Workers’ Compensation Newsletter

In an effort to address the state-wide opioid addiction public health crisis, Governor Christie recently signed Senate Bill 3 into law, which becomes effective on May 16, 2017.  The controversial bill, categorized as one of the nation’s most aggressive anti-opioid laws, limits the prescription of opioids and mandates drug-addicted patients’ access to rehabilitation.  How will the new rules affect workers’ compensation programs and what should employers, carriers, and third party administrators [“TPAs”] know?  While workers’ compensation policies are not explicitly mentioned in the bill, there are clear implications to customary physician and claims management practices and this article will summarize the key provisions of the law and discuss the potential implications to workers’ compensation.

Limitations and Rules for Practitioner’s Prescribing Opioids

The bill includes many provisions that place restrictions on prescriptions for acute-pain patients.  The bill also requires new procedural safeguards at different parts of the prescription process that are aimed at ensuring both acute and chronic pain opioid users are properly educated regarding risks of abuse and overdose and prescribing physicians are auditing the patients’ histories and behaviors for red-flags.

Initial Prescription for Patients in Acute Pain Cannot Exceed Five Days

The statute places a five-day supply limit on initial opioid prescriptions, the first within a year, for patients in acute pain.  This five-day limitation is the strictest opioid prescription limitation in the nation, following a few states that limit prescriptions to seven days.  The prior limit was thirty days.

Extension of the Initial Prescription for Patients in Acute Pain Require a Consultation And Documentation

In order to extend the initial five-day prescription, the provisions require    (1) a consultation with the prescribing physician and patient and (2) the prescribing physician to document the rationale for the extension and weight of potential risks and benefits to the patient.  The consultation must take place at least four days following the issuance of the initial prescription.  The emergency amendments, which expired on April 15, 2017, provide guidance as to whether an in-person consultation is required.  They suggest the consultation can take place through “any direct means of communication, ” which includes telephone.  The legislature is currently finalizing regulations to supplement the bill that will likely address this issue.

If after the consultation the physician determines an extension is medically necessary and documents the extension does not present an undue risk of addiction, the physician can issue a subsequent prescription for an additional twenty-five day supply.

Practitioners Must Document and Perform Due Diligence Prior to Writing an Initial Opioid Prescription for Acute or Chronic Pain:

The provisions put in place procedural safeguards to ensure prescribing physicians are scrutinizing the patient’s history before writing an opioid prescription, which includes steps most workers’ compensation doctors in New Jersey are already implementing.  Before writing an initial opioid prescription for acute or chronic pain patients, the prescribing physician must:

1. Document the patient’s medical history including substance abuse history and non-pharmacological pain management approaches;
2. Conduct and document a physical examination;
3. Prepare a treatment plan; and
4. Perform an inquiry on the Prescription Monitoring Program to determine if opioids or other narcotics are being prescribed.

Practitioners Must Document and Explain Risks to Opioid Patients

In an effort to ensure opioid patients are properly educated regarding the risks associated with taking the highly-addictive narcotic medication, practitioners must discuss and document a discussion prior to the initial and third prescription [this would be the prescription following the twenty-five day extension of the initial five-day supply].  The discussion must include:

1. An explanation of the risks of physical and psychological dependence, taking more opioids then prescribed and mixing other drugs and alcohol with the medication;
2. Reasons why the prescription is necessary; and
3. Alternative available treatments.

Opioid Prescriptions for More Than Ninety Consecutive Days Require Frequent Reviews and a Pain Management Contract

Opioid prescriptions for chronic pain patients open for longer than ninety consecutive days require reviews and the patient to enter into a pain management contract with the prescribing physician.

The review must be performed at minimum every ninety days and include:

1. Preparation of a new treatment plan outlining etiology of pain and progress toward treatment objectives;
2. Assessment of physical and/or psychological dependence and;
3. If possible, reasonable efforts to stop use or decrease the current dose.

The provisions also require patients to enter into a pain management agreement with the prescribing physician.  The contract must include the treatment plan, patient’s obligations, means by which the physician can check compliance, and the process for terminating the agreement.  The agreement may require routine urine testing.

