State News : New Jersey

The idiopathic defense is not an easy one for employers to prevail on in New Jersey.  The basic concept is that the injury is not a result of any particular work effort and could happen anywhere, such as walking along a work corridor and suddenly feeling pain in one’s knee without falling or tripping.  But if work circumstances make the injury more likely, the defense is not available.  That was the holding in Quiles v. County of Warren, A-3938-17T3 (App. Div. February 13, 2019).

Officer James Quiles worked as a corrections officer for the County of Warren.  On March 14, 2014, he was climbing stairs at the County corrections facility to perform an inmate count when he felt a “pop and sharp pain” in his left knee. The County physician sent petitioner to an orthopedist following the incident, but the county denied the case.  So petitioner made an appointment with his own personal physician, Dr. Frank Capecci, who examined petitioner’s knee in April 2014.  Two days after seeing Dr. Capecci, petitioner went to the ER at Saint Clare’s Hospital with knee pain.  There was an entry in the record to the effect that petitioner had been running approximately 100 yards a few days earlier and suffered knee pain.

Petitioner continued to work for months, but in the Fall of 2014, Dr. Capecci recommended arthroscopic surgery to repair a left knee meniscal tear.  Three months later Dr. Capecci reconstructed petitioner’s ACL due to an incomplete ACL tear.

Petitioner filed a motion for medical and temporary disability benefits.  A video was shown at trial exhibiting petitioner climbing metal stairs while wearing heavy equipment and combat boots.  The equipment weighed about 25 pounds. Petitioner denied that he ever told the hospital that he had been running 100 yards.  Dr. Capecci also testified at trial, stating that in his view it was the stair climbing that caused the knee pathology.

The County’s medical expert, Dr. Richard Rosa, testified that there was no clear link between a torn ACL and just walking up steps.  There was some evidence that petitioner had complained of knee pain in 2008, but there was no evidence of any significant treatment.

The Judge of Compensation ruled in favor of petitioner on the ground that petitioner’s job required him to climb stairs while wearing 25 pounds of equipment.  As such he was performing a task that was stressful to his knees.  Further, the Judge did not credit the random entry in April 2014 to the effect that petitioner had been running 100 yards.  The Judge awarded medical treatment and temporary disability benefits to petitioner.  The County then appealed.

The Appellate Division noted that when an injury is due to a personal risk, such an injury is not compensable because there is no connection with employment.  Rather, it is idiopathic and not related to work.  The Court agreed with the Judge of Compensation that a key distinguishing feature in this case was that petitioner was wearing 25 pounds of equipment, making it harder to climb steps.  The Court gave more weight to the opinion of the treating physician, Dr. Capecci, because he was more familiar with the case.  The Court further discounted the one reference to running 100 yards, noting that petitioner exercised and participated in recreational activities until the March 14, 2014 stair climbing incident.  Those facts indicated that petitioner did not have a pre-existing knee problem.

The case is interesting because it underscores what employers need to win idiopathic claims.  In this case, the employer was at a huge disadvantage to begin with because petitioner was wearing 25 pounds while climbing stairs.  This was not someone who was just walking up or down stairs in light clothing.  The 25 pounds of weight removed the case from being an event that could have occurred anywhere.  The County also could not produce solid evidence of preexisting disability in 2008.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

What happens if an employer terminates the employment of a worker, who then has an accident before leaving the work premises?  Is there workers’ compensation coverage? Does it make a difference if the employee quits as opposed to being fired and then has the injury on premises while leaving?  Does the moment of job termination immediately sever workers’ compensation protection?

These are questions that were recently put to me by a claim professional.  A search of published cases in New Jersey since the 1979 Amendments yields no published case on point.  However, the answer is undoubtedly that coverage for workers’ compensation will continue, barring some deviation, until the employee leaves the work premises.

While workers’ compensation laws vary from state to state, there is one authority that courts in every state look to, namely Larson’s Workers’ Compensation Law.   This treatise written by Professor Arthur Larson suggests that the employee is covered for workers’ compensation purposes for a reasonable period of time while packing his or her belongings and leaving the work premises.  A slip and fall while exiting the work premises should therefore be compensable under most circumstances.

Professor Larson comments that injuries post job termination are actually quite common because employees are often extremely upset in the moments after termination, leading them to be inattentive or careless.  Many times employers are suspicious about such injuries, and employment counsel often recommend that someone in supervision accompany the injured worker who has been terminated until he or she leaves the premises.  This is certainly good advice for a number of reasons.

