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Court Finds that Complaint to Supervisor about Overtime is Considered Protected Conduct under the Fair Labor Standards Act

The Fair Labor Standards Act (“FLSA”) is the federal wage and hour law and due to its complexity, employers often have questions as to what protections this law provides to employees in the workplace. In Childs v. Universal Cos.,no. 15-3507, 2016 U.S. Dist. Lexis 53929 (E.D.Pa April 22, 2016), a recent case from the United States District Court for the Eastern District of Pennsylvania, the Court analyzed what type of employee behavior is considered “protected conduct” under the FLSA.

Facts

Maurice Childs (“Childs”) was employed by Universal Companies (“Universal”) as a building engineer and was paid overtime when he was required to work over forty hours a week. In May 2013, Childs was promoted to head engineer. After Childs was promoted, his supervisor, Ms. Hinson, informed him that he would no longer be eligible for overtime pay.  Ms. Hinson explained that Childs’ hourly wage was too high and if Childs were to be pad for overtime, he would be taking away available funds from other employees. Childs’ responsibilities often required him to work more than forty hours per week. When this happened, Ms. Hinson would change Childs’ time cards to prevent him from receiving overtime. Childs was also required to work without pay on Sundays.

In September 2014, Childs made an internal complaint to his human resources representative (“HR”). Childs explained that he needed to work more than forty hours per week to complete his job duties and that his supervisor was changing his time card. HR told Childs that in order to keep his job, he needed to do what his supervisor told him to do (clock out and finish his work without payment).

Childs claims that after he complained to HR, his employer harassed him by issuing frivolous disciplinary write-ups. Childs was then terminated in April 2014 after Childs called Ms. Hinson and advised that he was sick and could not come to work and after he sent an e-mail to Ms. Hinson and HR again complaining about overtime and payroll.

Childs brought suit again Universal claiming violations of the FLSA, including retaliation. Universal filed a motion to dismiss Child’s retaliation claim, arguing that Child’s communications to his supervisor and HR do not qualify as “protected activity” (filing a complaint) under the FLSA. Under the FLSA, filing a complaint is considered statutorily protected activity but the FLSA does not define the word “complaint.”

The Court found that precedent, although not directly on point, indicates that the word Complaint in the FLSA’s anti-retaliation provision should be interpreted liberally. In 2011, the Supreme Court found that an employee engages in protected activity under the FLSA anti-retaliation statute when the employee’s complaint is “sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context as an assertion of rights protected by the statue and a call for their protection” Kasten v. Saint-Gobain Perf. Plastics Corp., 563 U.S. 1, 14 (2011).  When the Court reviewed the facts from Childs’ case, it found that a reasonable jury could find that Childs’ complaints to Ms. Hinson and to HR were sufficiently clear assertions of rights protected by the FLSA. It was not necessary for Childs to explicitly refer to the FLSA when making his complaint in order for it to be considered “protected conduct” under the law. Moreover, the Court held that Childs’ reports to his supervisor regarding non-payment of overtime were necessary to the effective assertion of employees’ rights under the FLSA. Thus, Childs’ reports were considered “protected conduct” under the FLSA.

What does this mean to employers?

An employer must be careful when taking adverse action against an employee who previously brought forth complaints about overtime or pay practices.  Although an employee is not completely protected from adverse action once he/she engages in protected conduct under the FLSA, an employer must be sure that a non-retaliatory reason exists for the adverse employment action before such action is implemented.  As is always the best course of action, seek advice from legal counsel when taking employment action against an employee who has previously engaged in protected conduct.

Claim Based on Breach of Installment Contract Found to Accrue as of Date of Missed Payment

In a dispute against the executor of an estate, the two beneficiaries under the decedent’s will (Mark and Michael Balk) sued the executor (Mark Roseman) for breach of fiduciary duty and sought to remove him as executor. Ultimately, the parties reached an agreement, in which the executor Roseman agreed to execute a promissory note in the amount of $800,000. The terms of the note required an initial payment and then installment payments over a 24 month period. In the case of In re Estate of Balk, 2016 N.J. Super. LEXIS 70 (App. Div. 2016), the beneficiaries sued Roseman when he failed to make all of the installment payments due. In Balk, the issue was whether the beneficiaries’ claim was barred by the statute of limitations.

