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

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

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

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

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

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

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

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

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

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

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

Yes, 400 weeks is the statutory limit.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Q. Does New Jersey have “partial temp?” 

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

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

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

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

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

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

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A Brief History of the New Jersey Workers’ Compensation Act

For those who do not like workers’ compensation, blame Otto Von Bismarck.  Yes, the man known as the Iron Chancellor, who united all the kingdoms and states into one Germany, passed the first modern workers’ compensation law in 1874.  Other western European nations soon followed, and between 1911 and 1920 every state in America adopted a workers’ compensation law, all of which borrowed from Bismarck’s first modern law.  On April 4, 2024, New Jersey marks its 113th year of workers’ compensation.  Wisconsin was the first state to pass a workers’ compensation law in 1911.  Nine more states, including New Jersey, followed in 1911. 

The significance of having a workers’ compensation law can only be appreciated if you consider how injuries were treated before 1911.  Former Director of the Division of Workers’ Compensation, Peter Calderone, wrote an excellent article in 2011 explaining what life was like before modern workers’ compensation laws.  If an employee’s injury was caused by his own negligence, or by a co-employee’s negligence or was just a fact of business life, the employer paid no workers’ compensation benefits. That meant no medical treatment was offered, no lost wages and no benefits were voluntarily paid.  Fault was the main defense in all cases.  Work injuries quickly led to impoverishment for families.

Since there was no workers’ compensation law until 1911, injured workers would hire litigation lawyers who would sue the employer for medical care and damages.  Courts in every state were jam packed  with thousands of such cases.  Employers would sometimes win the suits and sometimes lose and pay high jury awards.  The process was slow and both labor groups and employers were unhappy with the system. 

While Bismarck may have started the concept of the modern workers’ compensation law, New Jersey owes its own unique version of workers’ compensation law mostly to one man named Walter Edge, who grew up in Pleasantville, Atlantic County, New Jersey and who started his first newspaper as a ten-year-old boy.  At age 17, he purchased the Dorland Agency, an advertising business, and turned it into an international advertising company with offices in the United States and Europe.  He founded the Atlantic City Press at age 22, which he sold for an enormous profit.  He got into politics at age 21.  He was elected to the Assembly at age 36 in 1909 and became a state senator in 1910.  Edge was so passionate about creating a New Jersey workers’ compensation law that he traveled to Germany and other western European countries to learn how each country’s system worked.  When he returned from Europe, he had in his mind a plan for a New Jersey workers’ compensation law.

Edge sponsored the first New Jersey workers’ compensation law in 1911 and lobbied colleagues in both parties to support it.  The legislation would take workers’ compensation out of civil courts and create an administrative remedy.  Edge wrote in 2011:  “It is generally conceded that 20 per cent of all litigation today, clogging the machinery of our courts, consists of suits between employer and employee.”  The legislation was passed with bipartisan support in the Assembly and Senate on April 3, 1911, and then signed into law on April 4, 1911 by Governor Woodrow Wilson. 

New Jersey labor groups hailed the law’s main features, which were to eliminate fault as an issue for receiving compensation benefits and to provide prompt medical benefits after an injury along with temporary disability and partial permanent disability benefits in certain cases.  Edge wrote in 1911, “. . . American citizenship and humanity does not allow an injured man to walk about the streets uncared for; as, at great expense, the public is maintaining, mainly through charity, many institutions to properly look after unfortunate people. The public is paying the bill.”  Provisions also covered permanent and total disability benefits and dependency benefits.  In return for agreeing to a no-fault system, employers received what they wanted.  That was an end the right of an employee to sue his or her employer or co-employee in civil court. This provision is referred to as the “exclusive remedy.”  

Walter Edge would go on to pass many other laws that made a difference to New Jersey residents — both labor groups and employers.  When North and South Jersey could not agree on major capital projects, he managed to forge a compromise that would lead to the construction of the Ben Franklin Bridge and the Holland Tunnel.  He became an early ally of Enoch “Nucky” Johnson (the character on whom “Boardwalk Empire’s” Nucky Thompson was based).  In fact, Johnson became Edge’s campaign manager for Governor in 1916.  Johnson was a Republican power broker in Atlantic County, and Edge was also able to get the support of the state’s leading Democrat, Mayor Frank Hague of Hudson County fame.  Hague thought the Democratic candidate too liberal for his tastes.  Edge won and became Governor, eventually serving two terms as Governor of New Jersey, separated by 25 years.  What does this biographical history of Walter Edge have to do with workers’ compensation?  Not much, but perhaps consider this a minor deviation.

From 1911 to 1979, there really were few changes to the New Jersey Workers’ Compensation Act.  Walter Edge’s vision of workers’ compensation in 1911 has stood the test of time.  There has only been one major overhaul of New Jersey’s law, and that took place in 1979. The overhaul was necessary because New Jersey’s benefit rates were extremely low and were not keeping up with inflation.   An award of 50% permanent partial disability amounted to only $11,000 in 1979.  Even back then, that was not a lot of money.   In 1980 the same award more than tripled to $36,900.  Today an award of 50% permanent partial disability for a high wage earner amounts to over $226,000.  For their part, employers were unhappy with the endless exceptions to the going-and-coming rule and the unpredictable standards for occupational disease claims and also lobbied for change in 1979.  The Legislature passed dozens of major changes to the Act including the following:

  1. Significant rate hikes for temporary disability and permanent partial disability benefits starting in 1980;
  2. Tightening the standards for occupational disease claims to include the requirement that the petitioner show proof of a medical condition that is produced by causes which are characteristic of or peculiar to work in a material degree;
  3. Creating more stringent medical/legal requirements for cardiovascular and cerebrovascular claims;
  4. Requiring proof by objective medical evidence to support any claim for permanent partial disability and eliminating awards based solely on subjective complaints;
  5. Narrowing the countless exceptions to the former “going-and-coming rule” and adopting the “premises rule” instead.

Following these and many other amendments, the Supreme Court weighed in on its interpretation of key provisions passed in 1979, including Perez v. Pantasote, Hellwig v. J. F. Rast & Co., Inc., Saunderlin v. E.I. DuPont Co., and Jumpp v. City of Ventnor.

