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NEWS FROM NEW JERSEY

Recent Developments in New Jersey
John H. Geaney, Esq.

Capehart Scatchard

8000 Midlantic Drive, Suite 300 S

Mt. Laurel, New Jersey 08054

(856) 914-2063

Appellate Division Dismisses Bad Faith Claim

Unlike many states where bad faith claims plague the insurance industry and often chill the rights of employers to make decisions in workers’ compensation cases, New Jersey has been fortunate to see very little litigation on bad faith. Those cases which have arisen have been singularly unsuccessful for plaintiffs. That trend continues in Flick v. PMA Insurance Company, A-0202-06T1 (App. Div. July 17, 2007).

The case, which has been reported, involved a Monmouth County employee who was injured on April 9, 1997 and again on August 13, 2002, both involving the low back. The plaintiff, Flick, claimed benefits in compensation for both injuries. Plaintiff alleged that the carrier ignored recommendations of authorized physicians on treatment and was required to seek orders compelling benefits in workers’ compensation court. Plaintiff also alleged that orders signed by the judge were not promptly followed.. Instead of pursuing normal procedures in workers’ compensation, plaintiff filed a civil suit alleging bad faith. He claimed that he had to pay bills that he should not have had to pay and suffered enhanced pain.

The allegations of the case are puzzling because a footnote in the decision makes clear that the most recent order from the Judge of Compensation dated July 30, 2006 recited that PMA had fully complied with the Division’s prior order. Nonetheless, plaintiff sought to bypass the division’s procedures. PMA moved to dismiss the allegations of the civil claim and the trial judge agreed, dismissing the lawsuit in an order dated August 9, 2006. The Appellate Division affirmed the dismissal of the case.

The reasoning of the Court was that the exclusive remedy in New Jersey is to pursue a claim under the provisions of N.J.S.A. 34:15-7, et seq. Speaking generally and not with specific regard to this case, the Court observed that the New Jersey Workers’ Compensation Act has its own provisions which deal with alleged delay in making payments of benefits. There are specific motions which need to be filed to prove such a case, and there are specific remedies. For instance, Section 28.1 allows for a 25% enhancement of the amount due the petitioner. The Division also has regulations that provide remedies should a Judge of Compensation find that written orders were not adhered to under N.J.A.C. 12:235-3.14(a)6.

The Court emphasized that a plaintiff/petitioner must exhaust all administrative remedies first. “If these remedies are exhausted and a party before the Division continues to flout the orders of a judge of compensation, we discern no impediment to a party seeking compliance to bringing an order to show cause in the Law Division for enforcement under R. 4:67-6.” The Court noted that such an action can be brought without the compensation judge’s consent once all administrative remedies have been exhausted.

Plaintiff argued that the remedies available under workers’ compensation are inadequate and that he ought to be able to bypass the compensation arena completely. The Court disagreed. The court maintained that plaintiff must pursue the statutory remedies and was in the “wrong forum” in civil court.

This is one of only a handful of New Jersey cases dealing with the viability of bad faith claims and as such it is an important win for employers and for the insurance industry. The exclusive remedy provision has been under attack from all angles for years, but it is clear that “bad faith” claims are not gaining traction in this state.

Appellate Division Affirms Decision That Employer Did Not Commit Medical Malpractice In Caring For Employee Who Later Committed Suicide

            Medical malpractice cases in workers’ compensation remain a rarity seven years after the decision in Hawksby v. DePietro, 165 N.J. 58 (2000). In what is perhaps the first appellate decision since Hawksby involving a fully tried medical malpractice case in workers’ compensation court, the Appellate Division affirmed the decision of the Honorable Richard E. Hickey III, Supervising Judge, dismissing the petitioner’s claim in Karak v. DuPont, A-4168-05T2, (App. Div. August 1, 2007).

            The case involved a long procedural history with two separate decisions from the appellate division.   The first decision dealt in part with the compensability of the workers’ compensation claim. Olga Karak filed a claim alleging that her husband’s suicide was work related. E.I. DuPont de Nemours, Inc., (hereinafter DuPont) denied the claim and asserted that the decedent’s death had no relation to work stress and proved that the decedent’s death was due to personal stress. The decedent’s main concern was that he was going to lose his job and that the DuPont plant would be closing. There was no factual basis for these beliefs. The Appellate Division affirmed the decision several years ago that the underlying psychiatric claim was not compensable. That was only round one, however, in this long-running case.

            The more difficult aspect of this case was the claim that even if the case was not compensable, agents of DuPont allegedly committed medical malpractice in treating the decedent and not recognizing the signs of suicidal ideation. The DuPont company doctor, company nurse, and EAP coordinator all were accused of committing medical malpractice. The Appellate Division determined that this malpractice issue should be tried in the Division of Workers’ Compensation pursuant to Hawksby.