The settlement agreement was executed on June 4, 2007. It provided for an initial installment of $10,000 within 60 days of signing, $40,000 on December 3, 2007, $80,000 on June 3, 2008, $100,000 on December 3, 2008, and the balance over 24 months. Failure to pay the initial or any subsequent payment entitled the Estate to a judgment for the unpaid balance.

Between August 2007 and January 2009, Roseman paid $37,047 towards the payments due. However, he failed to pay the initial sum and the installment payments required by the note in full. It was not until June 2, 2014 that Michael Balk sued Roseman to enforce the settlement agreement and enter a judgment against him.

Roseman argued that the claim was barred by the 6 year statute of limitations. The trial judge found, however, that the installment contract approach applied in determining the accrual date of the Estate’s claims. Under this approach, the judge found that the Estate was entitled to collect on each of the installment payments that was due and owed by Roseman on and after June 3, 2008.

Roseman argued on appeal that the judge erred in applying the installment contract approach and that the Estate’s claim accrued when the initial payment was missed. Hence, he contended that the claim failed under the 6 year statute of limitations. The Appellate Division rejected these arguments and upheld the trial court’s decision.

Under the installment contract approach, claims accrue with each subsequent installment. As each payment is missed, a new statute of limitations starts to run and a new cause of action arises from the date of each payment missed. Unless there is a repudiation of the entire contract, a plaintiff may sue for each breach only as it occurs.

Here Roseman did not contend that there was a repudiation in this matter. Rather, he argued that his failure to make the first installment payment constituted a total breach under the agreement, preventing the application of the installment contract approach.

The Appellate Division found that the failure to make the first payment did not constitute a breach of the entire contract. A missed payment is insufficient to constitute a total breach of an installment contract unless accompanied by an anticipatory repudiation indicating a failure to perform the future obligations set forth in the installment contract.

While Roseman did breach his obligation to pay the first installment in 2007, there was no repudiation or total breach of the promissory note. There was no indication that he would not fulfill his future obligations. In fact, he did pay $37,000 to the Estate over the next several years.

Thus, the Appellate Division found that the trial court judge correctly applied the statute of limitations under the installment contract method, as there was no repudiation or total breach of the promissory note. Roseman’s conduct in paying monies over the next several years belied any argument that he did not intend to honor the agreement.

Accordingly, the Appellate Division ruled that the Estate was entitled to all payments which were due for the 6 years prior to the filing of the motion to enforce on June 2, 2014. The Estate would be entitled to collect on each of the installment payments due and owing by Roseman on or after June 3, 2008.

Damage to Commercial Building Barred by Wear and Tear Exclusion in Insurance Policy

A common exclusionary clause in a property damage policy is an exclusion for damage or loss caused by “wear and tear.” In Lam Inv. Research, LLC v. Public Serv. Mut. Ins. Co., 2016 U.S. Dist. LEXIS 45116 (D.N.J. April 1, 2016), the District Court of New Jersey interpreted such a clause in the context of claimed damage to a wall in a commercial building. The plaintiff property owner sued its insurer, seeking coverage under the commercial all risks real estate insurance policy issued to the plaintiff for this building.

The building was owned by Lam Investment Research, LLC, which company was owned by Anthony Lam who invests in commercial real estate properties. He bought this building, located in Jersey City, in 2001. The building to the east of his property had been demolished 20 years before he bought the property. The east side wall of his building, which had been intended as an internal wall, became an external wall after the demolition of the adjoining building.

By 2008, the exterior condition of the Lam building had deteriorated. In 2009, Lam purchased an insurance policy from the defendant Public Service Mutual Insurance Company. In late 2009 or 2010, Lam noticed cracks in the brick masonry and missing bricks in the east wall of this building. He obtained a repair proposal from an engineer who concluded that the building showed serious signs of deterioration and that the east wall showed evidence of water seepage and cracks which had recently increased in size due to the penetration of water.

On October 19, 2010, Lam filed a claim with the defendant, giving a date of loss of October 14, 2010.

The defendant insurer also obtained an engineering report which concluded that the damage to the east wall was due to the exposure to the elements. The defendant’s engineer found that the east wall, intended to be an interior wall, had become saturated with water, which damaged the brick as the water froze and expanded. The cracks that resulted allowed more water to seep in and caused further damage to the brick. Wood floor joists were cut, left pocketed into the wall, and not properly sealed. As a result of improper sealing, more water was permitted to seep into the wall. The report concluded that the majority of the distress to the wall was consistent with damage caused by normal wear and tear.

