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

Uncategorized

View OTHER BLOGS

Using the Offer of Judgment Rule as a Tool to Obtain a Reasonable Settlement

By Betsy G. Ramos, Esq.
Co-Authored by Ryan P. Duffy, Law Clerk

The New Jersey Offer of Judgment Rule exists to encourage settlements by requiring litigators to step back and examine the merits of their case and its potential at trial. It can be a very useful tool in negotiating a settlement, particularly, in situations in which the plaintiff makes no demand or makes a very high demand. Due to the ramifications of the failure to accept an offer of judgment, a plaintiff will be forced to at least consider a settlement on the terms as offered by the defendant. The Rule, set forth in New Jersey Court Rule 4:58, explicitly lays out the process of using it.

In a non-matrimonial case, any party may, at least 20 days before the trial is set to begin, serve upon opposing counsel an offer of judgment for a specific amount. The recipient then has until either 10 days before trial or 90 days after being served the offer of judgment, whichever is sooner, to respond to the offer. If the offer is accepted, the purpose of the rule has been achieved, trial avoided, and no penalties of the offer of judgment rule applied.

The consequences of non-acceptance of an offer of judgment are spelled out in Rule 4:58-2 (offer made by plaintiff) and Rule 4:58-3 (offer made by defendant). These consequences relate to the payment of attorney’s fees and litigation expenses incurred after the date of non-acceptance.

For an offer made by a defendant, if the judgment is within 80% of the offer or less, then the offeror is entitled to attorney’s fees and litigation expenses incurred after the date of non-acceptance. However, there are no consequences if one of the following exceptions apply, per  R. 4:58-3(c): “(1) the claimant’s claim is dismissed, (2) a no-cause verdict is returned, (3) only nominal damages are awarded, (4) a fee allowance would conflict with the policies underlying a fee-shifting statute or rule or court, or (5) an allowance would impose undue hardship.” However, R. 4:58-2(b) provides that if the undue hardship may be eliminated by reducing the fee, the court will reduce the fee. Thus, the offer of judgment rule can still be applied against a plaintiff, even when the plaintiff prevails in a case. A case in point is Ungarian v. Jacobson, 2015 N.J. Super. Unpub. LEXIS 2358 (App. Div. Sept. 30, 2015).

In Ungarian, the plaintiff was hospitalized following a motor vehicle accident. Before trial, the defendant gave the plaintiff a $350,000 offer of judgment, which the plaintiff rejected. The jury awarded the plaintiff $244,000 for her injuries, including pain and suffering. Even though the plaintiff won the trial, defendant was still owed fees pursuant to R. 4:58-3(b) because the plaintiff rejected an offer and obtained a money judgment “that is 80% of the offer or less.”  The award of $244,000 was clearly less than 80% of $350,000. The plaintiff argued she should not be responsible for the fees via the offer of judgment rule because “the amount awarded by the jury was already far too low, leaving her ‘with a pittance to support her for the rest of her life’” and that enforcing the offer of judgment rule would be an “undue hardship.” In denying the plaintiff’s undue hardship argument, the Appellate Division found no appellate court opinions applying the undue hardship standard. The court did note that after the offer of judgment fee is paid, the plaintiff would still have over $220,000 remaining and, thus, there was no undue hardship to the plaintiff.

On the flip side, despite this recent unpublished Appellate Division decision, do not be surprised if the court utilizes the undue hardship exception to avoid the entry of fees against a plaintiff. An example of such a scenario is the case of Reid v. Finch, 425 N.J. Super. 196 (Law Div. 2011).

In Reid, the plaintiff was injured in a motor vehicle accident and sustained extensive injuries. Prior to trial, defendants filed an offer of judgment of $40,000, which plaintiffs did not accept after receiving an arbitration award of $110,000. At trial, the jury awarded plaintiffs a judgment of $34,400, which was then molded by the court to $20,647 to account for disability benefits. The defendants then requested expenses pursuant to R. 4:58-1, specifically a total of $26,350. That amount was $5,703 more than the molded verdict the plaintiff won at the trial. The plaintiff argued that having to pay this offer of judgment fee to the defendants would constitute an “undue hardship.” The court noted that, when adding up the litigation expenses, attorney’s fees and the offer of judgment fee, the plaintiffs would “stand to lose $22,729.04 as a result of bringing a meritorious lawsuit” and that “is an insurmountable hardship.” Therefore, the court reduced the offer of judgment award to $3620.96, which allowed the plaintiffs to essentially “break-even” when considering the litigation expenses and attorney’s fees along with the judgment awarded.