Professor Larson analogizes injuries post job termination to punching in or out before leaving the premises.  Case law in New Jersey provides that punching in and out of work is separate and distinct from shedding the protection of workers’ compensation coverage.  Punching in and out is important for purposes of payment.  But New Jersey cases make clear that one remains covered for purposes of workers’ compensation while being on the premises, whether the employee has not yet punched in or has already punched out of work.  The key is the location of the worker at the time of the accident.  Was the employee injured on premises owned or controlled by the employer? If yes, there is coverage, notwithstanding that the employee may not have punched in yet or has already punched out.

Similarly, an employee is covered for workers’ compensation purposes during on-premises lunches, even though having lunch itself is not a job requirement.  New Jersey law is unequivocal that injuries in company cafeterias are compensable.  The reasoning again is that New Jersey has a strong premises rule.  Work premises are equal:  sitting in a lunch room is the same as sitting at one’s desk for purposes of workers’ compensation coverage.

Are there exceptions to the rule noted above?  Professor Larson makes an interesting observation that an employee who has quit or who has been fired can sometimes lose coverage if he or she lingers for a lengthy period of time on the premises and begins, for example, to play cards with colleagues or drink alcohol.  Those activities would be deviations and would take the employee out of workers’ compensation coverage.  But if the delay in departure from the work premises is caused by the employee’s need to wait for employer transportation in a company vehicle, coverage would continue while the employee leaves in the company vehicle.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

Janice Hustvet worked for Courage Center, which merged with Allina Health System in 2013.  Hustvet worked for 15 years at Courage Center as an Independent Living Skills Specialist, educating, supporting and assisting clients with disabilities including spinal cord and brain injuries.

On May 13, 2013, Hustvet completed her pre-placement health assessment.  She acknowledged that she did not know if she had been immunized for rubella.  She later confirmed that she had not been immunized for rubella.  There was some confusion whether her job would require completion of a Respirator Medical Evaluation (“RME”).  Following the merger on July 1, 2013, Hustvet was informed that she had to submit a complete RME and take one dose of a Measles, Mumps, Rubella vaccine (“MMR vaccine”).

Hustvet never took the MMR vaccine.  She had had a severe case of mumps and measles, and she also had many allergies and chemical sensitivities.  However, she did agree to take a rubella vaccine only, (without the mumps and measles), but no such vaccine was available. When Hustvet refused to do take the MMR vaccine, her employment was terminated.

Hustvet sued Allina Health alleging discrimination under the ADA. The federal court ruled against Hustvet, and she appealed to the United States Court of Appeals for the Eighth Circuit.  Hustvet argued that she never received an offer of employment, and therefore the rules of post-offer medical examinations did not apply to her.  She also argued that she was a continuous employee and that the health screen requirement was imposed after her employment.

The Court of Appeals interpreted the letter Hustvet received during the merger period advising that she would soon be an employee of Allina Health as an offer of employment.  The Court noted that an employer has a right to apply entrance examination standards and withdraw an offer to those who do not meet those standards if the standards are job-related and consistent with business necessity.

Even if Hustvet were viewed as an existing employee and not subject to the post-offer requirement, the Court said that an employer can require an examination of an employee if that exam is shown to be job-related and consistent with business necessity.  The Court said: “… We believe Allina’s decision to force a class of employees (those employees with client contact who merged into the company) to undergo a health screen was job-related and consistent with a business necessity.  The information requested and the medical exam, which tested for immunity to infectious diseases, were related to essential, job-related abilities.  The undisputed evidence shows that the purposes of Allina’s health screen were to (a) insure that incoming employees who might come into contact with clients had immunity to communicable diseases as recommended by the Centers for Disease Control and Prevention. . .”

The Court noted that rubella has been eliminated in the United States but observed that rubella remains a common disease in many parts of the world and can be contracted through foreign travel.   The Court further observed that rubella is particularly dangerous to expectant mothers and infants.

Hustvet also argued that her multiple chemical sensitivities constituted a disability that Allina should have accommodated by foregoing the requirement of the MME.  The Court rejected this argument as well.  “There is insufficient evidence in the record to support the conclusion that Hustvet’s chemical sensitivities or allergies substantially limit her ability to perform major life activities.  She has never been hospitalized due to an allergic or chemical reaction, never seen an allergy specialist, and never been prescribed an EpiPen.  Nor has she ever sought any significant medical attention when experiencing a chemical sensitivity, taken prescription medication because of a serious reaction, or had to leave work early because of a reaction.”

