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.
One of the most significant cases for employers in many years is N.J. Transit Corp. v. Sanchez, 2020 LEXIS 520 (N.J. May 12, 2020). This decision is really a game changer for employers, carriers and third party administrators. The conventional wisdom has always been that if an injured worker cannot sue for personal injuries in a motor vehicle accident on account of having the limitation-on-lawsuit option (aka “verbal threshold”), then the employer cannot pursue subrogation rights. The argument has always been that the employer stands in the shoes of the worker. But the Appellate Division and Supreme Court opinions in Sanchez have upended conventional wisdom.
The key facts were that David Mercogliano was driving a vehicle during the course of his employment when he was rear-ended by a vehicle driven by Sandra Sanchez and owned by Chad Smith. N.J. Transit owned the vehicle Mercogliano was driving and paid $33,625.70 in workers’ compensation benefits. Mercogliano never sought or received PIP benefits under his personal automobile policy. He also never sued Sanchez because he could not meet any of the exceptions under the limitation-on-lawsuit option.
N.J. Transit filed a complaint against Sanchez and Smith to recoup its payments under N.J.S.A. 34:15-40 relying on Section (f), which allows employers which have paid workers’ compensation benefits to injured employees to pursue subrogation rights after a one-year period. Sanchez and Smith argued in part that N.J. Transit was barred from recovery because Mercogliano could not bring his own suit. The Appellate Division disagreed with Sanchez and Smith, allowing N.J. Transit to recover its payments in the civil suit because Mercogliano had not received PIP benefits and N.J. Transit was trying to recover its own economic losses. The Supreme Court took certification and came down equally divided in its decision. When that occurs, it represents an affirmance of the Appellate Division decision.
Why is this a game changer? Because most New Jersey drivers opt for the limitation-on-lawsuit option since that option lowers car insurance premiums. So the precise situation in this case happens all the time. The verbal threshold policy means that injured workers in car accidents cannot bring a civil suit against a negligent third party unless they can show one of six exceptions, the main one being a permanent injury. Unlike workers’ compensation law, permanent injury is defined very strictly under AICRA (Auto Insurance Cost Reduction Act). Sometimes even a herniated disc may not suffice to prove a permanent injury under AICRA.
The Supreme Court found no evidence that when the Legislature enacted AICRA, it intended to bar employers and insurers that have paid workers’ compensation benefits from seeking reimbursement from third-party tortfeasors where the injured worker did not seek or receive PIP benefits. Normally injured workers who receive medical benefits and temporary disability benefits in workers’ compensation would not also seek or receive PIP benefits.
Another key fact for employers to consider is the percentage of recovery. An employer’s lien is typically limited to two thirds (the other third represents the contribution to the plaintiff’s counsel fee). But there is no plaintiff bringing suit here, so the employer can recover the entire amount of its payments reduced only by whatever contractual arrangement the employer has with its own subrogation counsel.
This decision has generated both interest and surprise among employers, carriers and third party administrators. Frankly, the scope of the decision is just beginning to be fully appreciated in the employer community, and the case has not gotten all the attention it deserves. Kudos to N.J. Transit and their counsel for taking a creative position that has essentially carved out new law for the benefit of employers. For large employers, carriers and third party administrators, the decision is huge: it will literally mean over time millions of dollars in recovery for economic payments made under workers’ compensation.
In response to client interest, Capehart Scatchard has established a subrogation recovery team comprising partners Betsy Ramos, Chris Carlson and Voris Tejada. Interested clients can email bramos@capehart.com. ccarlson@capehart.com, vtejada@capehart.com or the undersigned for more information and for copies of the decisions of the Appellate Division and Supreme Court.
--------------------------------
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.
A3945 was signed into law on July 1, 2020 by New Jersey Governor Phil Murphy. The law provides for both an accidental disability pension for an eligible member who becomes totally disabled from COVID-19 as well as a death benefit for eligible beneficiaries if the covered member should die from COVID-19.