Bear in mind that this rule can also be used by a plaintiff against a defendant. For a claimant (the plaintiff), if an offeror procures a judgment at least equal to 120 percent of the judgment he or she offered, then that offeror is entitled to all reasonable litigation expenses incurred after the date of non-acceptance plus 8 percent interest on the judgment from the offer date or the discovery end date, whichever is later.

It will likely be difficult for a defendant to claim undue hardship to avoid the application of the rule. In Feliciano v. Faldetta, 434 N.J. Super. 543 (App. Div. 2014), the defendant rejected an offer of $15,000 before the trial, which turned into a $50,000 judgment and, after the legal fees were included via the offer of judgment rule, doubled to $109,185.27. The defendant attempted to claim undue hardship but the Appellate Division rejected that argument, stating that there was nothing in the record demonstrating the defendant’s financial position. Additionally, the court stated that the defendant may have a Rova Farms claim against the insurance company and its lawyers for not settling when the offer of judgment was well within policy limits.

In summary, defendants should consider using the offer of judgment in an appropriate case as a tool to negotiate a reasonable settlement. Due to the potential ramifications of non-acceptance, plaintiffs are forced to take these types of offers much more seriously than a simple offer to settle. Of course, before an offer of judgment is made, a defendant must be prepared to settle the case. Moreover, the offer should reflect a realistic value of the case or the plaintiff will disregard the offer, knowing that there will be minimal risk to non-acceptance.

Second Hand Smoke Cancer Claim Is Barred For Late Filing

In Pulejo v. Middlesex County Consumer Affairs, A-3133-14T4 (App. Div. July 14, 2016), the petitioner, an investigator for the County, alleged that he worked along side a chain smoker four to five hours per day, five days per week, from 1976 to 1997. Mr. Pulejo was diagnosed in 2000 with lung cancer and underwent a bilobectomy.  Mr. Pulejo did not file a workers’ compensation claim for years after his bilobectomy.  Before working for the County, Mr. Pulejo received an award of 10% permanent partial disability against Johnson and Johnson for chronic obstructive pulmonary disease (COPD).

In 2010, nine years after his lung cancer surgery, when petitioner was 84 years old, he ultimately filed an occupational disease claim petition in the Division of Workers’ Compensation alleging that his cancer had been caused by second hand smoke at work.  He said he himself had never smoked cigarettes, but he argued that the constant exposure to cigarette smoke caused his cancer to develop. In testimony at trial he admitted that he had engaged in conversations with his treating doctors about his cancer, and his oncologist had told him back in 2000 or 2001 that the likely cause of his cancer was cigarette smoke.  Petitioner also recalled telling his doctors at the time of his lung surgery that he had been exposed to second hand smoke at work.

The experts retained by the parties disagreed on the cause of petitioner’s lung cancer.  Petitioner’s expert said the cancer was work related due to second hand smoke, while respondent’s pulmonary doctor said there was no known cause.  Both parties submitted legal briefs without addressing the statute of limitations issue.  The trial judge, who is now the Chief Judge and Director of the Division, the Honorable Russell Wojtenko, asked for supplemental legal briefs addressing the occupational statute of limitations issue.  After receiving supplemental legal briefs, the judge dismissed the petitioner’s claim on the basis of N.J.S.A. 34:15-34.

This statute provides that “where a claimant knew the nature of the disability and its relation to the employment, all claims for compensation for compensable occupational disease except as herein provided shall be barred unless a petition is filed . . . within two years after the date on which the claimant first knew the nature of the disability and its relation to the employment.”

The Judge of Compensation rejected petitioner’s argument that he did not know his lung cancer was work related until he was examined by his expert, Dr. Hermele, in 2012.  That made no sense since the claim petition alleging work-related cancer had been filed in 2010 two years before petitioner saw Dr. Hermele. Additionally, petitioner had spoken with his doctors in 2000-2001 regarding the link between smoking and lung cancer.  The Judge held that petitioner should have filed his claim petition no later than January 2003, two years after portions of his lung had been removed.

The Appellate Division affirmed the decision of the Judge of Compensation. The Court rejected the argument of petitioner that the defense waived the statute of limitations defense by not raising it until well after trial.  This was  a pivotal aspect of the case and addressed a central question:  can an employer waive the statute of limitations? The answer is no.  The Appellate Division ruled that the statute of limitations is jurisdictional.  The word “jurisdictional” means that filing a claim on time relates to the power of the Division of Workers’ Compensation to hear the claim.   If a claim is not filed on time, the Court has no power to hear it.  Even if the defense wants to waive the statute, it does not matter:  the court cannot hear an untimely filed claim.

