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Workers’ Compensation Newsletter — Volume 19

Newsletter

Workers’ Compensation Newsletter

September 2001

Does The Bond Rule Remain The Standard In New Jersey For Allocation Of Responsibility In Multiple Exposure Cases?

By John H. Geaney , Esq.

In one of the most important decisions in many years, the Appellate Division in Levas v. Midway Sheet Metal, 337 N.J.Super. 341 (App.Div. 2001) has clarified that Bond is not the only way to handle allocation of responsibility in occupational claims involving multiple employers. “The Bond last injurious exposure” rule, then, is not the only acceptable method in New Jersey for imposing responsibility for a compensable condition that may be aggravated by successive employers/carriers. Where the evidence warrants, apportionment among two or more of the causally contributing employers or carriers then on the risk may be appropriate.” Id., at 356.

The facts in Levas are confusing and involve a worker who had pulmonary exposures at numerous places of employment. This decision is the second remand in the long-running case, but it sets forth very clearly how courts should handle future cases of this nature. It does not overrule Bond, but it seems to limit Bond to situations where “an occupational exposure activates or causes a progressive disease, the existence of which is undisclosed and unknown until at or after the last of the potentially responsible employers.”

Where a pulmonary condition manifests during a series of employments but then worsens during subsequent employments, it now appears that Levas is the case employers, carriers, and third party administrators should look to. In Levas the Appellate Division found that the petitioner’s pulmonary condition manifested in March 1990 during the employment of D & M Sheet Metal. At that point, it appeared, from the testimony of Dr. Hermele for the petitioner, that petitioner had at least a substantial partial permanent disability. Thereafter, petitioner worked for a number of other brief employers at a Ford plant, including Folander Sheet Metal in May 1990, Elmsford/Independent Joint Venture IV in May 1990, July 1990 and August 1990, Bonland Industries, Inc. in June 1990, Allied Ventilation, Inc. in July and August 1990, and Hayden Schweitzer in November and December 1990. He had exposures to dusts and pulmonary irritants at all of them and continued to treat with the same physician he had been treating with when his condition manifested at D & M Sheet Metal.

Petitioner’s next employment at the Ford plant occurred in January 1991 with Raritan Valley Sheet Metal. During this employment petitioner was hospitalized twice for pulmonary complications on January 16, 1991, and February 8, 1991. His employment with Raritan Valley ended on February 15, 1991. He then worked for Midway Sheet Metal for one week from March 4, 1991 to March 11, 1991 where he had some additional exposure to dusts and pulmonary irritants. Midway was the last employer.

The Appellate Division reversed the workers’ compensation judge’s order that each of the Ford plant respondents equally share in the award. It decided that a remand was required only as to D & M Sheet Metal, Raritan Valley Sheet Metal and Midway Sheet Metal. It released the other Ford plant employments because there was no medical evidence that supported a finding that petitioner’s disability “had reached a measurable, increased plateau during the other Ford plant employments.” Id., at 359. As to D & M Sheet Metal, the Appellate Division clearly indicated that an award of partial permanent disability was warranted because this employment coincided with the manifestation of the illness, and there was exposure to pulmonary irritants during this employment. The condition was fixed and measurable during this employment. The court added that after the judge assesses the extent of partial permanent disability against D & M Sheet Metal, it should measure the amount of increase thereafter and apportion it to Raritan Valley. “The remainder shall be allocated to Midway.” Id., at 360.

The rule in Levas makes assessment of responsibility in multiple employment situations more complicated where the occupational condition manifests during a series of employments and then proceeds to get worse from subsequent exposure. In this situation, future courts will have to try to determine how much the subsequent employments contributed to the increased disability. To do this courts will have to pay close attention to medical records and, in particular, subsequent hospitalizations and objective testing. The last employer with exposure will still remain a target, in all likelihood, but Levas alleviates that employment from being completely responsible for an award unless the medical condition at issue only manifested during or after that employment.

Appellate Division Blurs The Employee/Volunteer Line

By Claire Y. Ringel, Esq.

Most employers and insurers assume that if a person is not paid to perform a task, then they are not an employee and therefore not entitled to workers’ compensation benefits. In the recent case of Kraivanger v. Radburn Ass’n, 335 N.J. Super. 169 (App. Div. 2000), the Appellate Division has demonstrated that they are willing to expand the definition of employment to what most people would consider a volunteer situation.