This new pension law applies to certain members of three pension systems: PERS (Public Employees’ Retirement System), PFRS (Police and Firefighters’ Retirement System), and SPRS (State Police Retirement System). Those covered by the new pension law are solely law enforcement officers, state troopers, firefighters and emergency medical responders who are enrolled in one of the three pensions systems.
COVID-19 claims are normally considered occupational exposure claims for workers’ compensation purposes, but for pension purposes A3945 transmutes such claims into traumatic events for those pension applicants covered under this law. This is crucial because an accidental disability pension is only available for traumatic work-related events. Under current law members of PFRS and SPRS who are eligible for accidental disability retirement benefits receive a pension of 66% of their final compensation. In addition, an amount that is equal to three and a half times their final compensation is paid to the member’s beneficiary on death. In the case of accidental death, eligible spouses or partners of PFRS and SPRS members receive an annual pension equal to 70% of the member’s final compensation and an amount that is equal to three and a half times the compensation paid in the last year of service. Eligible widows or widowers of PERS members are paid an annual pension of 50% of the compensation paid in the last year of service.
Below are the only conditions that must be met for the COVID-19 accidental disability pension and death benefits:
Accidental Disability Pension:
1. The law enforcement officer, firefighter, or emergency medical responder must sustain a total and permanent disability from an on-the-job COVID-19 illness. Such an illness will be considered “traumatic” for purposes of his or her pension application.
2. The applicant must begin showing symptoms within 14 days of interacting with the public or supervising other personnel who interacted with the public as part of their job.
3. There must be proof of a positive COVID-19 test.
4. The exposure must occur beginning March 9, 2020 and prior to the termination date of either the public health emergency or state of emergency, whichever occurs later.
Death Benefit:
1. The eligible widow or widower must prove that the deceased law enforcement officer, firefighter, or emergency medical responder contracted COVID-19 during the period of the public health emergency beginning March 9, 2020.
2. The decedent must have died as a result of the disease.
3. The decedent must have begun to show symptoms within 14 days of interacting with the public or supervising other personnel who interacted with the public as part of their job.
An unusual provision of this COVID-19 pension law is that the covered pension applicant does not have to offer any proof at all that “more likely than not” he or she contracted the disease in the line of duty. That is the requirement for all other accidental disability pension applications. This law is much stronger than so-called rebuttable presumption laws being passed around the United States. This is an absolute presumption law. Evidence presented by the public entity that the member developed the disease at home or outside work is not relevant. There are only two relevant issues: first, did the pension applicant develop COVID-19 symptoms within 14 days of interacting with the public or supervising other personnel who interacted with the public as part of their job? If the answer is yes, that satisfies the on-the-job criterion. Second, does the Division of Pensions and Benefits agree with the applicant’s medical report stating that the member is totally disabled from COVID-19?
The law provides that new onset diseases or chronic psychological disease that may appear later in possible connection to prior COVID-19 exposure and subsequent recovery will not be considered a permanent and total disability caused by the virus. However, the law does apply to complications from COVID-19 or aggravation or acceleration of a preexisting condition. The distinction is between “new onset diseases” (meaning a disease that the individual never had been diagnosed with before) as opposed to medical conditions that were already diagnosed prior to the COVID-19 exposure but were aggravated by the virus.
The new law applies to any law enforcement officer, firefighter, and emergency medical responder who was performing regular or assigned duties but not yet enrolled in either PFRS, PERS or SPRS who would otherwise be eligible for benefits from this Bill.
The law will not apply to any member who has already retired and subsequently returned to employment pursuant to the Executive Order without reemployment to assist during the public health emergency.
--------------------------------
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.
Employers, third party administrators and insurance carriers have for months been expending a great deal of time collecting information needed to make compensability decisions in respect to COVID-19 claims. There are many important questions to be asked in making such decisions. This blog focuses not so much on specific questions but on areas of inquiry.
