Harm – Millison v. E.I. duPont deNemours & Co.

In New Jersey it is very difficult to get past the exclusive remedy provision.  The leading case on proving an intentional harm claim sufficient to get beyond the exclusive remedy is Millison v. E.I. duPont de Nemours & Co., 101 N.J. 161 (1985) in which plaintiffs had shown intentional wrong by respondent in deliberately concealing x-ray evidence of asbestos injuries. In Millison the court set forth two factors in proving deliberate intent to injure:

  1. Conduct which amounts to substantial certainty of harm, well beyond negligence or recklessness; and
  2. A context in which the injury or illness is plainly beyond anything the Legislature could have contemplated as entitling the employee to recover only under the New Jersey Workers’ Compensation Act, excluding those risks that are simply a fact of life in the industrial setting.

Heart Case – Hellwig v. J.F. Rast & Co., Inc.

In a traumatic heart claim, New Jersey requires a comparison between work and non-work effort.

The Central Issue Is:  Does A Claimant Have To Prove That The Work Effort Was Greater Than Both What He Usually Did At Work And What He Did Outside Of Work?

The answer came in one of the most important cases on traumatic heart attacks:  Hellwig v. J.F. Rast & Co., Inc., 110 N.J. 37 (1988). This was a Supreme Court case which has finally defined what the phrase “in excess of the wear and tear of the claimant’s daily living” really means. The answer is that this standard does not include the claimant’s daily work. Adjusters should turn to the Hellwig case, not Prusecki, when handling traumatic heart claims.

The decedent in Hellwig, out on a layoff for several weeks, returned to work at Anheuser-Busch in Newark.   He had done little during his layoff, but he was eager to get back to work, each day going to his union shop. On his first day back he reported to work and was given a job involving the repair of a pasteurizer machine. The work had to be done on an upper level, requiring climbing of six or eight steps on a ladder at a 70 degree angle. Decedent and a co-employee raised 20-25 stainless steel doors searching for leaky sprayheads. The doors were heavy, weighing 35-50 pounds and were hard to lift. The humidity was high, with temperature in the 80s. The record states that the decedent was perspiring. After completing his inspection, decedent walked 1,000 feet to the maintenance shop where he obtained a welding machine, a large bottle of gas, and a few hundred feet of welding lead. The welding machine weighed about 300 pounds. Decedent carried about 100 pounds of welding lead to an elevator. He then carried all of this to the pasteurizer with the aid of another employee. At 9:30 he took a 15-20 minute coffee break. He then went to the bathroom. After a few more trips up and the down the ladder the coworker noticed that he did not return. He died of a massive heart attack at work.

The Supreme Court agreed with the workers’ compensation judge that this was a compensable accident but it corrected an error that the Prusecki court had made. Here are the rules from the Hellwig case:

RULE ONE:

Measure the work effort against the wear and tear of the claimant’s daily living, not against the normal work activities. In other words, the test is not what the worker usually did at work, but a comparison between what the worker did at work which caused the injury and what the worker did outside of work.

RULE TWO:

Consider the worker’s medical history, intensity and duration of the precipitating work effort, and the time interval between the work effort and manifestation of the heart dysfunction.

When a practitioner has facts like those in Hellwig, he or she should consider that most courts will find compensability. The three factors that tend to point to compensability in a traumatic heart claim, regardless of risk factors, are as follows:

  1. The claimant engaged in intense work effort for a considerable period of time;
  2. The time gap between the intense work and the heart dysfunction is short;
  3. The worker did not engage in very stressful non-work activities.

If a claimant says he or she was a couch potato at home, respondent must be creative.  The best way to defeat this sort of testimony is to consider investigation along these lines:

  • statements of co-employees regarding hobbies or sports the worker usually engaged in;
  • surveillance which shows the worker doing something he or she claims he/she never did and cannot do;
  • secondary employment, active participation in organizations, or the like;
  • evidence of unhealthy lifestyle such as excessive smoking or drinking.

The riddle in Hellwig is how to deal with the worker that has a history of obesity, smoking, or other risk factors of a heart attack. Claimants’ attorneys argue that these kinds of claimants — those with many risk factors — are ideal to represent precisely because it takes less work effort to prompt the onset of a heart attack in a person who has risk factors. Defense counsel argue that the history of obesity, smoking, or other risk factors is part of the wear and tear of daily living as measured against the work effort and should tilt the scales toward non-compensability. Until the precise cause of heart attacks is known at the cellular level, practitioners will continue to struggle with the standards in Hellwig.

