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NWCDN is a network of law firms dedicated to protecting employers in workers’ compensation claims.

NWCDN Members regularly post articles and summary judgements in workers’ compensations law in your state.

Select a state from the dropdown menu below to scroll through the state specific archives for updates and opinions on various workers’ compensation laws in your state.

Contact information for NWCDN members is also located on the state specific links in the event you have additional questions or your company is seeking a workers’ compensation lawyer in your state.

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28-Oct-2016: LYME DISEASE QUALIFIES AS A DISABILITY UNDER THE NEW JERSEY LAW AGAINST DISCRIMINATION - NWCDN New Jersey Member
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In Cook v. Gregory Press, Inc., 2016 N.J. Super. Unpub. LEXIS 1885 (App. Div. August 11, 2016), the Appellate Division reversed a trial court’s dismissal of a plaintiff’s disability discrimination case involving an employee eventually diagnosed with Lyme disease. The case involved Matthew Cook, who worked as a printing machine operator since 2002. In 2011, he began experiencing facial numbness, tingling in the hands, and neck pain. He saw a neurologist who thought he might have a demyelinating disease, recommending an MRI of the brain and spine.

Before Cook went for the MRI, his home was damaged by Hurricane Irene, and he was out of work for almost a week making repairs. He was given a day off from work on September 9, 2011 to undergo the MRI, which showed myelitis. His doctor recommended next a spinal tap to determine whether he might have MS, Lyme disease, or a virus. His boss granted him time off to get the spinal tap but suggested that Cook really had nothing wrong with him. The boss said he thought his problem was stress from the flood. Cook responded that this would not explain a lesion on his spine.

The spinal tap occurred on September 16, 2011, and Cook experienced complications from the spinal tap, including dizziness and headaches. He stayed in bed all weekend but went to work on September 19, 2011. He found that his head was pounding as the day went on and he had to leave to go home. His doctor prescribed fioricet. He could not work the next day due to severe headaches and nausea. His doctor prescribed Prednisone to relieve inflammation, but that made him jittery. His doctor next faxed a note to Cook’s supervisor saying that Cook needed to be out until released later in the week. Cook called his boss to ask for more time off, but his boss said that Cook better get back to work by Wednesday, September 21, 2011.

Cook did not feel well enough to return to work on September 21^st but he did return anyway because he felt he had to. His head was pounding, and the loud noise from machines was aggravating his pain. He made a production mistake which delayed a printing job and wasted paper. His boss then proceeded to yell at him for the production mistake. Cook told his boss to stop yelling at him and then took off his headphones and threw them in a garbage can, walking away. His boss continued to yell at him, whereupon Cook told his boss that he would pay for the wasted paper but admonished his boss to stop yelling. The two men stared at each other, and then Cook walked away, telling his boss that all the yelling was aggravating his headache pain. Shortly thereafter, Cook was fired.

At some later point in time, Cook was diagnosed with Lyme disease and began intravenous therapy for 27 days. His doctor noted that the combination of Lyme disease and the effects of the spinal tap would naturally have an effect on Cook’s ability to handle stress. Cook sued under the New Jersey Law Against Discrimination (NJLAD) for wrongful termination and failure to make reasonable accommodation.

The trial judge threw out Cook’s case, finding that Cook was terminated for his bad attitude, not because of any disability. The judge also found that it not the responsibility of the company to initiate the interactive process where all the plaintiff says is that he has a headache.

The Appellate Division reversed for the following reasons. It said that the definition of disability under the NJLAD is much broader than the ADA. Under the NJLAD the plaintiff only has to show a physical or psychological condition which prevents the normal exercise of any bodily or mental function. One need not show a substantial limitation of a major life activity as is required under the ADA.

Under the court’s analysis, Lyme disease is a serious condition which qualifies as a disability under the NJLAD. It said that Cook’s doctor established that his patient had physical symptoms of Lyme disease while employed by Gregory Press. Because of his condition, Cook had to undergo medical testing that caused severe headaches and required steroid treatment, both of which affected Cook’s ability to work. The court also found that a jury could infer that the employer was aware of this disability, that Cook requested a reasonable accommodation in the form of leave, and that he could have been reasonably accommodated. The court said:

Plaintiff requested and was granted time off for the MRI and spinal tap. Plaintiff told Jeffrey (supervisor) about the spinal tap, and Gregory (another supervisor) approached plaintiff prior to the procedure and, despite knowing of the lesion on plaintiff’s spine, expressed his doubt there was anything wrong with plaintiff. Plaintiff returned to work on Monday with a severe headache, told Jeffrey about it, and Jeffrey permitted him to leave early. The next day, defendants received Dr. Monck’s note advising plaintiff was under her care and had an exacerbation in his neurologic condition, side effects of the spinal tap, and could not return to work until later that week ‘based on his recovery.’ Plaintiff advised Jeffrey that he was on steroids, the headaches could last a week and asked for the rest of the week off. Jeffrey ordered plaintiff back to work without further investigation or inquiry. Believing he had no choice, plaintiff returned to work the rest of the week, still suffering a headache and the effects of the steroids, which attributed to the production mistake. We conclude a jury could reasonably infer from this evidence that defendants knew of plaintiff’s disability, plaintiff requested a reasonable accommodation, plaintiff could have been reasonably accommodated, and defendants failed to make a good faith effort to provide a reasonable accommodation.