PCP and Hospital Records
Primary care physician records as well as hospital records related to COVID-19 are often pivotal in making compensability decisions. The PCP records often document when symptoms first appeared and what those symptoms were. The physician almost always asks the patient questions about the source of the coronavirus, specifically whether that source is a family member, friend, work associate, or someone whom the employee was assisting or caring for. Similarly, initial hospital admission records may assist in confirming the start of symptoms and source information.
Source and Exposure Identification
Questions should focus on where and how the employee believes he or she contracted the virus. Sometimes the employee knows no specific source and other times the employee is quite certain of the source. Whether the employee indicates the source is a colleague, patient, or customer, follow-up questions should address how much time the employee spent working with this individual or individuals and how close they physically were. Was there daily contact and what was the physical work situation? Does the employee know whether the source has tested positive for COVID-19? Were masks or protective devices being used?
Quarantine Issues
One area of inquiry should be whether any colleagues, close friends or family members have been quarantined within the past month. If the answer is affirmative, follow-up questions need to focus on the reason for the quarantine and whether the employee is aware of positive or negative test results for the individual who was quarantined. If the quarantined individual is a family member, it is important to ask about contact which the employee had with the family member before, during and after the period of quarantine. The dates of the quarantine period should also be identified.
Travel Issues
Each states has had somewhat different approaches to responding to the coronavirus, so it is important to ask questions about travel both within and outside the employee’s home state and places where the employee visited and stayed. By the same token, inquiry should be made about any friends or relatives who have visited the employee in the last month and the health of the visitor.
Timeline Questions
The CDC advises that respiratory symptoms of COVID-19 usually appear an average of 5-6 days after exposure, but symptoms may appear in as few as 2 days or as long as 14 days after exposure. This is important to keep in mind in the event that the employee has just recently tested positive for COVID-19 but is pointing to a source that the employee has not been around for four weeks. It is often difficult for any of us to remember what we were doing a few weeks ago. Calendars and emails are often helpful in refreshing recollection.
Outside Activities
Questions need to be asked about recent gatherings, whether they be religious, social, or entertainment oriented. Family get-togethers have been documented in many articles as a source of spreading coronavirus. It is worthwhile to ask the employee whether he or she has been shopping in the past month and worthwhile to confirm that the employee wore a mask or similar covering.
Symptoms and Medications
Questions about symptoms and medications are significant because one can have COVID-19 long before a positive test confirms it. The questions should document when symptoms occurred, what they were, what medications were taken, and whether symptoms changed over time. This information can often be checked against family doctor or hospital records. For those who have had symptoms, it is helpful to pin down the nature and severity of the symptoms. This information may take on added significance if a claim petition should later be filed in the Division with allegations of impairment of specific bodily organs. Of course, as has been well documented, some people who are positive for COVID-19 have no symptoms at all.
COVID -19 Testing
It is necessary to ask about positive and negative COVID-19 test results and the dates of those tests. If a physician or hospital was involved in facilitating the testing, those records should be obtained.
Last Employment Date and Second Jobs
An employee who reports a COVID-19 claim should be asked when he or she last worked, whether the work was performed on site or remotely, and whether the individual has another job. There are hundreds of thousands of employees in New Jersey who work part-time jobs. An EMT may work part-time in that position but have another full-time position. A nurse or technician may work part-time for two hospitals. Decisions on compensability are obviously much more complicated when someone has two jobs since there may be potential exposure in one or both jobs or no exposure at all. In multi-employment situations, it becomes critical to obtain a record of the days worked in each position. That information should be compared with the timeline of symptoms and illness.
Summary
These are some of the key areas of inquiry that will facilitate decisions on compensability. Employers, third party administrators and carriers should bear in mind that when if a decision is made to accept a COVID-19 claim, that does not mean that the allegations of the formal Claim Petition have necessarily been accepted. For instance, if an employee has contracted work-related COVID-19 and files a claim petition alleging permanent pulmonary impairment and psychiatric impairment, the pulmonary and psychiatric aspects of the claim petition may still be denied. Just as in any workers’ compensation claim, there must be a showing of objective evidence of causally-related impairment to support an award in workers’ compensation.