Implications for Workers’ Compensation Carriers, TPAs and Employers

The new prescription rules and limitations will apply to claimants on both extremes of the injury spectrum.  The five-day supply limit only applies to the acutely injured patient but will hopefully curb the amount of pills a claimant consumes in the initial days following the work injury.  Adjusters may receive frequent calls from claimants who want to extend their five-day opioid supply and need authorization.  At this time, it appears as though the bill will not require claimants to attend an in-person consultation, which is a huge-cost saver.  However, adjusters will want to stay on top of the case management and issue timely authorizations to prevent the claimant from pursuing the medication through costly unauthorized emergency room visits or urgent care visits.

On the other side of the injury spectrum is the claimant suffering from chronic pain.  The legislation will require more appointments with and frequent reviews from prescribing physicians based on the standards outlined above.  As a result, workers’ compensation professionals should expect to see longer appointment times with more detailed reports including treatment plans and the practitioners’ reasoning for their recommendations.  The rules also place more pressure on physicians to wean claimants off of their opioid medication when possible.

Carriers, employers and TPAs may also be wondering how they can hold workers’ compensation physicians accountable for following the rules set forth in the bill.  At this time, it is unclear what will happen to practitioners who violate these provisions, as the statute does not currently outline any penalties or fines in the event of non-compliance.  Instead, the bill gives the state Attorney General the authority and responsibility to investigate any violations of the provisions.

Rehab Provision

The new rehab provisions mandate state-regulated health insurance plans to provide 180 days of inpatient or outpatient substance abuse treatment every plan year.  Insurance providers must cover the first four weeks of treatment without pre-payment or prior authorization.  A patient’s covered treatment provider or licensed psychologist or psychiatrist must deem the substance abuse treatment medically necessary.

Implications for Workers’ Compensation Carriers, TPAs and Employers

The mandate does not expressly mention workers’ compensation policies, which are considered casualty insurance policies.  However, employers, workers’ compensation carriers and third party administrators across New Jersey have already been authorizing programs deemed reasonable and necessary to address a claimant’s work-related substance abuse.

While the rehab mandate will not necessarily affect workers’ compensation carriers, the provisions of the mandate will apply to all state regulated health insurance plans, including policies that cover state employees and many teachers and local government workers.  Insurance premiums of state worker policyholders will unequivocally rise as a result of the new law.

The new legislation is a step in the right direction in addressing the opioid health crisis affecting the State of New Jersey.  The law places limitations on prescription lengths and requirements for claimant narcotic education and physician review and analysis throughout each step of the prescription process.  The legislature is currently working on issuing regulations to supplement and provide more specific rules for the new bill.  We will continue to publish updates as this important law evolves.

Using a taxi to get from point A to point B is changing. All you need is a smart phone and a destination. Click on an app and within minutes a driver will arrive at your location and take you wherever you want to go. Uber and other “ride-sharing” companies such as Lyft have completely disrupted the taxicab industry. While there are several companies in this market, Uber is winning the race. The business model is structured around a network of individuals who use the company’s software to locate customers and facilitate payment (with a commission going to Uber or Lyft).

While our focus here is primarily on Uber and “ride-sharing” platforms, this type of arrangement is not limited to transportation. Lately, there has been an explosion of companies, websites, and apps that fall into what is often referred to as the “gig economy.” Task Rabbit and Gig Walk (handyman and odd job services), Postmates (food delivery), and Rover (dog sitting) are just a few of the many start-ups getting in on the action. The premise is generally the same throughout: individuals use a company’s app and software to connect with others who are willing to provide various services for a fee, whether it is fixing a sink, delivering groceries, or walking a dog.

For the purposes of the New Jersey’s Workers’ Compensation Act the question before us is whether these individuals, Uber drivers for example, work for Uber as employees or are in fact independent contractors. Put simply, if a driver is injured on the job can he/she file a successful claim for workers’ compensation benefits, or is that driver precluded from such benefits because there is no employment relationship?

New Jersey Employee Classification

For years, New Jersey’s case law regarding employment classification tilted toward establishing an employment relationship, which opened up the benefits and protections of New Jersey’s Workers’ Compensation Act for multitudes of workers. Determining employment status in New Jersey has always been a fact-based inquiry with courts primarily focused on two analyses: the relative nature of the work and the right to control.