In New Jersey, it is rather easy for a plaintiff to prove a disability, so employers must take requests for time off work seriously when there are medical issues involved. The case is a primer for how an employer should not make termination decisions in a situation where an employee is having serious pain and symptoms from a cause as yet unknown. That the employer did not know plaintiff had Lyme disease at the time of firing was not a defense. The employer knew enough to realize that Cook may have a disability. The employer made a number of major mistakes in this case, first in pressuring the plaintiff to return to work before his doctor approved it, and second in engaging in a verbal confrontation while Cook was complaining that the yelling was aggravating the condition that he was treating for. It is also worth noting that the employer should not have speculated on the “real” problem that plaintiff was having, in suggesting his problems were related solely to stress. Lastly, the employer should have tried to engage in the interactive process before making the precipitous decision to fire Cook.

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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.

28-Oct-2016: THE EVOLUTION OF THE RECONSTRUCTED WAGE RULE IN NEW JERSEY - NWCDN New Jersey Member
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What is a reconstructed work week and wage and why does it matter? Originally, this referred to a principle by which certain injured employees can seek recalculation of their work week, thereby increasing their wage and permanency rate at the time of settlement. For example, an employee works 20 hours per week earning $20 per hour for a $400 wage and a rate of $280 for permanency. The employee is injured and is unable to work full-time in the future due to the effects of the injury. The court may recalculate the rate to $560 per week instead of $280 per week by reconstructing the work week and wage to a 40-hour week. In this example, reconstruction would mean wages of $800 per week, which would in turn equate to $560 per week for the permanency rate. Depending on the severity of the injury, that can double the permanency award.

The leading case remains Katsoris v. South Jersey Pub. Co., 131 N.J. 535 (1993) but as indicated below, the principle of reconstructing a wage may be changing. In Katsoris, petitioner had two jobs. She was seriously injured delivering newspapers in her part-time job for the Atlantic City Press. She also had a full-time job as a secretary and was able to return to that job. She worked three hours per day, seven days per week, delivering newspapers. She received an award of 55% partial permanent disability, entitling her to 330 weeks of compensation. But the issue was which wage and rate should be used? The employer argued for use of her rate of $106.97 per week, which would limit her award to $35,300. Petitioner’s attorney argued that she was entitled to reconstruction of her wage based on a 40-hour work week, thereby yielding a new rate of $221 per week for a total award of $72,930.

The Appellate Division ruled that no reconstruction should occur in this case. It said, “The key to the availability of compensation based on a reconstructed work week for a part-time employee is not contemporaneous full-time employment but whether the disability represents a ‘loss of earning capacity, i.e., a diminution of future earning power.’” The court said that Ms. Katsoris only lost the ability to work her part-time job, not her full-time job and had not proved a diminution of future earning power.

Many practitioners translated the rule in Katsoris to mean that if the employee actually returns to work full time following the work accident, reconstruction of the work week and wages should not occur. That interpretation has now been called into question via the recent decision in Dunkley v. Costco Wholesale Corp., No. A-3405-14T2 (App. Div. Sept. 30, 2016). Ms. Dunkley worked in the Costco member services department four hours per day, five days per week. She was laid off in 2008 but got rehired in 2009 on a part-time position in the food court, making pizza, lifting cooking equipment, working as a cashier, mopping, sweeping and removing containers of garbage. Before working at Costco in the 1990s, she worked as a nurse’s aide until her license expired in 2000. Thereafter she worked as a home health aide until 2008.

On April 27, 2009, she slipped on a wet floor while cleaning at Costco, leading to surgery. On June 27, 2010, she injured herself again, sweeping the floor, requiring another surgery. In August 2011 Costco increased her working hours and she became fulltime in the member services department. She received an increase in her hourly wage, additional vacation time, and potential family benefits.

Petitioner argued that she was entitled to a reconstructed work week and wage because the injuries prevented her from performing duties required in her full-time position with Costco, including positions in the food court, kitchen, cashier, butcher and supervision. Her doctor testified that her injuries precluded certain full-time duties. The Judge of Compensation disagreed with petitioner and held that her wage should not be reconstructed. Petitioner appealed.

The Appellate Division did not decide the issue of reconstructed work week and wage, but it remanded the case because the court clearly disagreed with the reasoning of the Judge of Compensation that petitioner’s wage should not be reconstructed on account of the fact that she earned a higher hourly wage after the accident than she was earning before the accident and was working full time. The Appellate Division sent the case back to the Judge of Compensation to make findings concerning whether the disabilities suffered in each work accident affected petitioner’s future earning capacity or will have an impact on her probable future earnings. The court said “contemporaneous full-time employment does not require rejection of a request for reconstruction of a part-time employee’s work week.”