For these reasons, the Eighth Circuit affirmed summary judgment in favor of Allina.  The case shows that courts will support termination of applicants who cannot pass a post-offer examination if the standards are job-related and consistent with business necessity.  Readers may find this case at Hustvet v. Allina Health System, 910 F.3d 399 (8th Cir. 2018).

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

The New Jersey Appellate Division decided an important case on January 17, 2019 entitled The Plastic Surgery Center, PA. v. Malouf Chevrolet-Cadillac, Inc,.  The case centered on how long a medical provider has to file a claim petition in the Division, namely whether providers have two years, like claimants, or six years.  The case has been reported.

The Court first noted that suits on contracts in New Jersey have a six-year statute of limitations under N.J.S.A. 2A:14-1.  When the New Jersey Legislature amended the New Jersey statute in 2012 granting exclusive jurisdiction over disputed medical charges to the Division of Workers’ Compensation, the Legislature never addressed which statute of limitations would apply.

New Jersey Manufacturers argued in this case that it should be two years because that is how long a claimant has under the statute, namely two years from the date of injury, or if compensation has been provided by the employer, then two years from the last payment of compensation.   Counsel for the Plastic Surgery Center argued that it should have six years like any other contract claim.

The Court gave several reasons for its conclusion that medical providers should have six years to file in the Division.   It began by noting that the Legislature could have expressed but did not express its intent to apply the two-year time bar to medical providers when it gave the Division exclusive jurisdiction over medical provider claims.  The Court also noted that the Legislature did not expand the two-year statute of limitations provision to specifically reference medical providers as falling with that rule.  Instead, the rule only mentions claimants.

Most importantly, the Court said that the rationale for two years does not fit N.J.S.A. 34:15-51, which is the statute of limitations provision in New Jersey.  “…We  are most persuaded that the Legislature intended to leave unaltered the time within which medical-provider claims must be commenced because the Act’s two-year-bar simply doesn’t fit.”   It said that such a rule would sometimes mean that the statute would run on the rights of the medical provider to file before the medical service is even provided because the medical provider might not render its service until after two years from the date of accident.

New Jersey Manufacturers argued that the Court should consider the alternative language of the statute, which provides “two years from the last payment of compensation.”  The Court said that language applies to claimants who receive compensation.  It does not fit the concept of a medical provider who renders a service to a claimant.  “By arguing that the time-bar operates differently for medical-provider claims – that the action accrues on the date of service instead of the employee’s accident – the respondents must concede that medical providers are different types of claimants than employees.”  The Court said that adopting this approach would “rewrite” the statute, something the Court said it does not have a right to do.

The issue is of great importance because one of every five claim petitions in New Jersey is a Medical Provider Claim, and that percentage is rising rapidly.   It is hard to say whether this ruling will increase the number of filings by true New Jersey medical providers because this practitioner does not believe that there were many New Jersey medical providers sitting on the sideline waiting for a ruling on the statute of limitations.  Many practitioners always thought that the six-year statute of limitations on contracts applied to medical providers.

But this decision will give great greater impetus to a noticeable trend: out-of-state medical providers are moving satellite offices to New Jersey and choosing to do medical procedures in New Jersey even though many of the workers they are treating were injured in and worked in New York and Pennsylvania.  In many cases the injured New York and Pennsylvania workers also live out of state.  The only connection with New Jersey is the fact that the procedure was scheduled in New Jersey for higher reimbursements.  This trend is directly traceable to the fact that New Jersey has no fee schedule and reimbursements are therefore much higher here. The next issue that the Appellate Division needs to address is jurisdiction where the only contact with our state is the location of the treatment.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

Until 1979 New Jersey had a doctrine known as the “going and coming rule,” and that rule basically said that employees were not covered for workers’ compensation when they were going to work or coming from work.  Scores of exceptions emerged over the years, creating a patchwork of inconsistency, thus prompting the New Jersey Legislature to adopt a more uniform doctrine known as the “premises rule.”

There is one basic principle for the premises rule as well as one main exception:  1) An employee is covered when he or she is injured on work premises if those premises are owned or controlled by the employer; and 2) An employee is covered when he or she is required by the employer to be away from the employer’s place of employment when performing duties authorized by the employer.

Think of the premises rule as a protective blanket covering the employee when situated on any area owned or controlled by the employer, including parking lots owned or controlled by the employer, walkways owned or controlled by the employer, cafeterias, restrooms or offices owned or controlled by the employer.  It makes no difference where on the premises the injury takes place:  one is just as protected for workers’ compensation purposes in a company cafeteria, coffee station, restroom or company parking lot as in one’s own office.