The report did note that some of the damage could have been caused by the demolition of the adjacent building. Further, the engineer stated that, when Mr. Lam bought the property, the majority of the damage could have been present and any additional distress was “likely related to wear and tear due to exposure to the weather and the environment.”

In interpreting this policy, the District Court noted that it was an “all risk” policy, meaning that it covered all losses of “a fortuitous nature, in the absence of fraud or other intentional misconduct of the insured, unless the policy contains a specific provision expressly excluding the loss from coverage.” The Court also found that this policy contained two exclusionary clauses which may bar coverage – the “earth movement” and the “wear and tear” exclusion. The Court noted that exclusionary clauses in an insurance policy are upheld under New Jersey law if they are “specific, plain, clear, prominent, and not contrary to public policy.”

Focusing on the wear and tear exclusion, the Court found that the defendant’s report showed that wear and tear was the efficient proximate cause of the damage to the building. The defendant’s engineer concluded that the damage was ongoing and progressive since the adjoining building was demolished 20 years before Lam bought the building. Over the years, water seeped in and caused damage to the brick.

Lam did not contest this finding, nor could he, because his own consultant reached the same conclusion. His contention was that some unidentified cause arising after 2008 must have been responsible for the damage. Further, he argued that because the defendant insurance company did not perform an inspection when it issued the policy, it should not be permitted to utilize the wear and tear exclusion in the policy.

The District Court rejected these arguments. It found that the uncontradicted engineering evidence showed that the damage was caused by wear and tear over time. The need to repair the wall did not arise from some specific, identified event on October 14, 2009 but, rather, was caused by the deterioration of the wall. The policy clearly excluded all kinds of “wear and tear.” Accordingly, the District Court held that the wear and tear exclusion barred coverage, granted summary judgment to the defendant insurance company, and dismissed the complaint.

Can a Corporation Be Your Doctor?

With the recent and continuing proliferation of ambulatory care facilities, drug treatment facilities, and diagnostic, therapeutic, and ancillary care services frequently under the same roof as medical practices, it is essential that physicians and other licensed practitioners ensure that the structure of their practice complies with the Corporate Practice of Medicine (CPOM) doctrine and associated regulations.

While some states have done away with the CPOM doctrine, the doctrine is alive and well in both Pennsylvania[1] and New Jersey.[2]  In essence, the CPOM doctrine prohibits a practitioner from providing health care services as an employee of a general business corporation or a business entity in which the shareholders are not all licensed practitioners (however, there are several exceptions to this rule found in the regulations).[3]  The rationale behind the CPOM doctrine is to create a barrier between the practitioner, who must act in patient’s best interests, and corporate shareholders, who seek to maximize profits, thereby eliminating any influence in the provision of medical care from a corporate shareholder.

In light of the CPOM doctrine, a practitioner must be careful in how his/her practice is structured and the shareholders thereof. The following are several common structures which are generally permissible.

Solo Practice.  A practitioner may practice solo and/or may employ or otherwise remunerate other licensed practitioners to render professional services within the scope of practice of the employee’s license.   However, it is important to ensure that the scope of the employee’s license does not exceed that of the employer’s license.  For example, a nurse, chiropractor, optometrist, psychologist, or other professional holding a limited licensed may not employ a physician who holds a plenary license to practice medicine.

Limited Liability Company, Professional Association, Partnership.  While the CPOM doctrine generally prohibits the practice of medicine through a general business corporation, a limited liability company, partnership, and professional association are expressly allowed under the regulations, so long as such entity is composed solely of health care professional shareholders, each of whom is duly licensed or otherwise authorized to render the same or closely allied professional services.  Closely allied fields include chiropractic, dentistry, nursing, nurse midwifery, optometry, physical therapy, podiatry, psychology, and social work.

Associational Relationship with Other Practitioner or Professional Entity. In this scenario, a practitioner would be an employee or independent contractor, for any form of remuneration, of the other practitioner or professional entity; however, the scope of the employer’s license must be equal to or exceed that of the employee/contractor.