The “relative nature of the work” test considers the economic dependence of the worker upon the business and whether the work performed is an integral part of the business.  For example, in Re-Max v. Wausau Ins. Cos. 162 N.J. 282 (2000), in addition to considerations of control, the New Jersey Supreme Court looked to the nature of the work itself and held that Re-Max real estate agents were indeed employees for the purposes of the Workers’ Compensation Act.  The Court reasoned that the nature of Re-Max’s business is dependent upon the services of real estate agents. Without the agents, the company simply cannot survive.  The court also pointed to the fact that the agents were required to work exclusively with Re-Max and were, therefore, economically dependent on the company.

The “control test” on the other hand evaluates the company’s right to control the manner and means of the work performance – what should be done and how it should be done.  This is a case specific inquiry that considers factors such as whether the company supplies equipment and materials, directs the individuals on how to perform the tasks, requires uniforms, provides insurance, solicits customers, et cetera. Typically, the petitioner in a workers’ compensation case does not need to satisfy both tests. Employment may be established if either the relative nature of the work test or the control test has been met.

Recent case law has begun to erode the trend toward finding employment and reshaped the analysis for determining a workers’ employment status.

Estate of Kotsovska v. Liebman

The New Jersey Supreme Court case of Estate of Kotsovska v. Liebman, 221 N.J. 568 (2015) involved an unfortunate set of facts where a woman contracted as a home aide was tragically killed in a motor vehicle accident by the 80 year old man for whom she provided services. On appeal, the Court addressed the issue of Ms. Kotsovksa’s employment status and in doing so, endorsed a hybrid test and the use of twelve key elements to consider in a workers’ compensation case. The test encompasses both the right to control and the relative nature of the work tests.

The twelve elements addressed by the court are:  (1) the employer’s right to control the means and manner of the workers’ performance; (2) the kind of occupation — supervised or unsupervised; (3) skill; (4) who furnishes the equipment and workplace; (5) the length of time in which the individual has worked; (6) the method of payment; (7) the manner of termination of the work relationship; (8) whether there is annual leave; (9) whether the work is an integral part of the business of the “employer”; (10) whether the worker accrues retirement benefits; (11) whether the “employer” pays social security taxes; and (12) the intention of the parties. The court also considered the workers’ economic dependence on the work relationship.

It is important to add that Kotsovska was filed as a negligence claim in Superior Court, rather than as a workers’ compensation claim – presumably because Ms. Kotsovska had no dependents. Addressing a rather specific issue before the Supreme Court, the Court held that when there is a genuine dispute over the worker’s employment status and a plaintiff elects to file a claim in New Jersey Superior Court – Law Division, the Superior Court has concurrent jurisdiction to resolve the issue. This holding set the stage for the Court’s endorsement of the employment classification test above. Ultimately the Court found the jury charge provided by the trial court was sufficient to allow the jury’s award of damages to stay.

Babekr v. XYZ Two Way Radio

More recently, the Appellate Division in Babekr v. XYZ Two Way Radio, A-3036-13T3 (App. Div. August 6, 2015) utilized this hybrid approach to find no employment relationship and thus no benefits under the Workers’ Compensation Act. While this case is unpublished, courts may look to it as persuasive. The relevant facts of Babekr illustrate how companies such as Uber and Lyft may find themselves in a similar situation if forced to litigate the issue of a workers’ employment classification.

XYZ Two Way Radio (“XYZ”) was a limousine company comprised of approximately 430 individual drivers who each owned shares in the company. Mr. Babekr, a driver, was injured in a motor vehicle accident while performing his job – a job he had done for over 20 years. Mr. Babekr was free to work whenever he wanted and used his own car to chauffer passengers. He also paid his own insurance and there was no indication he was reimbursed for gasoline or repairs. Mr. Babekr and other drivers were part of a list of drivers – a sort of, “available driver” list. After a driver took a fare he/she was placed at the bottom of the list.

XYZ, for its part, provided Mr. Babekr and other drivers an in-car computer to help locate passengers in their respective geographic regions. Importantly, Mr. Babekr did not need to use this computer and could solicit his own fares from would-be passengers.  Also, Mr. Babekr was free to turn down fares coordinated through XYZ, but if he did, he was marked as “unavailable” for 30 minutes and was placed at the bottom of the “available driver” list.