The author has a useful list of questions for clients and readers to help make COVID-19 determinations. Readers are welcome to send an email to jgeaney@capehart.com for a request for this list.
--------------------------------
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.
A recent unpublished case poses an unusual question: can a party to a consent settlement for a percentage of disability award reopen the case to dispute the rate that was agreed to in the settlement? The case is Calero v. Target Corporation, A-2650-18T3 (App. Div. June 10, 2020).
Ms. Calero and Target Corporation agreed to a settlement on August 23, 2016 for a certain percentage of partial permanent disability. Wages were stipulated at that time of $276.17 week with a capped rate of $193.32. That meant that petitioner’s weekly permanency payments were capped at $193.32. The Judge of Compensation and all parties, including the petitioner, signed the final order. Several months later petitioner hired a new lawyer, who filed a motion for reconsideration of the wage which had been stipulated to in the settlement order. The new lawyer argued that the part-time wage should have been reconstructed based on a full time wage. Target opposed the motion for reconsideration.
A hearing took place on September 12, 2018, and petitioner was permitted to testify essentially that the consent award was wrong on her wage. She agreed that she earned $11.50 per hour but she was not seeking a higher percentage of disability. She testified that she was hired on a full-time basis but she “worked the hours that were posted” for her. She maintained that she was always available for 40 hours. After her accident she tried to return to work but was physically unable to do so, and she said her hours continued to be reduced until there was no more work for her. She had not worked anywhere since leaving Target.
On cross examination, petitioner acknowledged that sometimes she barely worked 20 hours per week. But she maintained that most of the time she worked 40 hours per week. Counsel for Target did not offer any documents on her actual hours worked, nor produce any testimony from store employees. It does not appear in the decision whether petitioner was asked why she had in fact agreed to the rate of $193.32 at the time of the 2016 settlement.
On January 16, 2019, the Judge of Compensation issued his decision reconstructing petitioner’s wages to 40 hours per week. The judge applied the law set forth in Katsoris v. S. J. Publ’g Co., 131 N.J. 535 (1993). That case requires proof of a permanent diminution of earnings capacity to reconstruct wages. Given petitioner’s testimony that she mainly worked 40 hours per week and that she could no longer work, the judge held that petitioner had proven a permanent diminution of wage earning capacity. In so finding, the Judge of Compensation relied on a Civil Rule 4:50-1, which allows for judicial relief “which involves mistake, inadvertent surprise or excusable neglect.”
Pursuant to the reconstructed wage, petitioner’s new wage became $460 per week, which allowed for a permanency rate up to $322 per week, substantially higher than the rate in the 2016 order of $193.32 per week.
Target appealed and argued that N.J.S.A. 34:15-27 respecting requests for modifications does not permit a party to reopen a case on stipulated facts like wage and rate. Rather, the rule is designed for requests for modifications in the percentage of disability, or requests for further treatment or further temporary disability benefits. The Appellate Division refused to hear this argument because Target failed to argue this point before the Judge of Compensation. The policy of the appellate division is to only hear arguments on appeal that were raised below. The Appellate Division also noted that Target had conceded that Civil Rule 4:50-1 permitted petitioner to make application to the Judge of Compensation for relief from a mistake.
The Appellate Division commented that even if it had considered Target’s argument that stipulations on wages and rates cannot be the subject of a motion for reconsideration, “… we would find no error because regardless of the Act’s provisions, a judge of compensation has inherent authority to open judgments or orders in the interest of justice and that decision will not be disturbed absent an abuse of discretion.”
Target also argued that it was unfairly required to “incur additional and unforeseen litigation expenses to defend the settlement” which created “a tangible and significant harm.” The Court rejected this argument because “Target did not argue before the judge of compensation or now before us, that had reconstruction been raised by Calero in the settlement discussions that led to the consent order, she would not have been entitled to the application of reconstruction to her wages.” In other words, the Court said that Target never proved petitioner was not entitled to the reconstructed wage. The Court said, “Target offered absolutely no evidence to refute Calero’s proofs or to establish that the alleged substantial prejudice Target suffered outweighed that which Calero experienced by not have her award properly determined.”