It will be important for practitioners to see how courts deal with the proofs on this sort of issue. Bear in mind that most doctors in workers’ compensation do not have a vocational background, nor do they necessarily know whether a work injury will likely impact the ability to do certain jobs that the employee does not have but could in theory have obtained but for the work accident. That sort of analysis requires a thorough understanding of various potential jobs, essential job functions of those jobs, and specific restrictions on the employee. FCEs would be helpful in this regard. Does the employee have to prove that she would have been just eligible for the higher paying positions or that she would have likely obtained those positions? How does one prove that one would have obtained a job that he or she never had before? Doesn’t that depend on the employee’s credentials and the assessment by the employer of more than just the employee’s physical capacity? Would surveillance by the employer be relevant to show that the employee has more capacity than the expert for petitioner says the petitioner has? Presumably, yes. There are a lot of unanswered questions.

The Dunkley case is important, even if it is unreported, because it moves the focus from reconstructing the workweek to reconstructing wages of someone who is working fulltime and in fact has received a higher wage than the wage at the time of accident. Perhaps that was the original meaning in Katsoris, but if it was, it was unclear to most practitioners at that time. For a claimant who is now working fulltime (with a raise) to prove that but for the injury she would have earned more by obtaining other potential jobs can certainly involve a fair amount of speculation.

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08-Oct-2016: UNDERSTANDING GEORGE V. GREAT EASTERN FOOD PRODUCTS - NWCDN New Jersey Member
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The case that generates more questions than any other in this practitioner’s experience is George v. Great Eastern Food Products, Inc., 44 N.J. 44 (1965) regarding idiopathic claims. This case comes into play any time that an employee falls for reasons unknown and suffers an injury caused by the fall itself. Countless employers have had situations where employees fall at work for no work-related reason, and the question is whether or not such a fall is compensable. The George case was decided by the New Jersey Supreme Court, and it has been the leading case on this particular type of claim since 1965.

The facts are very simple. Mr. George worked for Great Eastern and became dizzy at work probably related to some personal cardiovascular condition. That led him to fall to the concrete floor and fracture his skull. He died from the skull fracture, and his widow filed a dependency claim. Mr. George did not strike any object while falling, and he did not trip on anything. He simply fell onto a concrete floor from a standing position.

The lower courts found that this accident was not compensable based on a number of very old workers’ compensation decisions. But the Supreme Court of New Jersey reversed in favor of the widow’s dependency claim. The Supreme Court said that an employer takes the employee as he finds him. The Court added that an accident under the New Jersey Workers’ Compensation Act occurs “if either the circumstance causing the injury or the result on the employee’s person was unlooked for, regardless of whether the inception or the underlying reason for the circumstance or result was personal or work connected.”

The Court viewed both the circumstance causing the injury in this case (striking the floor) and the consequence upon the employee’s person as unexpected events. Since an accident is by definition an unexpected event, the case was found compensable. The Court said, “We also completely endorse the second necessary element . . . that such an unlooked-for mishap arises ‘out of’ the employment when it is due to a condition of the employment – i.e., a risk of this employment, and that the impact with the concrete floor here clearly meets that test.”

The Supreme Court concluded with this comment; “Of course, we do not mean to intimate that an employee is entitled to compensation for some idiopathic incident in and of itself, as, for example, where one suffers a none-work connected heart attack or convulsion at work and simply dies at his desk or machine or falls to the floor and suffers no injury from the impact.” Thus the general rule that we do not pay for the underlying condition which caused the fall, but we do pay for the effects of the fall under the rule in George.

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08-Oct-2016: MANAGED HEALTHCARE SERVICES COMPANY PREVAILS IN NURSE’S ADA CLAIM - NWCDN New Jersey Member
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Katherina Swank worked for CareSource Management Group (hereinafter CareSource) as a Registered Nurse (RN). CareSource provides managed healthcare services to Medicaid recipients. Her work involved case manager duties by telephone until CareSource initiated a new approach in 2011 to delivering managed care services to the Ohio Department of Job and Family Services, which mandated that CareSource employees meet face-to-face with certain high risk members of the community on at least a quarterly basis.

This face-to-face requirement posed a problem for Swank because she suffered from rheumatoid arthritis. She had intermittent difficulty with walking, lifting heavy items, and driving. She had a weakened immune system and was susceptible to illness. Because of these medical issues, CareSource had allowed Swank to begin working from home in 2009. When management contacted Swank in 2011 about the change in requiring face-to-face visits with members, Swank said that she had concerns about this, in particular having to drive a great deal as well as the impact on her autoimmune condition.