One Strike You’re Out, Says The Ninth Circuit

The Pacific Maritime Association had a “one-strike” rule which screened out any applicant who tested positive for drug or alcohol use during the preemployment process.  Santiago Lopez, who was addicted to drugs and alcohol, tested positive for marijuana during his preemployment process in 1997 and was therefore disqualified from further consideration.

In 2002 Lopez began to address his addictions.  By 2004 he was clean and sober and he reapplied to be a longshoreman with Pacific Maritime Association.  His application for employment  was rejected because of the one-strike rule.  Plaintiff Lopez sued under the ADA and argued that he was discriminated against based on his disability status as a rehabilitated drug addict.

The Ninth Circuit Court of Appeals held that a company one-strike rule is valid.  “The ADA prohibits employment decisions made because of a person’s qualifying disability, not decisions made because of factors merely related to a person’s disability.”  The Court agreed with prior case law that held that an employer’s policy not to rehire someone who lost his or her job due to drug-related misconduct is a neutral and nondiscriminatory reason for not rehiring.  In addition, the Court observed that the Longshore industry has suffered numerous serious accidents including fatalities that were related to use of drugs and alcohol in the workplace, underscoring the need for a one-strike policy.

Plaintiff also argued that this policy impacted more heavily people with drug and alcohol addiction.  The Court said that this was purely speculative.  “We disagree because, as we have noted, the rule does not necessarily screen out recovering drug addicts disproportionately.”   The Court added, “. . . [W]e still do not know how many recovered drug addicts Defendant hires versus how many recovered drug addicts it turns away,  nor do we know how many of those turned away are not drug addicts, recovering or otherwise.”

This case can be found at Lopez v. Pacific Maritime Association, 2011 U.S. App. LEXIS 3923 (9th Cir. 2011).

Pulmonary/Respiratory – Laffey v. City of Jersey City

In one of the most important decisions since the 1979 amendments, the Appellate Division reversed in Laffey v. City of Jersey City, 289 N.J. Super. 292 (App. Div.), certif. denied, 146 N.J. 500 (1996) an award of 35% permanent partial disability for a Jersey City police officer who testified that his breathing was worsened by constant exposure to dusts, fumes, chemicals, and other irritants. Every adjuster and practitioner should keep this case in his or her desk because the Appellate Division, in throwing out the award, spelled out what it means by the phrase “characteristic of or peculiar to a particular trade or occupation.”

The Laffey case is also interesting because the appellate court reiterated the need for scientific proof. The court was not impressed with guesswork from a medical standpoint. Rather, it wanted the claimant to prove that his exposure as a police officer was indeed higher than the degree of exposure to dusts or fumes of any other person living in Jersey City. This idea most closely tracks the idea that Professor Larson gives when he says that there is a difference between diseases that are common to people in every day life and those that are peculiar to the employment. The petitioner in Laffey could not show scientifically that his exposure was any greater than that of others. The court said:

Here, petitioner has done no more than offer subjective characterization about his work environment. He has failed to provide quantitative evidence concerning the level of pollution, or the duration of exposure in any measurable manner. There was no evidence of any articles, treatises or medical studies that link exposure to fumes from vehicles, furnaces, landfills or fires to petitioner’s ailments. Petitioner’s expert’s testimony of a causal relationship was based solely on the subjective characterization of the petitioner and not on any existing medical epidemiological or scientific studies establishing causation.

Id. at 306. The court added:

We are satisfied that Dr. Velez has asserted a causal relationship without credible foundation. Furthermore, petitioner presented no scientific evidence that police officers as a class, or even Jersey City police officers as a sub-class, are more particularly prone to exposure to the environment than any other resident or employee of Jersey City.

Id. at 307.