This case is unpublished, meaning that other courts are not bound by it, but it raises some very important questions for all cases where petitioners do not regularly work 40-hour per week jobs and may have capped permanency rates. If the petitioner agrees on the record to the wage and rate and testifies as such, is the petitioner still able to hire another lawyer later on to prove that wages should have been reconstructed? How can the respondent protect itself from settlements being overturned on this issue? Can respondent do the same thing and reopen awards if records show that the petitioner in fact had a lower wage than that which was agreed on?
In this particular case, the evidence produced by petitioner for reconstruction of wages was strong and consistent with the Katsoris decision because petitioner argued she had a permanent diminution of earning capacity. There was no evidence offered by Target to dispute the statements petitioner made in court. Rather, Target focused on the unfairness to the company when a petitioner moves to reject the terms of consent order after the order has been entered and is being paid. In fact, It does seem unfair to the employer to negotiate a settlement considering all factors, including the percentage of disability and rate, and then have one part of that settlement remain open for a subsequent attack. What we do not know in this case was whether the overall percentage of disability was negotiated higher in exchange for a capped rate. There is no mention of that in the decision.
Thanks to Rick Rubenstein, Esq. for bringing this case to our attention.
--------------------------------
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.
A key doctrine in the law known as “respondeat superior” provides that an employer is responsible for the acts of its employees performed within the course of their employment. Whether that doctrine applied to an employee who had a motor vehicle accident after being summoned to a training meeting was the issue in Samol v. Vanlaningham, No. A-5058-18T2 (App. Div. June 3, 2020).
The facts involved a high school student, Ryan Vanlaningham, who was called by his store manager to attend a training meeting at Party City where he worked in March 2016. Vanlaningham was informed that he would be compensated at his usual hourly rate for the training meeting, and he would work his regular shift the same day. He was not compensated for the time driving to the training meeting at his work location. While driving to the training meeting, Vanlaningham’s vehicle struck a vehicle owned by Pablo Samol. A passenger in Samol’s car, Beatrice Samol, was injured and filed a lawsuit naming Vanlaningham and his employer, Party City, as defendants.
Party City opposed the law suit and moved to dismiss it. The company argued that Vanlaningham was not in the course of his employment when he was driving to work for the training meeting under the going-and-coming rule. Samol countered that this was not a normal commute to work because Vanlaningham was either compelled to go to work or was on a special mission, two exceptions to the premises rule, which replaced the going-and-coming rule in New Jersey in 1979.
The trial judge ruled that Vanlaningham had not arrived at work when the accident occurred, and therefore Party City was not liable for his actions. The judge concluded that the training meeting was a normal and routine part of the young man’s employment. The Appellate Division agreed with the trial judge but considered the argument of Ms. Samol that Vanlaningham was “compelled” to undertake the actions of driving to the training meeting. The Court reviewed the two leading cases on compulsion in workers’ compensation, namely Sager v. O. A. Peterson Constr. Co. and Lozano v. Frank De Luca Constr. Those cases stand for the proposition that an otherwise non-compensable activity can become compensable if the employer compels an employee to perform the activity.
The Court seemed to blend the special mission and compulsion arguments together: “Here, there was no credible basis to support the assertion defendant controlled Vanlaningham’s commute or that his commute fell within the scope of his job duties. The facts did not demonstrate Vanlaningham’s commute was pursuant to a special mission; he was traveling to his regular place of employment on one of his pre-scheduled workdays. For these reasons as well, his drive to work on the day of the incident was not a compelled activity.”
The decision of the court is clearly correct and the reasoning is a sound. But the court slightly missed the mark on the special mission argument. The statute states that a special mission only applies when the employee is required to be away from the employer’s place of employment. N.J.S.A. 34:15-36. Here the drive was directly to the normal place of employment. Therefore, it could not be considered a “special mission.”