In the Kraivanger case, the petitioner was a fourteen year old counselor in training for a summer recreation program. She was paid only for one day of training in advance of the summer program. She received no compensation for work during the program itself. The petitioner was injured during the second week of the summer program. The Workers’ Compensation Judge dismissed the claim petition, finding no employment relationship.

The Appellate Division reversed the Workers’ Compensation Judge’s decision. The Court stated that it was important the respondent had required her to fill out a W-4 form, have “working papers”, and fill out an INS I-9 form demonstrating that she was eligible to work in this country. The court also considered the fact that the petitioner was reimbursed for expenses incurred during field trips. The Appellate Division stated that any “consideration” at all paid to the petitioner was enough to change the relationship from volunteer to employee. The one day payment before the commencement of the program was sufficient to make the petitioner an employee for the entire summer!

While this holding is certainly expansive, the Court’s dicta in this case is even more disturbing for employers. Dicta is a part of a decision which is not necessary for the decision in that particular case and not binding on future cases; it gives an indication, however, how the court might decide cases in the future. In dicta in Kraivanger the Court discussed how intangibles such as value of training, preference in future hiring or even benefit to the community might possibly be the basis for “consideration” and therefore a finding of employment.

In view of the Kraivanger case, an organization has to be very careful in its treatment of volunteers so that an employment relationship is not found. In order to preserve a volunteer relationship with a person it is important that absolutely no financial consideration pass between the parties. It is also important that the volunteer is not treated as an employee – there should be no requirement of any type of employment forms or paperwork.

Intoxication And Drug Use: The Perspective From the ADA and Workers’ Compensation

By Prudence M. Higbee, Esq.

As the law currently stands, the Legislature and the Courts have made it very difficult to defeat a workers’ compensation claim based on intoxication. To successfully assert the defense, Section 7 of the New Jersey Workers’ Compensation Act requires an employer to prove that intoxication “is the natural and proximate cause of the injury.” The same provision applies if a claim is being defended based on the use of illegal drugs. The courts have interpreted this provision to mean that an employer has the burden to prove that the intoxication was the sole cause of the injury. See, Warner v. Vanco Manufacturing, Inc., 299 N.J. Super. 349 (App. Div. 1997), cert. denied, 151 N.J. 72 (1997). In Warner, the petitioner fell from an eighteen foot scaffold while assembling a metal roof on a tractor trailer. The scaffold consisted of a bridge supported by two sides which spanned across the tractor trailer. It was undisputed that the petitioner spent several hours drinking vodka the evening before the accident. It was also undisputed that the petitioner drank vodka during the early morning hours on the day of the accident, including two beers during his morning break.

At trial, the petitioner testified that he fell while attempting to fasten a crane hook to the bridge in order to move the scaffolding. According to his testimony, the bridge was missing an “eye hook” to which the crane should be fastened. Since the eye hook was missing, the petitioner attempted to kick the crane into place. As a result, the petitioner fell. During the trial, co-workers testified that the scaffolding area was very unstable and that another worker had previously fallen from the scaffold. The co-workers also testified that the petitioner did not act unusual on the day of the accident. In fact, the co-workers testified that the petitioner “looked and acted normally.”

While the employer did not offer any fact witnesses to dispute this testimony, the employer offered the testimony of Dr. Saferstein, a well known expert in forensic science and blood alcohol analysis. Dr. Saferstein testified that the petitioner’s blood alcohol reading was over .29 percent at the time of the fall. He explained that a person with such a high level of intoxication could not have properly performed any basic task on a scaffolding. Despite Dr. Saferstein’s conclusion that the petitioner’s intoxication was the sole and proximate cause of the accident, the judge of compensation found in favor of the petitioner. The court noted that there was “no evidence presented by the employer that the petitioner was staggering, falling, unable to keep his balance or any other indicia of an inability to do his job [as a result of intoxication].” Consequently, the judge concluded that the employer failed to sustain the burden of proof. The court found that intoxication was not the sole cause of the petitioner’s injuries as the sliding of the crane clearly contributed to the petitioner’s fall.