More than any other factor, medical science determines the outcome in occupational disease claims. Employers need to be aware of the not-so-bright line which the Appellate Division is drawing between cases which utterly fail to meet the standards of Section 31 and those which just barely meet the standards. Subtle differences in the quality of scientific proof can turn a case which would fail under Laffey, supra, into a compensable claim. For example, in Kiczula v. American Nat’l Can Co., 310 N.J. Super. 293 (App. Div. 1998), even though the claimant’s expert could not cite the cause of a severe pulmonary condition known as “Wegener’s granulomatosis,” the Appellate Division nevertheless affirmed an award of 50% permanent partial disability to the claimant who alleged that fumes from solder and from solvents aggravated and accelerated her breathing problem. The Appellate Division held that claimant’s expert listed specific pollutants to which petitioner was exposed, discussed the duration of exposures, and evaluated a medical article which theorizes that Wegener’s granulomatosis is a kind of hypersensitivity disorder and states that many researchers consider it to be “aggravated by inhalation of an environmental agent or agents.” Id. at 303. The court contrasted this evidence with that in Laffey, supra, in which the claimant only identified generally “dust, fumes and pulmonary irritants” and failed to offer any scientific evidence at all.

 

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Permanency Standard of Proof – Perez I, II and III

It is an uncanny coincidence that three of the most important post-1980 cases dealing with the quality of proofs for permanent disability all begin with the name of Perez. Thus, these three claimants, all unrelated presumably, have left their mark on New Jersey law as Perez I, II, and III. Perhaps the most important case of all since the 1979 amendments is Perez #1, known as the case of Perez v. Pantasote, 95 N.J. 105 (1984). It is this decision that clarifies the definition of permanent disability outlined above. Perez #1 was the first and most lucid definition of the need for objective medical evidence of restriction of the body or body member. The need for this type of evidence is the underpinning of any award in workers’ compensation, and it applies to both traumatic and occupational claims in the sense that all compensation awards must reflect objective medical evidence. Without that there can be no award.

The statutory definition of permanent, partial disability is contained in N.J.S.A. 34:15-36 but the Supreme Court opinion in Perez #1 offers a much more complete understanding of the operative standard. This case is one of the most important cases for adjusters and human resource personnel to know. The case is also important because it makes abundantly clear that New Jersey is not a wage loss state, although loss of wages can impact the amount of permanent disability benefits a worker may receive as is noted in Perez #3 discussed below. The basic formula for compensation is set forth in Perez #1, namely that there be proof of the following in all cases:

1.         Demonstrable objective medical evidence of a functional restriction of the body, its members or organs; PLUS,

2.         Either a lessening to a material degree of working ability, or if not, whether there has been a disability in the broader sense of impairment in carrying on the ordinary pursuits of life.

Most claimants have returned to work by the time the issue of permanency is raised, so that the focus tends to be on objective medical evidence and the impact on the ordinary pursuits of life. Both parties send the injured worker for an independent medical examination in which the extent of disability is considered. It is rather common for the independent examiners to have dramatically different estimates of disability and sometimes even different results on range of motion tests. However, the Supreme Court of New Jersey does not place much credence in cases where the only abnormality is alleged decreased range of motion testing. In Colon v. Coordinated Transport, Inc., 141 N.J. 1 (1995) the court commented as follows:  “We are persuaded that ordinarily a diminution in range-of-motion alone will not satisfy the ‘demonstrable objective medical evidence’ standard required to support an award of partial-permanent disability. Most range-of-motion test results are subjective responses of the patient, especially when there is no physical manifestation that is observable by a medical expert.” Id. at 10.

Perez #2 is the case of Perez v. Monmouth Cable Vision, 278 N.J. Super. 275 (App. Div. 1994), certif. denied, 140 N.J. 277 (1995). This case focuses not so much on the requirement of objective medical evidence but on the meaning of having a substantial impairment of the ordinary pursuits of life. As Perez #1 makes clear, one must have more than just proof of objective medical evidence. There must also be proof of a lessening to a material degree of working ability, or a substantial impairment of non-work activities. The case of Perez #2 is the first case to discuss the threshold to prove a diminution of ordinary pursuits of life.

Perez #2 involved an injury to the petitioner’s right hand resulting in an award of 12.5% of the hand. Respondent appealed the award, arguing that petitioner did not prove a substantial impairment of non-work or work activities. Respondent seemed to have a very good point here since petitioner only gave the following complaints in that regard:

1.         loss of grip strength in the right hand because of difficulty using the thumb;

2.         pain in the wrist, noticeable when playing with his children;

3.         not playing volleyball as well as he used to, although he played every week for two hours;

4.         not being able to do as much weightlifting as in the past, although he still did it.