Shareholder or Employee of a General Business Corporation.  Such a form is permissible, but is limited to the following circumstances, in which the corporation is:

  • Licensed by the New Jersey Department of Health and Senior Services as a health maintenance organization, hospital, long- or short-term care facility, ambulatory care facility or other type of health care facility or health care provider, such as a diagnostic imaging facility;
  • Not in the business of offering treatment services but maintains a medical clinic for the purpose of providing first aid to customers or employees and/or for monitoring the health environment of employees;
  • A non-profit corporation sponsored by a union, social or religious or fraternal-type organization providing health care services to members only;
  • An accredited educational institution which maintains a medical clinic for health care service to students and faculty; or
  • Licensed by the State Department of Insurance as an insurance carrier offering coverage for medical treatment and the licensee is employed to perform quality assurance services for the insurance carrier.

In less common circumstances, a licensed health care professional may also have an equity interest or be employed by a professional practice (including a professional service corporation or limited liability company) which is a limited partner to a general business corporation which, in turn, has a contractual agreement with the professional service entity.  The general business corporation may contract to provide the professional practice with services exclusively of a non-professional nature, including routine office management, hiring of non-professional staff, provision of office space and/or equipment and servicing thereof, and billing services. The practitioner, however, remains responsible to assure that an appropriate licensed health care professional determines and carries out all services and medical care including retention of sole discretion regarding establishment of patient fees and modification or waiver thereof in an individual case. As a condition of such contractual arrangement, the general business corporation may make no representations to the public of offering, under its own corporate name, health care services which require licensure.

In all, there are a variety of business structures which allow practitioners to provide professional services while being employed, partnering with, and/or engaging the services of other licensed professionals.  However, given the structural complexity of many modern medical entities (i.e. captive practices, MSOs, etc.), it is vital to ensure that any corporate arrangements comply with the statutory and regulatory requirements of the CPOM doctrine.

[1] See Neill v. Gimbel Bros., Inc., 199 A. 178, 182 (Pa. 1938).  Please note that while the PA CPOM doctrine remains, this blog focuses on New Jersey’s regulations thereof.

[2]See N.J.A.C. 13:35-6.16; see generally Michal et al., CORPORATE PRACTICE OF MEDICINE DOCTRINE 50 STATE SURVEY SUMMARY, available at http://www.nhpco.org/sites/default/files/public/palliativecare/corporate-practice-of-medicine-50-state-summary.pdf.

[3] See N.J.A.C. 13:35-6.16(f)(4); Selective Ins. Co. of America v. Medical Alliances, LLC, 362 N.J. Super. 392, 395, fn.1 (Law Div. 2003) (“the Legislature has carved several statutory exceptions from this common law ban against the corporate practice of professional services to permit hospitals, nursing homes and certain other “ambulatory care” facilities to operate as general business corporations. The rationale for this exception is that the adverse influences and countervailing interests peculiar to a business corporation are minimized and overshadowed by their public necessity, by a public need to assure institutional continuity, and by the fact that such entities are regulated and inspected by the State Department of Health and Senior Services, thus providing similar protections otherwise provided by the regulations of the State Board of Medical Examiners, N.J.A.C. 13:35-6.16(f)(4), which limit the ability of its licensees to be shareholders or employees of a general business corporation to five settings.”)

 

Questions regarding this article may be sent to Publications@Capehart.com. 

Defendant Wins Dismissal of Personal Injury Suit Due to Plaintiff’s Inability to Apportion His Damages between Successive Accidents

In a work related accident, plaintiff Alan Pickett fell on black ice at the defendant supermarket’s premises and injured his neck and back. About 8 months later, he suffered a second work related accident and severely aggravated his lower back injury. In Pickett v. ShopRite of East Norriton, 2016 N.J. Super. Unpub. LEXIS 442 (App. Div. March 1, 2016), the plaintiff appealed an order precluding his expert from testifying at trial and dismissing his personal injury case. The basis of the dismissal was the plaintiff’s inability to allocate his damages between the two accidents.

Following plaintiff’s first accident, he had an MRI of his lumbar spine as part of his treatment. Plaintiff received the only copy of the MRI film but later misplaced it. The radiology imaging center’s file was corrupted and no other films were available. Due to the unavailability of the film for defendant’s review, the trial court judge barred the plaintiff from introducing the MRI study into evidence.

At trial, the defendant moved to bar the plaintiff’s medical expert from testifying. The defendant argued that the doctor did not apportion the plaintiff’s injuries between the two accidents. Further, the defendant contended that, because the doctor relied on the 2010 MRI in his report, he would be unable to specify an apportionment of damages.