The Appellate Division also agreed with the Judge of Compensation that petitioner could not switch the nature of his claim petition at trial to argue for the first time that that his COPD condition had been worsened as a result of working for the County.  Counsel for petitioner argued that even if the cancer claim is barred, his client ought to receive an award for aggravation of the prior COPD condition.  The Court noted that this was a new argument and that “Dr. Hermele (petitioner’s expert) never quantified the proportion of lung disability attributable to the exacerbation of Pulejo’s pre-existing COPD.”

This case is important for New Jersey practitioners because it focuses on a little understood provision of the law, namely the time limits for filing occupational disease claims.  New Jersey really has a “discovery” rule for filing an occupational disease claim petition, and it is focused on the knowledge of the claimant as to the nature of his or her illness and relationship to work.

 

 

Forum Selection Clause Requiring Litigation in Russia Upheld

Agreements often contain forum selection clauses whereby parties can agree on a forum where any disputes would be litigated. Absent certain exceptions, New Jersey courts will uphold a forum selection clause as valid and enforceable. In Ogorodnikov v. Dikker, 2016 N.J. Super. Unpub. LEXIS 1388 (App. Div. June 17, 2016), the Appellate Division upheld a forum selection clause which provided that any disputes would be litigated in Russia.

New Jersey courts will uphold the parties’ choice of a forum selection clause unless the clause fits into one of three exceptions to the general rule: “(1) the clause is a result of fraud or “overweening” bargaining power; (2) enforcement would violate the strong public policy of New Jersey; or (3) enforcement would seriously inconvenience trial.” Caspi v. Microsoft Network, 323 N.J. Super. 118 (App. Div. 1999).

None of these exceptions applied in this case. The complaint concerned a commercial deal that the parties negotiated in Russia, involving property located in Russia. Further, the contract was drafted by plaintiff’s attorney in Russia and was signed in Russia. Also, important witnesses and public records concerning the case were all located in Russia.

In this case, it was the plaintiff seeking to invalidate the clause based upon the concern that the defendant, who now resides in New Jersey, would be unwilling to return to Russia to participate in the litigation there. He had additional concerns over whether a Russian complaint could be subject to dismissal based upon lack of in personam jurisdiction over the defendant, as well as the enforceability of any Russian judgment in New Jersey.

However, the Appellate Division noted that the plaintiff cited to no Russian statutes or cases or offered a Russian legal expert to support his supposition that the Russian courts would not have jurisdiction over the defendant merely because he now resides in New Jersey. Further, at the oral argument in this case, the defendant’s counsel conceded that his client would not raise the defense of lack of personal jurisdiction. By agreeing to the forum selection clause, he admitted that his client had waived that defense.

The trial court had dismissed the complaint without prejudice to the plaintiff’s right to file his complaint in a Russian court, as provided in the forum selection clause. The Appellate Division agreed with the trial court’s decision and affirmed.

This case points out the importance of some of the “boilerplate” clauses found in agreements. Clauses in a contract such as choice of law, forum selection, and arbitration provisions can impact and/or limit a party’s ability to litigate a dispute, should one arise. One must carefully read not only the substantive terms of a contract but also pay close attention to these boilerplate type of provisions, typically placed at the end of an agreement. Otherwise, you may get stuck litigate with the court applying law from another state, litigating in another state (or country!), or giving up your rights to litigate in a court of law and be forced to arbitrate your dispute. Before you sign, read your contract closely and be certain you understand the significance of these “boilerplate” clauses.

Court Finds Herniated Disc Condition Meets Test of Disability under ADAAA

Anthony Mazzeo provided technical and sales services to customers in Florida and southern Georgia for Color Resolutions International LLC.  He was diagnosed with a herniated disc in his low back in 2007.  His employer was aware of his condition.  Between January and March 2009 Mazzeo had three discussions with his supervisor regarding possible back surgery which he said would take him out of work for two weeks.  His supervisor, Mr. Boyd, said that it would more than likely take him out of work for eight weeks.  On February 25, 2009, Mazzeo advised Boyd that the surgery was set for the second week of March.  The very next day Boyd began preparing job termination papers for Mazzeo.  Boyd handed the termination papers to Mazzeo two days before the scheduled surgery.

Mazzeo sued under the Americans with Disabilities Act alleging disability discrimination.  The company responded that it let him go because of declining sales revenue over a period of several years in the territory.  A young college graduate was hired by the company shortly after the termination of Mazzeo to help in a different territory for someone else who was retiring.  Mazzeo contended that he had previously asked to merge his territory with the retiring sales person’s territory but had been refused on the ground that his territory was very busy.