Swank sent a letter on November 14, 2011 to the Senior Vice President of Health Services stating that the new position “would be hazardous considering her current health condition.” She elaborated that contact with high risk patients would be detrimental to her health. She met with management and stressed that long distance driving would also be a problem. CareSource suggested that Swank make an accommodation request.

Swank filled out an application for an accommodation and stated that she was “unable to tolerate being exposed to changes in weather conditions” and “unable to sit/stand for long periods of time.” Her request was to be permitted to continue to work in an office setting. Her physician weighed in by saying that Swank would have “difficulty” performing some of the job duties of the new CMHR job position. Her doctor also said that during acute flare-ups of her rheumatoid arthritis, her medical condition would preclude her from traveling to and from work and from being at work.

Ten more conversations took place between the parties with no real progress. Ultimately Swank admitted that she could not perform the essential functions of the new CMHR position, and CareSource advised that it had no other position for her. The company then terminated her employment.

Swank sued under the ADA and contended that the company failed to make reasonable accommodation for her disability. The district court ruled for CareSource and the United States Sixth Circuit Court of Appeals affirmed the dismissal of Swank’s case. The Court noted as follows:

The case can be found at Katherina Swank v. CareSource Management Group Corporation, 32 AD Cases 1731 (6^th Cir. 2016).

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08-Oct-2016: OSHA ATTACKS EMPLOYER POST-ACCIDENT DRUG TESTING POLICIES - NWCDN New Jersey Member
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Many employers have a policy of mandatory post-injury drug testing. Those policies must now be reconsidered and largely jettisoned. The underpinning of the new OSHA policy on drug testing is the belief that blanket post-injury drug testing policies deter proper reporting of injuries. On May 12, 2016 OSHA published new final rules against discrimination and injury and illness reporting. The new rule became effective August 10, 2016. The rule itself does not mention blanket drug testing policies, but the Comments to the rule make clear OSHA’s position.

The way OSHA gets to drug testing is through Section 1904.35(b)(1)(iv) which prohibits an employer from discharging or discriminating against an employee for reporting a work-related injury or illness. While the evidence seems threadbare that employers retaliate against employees who report work injuries by requiring post-accident drug testing, employers have to deal with the new rule, like it or not.

Here is the new standard contained in the Comments to the rule. “To strike the appropriate balance here, drug testing policies should limit post-incident testing to situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use.” Employers rightly question how they will develop the expertise to know when drugs are contributing to an accident. The Comments suggest that it would not be reasonable to drug test an employee who reports a bee sting, a repetitive strain injury, or an injury caused by a lack of machine guarding or a machine or tool malfunction. That sort of testing, in the view of OSHA, “is likely only to deter reporting without contributing to the employer’s understanding of why the injury occurred, or in any other way contributing to workplace safety.”

Another harm that OSHA sees in drug testing is that it can be perceived as punitive or embarrassing to the employee and therefore likely to deter injury reporting. OSHA states that “this final rule does not ban drug testing of employees. However, the final rule does prohibit employers from using drug testing (or the threat of drug testing) as a form of adverse action against employees who report injuries or illnesses.”

So how can an employer perform post-incident drug testing while at the same time convincing OSHA that it is not doing this to deter reporting of injuries or illnesses? OSHA says that drug testing which complies with a requirement of state or federal law or regulation is fine because the motive of the employer will be considered non-retaliatory. But those examples of drug testing do not address the issues most employers face.

OSHA adds the following opaque comment: “Employers need not specifically suspect drug use before testing, but there should be a reasonable possibility that drug use by the reporting employee was a contributing factor to the reported injury or illness in order for an employer to require drug testing.” What “reasonable possibility” means is anyone’s guess at this point in time. Questions abound on how an employer will be able to acquire in the short window of time following an accident sufficient information to make a decision to drug test under the “reasonable possibility” standard? A huge percentage of workers’ compensation accidents are unwitnessed, and drug use is widespread in our society generally. One can argue that there is always a reasonable possibility that drugs may be involved in work injuries, but clearly OSHA is looking for something beyond broad generalities like this. The Comments provide no examples of what OSHA is looking for. The likely effect of this rule will be to deter employers from drug testing after work injuries, and ultimately this will make workplaces and workers less safe.

Employer groups will surely challenge this rule in federal court. In the interim, employers should know that maximum penalties are now $12,000 per violation and over $120,000 for repeat violations. Given the new rule is now in effect, we recommend that employers, if they have not already done so, take a fresh look at their drug testing policies.

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19-Sep-2016: CONVENT FOUND TO BE EMPLOYER OF COOK AND REQUIRED TO REIMBURSE DIOCESE FOR MEDICAL AND TEMPORARY DISABILITY PAYMENTS VOLUNTARILY PAID BY DIOCESE - NWCDN New Jersey Member
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Consider this situation: Company A voluntarily pays approximately $172,000 in medical and temporary disability benefits to Worker. Company A demands reimbursement from Company B believing that Company B is the true employer. Worker never files a claim petition against Company A or B. Can Company A file a claim petition in the name of Worker and recover from Company B all $172,000 that Company A voluntarily paid?