As mentioned, in finding Mr. Babekr was an independent contractor and not an employee, the Appellate Division walked through each factor and determined there was insufficient control over Mr. Babekr to establish an employment relationship. Among other facts, the court reasoned that Mr. Babekr was working for XYZ for 20 years, made his own schedule, did not receive benefits, could freely turn down fares, paid his own insurance, received a percentage of the fare, and did not need to use the XYZ computer to solicit and obtain fares

Additionally, and perhaps most importantly, with regard to the relative nature of the work, the court found that Mr. Babekr was not necessarily an integral part of the XYZ business. Though XYZ, as a transportation company, relied upon drivers generally, the court noted that Mr. Babekr himself was not critical to the operation of XYZ’s business. If he were not available to take a fare, the next driver on the list would be given that opportunity. The company would not miss a beat without him.

This is a subtle but important distinction from the New Jersey Supreme Court’s reasoning in Re-Max v. Wausau Ins. Cos. where the court noted that the Re-Max business model relied upon the real estate agents generally; without agents the company could not function. Despite this difference, the New Jersey Supreme Court recently denied the Petition for Certification.

Uber and Beyond

In many ways, Uber’s business model resembles that of XYZ, even though Uber specifically identifies itself as a technology company and asserts that drivers pay Uber to use its software. In light of the Babekr decision and New Jersey courts trending away from finding employment, Uber drivers making an application for workers’ compensation benefits in New Jersey may face the same uphill battle that Mr. Babekr faced. Applying the twelve factors of the Babekr case to a typical Uber driver, it appears the scales may tip in Uber’s favor and away from employment.

Uber insists the drivers are independent contractors: they can make their own hours; are free to refuse a fare; use their own car; pay their own auto insurance (at least when there is no fare in the car); and like Mr. Babekr, Uber drivers do not receive benefits. Also, Uber drivers are free to have other sources of income and many drivers use Uber as a side job to make extra money. However, because this is a fact sensitive inquiry there are contrary arguments to be made for employment. For example, Uber pays for insurance when the driver has a fare in the car; Uber sets the rates; drivers use Uber’s software to locate passengers, and similar to the Babekr case, the passengers pay directly to Uber and the driver receives a percentage (with Uber, the driver receives approximately 70-80% of the fare).

With regard to the relative nature of the work, as in Babekr, there is no one Uber driver whose availability can make or break the company. If you have ever used Uber’s services you may know this first hand. If one driver is unavailable or chooses not to take a fare, the passenger has the option of choosing a different driver by simply tapping an icon in the app.

Whether or not a New Jersey workers’ compensation court would determine that Uber drivers, and other participants in the “gig economy,” are independent contractors remains to be seen. What we can tell is that each case will require its own analysis with the court evaluating all twelve factors and the economic relationship between the company and the worker.

While the focus here has been on Uber and “ride sharing” in light of the obvious factual similarities in Babekr, the application of Babekr and Kotsovska extends well beyond the transportation industry and the internet’s “gig economy.” Litigation surrounding employment classification is nothing new. Determining whether a worker is an independent contractor or an employee has been a contested issue for years. Whether the worker repairs houses, walks dogs, cleans pools, or provides transportation services, the hope is that New Jersey’s recent case law can provide some clarity to the issue of employment classification, particularly in the Workers’ Compensation setting for all affected, whether companies, workers, legal practitioners, or insurance carriers.

By Katherine H. Hellander, Esq.

It is well-established that N.J.S.A. 34:15-12 entitles a petitioner to temporary disability benefits provided petitioner is unable to work for more than seven days due to a work-related accident. This principle is not absolute, however, as courts have placed several limitations on such an entitlement. One such exception, known as the Cunningham rule, dictates that the petitioner must demonstrate that he would be working “but for” the compensable accident. Cunningham v. Atlantic States Cast Iron Pipe Co.  386 N.J. Super. 423 (App. Div.) certif. denied. 188 N.J. 492 (2006)  If a petitioner fails to meet this burden, he is not entitled temporary benefits. While this rule seems concrete on its face, there are several scenarios which fall into an area of Cunningham ambiguity. One scenario that courts have yet to address is whether the reason behind the termination of employment has any bearing on entitlement to temporary benefits.

In Cunningham v. Atlantic States Cast Iron Pipe Co., the petitioner tore his medial meniscus in a work-related accident on October 21, 2003. Following the injury, the petitioner was incarcerated for a brief period of time and was unable to work. Upon his release, the petitioner missed additional time from work due to issues with child care. Employer Atlantic States’ policy mandated that any employee who inexcusably failed to report for work for three consecutive days would be terminated. The petitioner was terminated from employment on two separate occasions pursuant to this policy, only to win reinstatement through his union. The petitioner’s employment with Atlantic States was terminated for the final time on February 3, 2005 when he left work without permission.