The trial court judge agreed and granted the defendant’s motion to preclude the doctor’s testimony. Without the doctor’s testimony, the court also granted the plaintiff’s motion to dismiss the case.

The Appellate Division ruled that the trial court’s decision to bar all references to the initial 2010 MRI was well within the trial court’s discretion. The court noted that the plaintiff’s doctor made only general statements indicating that the second accident caused most of the plaintiff’s injuries but failed to specify the percentage attributable to the first accident.

The Appellate Division pointed out that it is the plaintiff’s burden to prove the defendant’s negligence and that such negligence was the proximate cause of the plaintiff’s injury. To meet that burden, the plaintiff seeking to recover for an injury caused by successive accidents must apportion damages between each responsible party. The defendant should only be responsible for the harm he or she caused.

The court ruled that the plaintiff was in the best position to apportion responsibility between his two injuries suffered in these two accidents. Plaintiff, however, would normally need expert testimony for this apportionment. Because plaintiff’s expert was barred from testifying, plaintiff was unable to meet his burden of proving damages. Hence, the Appellate Division upheld the trial court’s dismissal of the suit.

Rehabilitation Center Found Not Responsible for Injuries Caused by Fall over Mattress on the Floor Due to it being an Open and Obvious Condition

Plaintiff Elizabeth Cunningham was visiting a resident of Briarwood Rehabilitation Center (“Briarwood”) when she tripped over a mattress on the floor and sustained an injury. The defendant Briarwood argued that it owed no duty to the plaintiff to warn of an open and obvious condition. In Cunningham v. Briarwood Care and Rehabilitation Center, Inc., 2016 N.J. Super. Unpub. LEXIS 566 (App. Div. Mar. 15, 2016), the plaintiff appealed a summary judgment order in favor of the defendants.

The plaintiff had been visiting a resident for 2 hours before the accident happened. She admitted that she saw a mattress on the floor when she first entered the room. It had been placed on the floor as part of a seizure protocol for the resident’s roommate. Plaintiff exited and entered the room at least one time during her visit. However, forgetting that the mattress was there, she walked over to the other side of the room and tripped over the mattress.

Both parties agreed that Briarwood owed plaintiff a duty of reasonable care to warn against known or reasonably discoverable dangerous conditions on the property. The parties disagreed, however, on whether the location of the mattress was open and obvious.

The plaintiff argued that the trial judge erred in finding that the hazardous condition was open and obvious. The Appellate Division, however, agreed with the trial court judge.

The court noted the plaintiff’s admission as to seeing the mattress when she entered the room and remaining there for 2 hours. It was only when she walked to the other side of the room and forgot it was there that she tripped over it. Thus, the court found that even if the mattress being located on the floor was a dangerous condition, no reasonable finder of fact could conclude that the plaintiff was unaware of the condition. The Appellate Division held that the mattress on the floor was open and obvious “and that plaintiff could have, and indeed did, observe the condition through a reasonable use of her faculties.” Hence, it affirmed the trial court’s order, dismissing the complaint.

Answers to Common Questions Regarding Partial Permanent Disability Awards in New Jersey

Permanent partial disability awards are often mysterious, partly because New Jersey compensation is so different from our neighboring states.  For those who are used to the laws in Pennsylvania and New York, permanency awards in New Jersey can make no sense.  Here is a sample of common questions about our system in New Jersey:

Question: How can someone who is back to his or her job doing full duty receive an award for permanent partial disability?

Answer: Unlike most states whose compensation systems focus on lost wages, New Jersey has two indemnity payments. The first, temporary disability benefits, depends on actual lost wages. They are similar to payments in other states.  These benefits end at maximal medical improvement or return to work, whichever occurs first.  But permanency payments are based on loss of function, not directly related to lost wages.  The loss of function need not arise at work; it can be loss of function in non-work activities, like sports, hobbies, home activities or the like. Someone who is back to work doing the same job following surgery will still get an award of partial permanent disability.

For example, if an employee has rotator cuff repair surgery and returns to work performing the same job duties as before the accident, the employee is still eligible for a permanency award if he or she has lost function in the activities of daily living.

Question: What kind of testimony does a Judge of Compensation need to hear to decide to make an award of permanent partial disability?