The old adage in real estate applies:  location, location, location.  The premises rule focuses literally on where the accident or injury takes place, and a few feet off-premises can make all the difference in the world.  In one case, a Harrah’s casino dealer finished her shift and proceeded to her car.  As the claimant’s vehicle pulled out of the lot, it collided with another vehicle.  The impact occurred on MGM Mirage Boulevard, but a portion of the rear of claimant’s vehicle was positioned over the Harrah’s driveway apron.  The Judge of Compensation measured the area of the injury and determined that one foot of claimant’s vehicle was still in the area of the parking lot controlled by Harrah’s.  Therefore the case was found compensable. Burdette v. Harrah’s Atlantic City, No. A-4797-12T1 (App. Div. January 17, 2014).

It is important to appreciate that it doesn’t matter in New Jersey whether the employee has clocked in or clocked out. That makes a difference under the Fair Labor Standards Act but not for purposes of workers’ compensation.  One could clock out of work but linger for 30 minutes talking to a co-worker about the latest Netflix series and then slip and fall in an employer parking lot.  The Judge of Compensation will focus on whether the employee was on the work premises for work purposes and whether there was any deviation from employment, such as playing soccer in the parking lot with friends.  Lingering after work to chat with co-workers is not a deviation from employment, and it happens all the time, as does arriving at work early before the employee’s technical start time.

For coverage under the premises rule, the employee must be on the premises for purposes of doing work.  If an employee visits the office on a Sunday when the office is closed to pick up papers for the Fantasy Football team, only to slip and fall in the building,  that injury would not be covered for workers’ compensation purposes because it did not occur during the course of employment.

But what about parking lots that are not owned or controlled by the employer?  Where does the work premise begin when someone arrives at a parking lot adjacent to an office where the employer is just a tenant on the third floor?  The premises rule in that situation does not protect an employee injured in that parking lot because the employer is just a tenant and generally would not own or control the lot.  Reading the lease agreement is essential, of course. The same is true of injuries in the entrance way of the office building, or even the elevator in most situations.  In the third floor tenant situation, the premises are only reached when the employee gets to the third floor because that is the area controlled or owned by the employer.   Exceptions exist where the employer has a lease that requires the employer to pay for maintenance, snow removal or there is other evidence of control by the employer of the parking areas.

The last point to remember about the premises rule is that the injury must always arise from the employment to be compensable.   Injuries frequently occur at work that are not caused by work.  Example:  an employee with arthritis is walking to the manager’s office and feels sudden pain in her knee.  She does not fall but some damage definitely occurs in the process of walking.  Judges will generally find that such an injury did not arise from work because the work conditions or premises did not cause it.  That type of injury could have happened anywhere, and the employee’s injury was not caused by a fall on a hard surface of the premises (which would change the result).  The same is true of an employee who has shoulder problems from playing basketball but who feels sudden pain at work while putting on his coat.  That sort of injury happens at work but it is not compensable because work conditions did not cause it.

In the last analysis, the premises rule is a huge improvement over the former “going and coming rule.” In the 40 years since the 1979 Amendments, there has been a great deal of predictability in court decisions.  New Jersey judges and practitioners know the case and statutory law extremely well.  As a result, employers and adjusters have been able to make consistent and well-informed decisions on whether to accept or deny such cases.  But there will always be new and interesting fact patterns under the premises rule.  For one, more and more employees work from home, presenting new and challenging fact patterns for judges to consider.  As these home injuries occur in different parts of the home or driveways outside the home, cases will be tried, fundamental principles will be applied, and fairly predictable rules will emerge.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

One of the most difficult issues for employers to deal with is the work injury which leaves an employee with lasting difficulties in performing job duties.  Employers encounter this frequently with occupational claims such as carpal tunnel or epicondylitis where the employer settles the compensable workers’ compensation claim and then places the employee back in the same job that caused the medical problem, sometimes with reasonable accommodations and sometimes not.

An interesting case on this theme is Exby-Stolley v. Board of County Commissioners, Weld County, Colorado, 906 F.3d 900 (10^th Cir. 2018).  In that case, the plaintiff was a health inspector for the County and broke her right arm on the job, leading to two surgeries.  To compensate for her injury, she used makeshift devices for lifting, moving, and opening objects.  She even learned how to write using her non-dominant hand.  Inspections took her much longer than before, and she got fewer done in a day.