The court found no evidence of any impairment of working ability but unfortunately did find that these complaints of pain and loss of some function were enough to prove an impairment in the ordinary pursuits of life.

The lesson of Perez #2 is that once a claimant proves objective medical evidence, it is relatively easy for the claimant to prove an impairment in the ordinary pursuits of life because the courts tend to look at the objective medical evidence as corroboration of the petitioner’s subjective statements regarding activities that he or she has curtailed or given up. There is no real threshold on what constitutes proof of an impairment of ordinary pursuits of life.

This point was driven home in Akef v. BASF Corp., 305 N.J. Super. 333 (App. Div. 1997). In that case the petitioner established that he developed azoospermia (sterility) as a result of his work with BASF. The judge of compensation found that “petitioner suffered no permanent disability … from the azoospermia because he suffered no functional loss in the workers’ compensation sense of the word.” However, the judge did award neuropsychiatric disability due to depression, but on appeal the appellate court held that the petitioner should have received an award of permanent disability because this condition impaired the petitioner’s ability to carry on the ordinary pursuits of life.

Perez #3 is Perez v. Capitol Ornamental, 288 N.J. Super. 359 (App. Div. 1996). This case deals mostly with the other criterion, namely the impact on working ability. The petitioner in Perez #3 suffered a herniated disc. He had very little education and worked as a farm laborer in Puerto Rico and in landscaping and construction in the U.S. After his laminectomy he continued to have problems with his back and applied to the Division of Vocational Rehabilitation for job training. The Division sent him to the Mental Health Clinic for psychiatric treatment. Petitioner was out of work for years after his accident, and even though a young man he could not find work. Even respondent’s evaluating doctor, who estimated 12.5% permanent partial disability, commented that petitioner could not return to his former job. However, respondent’s evaluator stated at trial that he did not consider this factor when he gave his estimate of 12.5%.

The court awarded 32% permanent partial disability, which was over the 30% threshold for the petitioner to obtain higher rates, but much less than petitioner apparently thought he was entitled to. The compensation judge commented that “…the award which I presented in my opinion was determined on a basis and with the purpose of being consistent with similar injuries previously presented to me for disability determination.” Id. at 366. The Appellate Division reversed and remanded mainly because of this comment, which the Appellate Division took to mean that the compensation judge had not really considered the difference between a person with a herniation who gets back to work and one such as the petitioner who cannot return to his work. The appellate court’s comments spell out that compensation judges must take the impact on work into account, and where there has been a severe impact on work respondents can expect an award to be much higher than a comparable medical condition in a person who gets back to work:

Clearly, an educated person who earns his living reading, writing and performing other sedentary duties, having the same injury and the same residuals as the petitioner here, may have the same orthopedic disability as the petitioner. However, that same person is less disabled in terms of an ability to work than this petitioner, an illiterate laborer who is incapable of doing anything more than the job which his orthopedic disability prevents him from doing. The Workers’ Compensation judge erred in failing to consider these relevant factors in assessing this petitioner’s award.

Id. at 370.

The message from Perez #3 is that cases should be valued higher where the injury causes a career change or career loss as compared to a similar injury with no career change or career loss. While courts seem to assume that any objectively proven injury will have an impact on the ordinary pursuits of life (see Perez #2), having an abundance of complaints about an impact on the ordinary pursuits of life may not affect the compensation judge’s overall evaluation of the award. This may be because such testimony tends to be subjective in nature. By contrast, courts must compensate workers for career changes caused by the accident. One of the biggest mistakes defense counsel and adjusters can make in light of Perez #3 is to plug in a certain case value for all one-disc herniation cases or all operated meniscal tear cases. That sort of analysis will not do where there has been a significant impairment of working ability, particularly where one cannot return to the former job.

Occupational Stress – Stroka v. United Airlines

When an employee’s worrying is not based on events which actually took place involving the employee but only on what might have happened to the employee, that kind of worrying has been found not compensable. An example is the case of Stroka v. United Airlines, 364 N.J. Super. 333 (App. Div. 2003), certif. denied, 179 N.J. 313 (2004). Kim Stroka worked as a flight attendant for United Airlines. Stroka was originally scheduled to work on September 11, 2001, but she requested the day off several days earlier to pick up her daughter from school.