Subsequent to his termination, but before he was able to secure new employment, the petitioner was placed out of work by the treating doctor. The employer denied the petitioner’s resulting request for temporary benefits. A Motion for Medical and/or Temporary Disability Benefits was filed and ultimately granted by the Judge of Compensation. The Judge held that a respondent is required to pay temporary disability benefits “…so long as petitioners are incapacitated due to work-related injury and have not reached maximum benefit of treatment.” The Judge went on to opine that the obligation to pay “…continues after they leave the employment irrespective of whether they left voluntarily.” As such, the petitioner was awarded temporary benefits retroactive to February 11, 2005.

On appeal, the respondent argued that temporary benefits are meant to serve as a replacement for actual wage loss. Given that the petitioner was not employed by the respondent at the time he was placed out of work, the respondent maintained that the petitioner could not prove actual lost wages. The Appellate Division noted that the petitioner was working full duty on the date of his termination and that his cessation of employment with Atlantic States was wholly unrelated to his disability. Taking this fact into consideration, the Court reversed the Judge of Compensation and remanded the matter to determine whether the petitioner could prove that he lost actual income due to the work-related accident.

The Appellate Division maintained this line of reasoning in the unreported case of Gioia v. Herr Foods, Inc.  No. A-0667-10T4 (App. Div. October 11, 2011). In Gioia, the petitioner injured his right ankle in a work-related accident and was provided with authorized care. He was cleared to return to light duty less than a week after the accident. However, on the day he was scheduled to return to work, the petitioner was terminated for violation of the employer’s drug policy as his post-accident drug screen was positive for cocaine.

The petitioner filed a Motion for Temporary Disability Benefits which was granted by the Judge of Compensation. The respondent appealed and argued that the petitioner was out of work due to violation of the drug policy, not as a result of the work-related accident. Just as in Cunningham, the Appellate Division held that the petitioner must prove that he would have been working “but for” the compensable injury. Given that the petitioner was out of work as the result of the failed drug test, not because of his disability, the Court held that the petitioner had failed to meet this burden. The Judge of Compensation was reversed, and the case was remanded to allow the petitioner to prove actual wage loss.

Both Cunningham and Gioia are clear that the petitioner must prove that he or she would be working but for the compensable accident. Further, both cases demonstrate that a petitioner who is terminated as the result of a company policy is not entitled to temporary benefits. The Court has yet to decide what happens when a petitioner is terminated pursuant to a company policy regarding exhaustion of leave time when the missed time was for treatment of the work-related injury.  For example, take a petitioner who is not at maximum medical improvement, but is terminated based on cessation of FMLA for a work-related injury.  If the petitioner exhausts all leave time and is terminated pursuant to company policy regarding excessive absenteeism, is he or she entitled to temporary benefits?    That question has not been addressed.

The Cunningham Court found “…no material difference between termination for cause with prior knowledge by the employee that violation of a work rule would result in termination, and voluntary departure.”  Essentially, the Court equated knowingly violating a company policy to quitting one’s job.   It makes a difference whether the employee quit or is fired.

Termination for excessive absenteeism is a reality in the workplace.  According to the EEOC, “an employer does not have to provide paid leave beyond that which is provided to similarly-situated employees.”   FMLA is for both work and non-work related serious health conditions.  Further, the Courts have held that it is unreasonable for an employer to be required to keep open a worker’s job for an indefinite period of time.   Therefore, an employer is not required to provide a petitioner with leave time greater than that of his co-workers, regardless of whether the leave arose out of a work-related accident.    Whether or not a person who is terminated for excessive leave is entitled to temporary benefits remains to be decided.

Light duty issues also come into play here.  If an employee is on light duty but the company policy limits light duty to three months, resulting in the termination of the employee, must the employer provide temporary disability benefits where a petitioner is not at maximum medical improvement?  One must study Harbatuk v. S&S Furniture Systems Installations. That case suggests that an employer must continue to pay temporary disability benefits if the employer can no longer provide light duty but the employee is not yet at maximum medical improvement.   However, this issue has not been specifically decided by the court.