Answer: The New Jersey Supreme Court said in Perez v. Pantasote, 95 N.J. 105 (1984) that an employee must provide both objective evidence of impairment in the body member plus either evidence of a lessening of working ability or a substantial impact on non-work activities. The first part of this test is easy to prove if there is a positive MRI or surgical record given that this would be considered objective medical proof of impairment. The second part of the test depends on the testimony of the claimant in court.  The claimant will describe the impact of the injury on work or non-work activities, discussing activities that he or she can no longer perform or have had to curtail.  If there are no complaints about work activities, the Judge will focus on statements that the claimant makes about hobbies, household chores, and basic daily activities like sleeping that have been affected by the work accident.

Question: Does a claimant who has had surgery ever not receive an award for permanent partial disability?

Answer: There are many claimants who never file for permanent disability awards who have had surgery.  One is not eligible for such an award unless he or she files a claim petition in the Division of Workers’ Compensation.  Almost every claimant who has surgery and who files a claim petition will receive an award of permanent partial disability because there will almost always be testimony that the surgery has left the claimant with a substantial impairment of work or non-work activities.  The only exception would be a claimant who comes to court and testifies that the work injury and surgery have had no impact at all on work or non-work activities.  The undersigned has never encountered this in his practice.

Question: How does an adjuster reserve a case following surgery? Is there a particular formula that a judge uses to determine an award?

Answer: There is no cheat sheet or document that New Jersey judges use to make awards.  Unlike almost every other state, New Jersey does not follow the AMA Guidelines to Impairment.  Every case must be assessed on its own merits, and the Judge must factor in the objective evidence and the testimony regarding the impact of the injury on work and non-work activities.  Both sides obtain permanency evaluations, and the judge reviews all of these reports.  The permanency evaluators are generally far apart in their assessment of disability.

As a general rule, operated cases are worth more than unoperated cases on the theory that if a medical condition requires surgery, it is probably more serious than one that does not require surgery.  For most operated cases involving one surgery to the back, leg or shoulder, for instance, a practitioner knows that the loss of function which may ultimately be awarded may be around 25% of partial total, give or take a few percentages points.  An award of 25% of partial total means that the worker has lost about a quarter of his or her function. So an operated rotator cuff  case with no serious complications may be reserved around 25%.  But the ultimate award will depend on the objective medical evidence and the testimony before the particular judge who is hearing the case.  Experienced adjusters and defense counsel have a sense of how to reserve for operated and unoperated cases.

Question: Have disability award percentages changed over the 36 years since the 1980 Amendments?

Answer: Not really.  The big change since the 1980 Amendments has been the escalation in the amount of the award, not the percentage of the award.  An operated herniated disc surgery without complications in 1980 would generally be reserved for 25%, as it is today, give or take a few percentage points.  However, the dollars have dramatically increased.  For example, in 1979 before the amendments took effect, an award of 50% permanent partial disability was valued at $12,000.  Today in 2016, an award of 50% permanent partial disability would be valued at $174,300.

One kind of injury where percentage awards have increased concerns head injuries.  Medicine and science have revealed a great deal more about head injuries and concussions in the past 10 years, resulting in much higher awards than in the 1980s.

Question: Why are finger injuries often put in terms of the hand and not the schedule for fingers?

Answer:  New Jersey has scheduled awards and unscheduled awards.  Fingers and hands have their own schedules.  They are not like partial total awards for parts of the body not on a schedule, such as the back, neck, shoulder, hip, trunk, and internal injuries.  Scheduled awards are valued lower than unscheduled awards.  A loss of function of 25% of the index finger is paid over 12.5 weeks. A loss of function of 25% of the hand is paid over 61.25 weeks. By comparison, an award of 25% for a back injury is paid over 150 weeks.  Claimants argue that the loss of function of the finger impacts the function of the hand and therefore contend that they should receive an award in terms of the hand, not the finger.

In the end, the Judge of Compensation has to decide whether the finger injury impacts the hand to such a degree that the award should be converted to a hand injury.  If the finger injury only impacts the function of the finger, then the award is in terms of the finger.  The Judge reviews the evaluation reports submitted by counsel for guidance.  Sometimes the judge will convert the weeks for the finger to the exact same number of weeks in the hand, meaning no dollar increase in the award; other times, the judge may award a percentage in the hand that is somewhat higher than the weeks for the finger schedule.