The district court dismissed Mazzeo’s claim and held that his herniated disc condition did not meet the test of disability.  The Eleventh Circuit Court of Appeals disagreed with the district court largely because of the impact of the Americans with Disabilities Act Amendments Act. The Court noted that Congress intended in passing the ADAAA to avoid extensive analysis on whether a medical condition meets the test of disability.  Mazzeo’s doctor said that his herniated disc condition impacted his ability to walk, bend, sleep and lift more than 10 pounds.  His pain would increase with more sitting and standing.  The Court also said that the relevant time to focus on whether someone is covered under the ADAAA is when the decision is made to terminate, not years later after surgery.  When Mazzeo was deposed much later he said that his back problems only affected his ability to play golf and have sex.  But Mazzeo had major physical complaints during the time period before his surgery when he was let go from the company.

The Court also commented that the term “substantially limits” when applied to an impairment was redefined under the ADAAA.  Someone meets that test if he or she has “an impairment that is episodic or in remission . . . if it would substantially limit a major life activity when it is active.”  EEOC regulations state that an “impairment need not prevent, or significantly or severely restrict, the individual from performing a major life activity in order to be considered substantially limiting.”  When his back acted up, Mazzeo had intermittent problems with walking, standing, lifting and sitting, all of which are considered major life activities.

Based on this interpretation of the Americans with Disabilities Act, the Court reversed the dismissal of Mazzeo’s case and permitted him to proceed with his law suit.  It also allowed Mazzeo to proceed on his age discrimination claim as well.  For workers’ compensation practitioners, the case is interesting because so many workers’ compensation claimants have problems with neck and back conditions.  These individuals may have covered disabilities under the ADA.  The case shows how much easier it is to meet the test of disability under the ADAAA than the former ADA.  When an employer is considering possible termination of an employee who has a workers’ compensation claim, it is always important to analyze whether the employee may be covered under the ADA.  The timing in this case could not have been worse for the employer in laying off Mr. Mazzeo within days of his having advised of his upcoming back surgery.  Readers may find this case at Mazzeo v. Color Resolutions Int’l, LLC. 746 F.3d 1264 (11th Cir. 2014).

Arbitration Clause Ruled Invalid in Educational Institute’s Enrollment Agreement

An arbitration agreement can be enforceable in a consumer contract if it clearly and unambiguously explains that the consumer is giving up the right to pursue relief in a judicial forum. In the recent New Jersey Supreme Court case, Morgan v. Sanford Brown Institute, 2016 N.J. LEXIS 563 (2016), the Court considered the enforceability of an arbitration clause in the enrollment agreement of Sanford Brown Institute, a private educational institution offering medical-related training programs. The Court also decided whether the court or the arbitrator should determine the arbitrability of the claims filed by the plaintiffs against Sanford Brown.

The plaintiffs, Annemarie Morgan and Tiffany Dever, filed suit against defendants Sanford Brown Institute and Career Education Corporation, claiming that misrepresentations and deceptive business practices of the defendants and certain administrators at the school led them both to enroll in the school’s ultrasound technician program. The enrollment agreement signed by both plaintiffs contained a lengthy arbitration clause, which required that any disputes relating to the student’s enrollment would be resolved through an arbitration with AAA.

In response to the lawsuit, the defendants filed a motion to compel arbitration. However, they did not make it clear at the trial court level that they wanted an arbitrator, rather than the court, to decide whether the parties agreed to arbitration. The trial court denied the motion on the basis that the arbitration provision did not inform the plaintiffs that they were waiving their statutory remedies and because the provision conflicted with the remedies available under the Consumer Fraud Act.

On appeal to the Appellate Division, that court reversed the trial court and ruled that the trial court erred in failing to enforce the arbitration agreement’s provision that the arbitrator would decide the issue of arbitrability. It determined that the suit should be submitted to arbitration and the arbitrator should decide as an initial issue whether the dispute was arbitrable.

In further appealing this decision to the New Jersey Supreme Court, the plaintiffs contended that they did not understand that the arbitration provision denied them the right of access to a judicial forum and a jury trial. They claimed that the arbitration provision was ambiguous and did not provide the information needed for them to make an effective knowing and voluntary waiver of their rights. More specifically, they argued that the enrollment agreement failed to explain that arbitration was a substitute for their right to seek relief in court.

The Supreme Court reversed the Appellate Division. While this appeal was pending before the Supreme Court, the Court decided the case of Atalese v. U.S. Legal Servs., 219 N.J. 430 (2014), which set forth the standard for the enforceability of an arbitration clause in a consumer contract. For an arbitration clause to be enforceable, the clause must clearly and unambiguously state that the consumer would be giving up the right to pursue relief in a court of law.