That is the issue in Diocese of Metuchen, a/s/o/ Elissa Martinez v. Sisters of the Immaculate Heart of Mary, A-1441-14T4 (App. Div. Sept. 6, 2016). It is the most interesting decision in many decades to come out of New Jersey on the right of a company to seek reimbursement from another company in a non-PIP situation through the Division of Workers’ Compensation.

Elissa Martinez was severely burned in the face, neck and torso while working as a cook at the convent of the Sisters of the Immaculate Heart of Mary (IHM). The convent, a high school, and an elementary school are part of the Immaculate Conception Church, all owned by the Diocese of Metuchen. Martinez was hired by the Mother Superior of IHM to cook for a net wage of $175 per week by checks issued by IHM. The Mother Superior directed the activities of Martinez. IHM issued a W-2 tax form to Martinez but clearly believed that Martinez was an employee of the Diocese.

The financial relationship of the Sisters at IHM and the Diocese is unusual because the sisters take a vow of poverty. Hence, no individual sister receives a check. However, the Diocese pays a stipend for each sister to IHM, which then allocates an amount per month to the sisters of the convent for their living expenses. An extra stipend of $600 per month also was paid to IHM by the high school and the elementary school. This stipend, however, was stopped after the accident to Martinez.

After Martinez’s accident, IHM notified its workers’ compensation carrier and the Diocese. The Diocese paid Martinez’s medical and temporary disability benefits on a “charitable basis.” Thereafter the Diocese demanded that IHM’s workers’ compensation carrier immediately assume responsibility for making all payments. When that did not happen, the Diocese filed a workers’ compensation claim on Martinez’s behalf underN.J.S.A. 34:15-15.1 The Diocese denied that Martinez was its employee, and IHM also denied that Martinez was its employee.

As part of the claim petition which the Diocese filed, a motion was also filed to require IHM’s carrier to accept the claim and pay benefits. The medical provider, St. Barnabas Medical Center, also intervened seeking repayment of $399,017 for in-patient hospital services paid to Martinez. The Judge of Compensation heard testimony and ordered IHM’s carrier to reimburse the Diocese and pay outstanding medical bills, as well as make payment of $50,000 for counsel fees and pay permanent disability benefits to Martinez. It is important to note that Martinez herself never filed a claim petition in this case.

The first issue which IHM raised was jurisdiction of the court to hear this case. The Appellate Division agreed with the Judge of Compensation that the Division had jurisdiction to handle a claim filed by one entity on behalf of a petitioner for reimbursement of benefits. That conclusion flowed from N.J.S.A. 34:15-15.1 which allows claims for reimbursement to be filed when benefits “have been paid by any person, organization or corporation on behalf of such petitioner.” This provision is a little known part of the New Jersey Workers’ Compensation Act:

Whenever the expenses of medical, surgical or hospital services, to which the petitioner would be entitled to reimbursement, if such petitioner had paid the same as provided in section 34:15-15 of the Revised Statutes, shall have been paid by any insurance company or other organization by virtue of any insurance policy, contract or agreement which may have been procured by or on behalf of such petitioner, or shall have been paid by any person, organization or corporation on behalf of such petitioner, the deputy directors or referees of the Division of Workmen’s Compensation are authorized to incorporate in any award, order or approval of settlement, an order requiring the employer or his insurance carrier to reimburse such insurance company, corporation, person or organization in the amount of such medical, surgical or hospital services so paid on behalf of such petitioner.

The Appellate Division distinguished this sort of petition for reimbursement from a claim for contribution by one employer against the other, saying contribution claims like this are prohibited under the case of Conway v. Mr. Softee, Inc., 51 N.J. 254, 258 (1968). The difference in this case was, according to the Appellate Division, that “the Diocese did not file a claim on its own behalf, but rather, as permitted by the statute, filed the claim on behalf of Martinez.” The Court said, “The claim in Conway was for contribution from the other employer, where the present claim is on behalf of the employee for reimbursement.” In Conway, one employer tried to file a claim against another employer, and the Court said that cannot be done in the Division of Workers’ Compensation.

The next issue that the Appellate Division decided concerned employment by IHM. It recited the two tests for employment, namely the “control” test, and the “relative nature of the work” test, and under both tests the Court found Martinez was an employee of IHM. The decision does not make clear whether IHM argued that the Diocese was a “joint employer.” Presumably that argument was advanced, but one cannot tell from the Appellate Division decision. Control was established by the Mother Superior providing direction to Martinez. The relative nature of the work test was met because Martinez cooked daily meals for the sisters in the convent and worked exclusively for the sisters in the convent. She had no written agreement with the Diocese.