Plaintiff received a poor performance evaluation in March 2012 for a variety of reasons, partly because she was behind in her work.  She met with supervisors and HR to discuss job modifications.  Her workers’ compensation doctor prepared a report setting forth her job restrictions.  The County decided to offer her a part-time office job.  Plaintiff did not like the work.  She was paid the same as she had been making pre-injury by a combination of workers’ compensation benefits and salary.

Plaintiff returned to her workers’ compensation physician on June 6, 2012, and the doctor set permanent restrictions.  She met again with HR and supervisors.  Plaintiff suggested various accommodations, including piecing together various job functions from several jobs into one job.  All of her requests were rejected.  There was a dispute over whether the County asked her to submit a letter of resignation or not, but plaintiff did submit one effective June 29, 2012.  She wrote, “After a final evaluation with the physician and meeting with management it is apparent I am no longer able to perform the duties in my job description.”

The County disputed some of the allegations in the ensuing law suit.  The County said that plaintiff had been complaining about pain she was suffering in doing her job in March 2012 even before she saw her workers’ compensation doctor.  The County said it considered first reducing her time in the field on tasks which caused her pain.  Ultimately the County proposed the part-time office job.  The County also claimed that plaintiff requested a new position be created for her, which the County refused to do.  The County witnesses said they were rather surprised when plaintiff submitted the letter of resignation because they considered that they were still deep in the interactive process.

In plaintiff’s law suit, she alleged that the County violated the ADA because if failed to reasonably accommodate her disability and failed to engage in the interactive process.  The jury found that the County should prevail because plaintiff had not proven that she was discharged from employment or suffered other adverse action.  The jury accepted the County’s position that placing plaintiff in a temporary half-time office job with full pay supplemented by workers’ compensation was reasonable, noting that plaintiff agreed with the change; further, the County took no adverse action against plaintiff because she voluntarily resigned.

The plaintiff argued that all failures to accommodate are adverse employment actions.  Plaintiff’s counsel cited some case law for the proposition that an adverse employment action occurs when an employer refuses to make reasonable accommodations.  The Tenth Circuit Court of Appeals disagreed:

In this case the County argued to the jury that Plaintiff suffered no adverse employment action because it did not do anything negative to her.  Because of her physical limitations, it had given her a part-time office job with the same pay (when workers’-compensation benefits are included).  When she asked for the County to create a new position for her, it denied her request but, according to testimony it presented, it did not fire her or make any other changes in her employment status.  And County employees testified that they were planning to continue to look for ways to accommodate her.  We are not willing to say in these circumstances that an employer’s failure to immediately accommodate a request by a disabled employee is in itself an adverse employment action.

The case illustrates how difficult it is for an employer to deal with the problem that arises when an employee has a work-related condition that makes it difficult to perform essential job functions.  This employer did not do an FCE or perform a fitness-for-duty examination with analysis of the job functions.  That is often very helpful in similar situations.  But the employer in this case did try to make a reasonable accommodation for months.  The fact that damaged the plaintiff’s case the most in this case was her writing of the resignation letter when the requested accommodation of a new position was not granted by the employer.  That ended the interactive process summarily, and the general rule is that the party who ends the interactive process is the one that most often loses the law suit.

On December 18, 2018, a petition for rehearing en banc was granted in this matter, so we may be hearing more on this case in the near future.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

The Honorable Joshua Friedman decided an issue this month that has been pending for several years regarding calculation of the Social Security Disability offsets in workers’ compensation cases for petitioners under the age of 62.  A petitioner’s attorney had brought motions in five cases including one handled by our office, asserting that the SSD offset had been calculated incorrectly because the petitioner’s rate should change and increase every three years in accordance with rate changes in Social Security – the triennial recalculation.  While we do not normally write about cases decided in the Division of Workers’ Compensation, this case is an exception because it is the only decision that we know of in the state dealing with the issue of triennial recalculation.

The total and permanent disability provision of the workers’ compensation statute NJSA 34:15-95.5 indicates that offsets should be calculated in conjunction with the SSD statute 42 USC 424(a).  In most states, if a petitioner gets both SSD and workers’ compensation the SSD is reduced to insure that the petitioner does not earn more than his 80% average current earnings.  In a handful of states, including NJ, there is a “reverse offset” – if the combination of SSD and workers’ compensation is more than the 80% average current earnings (ACE), then the workers’ compensation rate is reduced, not the SSD.  This offset can make a total disability award very attractive monetarily for the respondent and the Fund.  This offset is only applicable for total and permanent disability resolutions.