Where does New Jersey workers’ compensation stand today, 113 years after Walter Edge wrote the first workers’ compensation law in the state?  It remains very much where it stood in 1911 as buttressed by the 1979 amendments.  If one were to list the five main pillars of the New Jersey Workers’ Compensation Act that differentiate our law from that of other states, they would be these:

  1. Permanent partial disability benefits even for workers who are able to return to their job on a full-time basis with no restriction so long as they have proof of a substantial limitation of non-work activities;
  2. The absence of any medical fee schedule;
  3. Employer-directed medical care;
  4. The employer’s right to terminate medical and temporary disability benefits at MMI;
  5. The right of an injured worker to reopen his or her case for further medical, temporary and permanent disability benefits.

All these aspects of the law were set in motion in 1911. Other states have several of these features in their law, but no other state has all five of them.  The state that is closest to New Jersey’s system is Missouri.  Perhaps because Walter Edge was a moderate politician who routinely reached out to both sides of the political aisle throughout his career, he was able to craft legislation that offered advantages to both employees and employers. Neither employers nor employees like every aspect of the New Jersey law.  Few can dispute, however, that New Jersey has a better social policy behind its law.  The overwhelming majority of injured workers do return to work.  The New Jersey Act has its critics.  One of the most serious criticisms is that New Jersey has the highest workers’ compensation medical costs in the nation.  Overall, however, the New Jersey Act is more balanced than workers’ compensation laws of most states and remains true to the spirit of the original 1911 law.

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Recording and Taping IMEs in New Jersey Workers’ Compensation

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

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

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

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

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

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Guidance on Recording Defense Medical Examinations and Having Non-parties Present

One of the most nettlesome questions in New Jersey workers’ compensation is whether a non-party can attend an IME and whether a petitioner or a physician can record a medical examination without the other party’s consent and use it at trial.  It is important to observe that the New Jersey Workers’ Compensation Act provides very little guidance on procedures regarding medical examinations other than one particular statutory provision which allows only an employee’s personal physician to attend an independent medical examination. 

The New Jersey Appellate Division in Kathleen DiFiore v. Tomo Pezic, A-2826-20, A-0367-21, A-1331-21, (App. Div. May 3, 2022) recently set down some very clear rules on recording and attendance for defense medical examinations.  The case focused on Rule 4:19 Physical and Mental Examination Of Persons. That civil court rule provides as follows:

In an action in which a claim is asserted by a party for personal injuries or in which the mental or physical condition of a party is in controversy, the adverse party may require the party whose physical or mental condition is in controversy to submit to a physical or mental examination by the medical or other expert by serving upon that party a notice stating with specificity when, where and by whom the examination will be conducted and advising, to the extent practicable, as to the nature of the examination and any proposed tests.

In civil court these exams are officially called DMEs (defense medical examinations), although litigation attorneys generally refer to them as IMEs as they are also called in workers’ compensation. The Court discussed prior New Jersey cases that have weighed in on various aspects of DMEs and departed from them to some extent.  The Court first observed that a DME is “… not an adversarial proceeding inevitably designed to disprove claims of injury and trap plaintiffs into admitting or showing their claims are exaggerated or fabricated.”  Rather, the Court said that the DME is a professional assessment that must adhere to the standards of the examiner’s profession. The Court also added, “Nor is the DME, as defendants tend to portray it, always a purely objective exercise unaffected by any conscious or subconscious biases of the examiner.  The examiners tend to be hired repeatedly by insurance companies and defense firms, with the expectation the examiners will assist the defense, if needed, as witnesses at trial.” The similarity of DMEs to IMEs is obvious.

The Appellate Division in the DiFiore case established some basic rules in regard to recording of a DME and third-party attendance.  “First, a disagreement over whether to permit third-party observation or recording of a DME shall be evaluated by trial judges on a case-by-case basis, with no absolute prohibitions or entitlements. . . . The trial court must balance the competing advantages and disadvantages tailored to the particular case.”

The Court added that the expert who performs the DME “does not have the right to dictate the terms under which the examination shall be held.”  The court noted that if the expert does not wish to proceed with the exam on the conditions imposed by the court, the examiner can withdraw from the examination.

The Court emphasized that to record an examination, the plaintiff must make a request and there must be consent to the request.  To that extent the DiFiore Court departed from the Carley case.  “Second, despite contrary language in Carley, we hold that, going forward, it shall be the plaintiff’s burden to justify to the court that third-party presence or recording, or both, is appropriate for a DME in a particular case, absent consent to those conditions.”  

Next the court suggested that technological advances make recording rather easy.  “We take judicial notice that with the pervasive use of pocket-sized smart phones as cameras and audio recorders, they can be unobtrusively placed on a tripod with minimal effort.”

The Court also addressed the presence of third parties in the examination. “… If the court permits a third party to attend the DME, it shall impose reasonable conditions to prevent the observer from interacting with the plaintiff or otherwise interfering with the exam.”

With respect to psychological examinations, the Court concluded that there is no reason to treat psychological examinations differently than physical examinations with respect to recording the examination or having third parties present.  “We also discern no reason to favor or disfavor third-party presence or recording for neuropsychological (or any other ‘mental’) DMEs as opposed to other specialties.”

Lastly, the Court stated that if an interpreter is needed for the exam, the examiner shall utilize a “neutral interpreter” agreed upon by the parties.

As all practitioners and judges well know, New Jersey is a state in which only one party has to consent to a recording.  Why then did the Appellate Division devote 44 pages to this important decision? It is important to understand that the consequence of the DiFiore decision is that without a request for a recording and without consent, the recording will not be permitted to be used at trial.  The point of this case is that if a party wishes to record an exam and use the recording at trial, the party must make an initial request. The same is true of a request to have a third party present in the examination. 

These rules are sensible.  The fundamental ruling in this case is that a request must first be made by the plaintiff to record the exam or to have a non-party attend the exam. Consent to the recording or attendance by the respondent or IME physician will resolve the issue.  Few cases will likely require a Judge to rule on the issue.

As mentioned above, the DiFiore case emerged from civil litigation. It did not involve a workers’ compensation case.  This issue will eventually get to the Appellate Division on appeal from the Division of Workers’ Compensation and will probably focus on a non-consensual recording of an IME that counsel attempts to use at trial.  Respondent will object based on DiFiore and an appeal will likely follow.  This practitioner expects that the Appellate Division will evaluate this issue exactly as it did in DiFiore. 