There is general recognition that finger and hand awards are very low in New Jersey relative to unscheduled losses.  There are bills being proposed to raise such awards.  For instance, an award of 60% of the hand amounts to $38,675 at 2016 rates; an award of 60% of partial total for the back amounts to $250.920.  Why should a back or shoulder injury of 60% be worth more than six times a hand injury of 60%?  There is no answer to that question.  This is perhaps an anachronism based on an assessment from many decades ago by the Legislature that hand injuries should be considered less important in the workplace and outside the workplace than injuries to the neck, back, shoulder, hip or trunk.

Question:  How can an employer produce evidence that may result in lower permanency awards?

Answers:  There are a number of things employers and carriers can do to reduce the percentage of the award.

  1. Credits for previous disability save money for employers. So if an employer can show that the claimant had the same condition in the past or a related condition, the judge will consider awarding a credit to the employer. Credits are dollars that come off the award. This is why employers should furnish post-offer medical exams to defense counsel, as these exams often reference a condition that existed at the time of hire.  This is also why defense counsel review ISO reports, DMV reports and prior family doctor records.
  2. Employers who are aware of social or athletic activities or second jobs that employees currently participate in should transmit this information to defense counsel. This information is directly relevant since it bears on the impact of the accident on work or non-work activities.  So if the employer is well aware that the employee seeking a permanency award is actively golfing and playing basketball but that employee has told his medical evaluator that he can no longer do these activities, this information needs to get to defense counsel.  In one case the undersigned had an employee with two surgeries to her leg who said that she could no longer golf as a result of the surgeries.  The employer obtained a tip from a newspaper that the employee was an active member of a golf club and had won a best ball event.  Our office contacted the golf club, which furnished the number of rounds that the employee played each week, and the Judge of Compensation reduced a very large award to a minimal award.

In Case of First Impression District Court Expands the Reach of the False Claims Act

In a recent decision, Druding v. Care Alternatives, Inc.[1], the United States District Court for the District of New Jersey held that Medicare hospice certification provisions are conditions of payment, thereby effectively expanding the reach of the False Claims Act (“FCA”).

The Defendant in the matter is a for-profit provider of end-of-life hospice care in New Jersey. The Plaintiffs, former employees of the Defendant, allege the Defendant fraudulently billed Medicare for patients admitted into its facilities, who were not eligible under the Medicare regulations for hospice care. Per its regulations, Medicare will pay for hospice services if a patient’s life expectancy is six months or less. The Plaintiffs’ complaint identified fifteen patients whose conditions allegedly did not meet Medicare’s life expectancy criteria for hospice care. The Plaintiffs further allege that the Defendant engaged in aggressive marketing tactics to bring in more patients, by providing gifts and meals to physicians, administrators, directors, and social workers to induce referrals.

The Plaintiffs initially filed the lawsuit in 2008, but after nearly seven years of investigating the Plaintiffs’ claims, the United States Department of Justice elected not to intervene. Nonetheless, the Plaintiffs served their complaint on the Defendant in July of 2015. The Defendant subsequently moved to dismiss the Plaintiffs’ complaint, arguing that the applicable Medicare regulations are not conditions of payment. Conditions of payment are requirements that must be met prior to payment by Medicare. On the other hand, conditions of participation are prerequisites to participation in a federal program such as Medicare. Noncompliance with conditions of payment result in nonpayment and are actionable under the FCA; whereas, noncompliance with conditions of participation result in administrative sanctions.

The District Court rejected the Defendant’s argument and held that hospice certification provisions of the Medicare regulations are conditions of payment because Medicare explicitly conditions payment for hospice care on a written certification from a physician with supporting documentation concerning the patient’s condition. In April of 2016 the United States Supreme Court will hear oral arguments in Universal Health Services, Inc. v. United States ex rel. Escobar, and the Court will likely decide whether compliance with Medicare requirements must be expressly delineated as conditions of payment in order to trigger FCA liability. The Supreme Court’s decision will be significant for health care organizations, because it will impact the scope of cases that are actionable under the False Claims Act.

[1] Druding v. Care Alternatives, Inc., 2016 U.S. Dist. LEXIS 21488 (Feb. 22, 2016).

 

Questions regarding this article may be sent to Publications@Capehart.com. 