As a result of the court’s decision, the employer appealed. On appeal, the Appellate Division upheld the compensation court’s decision and found the accident compensable. Based on this decision, if an injured worker is able to show that there were other factors or conditions which contributed to the work related accident, the claim will be found compensable, even if the employee is intoxicated and the intoxication played a role in the accident.

Despite the high burden placed upon employers when defending a workers’ compensation claim based upon the intoxication defense, as a general rule, employers have the right to terminate an employee who is under the influence of alcohol or drugs while at work. However, termination on this basis has created a lot of litigation under the Americans with Disabilities Act, 41 U.S.C.A., §12101 et. seq. [hereinafter, ADA]. Many workers have brought actions, alleging that their termination was in violation of the ADA as they are disabled by substance abuse. However, to bring a discrimination action under the ADA, the employee has the burden of proof. This is unlike workers’ compensation claims where the burden of proof lies with the employer to establish intoxication as a defense.

Under the ADA an employee must first make out a prima facie case of discrimination. To do this, employees must satisfy the following three part test to prove that they are a qualified individual with a disability: 1) they are disabled within the meaning of the ADA which means they have a “physical or mental impairment that substantially limits one or more of the major life activities;” 2) they are not a direct threat to the health and safety of others and are qualified to perform the essential functions of the job either with or without reasonable accommodation; and 3) they suffered from an adverse employment decision because of the disability. If an employee satisfies the three part test and makes out a prima facie case of discrimination, the burden shifts to the employer to offer a legitimate, non-discriminatory reason for the negative employment decision. If the employer has a legitimate reason, the only way the claim can survive is if the evidence offered by the employee shows that the employer’s decision to terminate was pretextual or the real motivation was more likely than not discriminatory. Like the intoxication defense in workers’ compensation claims, this is a very stringent burden to meet. The difference is, however, it is the employee’s burden to sustain.

In a recent decision, Bekker v. Humana Health Plan, 229 F.3d 662 (7 th Cir. 2000), cert. denied, 469 S.Ct.1603 (2001), the plaintiff was a doctor who was terminated based on reports from patients and co-workers that she smelled of alcohol and exhibited signs of alcohol use while treating patients. As a result of these reports, Dr. Bekker was terminated. In response to her discharge, Dr. Bekker filed an action against Humana for discrimination in violation of the ADA. She alleged that Humana terminated her because they perceived her as disabled by alcoholism.

After applying the three part test, the court concluded that the petitioner was not a qualified individual under the ADA. The court found that she posed a direct threat to her patients as there was sufficient evidence presented that she treated them while under the influence of alcohol. However, the court’s analysis did not stop here. The court explained that if an employee is a direct threat, it must be determined whether or not the threat can be reduced or eliminated by a reasonable accommodation. To eliminate the threat, Dr. Bekker suggested that her employer require her to submit to daily alcohol testing. The hospital rejected Dr. Bekker’s suggestion, arguing that it was not reasonable. The court agreed with the employer and concluded that Dr. Bekker’s suggestion was not reasonable as it would only reduce, not eliminate the threat. The court explained that there was nothing to prevent Dr. Bekker from consuming alcohol after the test was administered. The court also agreed with the employer that the costs of administering daily alcohol testing were excessive in relation to the benefits of said testing. The court explained that an employer is not required to adopt an employee’s request for accommodation; it is only required to provide a reasonable accommodation. In light of the foregoing, the court concluded that Dr. Bekker was not a qualified individual with a disability under the ADA.

Nevertheless, the court explained that even if Dr. Bekker were a qualified individual with a disability, the employer had a legitimate, non-discriminatory reason for discharging her. The court noted an employer can terminate an alcoholic employee for conduct it would not otherwise tolerate from a sober employee or from an intoxicated employee who is not an alcoholic. This means that an employer can hold an alcoholic employee to the same standards of job performance that they hold other employees even if the unsatisfactory performance is related to drug use or alcoholism.

Another recent decision handed down by the Court of Appeals for the First Circuit is Griel v. Franklin Medical Center and William Garrand, 234 F.Supp. 731 (1st Cir. 2000). In Griel, the plaintiff, a nurse, admitted to being a recovered drug addict who was participating in a rehabilitation program when she was hired by Franklin Medical Center. For the first three years of her employment with Franklin Medical Center, Griel’s performance was good. However, in 1995 Griel injured her back while lifting a patient at work. As a result of the work related accident, the petitioner was out of work for approximately one year. Of importance, is the fact that doctors prescribed narcotics for her pain.