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Coverage Issues and General Contractor/Subcontractor Allegations

Coverage Issues in Workers’ Compensation

A common issue arises where an employee works for an employer who does not maintain proper workers’ compensation coverage and alleges that there is a general contractor with coverage from whom they will seek benefits. As noted in our recent article, https://njworkerscompblog.com/how-to-properly-cancel-a-workers-compensation-policy/, claims that are denied for lack of coverage based on a cancelled policy often result in ongoing litigation regarding issues related to whether the policy was cancelled effectively. In these cases, the claimant’s counsel will often seek to bring any potential entity with whom the petitioner’s employer worked with and argue that they are liable for benefits as a “general contractor.” Therefore, an issue that can be simultaneously tried in connection with whether a policy was appropriately cancelled is whether there is a liable entity pursuant to Section 79.

Section 79 of the Workers’ Compensation Statute provides for penalties to employers who fail to carry workers’ compensation insurance but also provides a pathway for liability to a general contractor when a subcontractor they work with does not have coverage. The language of Section 79 provides:

Any contractor placing work with a subcontractor shall, in the event of the subcontractor’s failing to carry workers’ compensation insurance as required by this article, become liable for any compensation which may be due an employee or the dependents of a deceased employee of a subcontractor. The contractor shall then have a right of action against the subcontractor for reimbursement.

N.J.S.A. 34:15-79. The purpose of the foregoing is to protect the employee by permitting him to recover from a general contractor who gets direct benefit of the employee’s work.

In order for Section 79 to apply, three essential elements must be met: “(1) a contractor, (2) a subcontractor, and (3) failure by the subcontractor to carry workman’s compensation insurance.” Gaydos v. Packanack Woods Development Co., 64 N.J. Super. 395, 399 (Cty. Ct. 1960). “A contractor is ‘[o]ne who formally undertakes to do anything for another; specifically, one who contracts to perform work, or supply articles.” Jordan v. Lindeman & Co., Inc., 23 N.J. Misc. 194, 196 (Cty. Ct. 1945). A subcontractor is noted to be “one who enters into a contract with a person for the performance of work which such person has already contracted with another to perform. In other words, subcontracting is merely ‘farming out’ to others all or part of work contracted to be performed by the original contractor.” Brygidyr v. Rieman, 31 N.J. Super. 450, 454 (App. Div. 1954).

The foregoing criteria are highly fact sensitive and will often result in a number of fact witnesses testifying as to the issue of whether there was a general contractor/subcontractor relationship. As a result, some of the following examples provide guidance to litigants.

In Pollack v. Pino’s Formal Wear & Tailoring, 253 N.J. Super. 397 (App. Div. 1992), Pino’s Formal Wear decided to expand their business and have an extension put on their building to add dry cleaning services. Pino’s Formal Wear arranged for the co-respondent, Ernest Polgardy, to purchase the dry-cleaning machinery and to have the machinery installed. The decedent-employee was hired by Ernest Polgardy to install burners and to hook up the machines. The decedent-employee fell from a ladder and was injured. He ultimately passed away shortly thereafter from a number of conditions related to alcohol withdrawal and liver failure. The petitioner-dependent argued that that due to the decedent-employee’s fall, he was not able to drink which resulted in liver failure and death.

The petitioner-dependent filed claim petitions against Pino’s Formal Wear alleging that Pino’s Formal Wear was liable for benefits as the general contractor and that Ernest Polgardy, his direct employer, was an uninsured subcontractor.  The Appellate Division found that Pino’s Formal Wear was not a general contractor within the meaning of N.J.S.A. 34:15-79. It noted that Pino’s Formal Wear relied upon Ernest Polgardy’s skill and knowledge to purchase and install the dry-cleaning machinery with no restrictions placed on Ernest Polgardy. The relationship between Pino’s Formal Wear and Ernest Polgardy was that of owner and contractor, not general contractor and subcontractor. Therefore petitioner’s claim was dismissed.

In Brygidyr v. Rieman, 31 N.J. Super. 450 (App. Div. 1954), the petitioner was injured while washing windows for a building that was owned by Respondent Schwaben Halle. The petitioner filed claim petitions against Schwaben Halle and Federal Window Cleaning Company as an alleged uninsured subcontractor. The petitioner testified that he was regularly employed by another company but that in his free time he worked for Federal Window Cleaning Company and that on their instructions he was washing the windows of Schwaben Halle. Schwaben Halle, however, asserted that it was a cultural and singing society which owned and operated the building. The Appellate Division found that under these circumstances, Schwaben Halle could not have been a contractor and that “the washing of windows was not in the line of Schwaben’s regular business, and the contention that it had contracted to keep the windows clean is without merit… To hold otherwise would mean that any property owner who contracted for services would be liable for injuries sustained by the contractor’s employees.” Id. at 453-54.

In a more recent matter involving an action in the Superior Court filed by the carrier asserting that an employer withheld material information about its operations and use of subcontractors and thereby underpaid its workers’ compensation premiums, the Appellate Division affirmed the trial court’s order of the policyholder to pay the carrier additional unpaid premiums, plus interest, costs, and counsel fees in the amount of $145,231.00. In Fournier Trucking, Inc. v. New Jersey Manufacturers Ins. Co., No. A-1353-18T2, 2020 WL 1802840 (App. Div. Apr. 9, 2020), certif. denied, 244 N.J. 161 (2020), the trial court found that the employer-policyholder, a freight company that facilitated the transport of goods, was liable under N.J.S.A. 34:15-79 to provide workers’ compensation coverage for the employees of uninsured motor carriers it used for hauling of shipments to its customers. The Appellate Division noted that customers hired the employer-policyholder “to consolidate and transport goods; Fournier Trucking consolidates the goods itself, and then subcontracts with the carriers to perform the transportation. Therefore, Fournier Trucking is a contractor, and the carriers it uses to fulfill part of its contracts with shippers are subcontractors.” Id. at *12.

The policyholder-employer attempted to argue that the carriers it contracted with are independent contractors and therefore are not liable for workers’ compensation benefits. However, “to the extent that the carriers maintain employees, those carriers are statutorily obligated to maintain workers’ compensation coverage, as is any other employer within the state. By operation of N.J.S.A. 34:15-79(a), to the extent those carriers fail to satisfy their statutory obligation, Fournier Trucking, as the general contractor, is obliged to provide benefits to any carrier employee who suffers an injury while providing services under Fournier Trucking’s general contract. Ibid. In discussing the argument that the carriers were independent contractors, the Appellate Division stated that “a company can choose to use its own workers to carry out its responsibilities, or it can retain independent companies who may also qualify as subcontractors to discharge some of those tasks. When it does the latter, the law of our State requires the contracting company to assure that the subcontractor’s employees have adequate workers’ compensation insurance.” Id. at *14.