The petitioner’s attorney had argued that since SSD re-determines the ACE every three years that workers’ compensation was required to do the same.  This would mean that every offset case would have the rate increased every three years by an amount determined by Social Security which takes in effect national wage factors, inflation, cost of living etc.  The effect of the change that the petitioner was seeking would be to both increase the exposure for every total disability case for a worker under 62 and also insert uncertainty regarding the amount of the award.  Another potential issue is that any change in the NJ workers’ compensation statute regarding the offset could result in the loss of the “reverse offset” for the entire state, converting NJ to a state where Social Security, rather than workers’ compensation gets the offset.

The motions were pending for a very long time with multiple briefs provided by each party and testimony offered regarding legislative intent regarding NJSA 34:15 – 95.5. and Social Security.  In his decision, Judge Friedman stated that the triennial recalculation is essentially a cost of living adjustment, which was not contemplated by the Workers’ Compensation Act.  He also found important the fact that Social Security does not make triennial recalculations in reverse offset states.  He believed that the calculations that the petitioner’s attorney provided were merely hypothetical, not official calculations from Social Security.  Judge Friedman also decided that the Supremacy Clause, which holds that Federal law pre-empts conflicting State law, was not applicable because there was no intent in the Federal law to “occupy the field” for payment of workers’ compensation disability benefits.

This decision is a very favorable outcome for the respondents and the Fund.  A contrary decision would have been extremely disruptive to both pending total and permanent disability cases and potentially cases already settled or tried.  At this time we do not know if the case will be appealed. Claire Ringel of our office handled this case for respondent Burlington County. Please direct any questions regarding this issue to her.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

Section 20 settlements are not technically payments of workers’ compensation benefits except for insurance rating purposes.  These settlements are popular with employers because the file can be closed for good with no potential for a reopener claim.  In many states, the Section 20 settlement is called a full and final settlement.  But does a Section 20 settlement mean that the employer has no subrogation rights as to medical, temporary or permanency payments when the injured worker has a good third party case arising from the work accident?

It is important for practitioners to consider at the time of a Section 20 settlement whether there is a third party case pending.  If so, the issue arises whether the employer has a lien on medical and temporary disability benefits paid prior to the settlement.  Example:  suppose the employer pays $30,000 in medical and temporary disability benefits to a claimant, who has a good third party lawsuit which he will eventually settle for $100,000.  There are causation issues in the workers’ compensation case such that the parties agree to settle the permanency claim petition months later for $45,000 on a Section 20.  On the day of settlement, no one mentions anything about the prior payments of $30,000 for medical and temporary benefits.  The Judge of Compensation approves the Section 20 settlement for $45,000.  A few days later the third party case settles for $100,000, and the employer requests reimbursement of two thirds of the $20,000 it has paid in medical and temporary disability benefits.

Does the claimant owe the employer $20,000 minus $750 in costs of suit?  The answer is yes, according to Aetna Life & Cas. v. Estate of Engard, 218 N.J. Super. 239 (Law Div. 1986).  The $45,000 payment under the Section 20 is not lienable, but the prior medical and temporary disability benefits made well before the case settled remain lienable.  Best practice would be to place all of this on the record so that the injured worker is well aware that only the $45,000 Section 20 payment will escape the respondent’s lien, not the prior medical and temporary disability benefits.

Suppose the defense attorney in the same case negotiated with the petitioner’s attorney to allow the $45,000 Section 20 payment to be lienable?  Can that be done in New Jersey when a Section 20 payment is not really a payment of workers’ compensation benefits?  Yes, according to Calle v. Hitachi Power Tools, No. A-1015-09T1 (App. Div. February 15, 2011).  This situation seldom happens in workers’ compensation court.  But the parties are free to negotiate the terms of a settlement whereby the petitioner agrees to permit a Section 20 payment to be lienable.  The Judge of Compensation must, of course, approve the entire settlement, including this aspect of the settlement.  The intention to make the Section 20 payment lienable should be placed on the actual court order and on the record, thereby making clear that respondent has a lien on the Section 20 payment itself.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

One of the most significant cases to be decided by the Appellate Division with respect to subrogation rights was issued on December 4, 2018 in New Jersey Transit Corporation v. Sanchez, A-0761-17T3 (App. Div. December 4, 2018).  The case will have an impact on how employers deal with a very common scenario in New Jersey.