When the plaintiff returned to work, a number of incidents occurred which caused the hospital to become concerned. For example, the hospital discovered that Griel administered a dose of drugs without requiring the requisite co-signature for surplus narcotics. It was also discovered that she failed to record one of the doses in the medical records. In another instance, Griel asked a new nurse to administer a drug drawn by Griel; this was a violation of hospital policy. Griel was also found rummaging through discarded medicine bottles. Based upon these incidents, a disciplinary hearing was held and Griel was terminated on the grounds that she posed an unacceptable risk to the health and safety of her patients. In response, Griel alleged that she was discharged because she was a recovering drug addict. However, the court determined that Griel did not sustain her burden of proof and dismissed her claim in favor of the employer. The court concluded that Griel was fired because of her violations of hospital protocol, not because she was a recovering drug addict.

While this decision was based primarily on the plaintiff’s failure to produce sufficient evidence to sustain her burden of proof, it is important to note that employees who are past drug or alcohol abusers are protected under the ADA if they have been rehabilitated and are no longer engaging in the use of drugs or alcohol or are currently participating in a supervised rehabilitation program and are not engaging in the use of alcohol or drugs . See, 42 U.S.C.A. §12114(b). However, if recovering abusers suffer a relapse, they are technically considered current users and can therefore be terminated if there is sufficient evidence that they are under the influence of drugs or alcohol while working.

In light of these decisions, an employer should have a clearly articulated policy in place prohibiting the use of drugs and alcohol in the workplace. The policy should be provided to each employee at the time of hire. The employee should be asked to read and review the provisions and sign a form acknowledging that he/she understands the policy. If an employee is suspected of being under the influence of drugs or alcohol while working, an employer should confront the employee, document the circumstances that led to the incident and have the employee sign an acknowledgment form indicating that his/her behavior was discussed. This procedure will help to protect the employer’s interest if an action under the ADA is filed and it may be helpful in a workers’ compensation case if the employer can otherwise prove that the sole cause of the injury was intoxication.

Case Law Update: Second Injury Fund And Independent Contractor Defense

By John H. Geaney, Esq.

Two important cases were recently decided, affecting the Second Injury Fund and independent contractor status. In Walsh v. RCA/General Elec. Corp. 334 N.J.Super. 1 (App.Div. 2000), the appellate division broadened the potential for Second Injury Fund liability, and in Auletta v. Bergen Center For Child Development, the court further signaled the decline of the independent contractor defense in New Jersey.

The Walsh case is perhaps the most important Second Injury Fund case in a generation of workers’ compensation litigation. The petitioner started with RCA as a maintenance mechanic and electrician and was exposed to chemicals and asbestos. He had two cardiac events in the 1970s. He did not want to retire and was assigned lighter duties with no lifting over 20 pounds. His new position became a trouble shooter, but by 1984 even that job was too stressful, so he retired on a service-based non-disability pension. He then began to receive social security retirement benefits. In 1991 he developed asbestosis, which was in part due to work exposures at RCA. The trial judge, Hon. Fred H. Kumpf, found that as of 1995 petitioner was totally and permanently disabled when his pulmonary disability was fixed by medical evaluations.

The parties had joined the Second Injury Fund, and the trial judge assessed liability for the first 225 weeks against the Fund even though the petitioner had not worked since 1984. The Second Injury Fund argued that petitioner was not eligible for Fund benefits because he was not actually working at the time his pulmonary disease manifested. The Fund also argued that petitioner was totally and permanently disabled when he retired in 1984. Judge Kumpf found that the petitioner retired due to his cardiac condition (not work related) but that he was not totally and permanently disabled from cardiac disease when he retired. He likened the situation to that of a municipal firefighter who retires at a fairly young age because of inability to perform firefighting duties but returns later to other work.

The appellate division affirmed the decision of Judge Kumpf and agreed that petitioner’s retirement was forced by the increasingly physical duties of his RCA job but that this alone did not prove that he was unable to work generally. This decision is important because it permits employers to bring in the Fund in certain cases involving claims for total and permanent disability even after the claimant has retired. There are two rules which employers should take from this case:

1) Retired status does not mean per se that a worker is unable to work generally;

2) The Second Injury Fund may still be impleaded even after retirement when an occupational disease later manifests if the court believes that the point of totality is the manifestation of the occupational disease.