The issue of Section 79 liability for alleged general contractor/subcontractor disputes involve the various parties exchanging information regarding the petitioner’s work, the work site or assignment wherein the petitioner was injured, and investigation into any and all entities who were involved in the business which was related to the petitioner’s work. Carriers should perform initial investigation with their insureds regarding any possible subcontractors that they work with and claimant’s counsel should investigate with their client any information they may have regarding their work. Readers with questions regarding issues related to coverage and potential general contractor liability can reach the undersigned at knagy@capehart.com.

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How to Properly Cancel a Workers’ Compensation Policy

Often cases are referred to this insurance defense attorney where the policy was cancelled prior to the alleged date of loss. The claimant-petitioner has retained an attorney and has filed a Claim Petition in the Division of Workers’ Compensation. The petitioner’s counsel has reviewed the New Jersey Compensation Rating and Inspection Bureau website and found the policy which would have been in effect at the time of the date of loss and has named that carrier. The carrier retains counsel and seeks to deny the claim for lack of coverage.  The question is whether there is sufficient evidence to prevail on a Motion to Strike Carrier.

Prior to filing a Motion to Strike Carrier, there are certain steps and documents which should be reviewed between counsel and the carrier regarding the effectiveness of the cancellation. In New Jersey, there is a strong public policy favoring uninterrupted workers’ compensation coverage for all employees. As a result, an insurance carrier must strictly comply with all statutory and regulatory mandates regarding any cancellation of a policy.

It is therefore beneficial to review N.J.S.A. 34:15-81, Cancellation of Contract. The Statute lays out three individual steps which must be followed in order for cancellation to be effective. Section 81 states that no policy for workers’ compensation coverage is deemed cancelled until the following three criteria are met:

  • (a) At least ten days’ notice in writing of the election to terminate such contract is given by registered mail by the party seeking cancellation thereof to the other party thereto; and
  • (b) Until like notice shall be filed in the office of the commissioner of banking and insurance, together with a certified statement that the notice provided for by paragraph “a” of this section has been given; and
  • (c) Until ten days have elapsed after the filing required by paragraph “b” of this section has been made.

While the foregoing three steps appear to be straightforward, there are various ways in which a potential issue may arise and therefore result in a finding of improper cancellation. The New Jersey Supreme Court has held that there needs to be strict compliance with the Statute in order for cancellation to be effective. Sroczynski v. Milek, 197 N.J. 36 (2008).

Consider an example of a policy issued to an employer for a policy period beginning on February 1, 2019 through February 1, 2020. During the policy period, the employer fails to make payments on the policy leading to a cancellation. The carrier sends a notice to the employer on July 1, 2019 stating the following:

“We hereby notify you that the policy identified above will be cancelled effective 12:01 a.m. July 30, 2019 in accordance with the cancellation condition of the policy and that all liability of the Company under such policy will cease at that time. Premium adjustment will be made to the date of cancellation and statement rendered. The reason for this action is: Nonpayment of Premium.”

With respect to the first step in cancelling a policy, a notice needs to be generated by the carrier and sent to the employer with at least 10 days’ notice of the date of the cancellation. So far, our cancellation example appears to comply with subsection (a) of the Statute as the notice is sent on July 1, 2019 and gives more than 10 days’ notice.

Subsection (a) of the Statute also states that this notice must be sent by “registered mail.” The Statute does not define “registered mail.” In practice, the carrier should send the notice to the employer by certified mail. The carrier should retain any and all transmittal information with the USPS regarding sending of the notice of cancellation as these documentary proofs are vital in the carrier’s Motion to Strike Carrier for Lack of Coverage.

The sending of the notice of the cancellation to the employer is not the end of the journey for the carrier. The carrier must also submit a “like notice” to the office of the Commissioner of Banking and Insurance. The Statute does not require “exact same notice,” but rather states “like notice.” The Commissioner of Banking and Insurance in New Jersey has designated the Compensation Rating and Inspection Bureau (CRIB) as the entity to receive the like notice.

CRIB requires that the like notice be submitted electronically and has provided a reference form to be used by carriers for the submittal of like notice.

You can see from the above form that at the bottom of the submittal there is a certification for which the carrier must provide a signatory. The certification is required in the like notice submittal to CRIB. Subsection (b) of the Statute has two clauses which must be adhered to in order for the cancellation to be effective. The first is that the like notice is filed with CRIB, the second is a certified statement must be provided by the carrier that the employer was provided notice in accordance with subsection (a), i.e., that the employer was provided notice of the election to terminate via registered (‘certified’) mail with at least 10 days’ notice.  These steps are required.

Finally, the Statute requires one last step for the policy to be effectively cancelled. Subsection (c) of the Statute requires that at least 10 days have elapsed since the filing of the notice with CRIB prior to the cancellation being effective.

Let us return to our example policy which is being cancelled by our hypothetical carrier. The policy period is for the year February 1, 2019 through February 1, 2020 and, due to nonpayment of premium, the policy is being cancelled. The notice of cancellation is sent to the employer via registered mail on July 1, 2019 stating that the policy will be cancelled effective July 30, 2019.

The carrier should at that time submit the like notice to CRIB that the policy is being cancelled with the effective date of cancellation being reported as July 30, 2019.

What then occurs if the like notice to CRIB is not submitted until August 15, 2019 and an injury occurs to an employee at the company on August 5, 2019 and the company did not obtain replacement coverage? In this practitioner’s experience, any issue with the filing of the like notice creates strong arguments by petitioner’s counsel that the policy was not effectively cancelled. The carrier will try to argue that the policy was effectively cancelled July 30, 2019 per the notice to the employer and that it is incumbent upon the employer to obtain proper coverage.

The New Jersey Workers’ Compensation Act provides certain timelines and a procedure which must be strictly complied with in order for the policy to be cancelled. In this example, the carrier did not provide the like notice to CRIB until after the date of the loss. As a result, the carrier cannot show compliance with subsection (b) and subsection (c) of the Statute.