As for the compulsion argument, all employees are compelled to go to work. Attendance at work is not optional, as we all know. The compulsion line of cases is a valid one in New Jersey. However, it only applies to activities that are not normally required of employees. Since all employees are compelled to report to work, the compulsion argument really made no sense. If the court were to entertain the argument that a drive to the normal work site was compelled, it would completely undercut the goal of the 1979 Amendments, which was to do away with the many exceptions in the law to the going-and-coming rule.
--------------------------------
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.
In the past few years there have been several unreported cases in which the Appellate Division has found a violation of the due process rights of respondent. McGory v. SLS Landscaping, A-4837-18T2 (App. Div. May 8, 2020) presents the first reported case in many years on the violation of a party’s due process rights, in this case the rights of the petitioner.
The facts of this case are very unusual. Petitioner fractured his foot jumping from a loft on the premises of respondent after retrieving a bucket. Petitioner, a young man, refused medical treatment offered by his supervisor, Nicole Caruso. He later went to the hospital and sent a text message to Caruso stating that he would use his personal health insurance because he felt that the accident was his own fault.
At the hospital petitioner was asked how he hurt his foot, and he said he fell off a roof cleaning the gutters at home. In his affidavit in support of his motion for benefits, petitioner explained that he misrepresented the truth partly because he did not understand workers’ compensation and partly because he feared negative consequences at work for his conduct in jumping rather than using the ladder.
According to his affidavit, when petitioner got home he discussed the accident with his parents, who explained how workers’ compensation worked and advised him to accurately report what happened. He then tried to contact the medical provider to correct their records. Respondent initially authorized care by a local surgeon, but later respondent denied the claim when it received medical records stating that petitioner injured himself at home.
At the first hearing on 4-17-19 on a motion for medical and temporary disability benefits, the Judge of Compensation asked whether respondent would be filing a fraud motion to dismiss the case. Defense counsel answered in the negative. The Judge advised the parties that petitioner had a right to remain silent in the event of any fraud allegations. The Judge of Compensation noted that petitioner’s counsel’s moving papers might constitute a prima facie case, and he advised respondent to produce its witnesses.
Respondent’s first witness was Sam Waddell, the owner of the company. He said that he was not on the premises at the time, but his manager notified him by phone that petitioner jumped off the loft instead of descending a ladder. The manager tried to persuade petitioner to see a doctor but petitioner declined. Ms. Caruso testified next that she heard the sound of the impact on the ground but did not actually see petitioner jump. She observed petitioner was in a great deal of pain and offered him medical care, which he declined. Caruso completed an accident form.
The matter was adjourned until May 29, 2019, after the judge noted that he did not understand why petitioner had jumped and considered whether this might constitute horseplay. The day before the May 29 hearing, respondent’s counsel filed a motion to dismiss for failure to sustain proofs. At the May 29 hearing, the judge reconsidered whether this case constituted fraud on the part of petitioner. The judge also questioned whether petitioner misrepresented that he was going to use his own personal medical insurance when his insurance was actually provided by Medicaid. The judge commented that it was not honest for petitioner to claim he was using his own insurance when it was taxpayer funded.
Without any testimony by petitioner, the Judge of Compensation noted that petitioner had misrepresented the facts to the medical providers in stating that he had been injured cleaning his gutters at home and misrepresented having his own health care insurance. The judge dismissed the claim petition without prejudice commenting that petitioner was a multiple liar. The Judge further said to counsel for petitioner: “If you can prove to me he’s honest, you can begin to present your case. If you cannot prove to me he’s honest, then under the circumstances the motion to restore is questionable.”
Petitioner did not file a motion to restore the case and instead authorized his attorney to file a Notice of Appeal with the Appellate Division. The judge scheduled the matter for another hearing on June 19, 2019. Counsel for petitioner argued that there was no basis for further proceedings since the case had been dismissed on May 29, 2019 and no motion to restore had been filed. Petitioner was in court and was ready nonetheless to testify. The judge would not permit any testimony by petitioner because no motion to restore had been filed.