As a further threshold issue, the Supreme Court reviewed Sanford Brown’s delegation clause. A delegation clause in an arbitration provision would state whether the arbitrator or the court would decide the initial issue of the validity of the provision and whether the dispute was subject to arbitration.

The Court noted that, unless the parties have clearly delegated to an arbitrator the decision as to whether the parties have agreed to resolve the dispute through arbitration, the issue is for a court to decide. Here, the Sanford Brown agreement did contain a “delegation clause,” which stated that “any objection to arbitrability or the existence, scope, validity, construction, or enforceability” of the agreement to arbitrate would be resolved pursuant to the arbitration agreement. The defendants argued that this case was distinguishable from Atalese because it contained a delegation clause, which required an arbitrator, not the court to decide the arbitrability of the dispute.

The Supreme Court found that that state contract law contract principles applied to the enforceability of the agreement, as well as the purported delegation clause. For an agreement to be enforceable, there must be a meeting of the minds based upon an understanding of the contract’s terms. The meaning of arbitration is not self-evident to the average consumer who would not understand that arbitration is a substitute for the right to pursue a claim in court – unless it is clearly explained.

The Court held that the Sanford Brown enrollment agreement and its delegation clause both suffered from the same fatal flaw in that they did not clearly explain to the plaintiffs that they were waiving their right to seek relief in court for a breach of the enrollment agreement or a statutory violation under the Consumer Fraud Act. Hence, the Court found that both the arbitration provision and the purported delegation clause were unenforceable.

Because there was some confusion over the challenge to the defendants’ delegation clause, the Court added some important guidance for future litigants seeking to enforce a delegation clause in an arbitration agreement. The party seeking to enforce a delegation clause in an arbitration agreement should clearly argue before the motion court that the decision as to whether the parties agreement to arbitrate should be decided by the arbitrator, not the court. On the flip side, the party opposing the enforceability of the arbitration clause must specifically challenge the delegation clause. The failure to challenge the delegation clause will result in the arbitrability being decided by the arbitrator, not the court.

Workers’ Comp Lien Applies to Medical Payments That Could Have Been Paid Through Plaintiff’s PIP Carrier

Ever since the decision in Dever v. New Jersey Mfrs. Ins. Co., No. A-3102-11T2, (App. Div. Oct. 23, 2013), plaintiffs’ counsel have been arguing that respondents do not have a lien for medical bills paid in workers’ compensation from a work-related car accident where the plaintiff had PIP coverage.  But civil courts have not been following Dever, and workers’ compensation carriers won another big decision on this issue in Talmadge v. Burn, No. A-3160-14T1 (App. Div. June 22, 2016).

Tina Talmadge was injured while working for Child and Family Services, Inc.  She was driving her own car when her vehicle was struck by a car driven by Ms. Burn.  Plaintiff underwent a cervical fusion procedure, and The Hartford Insurance Company (workers’ compensation carrier) paid $127,000 in medical and indemnity benefits.  The Hartford sought reimbursement of two thirds or approximately $84,500 and intervened in the civil case from which plaintiff recovered $250,000 as damages.   Plaintiff conceded that she owed two thirds of the indemnity benefits but argued that The Hartford had no right to a lien on medical benefits because as a no-fault insured, she herself could not recover medical benefits from the other no-fault insured Burns.  She contended that if she could not make a recovery of medicals in her law suit, The Hartford could not either as its rights are derivative of her own rights.

Both the trial judge and the Appellate Division rejected plaintiff’s arguments. The Appellate Division initially observed, “When an employee suffers an automobile accident while in the course of employment, workers’ compensation is the primary source of satisfaction of the employee’s medical bills, as provided by the collateral source rule, N.J.S.A. 39:6A-6, which ‘relieves the PIP carrier from the obligation of making payments for expenses incurred by the insured which are covered by workers’ compensation benefits.'” 

The Court went on to discuss how the PIP statute interacts with the workers’ compensation statute.  “In instances where an employee, as a result of a work related automobile accident injury, also has a claim for recovery against a third party, the Legislature overcame the possible ‘inequity of double recovery’ by including section 40, which requires an injured employee to refund paid workers’ compensation benefits once recovery is obtained from the tortfeasor, thereby avoiding duplication of the workers’ compensation benefits by the tort recovery.”

The Appellate Division concluded, “The employer’s workers’ compensation carrier’s lien, which includes medical expenses paid, must be satisfied from plaintiff’s $250,000 recovery from Burn.”  It did not matter that plaintiff could not recover the medicals from the other party in her law suit.  The Court made clear that this was still a double recovery.  In this practitioner’s opinion, the Appellate Division got it right in Talmadge. Dever is an outlier case because the workers’ compensation carrier was not even a party to that decision.  The dispute in that case involved the UIM carrier, and the comments in Dever regarding the workers’ compensation lien were what is known as “dicta,” the expression of an opinion that went beyond the facts before the court.