Let us move the date of loss then to August 20, 2019 and the like notice still is submitted to CRIB on August 15, 2019. The carrier can now show that the loss occurred after the date of cancellation and after the filing of the like notice with CRIB. However, again, this fact scenario will likely result in an improper cancellation and a covered loss. Subsection (c) of the Statute requires that at least 10 days have passed since the filing of the notice with CRIB. In this example, only 5 days have expired. As a result, the petitioner will have a strong argument that the policy was still in effect at the time of the loss despite the policy being cancelled as of July 30, 2019.

While the foregoing examples appear to result in simple solutions, Section 81 of the Statute often results in lengthy litigation regarding proper proofs of cancellation. As a result, the carrier should retain detailed documentary proofs and evidence of each step of the cancellation in order to properly seek to be stricken for lack of coverage from a pending claim.   Readers with questions on cancellation can reach the undersigned at knagy@capehart.com.

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Practical Advice In Defending COVID-19 Claim Petitions

Many claim petitions have been filed in the Division of Workers’ Compensation seeking awards of permanent partial and total disability as well as dependency benefits arising from exposure to COVID-19.  The high number of COVID claim petitions reflects the fact that well over 1.2 million cases have been confirmed as COVID positive in New Jersey, and more than 28,000 deaths have been traced to COVID exposures.  Given the high number of claim petitions already filed and the expectation that thousands of more petitions will likely be filed, this blog focuses on some of the important considerations in defending COVID-19 claim petitions.

Is The Petitioner Entitled To A Legal Presumption Of Compensability?

That is the first consideration that practitioners must focus on when receiving a COVID claim petition.  The Essential Employees bill was signed into law on September 14, 2020 retroactive to March 9, 2020.  The law creates a presumption of compensability for certain categories of employees:

  1. Public safety workers or first responders, including any fire, police, or other emergency providers;
  2. Those involved in providing medical and other healthcare services, emergency transportation, social services, and other care services, including services provided in health care facilities, residential facilities or homes.
  3. Those who perform functions which involve physical proximity to members of the public and are essential to the public’s health, safety, and welfare, including transportation services, hotel and other residential services, financial services, and the production, preparation, storage, sale and distribution of essential goods such as food, beverages, medicine, fuel and supplies for conducting essential business and work at home, or;
  4. Anyone deemed an essential employee by the public authority declaring the state of emergency.

What does the presumption mean? Does it mean that the employer automatically loses?  No, it means that the burden of proof does not rest on the Essential Employee to prove that he or she contracted COVID from work.  It is presumed to be work related.  The burden shifts to the employer to disprove the case.  The statute provides that the presumption is “rebuttable.” An employer could rebut the presumption, for example, if the Judge of Compensation were to find that the employee more likely contracted the virus from his or her spouse or children or from travel to another state or country rather than from work.

Has The COVID Presumption Ended?

Most defense practitioners think the answer is affirmative on this question.  The reason is that Governor Murphy declared the end of the public health emergency on July 3, 2021.  The rationale for the Essential Employee Law rested on the public health emergency and refers to it in the law itself.   While the Governor never specifically said on July 3, 2021 that the COVID presumption in workers’ compensation no longer prevailed, many practitioners reason that the presumption must have ended because the law was in response to the existence of a public health emergency.

If defense counsel are correct that the presumption ended on July 3, 2021, what are the implications for workers’ compensation claim petitions?  Right now the end of the presumption does not mean all that much because many claim COVID petitions are still getting filed.  Without a presumption, the claimant has to prove more likely than not that he or she contracted the virus at work.  That is just like all other occupational disease claims in New Jersey where the burden rests on the petitioner to prove his or her case on compensability.  But over the long term, as COVID becomes more community based and more prevalent in our population, it will be harder for petitioners to prove exposure at work.  Some scientists predict that eventually most Americans will contract some version of COVID-19, and it will be more like the flu – for which employers almost never get claim petitions.

Why Are Special COVID Occupational Interrogatories So Important In COVID-19 Claim Petitions?

In all occupational claims, such as COVID claim petitions, both parties can propound interrogatories on the other side to answer.  Unfortunately, New Jersey uses form interrogatories in occupational disease claims. These are mostly outdated and focus heavily on exposure to asbestos or industrial pollutants. There are no questions about family exposure, travel exposure, or community exposure in the approved form interrogatories. There are no questions about quarantine or mask use.   Counsel on both sides should prepare relevant interrogatories customized to address COVID claim petitions.  Otherwise answers to the form interrogatories will come back with nothing but objections such as “this interrogatory is irrelevant.”  If there is an objection to the use of special interrogatories, then counsel should file a motion for permission to serve special interrogatories with the Judge of Compensation. 

From the defense side, interrogatories must address exposure potential at home with relatives or friends, out-of-state vacations or travel, holiday gatherings, dates of positive testing, quarantine periods, and current symptoms and treatment.  The timing of COVID diagnosis is always important to focus on.  A little less than one year ago, just after Thanksgiving 2020, there was a massive surge in positive COVID testing in every state. The reason was that people were gathering in homes without necessarily taking precautions that are generally required in their workplaces.  

In cases where there is no presumption of compensability, interrogatories are still very important. Where this is no presumption, the burden rests on the employee to prove that he or she more likely than not contracted COVID-19 at work.  The proofs may focus on specific individuals who tested positive and who were in close contact with the petitioner. The employer will have to contact such individuals or check personnel information when such claims are made.  All the same investigation and discovery is done by defense in a non-presumption case as in a presumption case.

Who Has The Burden Of Proof On Permanent Partial Disability?

The claimant always has the burden of proof on impairment and disability.  The Essential Employee Law did not change that.  One does not automatically get an award of permanent partial disability for having work-related COVID.  There must also be proof of an impairment which substantially limits one’s activities of daily living or materially impacts one’s working ability.  COVID cases are being settled in the Division, but this practitioner is not aware of any full trials yet on COVID claims. 

Is There Any Other Law That May Provide A Presumption Relevant to COVID-19 Cases?

The Thomas P. Canzanella Law passed in 2019 states that public safety officers have a presumption of compensability in a variety of circumstances, including exposure to communicable diseases. The statute references exposures during epidemics as well as airborne exposures.  This presumption is also rebuttable. 

What Kinds Of Allegations Are Contained In COVID-19 Claim Petitions?

This practitioner has scores of COVID claim petitions, and the variety of physical and psychological injuries is noteworthy.  Some of the claim petitions involve only a very short absences from work with no treatment at all from any medical provider.  Those are the minor claim petitions.  Others involve patients who continue to have health problems months after recovering from the initial bout of COVID, namely “long haulers.”  Those can be high exposure claims.  In addition, most large defense firms are defending COVID dependency cases in the Division. 