On September 11, 2001, she went bowling while her daughter was in school. She heard about the World Trade Center attacks while she was bowling. Later her husband, who was also a flight attendant and was working that day, called Stroka to advise her that the plane which crashed in Pennsylvania was the one she was supposed to be flying. Petitioner wept, trembled, and had difficulty sleeping over the next few days. She could not eat for a while, but later she engaged in binge eating.

Petitioner began psychiatric treatment on September 24, 2001 with Dr. Stephen Clarfield for post-traumatic stress syndrome. She told her doctor that she felt guilty that she was alive, while someone else in her place had been killed.

Petitioner did not return to work and continued to treat on a biweekly basis. She filed a claim petition seeking medical and temporary disability benefits. Petitioner testified that her company provided her with training regarding hijackings. Flight attendants viewed a security video and read a Federal Aviation Administration handbook on how to deal with a hijacking crisis.

The judge of compensation found that the petitioner’s stress condition was work-related and awarded medical and temporary disability benefits to the petitioner. As of the time of trial, petitioner was still fearful and was having panic attacks when she would see a runway.

United appealed the decision and argued that petitioner’s psychiatric condition did not arise from work. The Appellate Division agreed:

Petitioner’s post-traumatic stress syndrome originated not while she was at work, but while she was taking a day off. Nothing happened while she was working which led to her current condition. She was not working at the time Flight 93 crashed, nor at the time she heard the news of the crash. In fact, her reaction to the event occurred because she was not working, not because she was working. If we were to accept petitioner’s argument, off-duty police officers, firefighters, and others whose jobs are inherently risky could seek compensation benefits when a fellow employee was injured or killed while taking that employee’s place. No authority exists to support that position.

Id. at 342.

This case is an important one because it delineates a line between compensable occupational stress and non-compensable occupational stress. It is a sensible decision because an employer could not possibly insure for risks of injuries occurring in the minds of workers who were not actually working when traumatic events took place.

Occupational Stress – Goyden v. State Judiciary

The most important occupational stress psychiatric opinion is Goyden v. State Judiciary, 256 N.J. Super. 438 (App. Div. 1991), aff’d, 128 N.J. 54 (1992). Goyden was the first significant post-1980 case construing Section 31. It involved a claim by the supervisor of records in the office of the Clerk of the Supreme Court, who was adjudged at trial in the Division of Workers’ Compensation totally and permanently disabled due to severe depression. Petitioner alleged that conditions at work, including extreme backlog in filing court documents, a change in filing procedures to computers, and vindictive managerial procedures, led to his depression.

The appellate court in Goyden reversed the award of 100% total and permanent disability. First, it negated the petitioner’s allegation of vindictive management procedures, finding a basis for the job evaluations of the petitioner. “Merited criticism cannot fairly be considered to be a ‘cause… and condition… characteristic of or peculiar to a particular trade, occupation, process of place of employment.’” The court went on to say that merited criticism is common to all occupations. This is exactly the analysis of Section 31 that Professor Larson referred to above.

The court then proceeded to find that there was ample evidence in the psychiatric testimony that petitioner had a compulsive personality, which stemmed from his childhood and tied his self-esteem to his job. This underlying compulsive personality condition created the stress petitioner felt on his job and would have done so regardless of “peculiar” workplace conditions. “The existence of such a predisposition precludes compensability not otherwise supported by evidence of ‘peculiar’ conditions which would be stressful to those without such a predisposition,” Goyden at p.459, citing Williams v. Western Electric, 178 N.J. Super. 571, 582 (App. Div.), certif. denied, 87 N.J. 380 (1981).

The court next discussed the purpose of the 1979 Amendments with respect to Section 31.

This definition of ‘compensable occupational disease’ was part of the 1979 legislative amendments which narrowed eligibility for workers’ compensation. Previously, compensation was permitted for all occupational disease arising out of and in the course of employment, not just that ‘peculiar’ to the employment. The purpose of these 1979 amendments was to ‘benefit employers’ and to limit compensation for occupational disease to those which are characteristic of and peculiar to a particular employment.’