Court Finds That Severe Neck Pathology Was Not Due To Occupational Activities But Rather To The Natural Aging Process

Lois Scafuri filed three workers’ compensation claims alleging occupational exposures as a sales assistant caused her severe neck pathology.  She worked at the Short Hills Mall for two employers: Sisley Cosmetics and Neiman Marcus Group.  She later worked for Bloomingdale’s/Macy’s in the same capacity.  All three employers denied her claims asserting that her neck pathology was simply the result of the natural aging process.

Scafuri did actually have a truamatic accident on August 3, 2005 when she slipped in the stockroom and struck her head on a metal shelving unit.  She did not, however, file a workers’ compensation claim and obtained treatment on her own.  She claimed that she was afraid she would be fired had she filed a claim at that time.  An MRI done five months after the fall revealed cervical spondylolisthesis and a disc protrusion at C3-4 with compression of the spinal cord at C4-5.  She had a cervical fusion at C4-5 and C5-6.

In November 2006 she was diagnosed with myelomacia, which is a softening of the spinal cord.  Six months later she left Sisley Cosmetics and Neiman Marcus Group to work for Bloomingdale’s/Macy’s, and she only worked there until November 2007. Her neck continued to worsen and she had another fusion surgery in December 2007. She filed for and received Social Security Disability benefits.

Not until June 2008 did she bring her occupational claims against her three employers, but by then it was too late to file for the specific accident in 2005.   She claimed that doing make-up applications, facials, packing and unpacking boxes, and lifting boxes containing small cosmetics caused or aggravated her neck condition.  Respondent Bloomingdale’s produced witnesses from the same department disputing the physical nature of the job.  The Judge of Compensation ruled that her work activities did not contribute to her disability under N.J.S.A. 34:15-31, the occupational provision of the New Jersey statute.  The judge also did not accept petitioner’s testimony that she would do overhead lifting in violation of her doctor’s orders.

Petitioner appealed and the Appellate Division reviewed the testimony of the experts as well as the lay witnesses.  The Court noted that Dr. Alexander Vaccaro did give an opinion favorable to petitioner but also conceded that petitioner had a progressive disability.  Although petitioner at first denied having prior neck problems, she admitted that she filed a workers’ compensation claim for her neck against Macy’s in 1993 and had lumbar spondylosis since age 19.  The Court also deferred to the Judge of Compensation in finding that Dr. Charles Effron’s testimony for respondent was more credible than that of Dr. Vaccaro for petitioner in stating that there was nothing petitioner did at work that was any different that what she would do outside work.  Dr. Effron insisted that petitioner’s condition was age related.

The Appellate Court affirmed the Judge of Compensation on the dismissal of all three claim petitions as well as petitioner’s claim petition against the New Jersey Second Injury Fund.  This was a significant ruling because petitioner would certainly have been found totally disabled had she prevailed on her occupational aggravation claim.  The case shows the importance of a key provision in Section 31, which states: “Deterioration of a tissue, organ or part of the body in which the function of such tissue, organ or part of the body is diminished due to the natural aging process thereof is not compensable.”  It also shows how important it is for respondents to produce their own witnesses at trial and not just allow petitioner to constitute the only lay witness in the case.  This case can be found at Scafuri v. Sisley Cosmetics, USA, Inc., A-2065-14T3 (App. Div. June 24, 2016).

 

Legal Alert: Equal Employment Opportunity Commission’s Final Rule Amending the Americans with Disabilities Act Regulations

On May 17, 2016, the Equal Employment Opportunity Commission (“EEOC”) issued its final rule amending the regulations implementing Title I of Americans with Disabilities Act (“ADA”) as they relate to employer wellness programs. In the section below you will find key information as to how the final rule applies to your workplace and the implementation of your employer wellness program.

Q:        What is an employer wellness program?

A:        Many employers have recently implemented health promotion and disease prevention programs for their employees as a benefit within the employer’s group health plan, or separately as a benefit of employment. These programs are referred to as “employer wellness programs.”

Q:        How is the ADA related to employer wellness programs?

A:        The ADA prohibits employers from discriminating against individuals on basis of a disability.  Furthermore, the ADA prohibits employers from obtaining medical information from applicants and employees but it does allow employers to inquire about employee health and/or conduct medical examinations as part of a voluntary health program, such as an employer wellness program. This special exception will be referred to hereafter as the “ADA exception.”

Q:        Why did the EEOC amend the regulations regarding the ADA?