Although it is difficult to generalize about the types of allegations, the most common allegation appears to be respiratory because the virus often attacks the lungs first.  There are many COVID claim petitions where the claimant was diagnosed with lung damage or pneumonia.  Another common allegation is anosmia and ageusia (loss of smell and taste).  There are allegations of cardiac injuries, visual disturbance, as well as neurological injuries, such as severe migraines and brain fog. There are also claims for causally related anxiety and depression.  Clearly every case is unique, which underscores the need to do detailed investigation and discovery.

What Sort Of Medical Experts Are Being Retained By Respondents In COVID Claim Petitions?

If you think about most workers’ compensation claims, orthopedic experts are mostly used to assess permanency.  That is not the case with COVID claim petitions.  The experts most suited to assess causally related permanency in COVID cases, in the opinion of this practitioner, are physicians with a background in internal medicine, occupational medicine or physiatry.  There are also cases where both sides need to retain an ENT, ophthalmologist, psychiatrist or psychologist.  This is a major challenge in COVID claims for both sides precisely because both sides are used to retaining orthopedic doctors who are familiar with workers’ compensation and who understand the legal standards.  Most of the COVID claim petitions in the Division have not gotten to the permanency stage, and it will be interesting to see which experts emerge in this area.

Why Is Past Medical Discovery So Paramount In COVID Claim Petitions?

More is known about COVID at the present time than was known in March 2020, but much more remains to be discovered.  No one really knows what the long term effects of COVID are.  Practitioners often find in defending COVID claim petitions that someone with prior medical issues often files a claim petition for a worsening of that preexisting condition.  The COVID virus seems to frequently attack preexisting medical conditions.  Employers, adjusters and practitioners have to obtain PCP records to assess the prior medical diagnosis.  PCP records may have very important information about prior conditions and also about initial conversations regarding the source of the COVID exposure. 

Depending on the allegations in the particular case, it may be necessary to obtain prior allergy records, prior records of treatment for diabetes, prior treatment with pain doctors for migraines, prior psychological treatment, prior cardiology records, and prior ophthalmological records among others.  This information may be directly relevant to causation.  Is the worker being treated now for a long standing condition?  Is it a prior condition that has been worsened by COVID?  In the latter example, the employer may be entitled to a credit at the time of the permanency award.  In short, medical discovery remains crucial to explore in formal and in informal discovery in order to properly defend COVID claim petitions. Collaboration among carriers, employers, adjusters, and nurses will be needed to identify appropriate experts to perform permanency examinations around the state.

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Why Good Adjusters Are Crucial To Success In Workers’ Compensation Court

Every defense lawyer knows that success in workers’ compensation court is the ultimate team sport.  There are many key participants:  employers, supervisors, adjusters, counsel, account managers, brokers, experts, IME doctors, physicians, nurse case managers and vendors such as investigators.  All play important roles but more often than not, the adjuster is the quarterback.   It has been this practitioner’s experience that the role of the adjuster is absolutely vital to the outcome of a workers’ compensation case. There are many dozens of skills needed to be a successful adjuster.  This blog focuses on only eight skills which successful adjusters all have in common.

  • Understanding That Not Everything That Happens At Work Is Compensable.

Good adjusters have a sound understanding of their state workers’ compensation laws. They know that claims must arise out of and in the course of employment.  They will deny a case, for example, where an employee is just walking along a corridor at work and feels knee pain but does not fall or strike anything, or an employee puts on a coat to leave for home and feels a tear in the shoulder, or the employee starts jumping rope during a break on the premises, falls and fractures an arm. These are examples of incidents that happen at work but do not arise from work.  Good adjusters immediately flag the causation issue and focus the attention of their counsel on potential defenses. 

  • Mastering A Checklist Of Important Issues In Every Case

Whether an adjuster has a written or a mental checklist of issues, good adjusters have many important tasks to complete with new files:   A) checking on prior claims; B) ordering an ISO; C) Considering whether there is jurisdiction in the state; D) Determining the accurate wage and rate; E) Investigating whether there is joint employment; F) Discovering whether there is subrogation potential and reserving lien rights; G) Evaluating whether to retain a nurse case manager; H) Deciding whether and when to put excess carriers on notice;  I) Assessing whether there is Second Injury Fund potential; J) Focusing on potential Medicare and Medicaid liens;  K) Properly reserving the file, and L) Taking statements from the injured worker and witnesses.   These are just some of the many analytical issues that adjusters focus on every day and all day long.  Defense counsel and clients in every state can attest to how invaluable it is to receive a well prepared and comprehensive file.  It speeds up the life of the file and puts the case on the right path.

  • Knowing When To Do Surveillance Or Social Media Searches

A talented adjuster has an intuitive sense of when to do surveillance.  Many times defense counsel will receive a file pre-packaged for success.  For example, in one case our office received a file from an adjuster with surveillance videos showing a man working a physical job over a period of days while out of work and receiving temporary disability benefits for an injury.  When I asked the adjuster what led her to obtain surveillance, she said, “The doctor said his injury would require him to remain home and rest.  I called several days in a row, and he never answered his phone.  So I assigned surveillance right away and found him working another job.”  The case was dismissed for fraud.  

There are various points in the case when adjusters will consider surveillance and social media investigation.  The adjusters know the case better than anyone, having read all the treating notes, and often having spoken with the injured worker before counsel is retained. 

  • Reading All The Medical Records And Physical Therapy Notes

Good adjusters read everything of a medical nature, including PT notes.  In fact, they will often say that the most helpful records are the PT notes because physical therapists ask a lot of questions that doctors often do not ask, including recent recreational or home activities.  In one of our firm’s cases an adjuster pored over dozens of pages of PT notes involving a worker who was having protracted problems with his knee long after surgery.  The doctor was puzzled by the slow recovery.  The adjuster sent us PT records, called our office and said, “See page 17, first paragraph.  The petitioner was hiking in New Hampshire six weeks ago, jumped from a height, reinjured his knee and went to the ER.”  That brief comment in the PT notes observed by the adjuster won the case.