IHM also challenged the counsel fee award of $50,000. For one thing, IHM argued that $50,000 constituted more than 20% of the award. The Court noted that the Diocese had paid $172,182 as of January 13, 2015, and St. Barnabas had a claim for $399,017. The Court said, that an award of $50,000 was far less than twenty percent of the combined amount paid by the Diocese and the amount owed to St. Barnabas.

Interestingly, the Appellate Division reversed an award of permanency to Martinez because Martinez never filed a claim petition and the Judge never explained the basis for the award.

This case is one of a kind, and there are really no other non-PIP cases like it that have been reported. It is somewhat astonishing because the Diocese volunteered initially to pay medical bills without any court order or claim petition having been filed. Yet the Diocese managed to obtain full reimbursement after paying $172,182 on a charitable basis by resort to filing a claim petition on behalf of the petitioner pursuant to N.J.S.A.34:15-15.1. The language that the court focused on would suggest that employers can utilize this procedure rather easily: the standard set forth in the statute is whether the petitioner would have been entitled to reimbursement had petitioner made the payments herself.

Until this case, this particular statute has been used almost exclusively by PIP carriers to obtain reimbursement for medical bills and temporary disability benefits that PIP is required to pay under contract with rights over against the workers’ compensation carrier for injuries arising out of and in the course of employment. Based on this case, this statute now has a much wider potential use than just PIP reimbursement actions.

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13-Sep-2016: APPELLATE COURT RULES EMPLOYER HAS SUBROGATION RIGHTS IN THREE KEY CASES - NWCDN New Jersey Member
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Three cases were heard together in the New Jersey Appellate Division regarding the right of employers to obtain reimbursement under N.J.S.A. 34:15-40 in situations involving car accidents where medical treatment was potentially recoverable under PIP. The cases are Lambert v. Travelers Indemnity Company of America, Reed v. Qual-Lynx and Township of Marlboro, and Agar v. Qual-Lynx and Township of Hazlet, App. Div. A-1073-14T3, A-3040-14T1, A-3071-14T1 (App. Div. August 24, 2016).

The first case involved Jennifer Lambert who worked for the Howell Township Board of Education as a school bus aide. She was injured in a work-related car accident. Travelers Insurance Company paid $94,705.22 for medical expenses and $54,695.87 for indemnity benefits. Lambert sued the other driver and recovered $300,000. Her lawyer refused to reimburse Travelers anything for medical expenses but agreed to reimburse two thirds of indemnity benefits.

The second case involved Paul Reed, who worked for the Township of Marlboro as a police officer. Reed was redirecting traffic during work when he was struck by a vehicle. Marlboro belonged to the Monmouth Municipal Joint Insurance Fund and its third party administrator, Qual-Lynx, paid $60,430.48 for medical expenses and $44,578.29 for indemnity benefits. Reed recovered $100,000 in his third party law suit. Counsel for Reed offered to reimburse the JIF two thirds of indemnity benefits but refused to reimburse any medical expenses.

The third case involved William Agar, who worked as a police officer for the Township of Hazlet. Officer Agar was injured on June 26, 2011 while sitting in his police car, which was struck by another vehicle. The Township of Hazlet also belonged to the Monmouth County Municipal Joint Insurance Fund and the JIF paid $4,331.02 for medical expenses and $15,693 for indemnity benefits. Agar recovered $60,000 in his third party law suit and refused to reimburse any of the medical expenses.

All three cases went before the same Judge of the Superior Court, who ruled based on the unreported Dever decision that the plaintiff injured workers did not have to reimburse the portion of the workers’ compensation lien corresponding to medical expenses. The Superior Court Judge concluded that since a no-fault insured cannot make a recovery from a third party tortfeasor for medical expenses, the workers’ compensation carrier could not seek reimbursement under N.J.S.A. 34:15-40.

The Appellate Division reversed in all three cases and said that the Automobile Insurance Cost Reduction Act (AICRA) did not negate the right of employers to subrogation of medical expenses. The Court explained that the way N.J.S.A. 39:6A-6 of AICRA works is that workers’ compensation becomes the primary payor in a work-related car accident. The PIP carrier must pay initially by contract but ultimately the workers’ compensation carrier must reimburse the PIP carrier. “N.J.S.A. 39:6A-6 ‘relieves the PIP carrier from the obligation of making payments for expenses incurred by the insured [, including medical expenses] which are covered by workers’ compensation benefits.” The Court also noted that workers’ compensation benefits “shall be deducted from the benefits collectible under [PIP].”

The Court added, “The collateral source rule does not make workers’ compensation part of the PIP no-fault system; rather it shifts the burden of providing insurance from the automobile insurance system to the workers’ compensation system.” The Court concluded, “. . . nothing in that statutory language suggests that the Legislature intended to treat a workers’ compensation insurer as if it were an automobile insurer.” The Court added, “Nor is there any suggestion that the Legislature intended to treat workers’ compensation insurers as if they were PIP insurers. It is fair to assume that had the Legislature intended to effectuate such a major change, it would have used express language in the statute and discussed that incorporation in AICRA’s legislative history.”