A:        Previously, the EEOC’s ADA regulations did not define the term “voluntary” or explain what constitutes a “health program.” This led to confusion for employers as to when they are able to inquire about employee health or conduct medical examinations as part of the ADA exception explained above. The EEOC has now made efforts to correct these omissions in the amended regulations.

Q:        What is the ADA’s safe harbor provision and does it apply to employer wellness programs?

A:        The ADA’s safe harbor provision allows insurers and plan sponsors (including employers) to use information about risks posed by certain health conditions to make decisions about insurability and cost of insurance coverage. The safe harbor provision does not apply to employer wellness programs because the information that an employer collects from employees as part of an employer wellness program is not used to decide insurability of a specific employee or to set insurance costs.  The safe harbor provision does not apply to employer wellness programs even if they are offered as part of an employer’s health plan.

Q:        Under the amended regulations, when can an employer ask employees to provide medical information as part of a wellness program?

A:        The ADA allows employers to make disability-related inquiries and to require medical examinations as part of a voluntary health program (ADA exception). The key is that a program only fits the definition of a voluntary health program/wellness if it is “reasonably designed to promote health or prevent disease.” The program cannot require an overly burdensome amount of time for participation, involve unreasonably intrusive procedures, be a ruse for violating the ADA or other employment discrimination laws, or require employees to incur significant costs for medical examinations.

Q:        What type of wellness programs meet the criteria set forth in the amended regulations?

A:        A wellness program that asks employees to answer questions about their health conditions or have biometric screening or other medical examinations for the purpose of alerting the employee to health risks (ie. high cholesterol, elevated blood pressure) meets the criteria set forth in the regulations.  Also, it is appropriate for wellness programs to collect and use aggregate information from employee health risk assessments to design and offer programs aimed at specific conditions prevalent in the workplace (ie. diabetes, hypertension).

Q:        What type of wellness programs DO NOT meet the criteria set forth in the amended regulations?

A:        Employers cannot ask employees to provide information on a health risk assessment without providing feedback about risk factors or without using aggregate information to design programs or treat any specific conditions. Employers are also not permitted to create a wellness program if it exists merely to shift costs from the employer to the employee based upon their health or if it is used by employer only to predict future health costs.

Q:        Under the new regulations how is “voluntary participation” defined?

A:        In order for an employer wellness program to be considered “voluntary,” it must meet the following requirements:

  • Employer may not require employee to participate; and
  • Employer may not deny any employee who does not participate in wellness program access to health coverage or prohibit an employee from choosing a specific health plan; and
  • Employer may not take adverse action or retaliate against any employee who chooses not to participate in the wellness program or fails to achieve certain health outcomes; and
  • Employer must provide a notice that clearly explains what medical information will be obtained, how it will be used, who will receive it, and restrictions on disclosure

Also the employer must comply with the incentive limits, explained below.

Q:        What are the incentive limits?

A:        If a wellness program is open only to employees enrolled in a particular health plan, the maximum allowable incentive an employer can offer is 30 percent of the total cost for self-only coverage of the plan in which the employee is enrolled.

When an employer offers more than one group health plan, but participation in a wellness program is open to all employees regardless of whether they are enrolled in a plan, the employer may offer a maximum incentive of 30 percent of the lowest cost major medical self-only plan it offers.

If an employer does not offer health insurance, but wants to offer an incentive program for employees to complete a health risk assessment or have annual medical tests, an employer can offer an incentive up to 30 percent of the cost that a 40 year old non-smoker would pay for self-only coverage under the second lowest cost Silver Plan on the state or federal health care exchange in the location that the employer identifies as its principal place of business.

Q:        Do these incentive limits apply to all employer wellness programs?

A:        No. The incentive limits only apply to wellness programs that require employees to answer disability-related questions or to undergo medical examinations in order to earn a reward or avoid a penalty.

Q:        When do employer wellness programs have to comply with the final rule?

A:        The final rule applies to wellness programs as of the first day of the first plan year that begins on or after January 1, 2017 for the health plan used to determine the level of incentives permitted under the rule. Any provisions of the final rule which are only clarifying existing obligations apply now.

If you have any questions, please feel free to contact us!

Key Appellate Case Explains Confidentiality Rules in New Jersey Workers’ Comp

The most expansive discussion of confidentiality in workers’ compensation comes ironically from a civil law suit in the matter of Seymoure v. A.O. Smith Water Products Company, et. al., A-3967-14T3 (App. Div. May 11, 2016).  The case arose from an asbestos law suit filed by Gwendolyn Seymoure, who sued several defendants, including Union Carbide Corporation (hereinafter UCC) for manufacturing, supplying or distributing asbestos products that led to the death of her husband from mesothelioma.  Plaintiff Seymoure alleged that her husband was exposed to asbestos while making deliveries and pick-ups at UCC’s Bound Brook facility.