            The matter was tried over six days by Lora Northen, Esq. of Capehart Scatchard. DuPont produced an expert, Barbara Ziv, who contended that the company nurse, doctor and EAP coordinator all met the standard of care required of them and properly joined in making an appropriate referral to an outside psychiatrist, who later saw the decedent. The outside psychiatrist opined that the decedent was fit to return to work, and a few days later the decedent committed suicide.

            Petitioner argued that the Judge of Compensation did not apply the correct standard of care. The Court disagreed: “[W]e note initially that since no information reasonably suggesting imminent danger of suicide was available, petitioner does not explain, and we are at a loss to understand, how the application of a different standard would have permitted a different result. In any event, we are convinced that the judge applied the correct standard.”

            The Court accepted the testimony of Dr. Ziv that the signs of depression leading to potential suicide were never communicated by the decedent and in fact were denied by the decedent “on appropriate inquiry.” “The judge’s conclusion that, given the information available to Gamballe, Sparks and Weiss, (the three DuPont employees) appropriate referrals were made, is unassailable.”

Federally Funded Program For 9/11 Responders To Obtain Comp Benefits

            Many clients have asked about the federally funded program for 9/11 first responders around the country. The program requires first responders to register for potential benefits by August 14, 2007. The program covers all first responders at Ground Zero, whether or not they were volunteers or were dispatched to the City. Residence also does not matter, and it does not matter whether the first responder has any health problem at this time. By registering, the first responder is protected should he or she develop related problems in the future.

            The program is administered by the State of New York. If a worker qualifies for 9/11 benefits, the program will provide up to 100% of the cost of medical care and two thirds of the worker’s wage up to $400 per week. Registering for the program does not prevent the first responder from filing a claim for workers’ compensation benefits in his or her home state. What is not clear is whether there is any offset should the first responder prevail in both claims and receive state and federal benefits for a condition related to 9/11 service..

            Those who performed rescue, recovery or cleanup work during the 366 day period between September 11, 2001 and September 12, 2002 are eligible to register.

Employers who have received formal claim petitions in New Jersey should consider whether New Jersey has jurisdiction over the claim, whether the first responder was dispatched by the employer or was simply a volunteer, and whether the particular medical condition is related to 9/11 service.

Division Sets New Rates For 2008 In New Jersey

            The rate schedule for 2008 has been established and represents a jump of over 4% in 2007 rates. The new maximum rate for temporary disability benefits and permanent and total disability benefits is $742 per week. The minimum rate for temporary disability benefits rose from $190 to $198 per week.   The minimum rate for partial permanent disability remains $35 per week.

            An employee who is out of work for a full year and receives maximum rates for temporary disability benefits will receive $38,584 in tax free benefits.