These cases make clear that the unreported decision in Dever is bad law insofar as its ruling on subrogation. These three decisions have been reported and should end the controversy over recent years about whether a work-related plaintiff injured in a car accident must reimburse the employer for medical expenses when a third party recovery is made.

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30-Aug-2016: EEOC GUIDELINES ON UNPAID LEAVE COMPLICATE MATTERS FOR EMPLOYERS - NWCDN New Jersey Member
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The new EEOC Guidance issued on May 9, 2016 upsets many of the assumptions employers routinely make in regard to leaves of absence. The EEOC states, “An employer must consider providing unpaid leave to an employee with a disability as a reasonable accommodation if the employee requires it, and so long as it does not create an undue hardship for the employer.” The Guidance adds that this is the case when:

The specific accommodation that the employee requires
The reason an accommodation or work restriction is needed
The length of time an employee will need the reasonable accommodation’
Possible alternative accommodations that might effectively meet the employee’s disability-related needs; and
Whether any of the accommodations would cause an undue hardship
The only defense an employer has to a request for reasonable accommodation for additional leave is undue hardship and that is a very vague standard. The Guidance says that in assessing undue hardship an employer may take into account leave already taken by the employee, whether or not that leave is for FMLA or workers’ compensation. The undue hardship considerations include:

The amount and/or length of leave required
The frequency of the leave
Whether there is any flexibility with respect to the days on which leave is taken
Whether the need for intermittent leave on specific dates is predictable or unpredictable
The impact of the employee’s absence on coworkers and on whether specific job duties are being performed in an appropriate and timely manner
The impact on the employer’s operations and its ability to serve customers/clients appropriately and in a timely manner
Employers will have to exercise great caution in denying unpaid leave requests in the future based on this Guidance. It is true that the Guidance is not law, but practitioners and judges do refer to Guidance regularly. The job of an HR Professional has becomes even more challenging given this new Guidance.
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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.

30-Aug-2016: PRO OR CON: REDUCING PAY WHILE EMPLOYEE IS ON LIGHT DUTY? - NWCDN New Jersey Member
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I received an excellent question today from a reader of this blog. The question was this: “I’m looking for some information on whether it is acceptable to bring an employee back for light duty at a wage that is lower than their pre-accident wage provided that they are paid at least at the temporary total rate. So for instance, would it be acceptable to return a construction worker to a desk job at a reduced wage?”

Let me begin by stating that there are no published cases in New Jersey which answer this question. There are also no unpublished appellate level cases that provide guidance. Decisions have been handed down within the Division of Workers’ Compensation that address this issue but they are not binding on any other court. As a result, I can only provide guidance with my answer. There is simply no case or statutory law which answers this question.

Two observations should be made at the outset. The first is that most employers pay the normal wage when someone is on light duty. The second is that no employer wants to be the first test case on the question posed above! The reason there are not published or unpublished appellate division cases is that employers recognize that if they push this issue all the way to the appellate division, they may make bad law for all employers.

Having said that, let me provide some guidelines. Temporary disability benefits replace lost wages from a work injury or occupational disease. They are non-taxable, which means that someone who earns $1,300 per week but is receiving $871 per week in temporary disability benefits is nearly made whole when one considers the non-taxability of temporary disability benefits.

The issue raised by the reader above is often discussed in workers’ compensation courts around the state. The consensus among practitioners and judges is that Judge Cox was right in his opinion in Soto v. Herr’s Foods, Inc., 2012 NJ Work. Comp LEXIS 4 (September 7, 2012). That case involved an employer who reduced an employee’s wages on light duty below the amount of temporary disability benefits. The petitioner had been earning $976.15 per week at the time of his injury. His temporary disability benefit rate was $683.31 per week. The doctor approved four hours per day of light duty initially, but the employee received a net payment of $329.43 per week, which was substantially less than his temp rate. Judge Cox wrote:

It seems rather obvious to this Court that if Respondent is responsible for the payment of temporary disability benefits, and, in this case, the amount to which Petitioner is entitled is $683.31 per week, to allow Respondent to provide minimum light duty and only pay the Petitioner an amount less than the $683.31 to which he is entitled defeats the purpose of both the temporary disability and the light duty provisions of the workers’ compensation statute.

The employer did not appeal the decision of Judge Cox. There is no doubt that the decision would have been affirmed had it been appealed. The Workers’ Compensation Act is social legislation, and courts certainly recognize that injured workers need to live on the amount of temporary disability benefits, which are capped in 2016 at $871 per week and will rise to $896 per week in 2017. Temporary disability benefits are paid at 70% of wages subject to the annual cap.