Seymoure filed a discovery request in 2013 seeking workers’ compensation records of other UCC employees.  Eventually the Law Division judge ordered UCC to produce the records.  UCC then moved for a protective order to limit disclosure of the files of other workers’ compensation claims to just this particular litigation.  That request was denied.  The judge required  the following: 1) UCC must advise former/current employees of production of documents within seven days; 2) UCC may redact social security numbers only, but not names; and 3) UCC had to produce all documents within 14 days.

UCC appealed and contended that the court’s order violated privacy rights under the New Jersey Workers’ Compensation Act. The company argued that current and former employees have a reasonable expectation of privacy in their records.  It relied on N.J.S.A. 34:15-128(a)(1) which prohibits disclosure of workers’ compensation records unless the information is provided in a way that makes it impossible to identify any claimant.

For his part, plaintiff’s counsel argued that he needed to use the records obtained in this law suit in other litigation against Union Carbide.  He stated that he fully anticipated using the medical records from other employees in future litigation that he might file.  Counsel also argued that N.J.S.A. 34:15-62 provides that all workers’ compensation hearings “shall be open to the public.”

The Appellate Division ruled, “As the judge’s protective order fails to adequately protect the privacy interests of UCC”s former employees, we are remanding this matter for the entry of a more comprehensive protective order. Both N.J.S.A. 34:15-128 and N.J.S.A. 34:15-128.3(a) prohibit disclosure of workers’ compensation records unless all personal identifying information has been removed.  Thus, a protective order would require the redaction of all personal identifying information of the employee.”

The Court also observed that requiring hearings to be public is not the same thing as giving third parties not involved in the workers’ compensation case access to medical information of other claimants.  The Court concluded, “Finally, the interest that plaintiff’s counsel has in expediting other asbestos litigation against UCC does not outweigh the privacy interests the former employees have in their medical records.  Unless the former employees specifically consent to the use of their unredacted medical records beyond this litigation, the use will be limited to this matter.”

This case deals with provisions of the New Jersey Workers’ Compensation Act that seldom, if ever, draw mention from courts. It is noteworthy that hearings in the Division are open to the public by statute.  Yet that does not mean that third parties can access medical information of claimants.  Only the parties to the case, such as the judge, carrier, third party administrator, treating doctor, experts, and counsel have access to medical information of the claimant.  There is no right of access, however, to medical information of other claimants not involved in the litigation.  Had the decision in this case gone the other way, there would be no way to protect medical information of claimants in the Division.

Legal Alert: Department of Labor Issues Final Rule Updating Overtime Regulations

On May 18, 2016, the Department of Labor’s Final Rule updating the overtime regulations was published. The key changes to the overtime regulations set forth in the Final Rule are explained below:

Under the Fair Labor Standards Act (“FLSA”), employees who are employed in a bona fide executive, administrative or professional capacity are exempt from minimum wage and overtime protections (“white collar exemption”).  Under the Final Rule, in order to be exempt under the white collar exemption of the FLSA, the employee must meet all of the following three elements:

  1. the employee must be salaried (paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed); and
  2. the employee must be paid more than $913 per week (the equivalent of $47,476 annually for a full-year worker); and
  3. the employee must primarily perform executive, administrative, or professional duties, as defined in the Department of Labor’s regulations

The second prong of this test is the major change in the Final Rule. Under the Final Rule, any employee who earns less than $913 per week or $47,476 per year must be paid overtime for hours worked over 40 no matter what job duties that person may have (compared to $455 per week or $23,660 per year under the old regulations). Employers are able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level to meet prong 2 of the exemption, provided these payments are made on a quarterly or more frequent basis.

Moreover, the Final Rule also updates the highly compensated employee exemption to the overtime law, and increases the salary that employees must be paid in order to fall within this exemption to $134,004/yr. (compared to $100,000 under the old regulations).

The effective date of this Final Rule is December 1, 2016. On that day, the new standard salary level ($913 per week or $47,476 per year) and highly compensated employee compensation requirement ($134,004 per year) will take effect. Automatic updates to these salary levels will occur every three years, beginning on January 1, 2020.

Capehart Blogs

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

N.J. Supreme Court Rules That Logs of Government-Related Emails From Elected Officials’ Personal Accounts Are Subject to Disclosure Under OPRA

Court Determines Plaintiff’s Evidence of Black Ice “Conjecture” in Dismissing Complaint

Court Denies School District’s Motion to Compel IMEs

Subscribe to Blog Updates

Categories

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