NEWS FROM NEW JERSEY Recent Developments in New Jersey John H. Geaney, Esq. Capehart Scatchard 8000 Midlantic Drive, Suite 300 S Mt. Laurel, New Jersey 08054 (856) 914-2063 jgeaney@capehart.com Appellate Division Dismisses Bad Faith Claim Unlike many states where bad faith claims plague the insurance industry and often chill the rights of employers to make decisions in workers’ compensation cases, New Jersey has been fortunate to see very little litigation on bad faith. Those cases which have arisen have been singularly unsuccessful for plaintiffs. That trend continues in Flick v. PMA Insurance Company, A-0202-06T1 (App. Div. July 17, 2007). The case, which has been reported, involved a Monmouth County employee who was injured on April 9, 1997 and again on August 13, 2002, both involving the low back. The plaintiff, Flick, claimed benefits in compensation for both injuries. Plaintiff alleged that the carrier ignored recommendations of authorized physicians on treatment and was required to seek orders compelling benefits in workers’ compensation court. Plaintiff also alleged that orders signed by the judge were not promptly followed.. Instead of pursuing normal procedures in workers’ compensation, plaintiff filed a civil suit alleging bad faith. He claimed that he had to pay bills that he should not have had to pay and suffered enhanced pain. The allegations of the case are puzzling because a footnote in the decision makes clear that the most recent order from the Judge of Compensation dated July 30, 2006 recited that PMA had fully complied with the Division’s prior order. Nonetheless, plaintiff sought to bypass the division’s procedures. PMA moved to dismiss the allegations of the civil claim and the trial judge agreed, dismissing the lawsuit in an order dated August 9, 2006. The Appellate Division affirmed the dismissal of the case. The reasoning of the Court was that the exclusive remedy in New Jersey is to pursue a claim under the provisions of N.J.S.A. 34:15-7, et seq. Speaking generally and not with specific regard to this case, the Court observed that the New Jersey Workers’ Compensation Act has its own provisions which deal with alleged delay in making payments of benefits. There are specific motions which need to be filed to prove such a case, and there are specific remedies. For instance, Section 28.1 allows for a 25% enhancement of the amount due the petitioner. The Division also has regulations that provide remedies should a Judge of Compensation find that written orders were not adhered to under N.J.A.C. 12:235-3.14(a)6. The Court emphasized that a plaintiff/petitioner must exhaust all administrative remedies first. “If these remedies are exhausted and a party before the Division continues to flout the orders of a judge of compensation, we discern no impediment to a party seeking compliance to bringing an order to show cause in the Law Division for enforcement under R. 4:67-6.” The Court noted that such an action can be brought without the compensation judge’s consent once all administrative remedies have been exhausted. Plaintiff argued that the remedies available under workers’ compensation are inadequate and that he ought to be able to bypass the compensation arena completely. The Court disagreed. The court maintained that plaintiff must pursue the statutory remedies and was in the “wrong forum” in civil court. This is one of only a handful of New Jersey cases dealing with the viability of bad faith claims and as such it is an important win for employers and for the insurance industry. The exclusive remedy provision has been under attack from all angles for years, but it is clear that “bad faith” claims are not gaining traction in this state. Appellate Division Affirms Decision That Employer Did Not Commit Medical Malpractice In Caring For Employee Who Later Committed Suicide Medical malpractice cases in workers’ compensation remain a rarity seven years after the decision in Hawksby v. DePietro, 165 N.J. 58 (2000). In what is perhaps the first appellate decision since Hawksby involving a fully tried medical malpractice case in workers’ compensation court, the Appellate Division affirmed the decision of the Honorable Richard E. Hickey III, Supervising Judge, dismissing the petitioner’s claim in Karak v. DuPont, A-4168-05T2, (App. Div. August 1, 2007). The case involved a long procedural history with two separate decisions from the appellate division. The first decision dealt in part with the compensability of the workers’ compensation claim. Olga Karak filed a claim alleging that her husband’s suicide was work related. E.I. DuPont de Nemours, Inc., (hereinafter DuPont) denied the claim and asserted that the decedent’s death had no relation to work stress and proved that the decedent’s death was due to personal stress. The decedent’s main concern was that he was going to lose his job and that the DuPont plant would be closing. There was no factual basis for these beliefs. The Appellate Division affirmed the decision several years ago that the underlying psychiatric claim was not compensable. That was only round one, however, in this long-running case. The more difficult aspect of this case was the claim that even if the case was not compensable, agents of DuPont allegedly committed medical malpractice in treating the decedent and not recognizing the signs of suicidal ideation. The DuPont company doctor, company nurse, and EAP coordinator all were accused of committing medical malpractice. The Appellate Division determined that this malpractice issue should be tried in the Division of Workers’ Compensation pursuant to Hawksby. The matter was tried over six days by Lora Northen, Esq. of Capehart Scatchard. DuPont produced an expert, Barbara Ziv, who contended that the company nurse, doctor and EAP coordinator all met the standard of care required of them and properly joined in making an appropriate referral to an outside psychiatrist, who later saw the decedent. The outside psychiatrist opined that the decedent was fit to return to work, and a few days later the decedent committed suicide. Petitioner argued that the Judge of Compensation did not apply the correct standard of care. The Court disagreed: “[W]e note initially that since no information reasonably suggesting imminent danger of suicide was available, petitioner does not explain, and we are at a loss to understand, how the application of a different standard would have permitted a different result. In any event, we are convinced that the judge applied the correct standard.” The Court accepted the testimony of Dr. Ziv that the signs of depression leading to potential suicide were never communicated by the decedent and in fact were denied by the decedent “on appropriate inquiry.” “The judge’s conclusion that, given the information available to Gamballe, Sparks and Weiss, (the three DuPont employees) appropriate referrals were made, is unassailable.” Federally Funded Program For 9/11 Responders To Obtain Comp Benefits Many clients have asked about the federally funded program for 9/11 first responders around the country. The program requires first responders to register for potential benefits by August 14, 2007. The program covers all first responders at Ground Zero, whether or not they were volunteers or were dispatched to the City. Residence also does not matter, and it does not matter whether the first responder has any health problem at this time. By registering, the first responder is protected should he or she develop related problems in the future. The program is administered by the State of New York. If a worker qualifies for 9/11 benefits, the program will provide up to 100% of the cost of medical care and two thirds of the worker’s wage up to $400 per week. Registering for the program does not prevent the first responder from filing a claim for workers’ compensation benefits in his or her home state. What is not clear is whether there is any offset should the first responder prevail in both claims and receive state and federal benefits for a condition related to 9/11 service.. Those who performed rescue, recovery or cleanup work during the 366 day period between September 11, 2001 and September 12, 2002 are eligible to register. Employers who have received formal claim petitions in New Jersey should consider whether New Jersey has jurisdiction over the claim, whether the first responder was dispatched by the employer or was simply a volunteer, and whether the particular medical condition is related to 9/11 service. Division Sets New Rates For 2008 In New Jersey The rate schedule for 2008 has been established and represents a jump of over 4% in 2007 rates. The new maximum rate for temporary disability benefits and permanent and total disability benefits is $742 per week. The minimum rate for temporary disability benefits rose from $190 to $198 per week. The minimum rate for partial permanent disability remains $35 per week. An employee who is out of work for a full year and receives maximum rates for temporary disability benefits will receive $38,584 in tax free benefits.