David Mercogliano was injured in a motor vehicle accident during the course of his employment. NJ Transit owned the vehicle driven by Mercogliano and paid workers’ compensation benefits to Mercogliano in the amount of $33,625.70 (comprising $6,694.04 in medical benefits, $3,982.40 in temporary disability benefits, and $22,949.26 in permanent partial disability benefits).  Mercogliano did not sue the driver of the other vehicle, Sanchez, or the owner of the vehicle, Smith.  Instead, NJ Transit filed a subrogation action pursuant to N.J.S.A. 34:15-40(f) against the third party defendant carriers.  That provision allows the workers’ compensation carrier or employer to file a suit after one year against a tortfeasor, if the tortfeasor has not filed suit.

The trial judge ruled against NJ Transit on the ground that the verbal threshold barred any such subrogation claim since Mercogliano himself could not meet the verbal threshold because he did not sustain a permanent injury as defined by N.J.S.A. 39:6A-8(a).  In essence, the trial court held that NJ Transit stood in the shoes of Mercogliano.   NJ Transit appealed.

In a decision that will surely lead to the filing of more subrogation suits, the Appellate Division reversed in favor of NJ Transit.  This decision has been published, so its impact will be great. First, the Appellate Division observed that the verbal threshold contained in so many drivers’ automobile policies does not apply to economic loss.  Rather, it applies to non-economic loss.  The Court said that an “injured worker may recover medical expenses from the third-party tortfeasor and N.J.S.A. 39:6A-12 does not apply,” citing Lambert v. Travelers Indemnity Co. of America, 447 N.J. Super. 61 (App. Div. 2016).  Since Mercogliano could have sued the tortfeasor to recover medical expenses, the Court reasoned that it follows under Section F of the workers’ compensation subrogation statute that the workers’ compensation employer could sue after the one-year waiting period.

The Court flatly disagreed with the reasoning of another published Appellate Division case, namely Continental Insurance Co. v. McClelland, 288 N.J. Super. 185 (App. Div. 1996).  The Court noted that the Continental case has not been followed by other court decisions in recent years.  The Court highlighted the fact that NJ Transit was seeking to recover benefits paid to Mercogliano for economic loss (medical expenses and wage loss), not noneconomic loss.  The Court said:

To be clear, Mercogliano’s automotive insurer paid him no benefits and incurred no costs, and the workers’ compensation carrier does not seek reimbursement from Mercogliano’s automotive insurer.  On the contrary, NJ Transit seeks reimbursement from the negligent third-party tortfeasors pursuant to Section 40.  If successful, NJ Transit’s workers’ compensation carrier would be reimbursed by the tortfeasors, subject to their right to indemnification from their own automotive insurers.  Therefore, allowing NJ Transit to pursue reimbursement does not conflict with AICRA’s collateral source rule, N.J.S.A. 39:6A-6.

This case provides a road map for employers to pursue tortfeasors for reimbursement of medical and temporary disability benefits paid in workers’ compensation arising from car accidents where the injured worker cannot sue due to a verbal threshold policy.

One key question is whether this decision is limited to payments of medical and temporary disability benefits as opposed to permanency benefits.  William T. Freeman, Esq. of Brown & Connery, whose colleague Shawn C. Huber, Esq. argued the case successfully for NJ Transit, notes that the Court cited language in Lambert that is very broad:  “As long as the employee’s injuries were caused by a third-party and not the employer, the WCA gives the workers’ compensation carrier an absolute right to seek reimbursement from the tortfeasor for the benefits it has paid to the injured employee.”  This language certainly supports the view that permanency benefits may be sought.

On the other hand, the NJ Transit opinion did not really focus on permanency benefits.  The Court initially framed the issue to be decided as follows: “In this appeal, we consider whether a workers’ compensation carrier can obtain reimbursement of medical expenses and wage loss benefits it paid from tortfeasors who negligently caused injuries to an employee in a work-related motor vehicle accident, if the employee would be barred from recovering non-economic damages from the tortfeasors because he did not suffer a permanent injury.”  Future cases will no doubt settle the question whether this important decision includes the right to sue for permanency benefits.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com. 

Just six years ago, former Governor Chris Christie signed into law a bill which vested exclusive jurisdiction within the Division of Workers’ Compensation over any disputed medical charge arising from any claim for compensation for a work-related injury or illness.  That was the beginning of what we now call “Medical Claim Petitions” or MCPs filed by providers and medical facilities.  In the early years following the passage of the bill, perhaps one or two percent of all workers’ compensation claims were MCP cases.