Goyden, at p. 443. The test now in occupational psychiatric claims is much more clear and also much more burdensome on claimants. The claimant must prove as follows:

  1. Objectively verified stressful work conditions (This will require more than just the testimony of the claimant, as the Williams court noted at p.585).
  2. Work conditions peculiar to the workplace (not just common to everyone).
  3. Medical evidence showing that these work conditions were the material cause of the psychiatric disability. This is particularly problematic where the worker already has a prior psychiatric problem. If such a preexisting psychiatric problem exists the claimant will have to prove that a person without that preexisting psychiatric condition would have reacted in the same manner to the work stress as the claimant did. Goyden at p.459.

Goyden deals more thoroughly with occupational psychiatric claims than any case before or since its decision. While the standards may seem somewhat confusing, the Goyden case sweeps aside a large portion of psychiatric claims just by stating that merited criticism cannot form the basis of a workers’ compensation claim. Many occupational psychiatric claims emanate from the reaction of an employee to some sort of legitimate work criticism. It is also clear from Cairns v. City of East Orange, 267 N.J. Super. 395 (App. Div. 1993) that a psychiatric reaction to the receipt of a layoff notice is not compensable. The reasoning behind Cairns is that worry over losing one’s job is common to everyone in all occupations. See also Iatridis v. Georgeson Shareholders, No. A-0284-08T3 (App. Div. March 31, 2010). The court said that stress caused from personnel decisions that occur at work is an ordinary part of life and not peculiar to any place of employment.

Goyden and Cairns have little applicability where a traumatic event leads to psychiatric problems, as in Prettyman v. State, 298 N.J. Super. 580 (App. Div. 1997). In that case, detectives wrongly accused petitioner of stealing a key to the receptionist’s desk. A bracelet was allegedly lost from a desk, which petitioner had checked, not knowing she was on film. Petitioner was looking for a key, but the detectives thought she was trying to steal the bracelet. The Appellate Division said, “… Even if the detectives’ actions were legitimate law enforcement techniques, the fact that their actions caused petitioner’s psychiatric disability is sufficient for an award of benefits. …” Id. at 597.

Liens and Subrogation – Kuhnel v. CNA Ins. Cos.

In Kuhnel v. CNA Ins. Cos., 322 N.J. Super. 568 (App. Div. 1999), certif. denied, 163 N.J. 12, cert. denied, 531 U.S. 819 (2000) the Appellate Division held that a lien under N.J.S.A. 34:15-40 shall not include expenses for rehabilitation nursing services as a medical cost unless respondent can prove that the services primarily benefited the employee and were reasonably necessary to the employee’s recovery. One case in which rehabilitation nursing services were considered to be medical services and therefore lienable is Raso v. Ross Steel Erectors, 319 N.J. Super. 373 (App. Div.), certif. denied, 161 N.J. 148 (1999). This case contains a helpful discussion of the requirements of N.J.S.A. 34:15-15.

Liens and Subrogation – Errickson v. Supermarkets General Corp.

New Jersey has a powerful subrogation provision under N.J.S.A. 34:15-40.  Respondent is entitled to two thirds of its payment if the recovery exceeds the total workers’ compensation expenses.  The employer must properly reserve lien rights.

The case of Errickson v. Supermarkets General Corp., 246 N.J. Super. 457 (App. Div. 1991) points out how failure to follow the rules can cause the loss of lien rights.

In Errickson, the accident happened on July 14, 1986. Cigna, the compensation carrier, paid compensation benefits and filed a suit in the name of Errickson on July 24, 1987. Cigna settled with the attorney for the third-party defendant and sent the release to Errickson, who refused to sign it. Errickson successfully argued that Cigna had not provided a written demand letter to him, and therefore the settlement Cigna had effected was invalidated. The court reviewed the proper procedure as follows:

  1. The compensation carrier or employer must wait one year;
  2. Then the carrier must make a written 10-day demand on employee to either effect settlement or institute a proceeding against the third-party defendant;
  3. The carrier must then wait the 10 days and can file suit if the employee fails to settle or institute proceedings.

It is important to bear in mind that if a carrier or employer files suit in the name of the injured worker against a third-party defendant, the rights of the carrier derive from the worker. Therefore, any money recovered in excess of the amount respondent has paid in compensation payments goes to the injured employee.

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