  • Focusing On Subtle Changes In The Mechanism Of Injury

Every good adjuster pays very close attention to changes in how the injured worker says he or she got injured, and then checks for any significant variation in the mechanism of injury.  It may be that the worker initially says he or she slipped but did not fall or strike anything, but when seen by the treating orthopedic doctor sometime later, the history suddenly changes to falling out of a truck and landing hard on one’s spine.   Adjusters live their cases and seldom miss material changes in the history of the accident.  They spot the red flags that then become the basis for defense counsel to contest the claim petition.  

  • Knowing When To Settle And When To Try The Case

As Kenny Rogers so famously said,  “You’ve got to know when to hold ‘em and know when to fold ‘em.”  The decision when to settle and when to go to trial is seldom a simple one. There are often many complicated factors having to do with the proofs in the case and the chances of success at trial or on appeal.  Good adjusters are in constant communication with their clients throughout the case, and collaboration is critical on this issue.  Ultimately the carrier or the client makes the final decision on whether to settle or to go to trial, but defense counsel and the adjuster must be on the same page.

  • Recommending Highly Credentialed Treating And Evaluating Doctors

Sometimes adjusters make recommendations on the appropriate treating and evaluating doctors, and sometimes nurses or defense counsel make recommendations, or all of the above.  Experienced adjusters know the reputation for excellence of many physicians and they also know which physicians understand the workers’ compensation system.  The physician must not only have great credentials but he or she must understand what terms like “maximal medical improvement” or “aggravation” mean in the context of workers’ compensation.   Adjusters also know which doctors take the time to obtain a detailed past medical history and which doctors ask about other potential causes for the impairment at issue.   

  • Quarterbacking The Case

One of the most significant skills of a good adjuster is the ability to keep all stakeholders informed, move the file from point A to point B and keep the file moving toward closure.  Skilled adjusters know the importance of communication and keeping clients, brokers, counsel, nurses and all those involved in the case well informed.  No matter how involved or complex the file is, the skilled adjuster strives for timely communication.  It is certainly true that the best adjusters are proactive.  They anticipate issues and they make suggestions throughout the life of the case.  Success in court depends heavily on timely and frequent communication.

The job of a workers’ compensation adjuster can be challenging, sometimes stressful, and is always impactful.  In this practitioner’s view, adjusters are the lifeblood of every insurance company or third party administrator.  There are probably dozens of more skills that make a huge difference on the outcome of a case, far more than the eight mentioned briefly above.  For example, every adjuster must  communicate effectively with injured workers and their attorneys, document their files and keep on diary.   Those skills alone could be the subject of an interesting blog.

From a defense lawyer’s standpoint, the importance of having an talented adjuster on a file can never be overstated. Time and again it is the adjuster’s good work that allows defense counsel to reach a successful outcome in workers’ compensation court.

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When Does The Special Mission Exception To The Premises Rule Apply?

One of the most misunderstood rules in workers’ compensation is the so-called “special mission” exception to the premises rule, which is New Jersey’s successor to the better known “going-and-coming rule.”  The New Jersey premises rule says that one is at work when he or she arrives at the work premises.  The main exception to that rule is the special mission exception.  Confusion abounds on this exception because few read the actual letter of the law.  Many think that the special mission applies when an employee has to drive somewhere out of the ordinary or work hours that are unusual.  That may not be true at all.

Here is what the statute actually says: “…When the employee is required by the employer to be away from the employer’s place of employment, the employee shall be deemed to be in the course of employment when the employee is engaged in the direct performance of duties assigned or directed by the employer.”  This language comes from NJSA 34:15-36.

Consider some common scenarios:

  1. An employee works for a large food distributor reporting every day to a satellite office in Cherry HIll, N.J., but once a year the employee must report to the employer’s headquarters in Jersey City for an annual review.  The employee is injured returning from Jersey City to his home in a car accident.  Special mission?
  2. An employee is approved for an educational seminar in Los Angeles, gets to the hotel, takes a warm, hot bath in the evening and slips and falls on the hotel bathroom floor, fracturing her femur.  Special mission?
  3. The maintenance superintendent for a large rental complex is summoned at nine p.m. to come back to work immediately because there is a power outage in the employer’s building where the superintendent works 9-5.  Special mission?
  4. The head of HR leaves work at four p.m. on Friday afternoon but gets a phone call during her drive home and is told to come to work for a special meeting on Saturday at nine a.m.  Special mission?
  5. A defense lawyer leaves his home on Monday morning and travels to Paterson workers’ compensation court, where the attorney drives every three weeks to handle a regular list.  On the way she is involved in a serious car accident.  Special mission?

All of these scenarios have one thing in common: they are unusual assignments for the employee either to locations where the employee does not normally work or during hours when the employee does not normally work.  But only two of these scenarios would meet the test of a special mission.  If you guessed numbers two and five, you are correct. 

In number two, the employee is at a location away from the employer’s premise on an approved seminar when the slip and fall occurs.  The employee’s presence in the hotel room is expected and necessary to complete the work assignment.  In number five, the defense lawyer is required by the employer to drive to a location away from the employer’s place of employment to perform court duties.  The accident happens on the way to court.

But examples 1, 3 and 4 would not constitute a special mission.  But why not?  Number one is easy because the employee is reporting to the employer’s work site in Jersey City. It doesn’t matter that this is not where the employee normally works:  The rule says it must be “away from the employer’s place of employment.”  This is the company’s headquarters!  

The same outcome applies for numbers three and four. Although the employees in numbers three and four may consider their assignments to be out of the ordinary and rather taxing (driving to work late at night or having to work on a Saturday), the test is not whether there is a deviation from the ordinary work schedule.  The test is whether the employee is required by the employer to be away from the employer’s place of employment.  They were both reporting to their normal work site.  So for numbers 1, 3, and 4, the normal premises rule applies.

The second part of the special mission exception is easier to understand.  When an accident occurs away from the employer’s place of employment, the employee must be engaged in the direct performance of work duties for the accident to be compensable.   So in the first example, if the employee at the seminar in Los Angeles is a baseball fan and decides to travel by herself to Chavez Ravine one night to watch the Dodgers play the Giants and falls in the stadium, that injury would not be covered because the game has nothing to do with the distant work assignment.   What would be covered on a distant assignment or at a seminar? Courts have found that injuries getting meals at a hotel or walking to one’s hotel room would certainly be covered.   Taking clients out to a different hotel for dinner or to a sporting event while at a seminar would certainly be covered.  That makes sense, but not everything one does on an approved trip is covered, just as not everything that one does in the normal work environment is covered. For example, the fitness-obsessed employee who jumps rope during breaks and falls will not win a workers’ compensation case even if the injury occurs on premises.