Fast forward to 2018:  20% of all formal claim petitions filed in the Division this year are MCP cases!  You read that right: one out of every five formal claim petitions filed in 2018 in the Division of Workers’ Compensation is a petition filed by a medical provider or medical facility disputing a payment. Already through November 2018, over 6,300 MCPs have been filed in the Division in the first eleven months.

The Judges of Compensation have learned a great deal over the years about how to deal with provider disputes. They ably manage not only a high volume of formal claim petitions filed by petitioners but an ever escalating volume of MCP cases.   If the current rate of growth of MCP cases continues, one can project that in a few years one in three formal claim petitions will be an MCP case.

Why are there so many MCP cases in New Jersey when New Jersey employers have control over medical care?   That is the question this practitioner put to Kelly Royce, Senior Vice President of Managed Care Operations for First MCO, a leading managed care and medical repricing company in New Jersey.  Royce said that the key for New Jersey employers and carriers is to have robust physician and facility networks.  In that case, MCPs do not generally get filed. “You look at the contract, and that ends almost all such disputes,” she said.

But Royce pointed out that there are many situations where emergency care is provided, and the doctor and facility would not likely be in network.  When the employer or carrier receives the bills, they may be repriced based on reasonable and customary charges in the geographic area, but the provider or facility often disagree on the determination of reasonable and customary, leading to the filing of an MCP.  The amounts in dispute are often tens or even hundreds of thousands of dollars.

Royce also pointed out that even if the physician is in network, the medical facility where the procedure or surgery takes place is often not in network.  That means that the physician’s charge will be covered by the network agreement, but the facility charge may not be.  She recommends that employers spend time trying to determine where network physicians operate and making sure that these facilities are in network.

Linda Woods, VP of Bill Review Operations for First MCO, added that the determination of reasonable and customary is not uniform.  There are many different data bases such as Fair Pay and Wasserman which may have different criteria on what is reasonable and customary.  She added that Medicare has its own schedule, and PIP has its own schedule, and sometimes these schedules are also considered.  The determination of reasonable and customary may vary significantly depending on the resource that is used.

There are a number of cases that have been decided on what constitutes reasonable and customary charges.  The leading case at the Division level remains Burn Surgeons of St. Barnabas v. Shoprite, C.P. # 2009-16548, 2011 N.J. Wrk. Comp. LEXIS 10 (August 26, 2011).  In that case the physicians who were contesting the level of reimbursement by the carrier were co-surgeons, and they testified in court in support of their charges.  Each surgeon felt that he should have been paid 87.5% of usual and customary charges.  The amount in dispute was very significant.

Attorney Ann DeBellis, Director/Supervising Attorney for New Jersey Manufacturers, successfully represented NJM and argued that her company was correct in paying each co-surgeon 73.6 percent of the charged amount in this case, which was a percentage in line with payments made by other commercial carriers and well above payments from government programs.  The late Honorable Virginia Dietrich, Administrative Supervising Judge of Compensation, rejected the argument by the burn surgeons that additional monies should be paid to account for the difficulty of the procedures, the severe illness of the patient and the expertise required.  The judge ruled that all of these considerations were taken into account when the codes were prepared.

When MCP cases do get filed, the data relied on by the parties are often complicated to understand, requiring defense counsel to master obscure terminology.   On the claimant side, there are several law firms which specialize in this area of law and generally work on contingent fees.  Because of the contingent nature of the representation, the providers and facilities incur no cost in filing MCPs.  They only pay counsel if there is a recovery.

Capehart Scatchard decided several years ago to create an MCP team headed by partner Claire Ringel, Esq., to oversee these increasingly complicated claims which often involve hundreds of thousands of dollars in dispute.  One claim petition that Ms. Ringel resolved this year involved a charge by a New Jersey medical provider for $960,000 for a complex surgery.  She resolved this claim for less than 10% of the charge.  Ms. Ringel has also filed more than 50 motions to dismiss MCP cases this year where all contacts are in the State of New York (hiring, injury and work), but the MCP cases were filed in New Jersey simply because the medical procedure occurred in New Jersey and the provider was unsatisfied with the New York fee schedule.

The reality is that MCP cases are here to stay and the volume is sharply rising.  There are complicated issues of appropriate levels of payment as well as many claims with jurisdiction as the principal issue.  Defense firms need to develop the expertise to successfully represent employers, and employers need to work with companies that have great networks and repricing skills.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com.