One can conclude from Judge Cox’s decision that employers would be unwise to pay someone on light duty an amount less than the temporary disability rate. For employers who do not wish to pay the full wage on light duty, they should, in this practitioner’s opinion, take into account the tax impact of earned wages to make sure the employee is getting an amount after taxes equal to the amount of temporary disability benefits. If an employee is being paid $800 per week on non-taxable temporary disability benefits and returns to work light duty at $800 taxable income per week, the employee will argue that he or she is being penalized because earned wages are taxable.

The best way to answer the reader’s question is this: an employer who pays an employee on light duty an amount less than the full wage but equal to or higher than the temporary disability rate is doing something consistent with the decision in Soto, so long as the tax impact is considered. The Soto decision did not say that the employee must receive the full wage before the injury. The philosophy behind Judge Cox’s decision is that light duty should not result in a financial penalty to injured workers. While Judge Cox’s decision is not precedential, the vast majority of judges and practitioners agree with the reasoning in the case.

What is clear is that employers who reduce pay while on light duty below the temporary disability rate run the risk of getting hit with a motion for temporary disability benefits along with penalties. Our office does not recommend reducing pay on light duty below the temporary disability rate for this reason and most of our clients pay the pre-injury wage while an employee is on light duty.

The other part of the reader’s question is whether an employee who does one type of work can be assigned to another type of work while on light duty. This is a common practice in New Jersey, and unless there is a collective bargaining agreement prohibiting temporary reassignment to another job on light duty, employers can make such temporary reassignments. After the light duty, the employee is returned to his pre-injury position.

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18-Aug-2016: WORKERS’ COMP LIEN APPLIES EVEN IF PIP BENEFITS ARE NOT RECOVERABLE AGAINST TORTFEASOR - NWCDN New Jersey Member
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On January 13, 2011, Paulette Dorflaufer was hit by a car while working as a part-time crossing guard for Livingston Township. She filed a workers’ compensation claim and filed a negligence law suit against the tortfeasor. She settled that case for $95,000 for pain and suffering. PMA Management Corporation put plaintiff on notice of its workers’ compensation lien in the amount of $46,856.22 for medical expenses paid on her workers’ compensation claim.

Plaintiff refused to reimburse PMA for the statutory lien amount. She argued that she should only have to reimburse the amount paid for temporary disability benefits. Her position on the medical benefits was that they were not payable from her third-party tort action and therefore should not be reimbursed to PMA.

Both parties sought a declaratory judgment in the Law Division. On November 17, 2014, the Superior Court denied plaintiff’s motion and granted PMA its lien on the medical expenses. The court based its opinion on N.J.S.A. 34:15-40, which states that any sum the plaintiff should recover from a third party settlement is subject to a lien. The court reasoned, “There is nothing in the statute that says it matters what the settlement was specifically compensating the plaintiff for or whether the plaintiff recovered full damages from it.”

On appeal, plaintiff argued that reimbursing PMA for its lien violates the Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 to -35. She contended that “since personal injury protection medical payments are not recoverable from the tortfeasor, a workers’ compensation carrier should not be able to recover medical expenses that it paid arising from an employee’s automobile accident.” The Appellate Division disagreed for the following reasons:

In circumstances where an employee is injured in a work-related automobile accident, the collateral source rule of N.J.S.A. 39:6A-6 places the primary burden of paying the employee’s medical expenses through workers’ compensation. Lefkin v. Venturini, 229 N.J. Super. 1, 9 (App. Div. 1988). Even where workers’ compensation benefits were not applied for by the employee, but would have been available, the statute provides that the PIP carrier may apply to the provider of workers’ compensation benefits for reimbursement of any benefits that the workers’ compensation carrier would have otherwise paid.

We are convinced that, based upon the plain language of Section 40, there is no bar to a workers’ compensation lien for reimbursement of medical expenses from an employee’s settlement in a third-party automobile negligence action. There is nothing in Section 40 that prevents a lien from applying where the settlement represents payment for pain and suffering. The fact that PIP benefits are not recoverable against a tortfeasor has no bearing on an employer’s Section 40 lien rights.

This case may be found at Dorflaufer v. PMA Management Corp., A-1727-14T3 (App. Div. August 9, 2016). This decision came one week after an appellate decision inDonatello v. Qual-Lynx, A-3643-14T4 (App. Div. August 2, 2016). That case involved virtually the same facts and arguments, with a different appellate panel ruling once again that medical expenses were properly included in a workers’ compensation lien. The injured worker also recovered in a third party action arising from a car accident and made the very same unsuccessful arguments that medical expenses and income continuation benefits in the third party action should be excluded from the workers’ compensation lien. The Appellate Division agreed for the same reasons stated inDorflaufer.

These two cases along with the recently published decision in Talmadge v. Burn, No. A-3160-14 (App. Div. June 22, 2016) make clear that Dever v. New Jersey Manufacturers. Ins. Co., No. A-3102-11T2 (App. Div. October 23, 2013) is bad law. Section 40 is a powerful statute which has a dominant policy of avoiding double recoveries.

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