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What Information Employers Need To Know To Defend Reopener Cases

For employers, perhaps the most negative aspect about New Jersey Workers’ Compensation Act is the proliferation of what are called “reopener” petitions.  These do not exist in many states. The injured worker in New Jersey who receives a permanency award can file within two years of the last date of treatment or payment of indemnity benefits for an increase in disability.  One reason employers get frustrated is that it is so easy to file a reopener claim petition in New Jersey even when the injured worker has never requested or received treatment from the date of the award right up to the date the reopener has been filed. 

Modification petitions or “reopeners” comprise a large percentage of claim petitions in the Division.  Either party can file for modification, but rarely do employers ever file to lower a percentage award.  While most small percentage awards are not reopened, most large percentage awards do get reopened.  This blog focuses on questions that employers should consider when faced with a reopener petition in determining whether the medical condition described in the prior award is deserving of additional treatment and ultimately an increase in the percentage of disability. Alternatively, is this a case that should be tried to a conclusion or should it be resolved on a Section 20?

We must start with what are known as form reopener interrogatories that are required to be completed by petitioners.  The 18 questions on the form reopener interrogatories are helpful.  They include questions about medical treatment and hospitalizations since the prior award, subsequent employment, new claim petitions against other employers and a question about new accidents/injuries: “Have you suffered any other accident or injury or occupational condition since the date of your last compensation hearing?”

These are all good questions but they are insufficient. In the opinion of this practitioner, the questions contained in reopener interrogatories are outdated and fail to address some of the most important issues.  Let’s consider the case of a 50-year-old man with preexisting osteoarthritis. He sees his co-employee struggling to lift a heavy box and hurries over to assist.  In so doing he feels sudden pain in his left knee. A partial tear is diagnosed, surgery ensues, and an award gets entered for 25% of the leg.  At the time of the settlement petitioner gives his complaints and testifies that he still enjoys jogging, going to the gym and playing basketball. 

Eighteen months later a reopener is filed with no treatment having occurred during those 18 months.  The petitioner answers “no” to the question about any new accident or injury since the award.  However, the petitioner has had knee pain since the award while working out in LA Fitness where he regularly goes, but the form interrogatories contain no question along those lines.  Here is the problem with the question about subsequent “accidents” or “injuries.”  If you ask 100 people for the definition of an accident or an injury, you will get 100 different answers.  But if you ask whether the petitioner has had pain in his knee during the past 18 months, that is a yes or no question.

Petitioner’s counsel sends a letter to the adjuster requesting a referral back to the former surgeon.  Now what? Options include setting up an exam right away, waiting for answers to form interrogatories before doing anything, or declining the request completely, which may prompt a motion for medical and temporary disability benefits. But there is another option:  before deciding to set up an exam, defense counsel or the adjuster can ask counsel for petitioner some simple questions:

  1. “Has your client been jogging, going to the gym or playing basketball in the past 18 months?”  — remember, he testified to doing this at the time of settlement.
  2. “When did your client begin to experience pain over the past 18 months and what was he doing when he felt the pain?”

Assume that the employee’s attorney responds that his client has in fact been going to the gym and has occasionally felt pain while working out.  Counsel also states that after running sometimes petitioner felt more pain and swelling in his knee but he did not see a doctor.  Is this information potentially important?  The answer is emphatically yes and the examining doctor must consider it.  Would you have gotten this information if you just used form reopener interrogatories.  The answer is probably no.  The point is that one must ask the right questions to get the right information.      

A better interrogatory question than asking for a subjective characterization of whether there was a new accident or new injury would be to ask about the existence of pain in the knee since the award and the connection to any specific activity.  There is a difference between a case where the employee says: “every day since the award my pain has never left me” as opposed to “I had 17 good months and then I was in the gym and the old knee pain suddenly returned.”  

Practitioners know that if someone has a preexisting knee condition but that condition is legally aggravated (objectively worsened) by a work event, the employer is liable.  But that rule works both ways.  If someone gets an award for the knee and then post-award the knee condition is aggravated by running or working out in the gym, the employer may no longer be liable.  Medical experts must comment on the connection between the non-work activities and the worsening in the knee.

Times have changed in the past 40 or more years since reopener interrogatories were created.  Back then there were no gyms in every shopping center and no treadmills and elliptical machines at home.   The hot stocks were IBM and GE, not Nike and Peloton.  It is a significant omission that the form reopener interrogatories have no questions about gym activities, use of home exercise machines, outdoor sports, etc., and no questions about the existence of new or episodic pain since the prior award. For purposes of both treatment and increased disability, treating and evaluating doctors need to get information on physical activities which the petitioner engaged in since the prior award.

What can employers do when faced with a request for treatment 18 months post-award? Defense counsel can ask petitioner’s counsel for information on what physical activities petitioner has engaged in during the past 18 months.  What sports activities has the injured worker engaged in?  Could this be a case where the petitioner has been regularly hiking, jogging, riding a peloton or outdoor road bike?  If so, that information may be highly important to the doctor.  In addition, counsel and the adjuster can ask when the petitioner first felt pain since the award, or was the pain there all along since the time of the award?

Adjusters, employers and defense counsel should resist the temptation to view reopener interrogatories as the only questions that can ever be asked.  Frankly, most petitioners’ counsel want to move the case along and get their clients to treating physicians.  If the questions are reasonable, they will address them.  In the same way, when petitioner’s counsel asks for the personnel file of the petitioner, most employers oblige even though there is no specific rule on this.

New Jersey is a state where the formal discovery is only moderately relevant; therefore informal discovery is critical to engage in.  The doctor selected for the medical examination can also go into questions along these lines, but how many doctors understand what a reopener is?  To put this in perspective, 18 months is a very long time:  there could several hundred visits to the gym during that period of time or a few hundred two mile runs.  What role did these activities play, if any, in the worsening of the knee case discussed above?

The lesson in all this is that in reopener cases employers need to focus heavily on the time period between the award and the date of the reopener.  Social media can assist in certain cases, and interviews with supervisors can help identify possible outside activities. A new ISO is often pivotal.  Unfortunately, the current diagnosis is that New Jersey’s form interrogatories seem rather out of shape and in need of a good workout.

The post What Information Employers Need To Know To Defend Reopener Cases appeared first on NJ Workers' Comp Blog.

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