Appellate Division Again Rules that Residential Landowners Not Liable for Injury Caused by Fall on Abutting Public Sidewalk

Plaintiff Sunnie Corry was walking with her husband and daughter, as well as her grandchild, who was in a stroller, on the sidewalk abutting the defendants’ home. She tripped and fell over a raised and severely broken sidewalk and, as a result, suffered a severe rotator cuff injury. In Corry v. Barbieri, 2016 N.J. Super. Unpub. LEXIS 255  (App. Div. Feb. 5, 2016), the plaintiff urged the Appellate Division to abandon the “unenlightened” standard that insulates residential landowners from liability for injuries caused by abutting sidewalks.

The trial court granted summary judgment to the defendants based upon the current state of the law. On appeal, the plaintiff argued that the Appellate Division should expand the law to find residential landowners liable for a fall on an adjoining public sidewalk.

The Appellate Division noted that the law has been evolving since Stewart v. 104 Wallace Street, Inc., 87 N.J. 146 (1981), in which the Supreme Court altered the “no liability” rule by holding that commercial landowners would be responsible for maintaining in reasonably good condition the sidewalks abutting their property. However, the Court limited its holding to owners of commercial property.

More recently, in Luchejko v. City of Hoboken, 207 N.J. 191 (2011), the Court adhered to Stewart’s residential v. commercial distinction by holding that a condominium association and management company could not be held liable for injuries caused by a sidewalk abutting a residential condominium complex.

Thus, the Appellate Division noted that while the common law has evolved since Stewart, the Court’s recent opinions showed its continued adherence to a residential landowner’s immunity from liability for injuries caused by public sidewalks abutting their property. Only the Supreme Court can decide if it is time for a change. Hence, it affirmed the trial court’s order, dismissing the case.

Plaintiff Cannot Extinguish Section 40 Lien Rights By Setting Arbitrary Dates To Provide Lien Amounts

The case of Cabrera v. Cousins Supermarket, A-5287-13T1 (App. Div. February 23, 2016) covers a point not previously addressed under N.J.S.A. 34:15-40, the provision dealing with the employer’s subrogation rights to third party recoveries.

Jose Cabrera injured his right hand while operating a meat perforating machine and recovered workers’ compensation benefits under an order approving settlement in 2010.  He received both temporary and permanent disability benefits.

Cabrera also brought a civil complaint against the manufacturer of the machine and his employer, but the arbitrator found no liability.  However, pursuant to a “high/low” agreement, Cabrera did recover counsel fees of $25,000. Those fees went to his attorney and to cover costs, but nothing went to Cabrera.

In May 2012, Cabrera issued a subpoena on Amerihealth Casualty, his health insurance carrier, to find out the amount of medical bills paid on his behalf in relation to the work injury.  Cabrera asked if Amerihealth Casualty was asserting lien rights.  Amerihealth did not respond to the subpoena.  Three months later (just prior to the arbitration) Cabrera contacted Cousins’s counsel with a request that counsel call Amerihealth to obtain the lien number.  Cousins was not informed of the impending arbitration.  The next day, Cabrera advised Cousins that he would not be honoring any lien because the lien amount had not been provided to Cabrera.  Cousins responded that it was not waiving any lien.  One day after the arbitration, the lien figures were provided to Cabrera.

Cousins filed a motion to enforce the lien under N.J.S.A. 34:15-40, arguing that there can be no waiver of lien rights where the plaintiff is already aware of the existence of a lien.  Cabrera countered that he did not get any money at all from the third party case, so there could not be a Section 40 lien.  The Appellate Division disagreed: “When a plaintiff recovers from a third party, a lien attaches regardless of whether the cumulative awards are sufficient to fully compensate for all injuries.” (citing to Frazier v. N.J. Mfrs. Ins. Co., 142 N.J. 590 (1995).

The Court specifically rejected the notion that a plaintiff can avoid a workers’ compensation lien by making a demand for specific lien information and putting a deadline on supplying the lien figures.  “As to the waiver of the right to assert a lien, we do not find the argument has sufficient merit to warrant discussion in a written opinion.”   The Court added that there are sometimes risks to bringing a third party action.  “The decision to pursue a third-party action with its attendant costs is a known risk, one that is part and parcel to litigation.”

This case is interesting for two reasons:  the plaintiff got no money at all from the third party case, but the award of counsel fees was considered a double recovery.  Secondly, plaintiff’s ploy in setting a deadline to provide lien information was rejected by both the Judge of Compensation and the Appellate Division.  While it is true that the respondent was not aware of the pending arbitration hearing when the subpoena was served, the key to the decision is that Cabrera was aware of the potential lien and that was enough to establish the lien rights of the employer.

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