Auletta is an important case because it explains two defenses which employers routinely rely on: the independent contractor defense and the recreational activity defense. The petitioner was a school psychologist working with special education students two days per week at $65 per hour. He was paid by means of a 1099, and the school considered him an independent contractor. He had two other jobs, including his own private practice as a psychologist. He received 30% of his annual pay from the Bergen Center for Child Development.

On November 5, 1998 petitioner was injured during a staff/student tournament football game which the gym teachers organized for the students every four to six weeks. The petitioner’s participation was voluntary, but the games occurred during school time. Classes would end early in the morning, and the games would begin.

The appellate division reversed a finding below that petitioner was an independent contractor and found instead that he was an employee. It used the more favored “relative nature of the work” test, rather than the “control” test in so finding. The reasoning was that the activities of the petitioner and the other staff who played in the football games were an integral part of the respondent’s regular business of serving children with special needs. The court accepted the argument that these regular staff/student games were an important part of the education of the students, and that therefore petitioner’s activities should be viewed as serving the educational interests of the students. The court also noted that petitioner was dependent on the school for 30% of his annual income; the school was dependent on petitioner as well because he was one of only two school psychologists.

The respondent also argued that the claim should be barred as a recreational activity. While this defense is a very strong one generally, here it failed because respondent could not dispute that these games were a regular incident of the employment and that they served to promote more than health or morale. The court held that they promoted something different from health and morale, namely education. Students benefited because of the better relationship between students and teachers.

Auletta does not change the recreational activity defense under N.J.S.A. 34:15-7 or the independent contractor defense. Most recreational activity claims (like company softball games) simply promote health or morale of employees, and these claims can still be successfully denied. However, Auletta is significant because it shows the promotion of an activity beyond simply health or morale, (i.e. education). Auletta also stands as part of the now legion of published cases in which the independent contractor defense has been defeated.

Capehart Scatchard News

Capehart Scatchard is pleased to announce that Anne M. Hammill will join the Workers’ Compensation Department as a full-time associate in September 2001. Anne is a graduate of Seton Hall Law School. From August 2000 to August 2001 she has worked as a law clerk for the Director of the Division of Workers’ Compensation, Judge Paul Kapalko. She was responsible for editing Judge’s decisions, legal research, and review and assessment of pending legislation.

Legislative Update

By Claire Y. Ringel, Esq.

Assemblymen Anthony Impreveduto and Paul Digaetano have recently sponsored a proposed amendment to the Workers’ Compensation Act that would dramatically change the way Workers’ Compensation claims would be handled in New Jersey. The bill would allow employees to choose their own medical provider upon notice to the employer. The loss of the employer’s medical control obviously has the potential to be very detrimental to employers. We will keep you updated regarding this bill.

WINS

Dobrescu v. Cumberland Farms – (Client, Cumberland Farms, AIG) Judge Colsey reduced total permanent disability award to 50% partial total and also found aggravation from a subsequent accident after a lengthy trial. Excellent surveillance videotapes provided the primary basis for Judge’s decision.

Dume v. Wawa – (Client, Wawa, AIG) Dismissal of claim petition because of finding of no objective evidence of permanent disability.

Hoffman v. Paulsboro Board of Education – (Client, Gloucester, Salem, Cumberland Joint Insurance Fund) Judge Parks dismissed claim for orthopedic injuries for failure to sustain burden of proof after a full trial.

Karak v. E.I. duPont de Nemours, Inc. – (Client, E.I. duPont de Nemours) Judge Parks dismissed claim for dependency benefits for alleged work-related suicide. The judge held that Cairns v. East Orange Board of Education barred this claim.

Maresca v. Mobil – (Client, Mobil Oil) Petitioner’s motion for medical and temporary disability benefits denied because of questions of causation.

Peterson v. Boro of Alpine – (Client, Bergen Joint Insurance Fund) Judge Farrington held after a full trial that petitioner, a police officer, was jointly employed by the Boro and a utility company for which he had been directing traffic. Appellate Division affirmed decision.

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