On July 9, 2019 petitioner filed a Notice of Appeal of the May 29, 2019 dismissal without prejudice. On July 10, 2019 the Judge of Compensation conducted the final hearing. Petitioner’s counsel indicated that his client would not testify since the Notice of Appeal had already been filed. The Judge of Compensation then ruled on the case and the motion, dismissing both with prejudice and stating that petitioner’s conduct in jumping from the loft was not compensable as it constituted willful misconduct.
On appeal petitioner argued that his client had been denied his due process rights to testify and present evidence supporting his claim. The Appellate Division agreed, adding that there was no requirement that a petitioner prove he is honest before giving testimony.
The Court observed: “We have held that, in accordance with due process principles, the opportunity to be heard ‘includes not only the right to cross-examine the adversary’s witnesses but also the right to present witnesses to refute the adversary’s evidence.” The Court added, “The judge also erred by making credibility determinations and findings of fact on the merits of petitioner’s claims based solely on the judge’s interpretation of petitioner’s affidavit, without hearing petitioner’s testimony and after only hearing Caruso’s and Waddell’s testimony.”
Finally, the Court criticized the judge for stating that the petitioner’s case did not rise to the level where consideration of the evidence was necessary.
As a side matter, the Court also observed in a footnote that the May 29, 2019 order dismissing the claim petition was an interlocutory order because there was still an opportunity to restore the claim petition, citing Scalza v. Shop Rite Supermarkets, 304 N.J. Super. 636, 638 (App. Div. 1997).
The Appellate Division reversed both the order to dismiss without prejudice and the order to dismiss with prejudice. The Court remanded the case for further proceedings with a different judge.
--------------------------------
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.
I had a recent discussion in relation to an upcoming COVID-19 webinar with former Supervising Judge of Compensation, Ray. A. Farrington, who sat in Hackensack, N.J. Judge Farrington raised an important question about what employers can do when employees ignore safety rules concerning COVID-19 in respect to both workers’ compensation and employment law.
Suppose an employer has a strict requirement that an employee must wear a mask at work to protect the employee and others. Suppose further that one employee repeatedly ignores the rule and eventually becomes sick with coronavirus and then brings a workers’ compensation claim. Is there a valid defense to the claim based on the employee’s willful failure wear his mask?
The answer is yes, if the employer complied with the terms of N.J.S.A. 34:15-7. That provision states that the willful failure to make use of a reasonable and proper personal protective device furnished by the employer is grounds for denial of the workers’ compensation claim if the employer has clearly made this a requirement of the employment and has uniformly enforced this rule. For this defense to work, the employer has to properly document that despite repeated warnings, the employee willfully failed to properly and effectively utilize the protective device, and that conduct led to the work illness, in this case the virus.
A second question in this scenario is whether the employer can terminate someone who fails to utilize required protective devices. As Judge Farrington posed the question: “Can the employer have a zero tolerance policy?” For the answer we turn to Ralph Smith, Esq., Co-Chair of Capehart’s labor law department. Ralph responded, “If you are a non-union employer, firing under a zero tolerance policy for a lack of mask use would no doubt be allowed because failing to follow such a directive would be insubordination, and insubordination is subject to discipline, including possible discharge.” He added, “Progressive discipline would be unnecessary unless the employer has a policy where progression is required, though most employers carve out from progressive discipline serious workplace infractions.” Ralph added that given the risks of COVID 19, not wearing a mask could have serious health consequences for others and should be considered a serious infraction.
The answer is more nuanced if the employer is in a unionized setting. Ralph explained, “I would think that discipline would be an issue which would have to be addressed with the union, it being considered a term and condition of employment, but if you already have a CBA (Collective Bargaining Agreement) with a progressive discipline policy, you would need to follow that and likely would not be able to go directly to termination.” Ralph suggested that in a union setting it would be wise to discuss the employer’s plans involving mask usage with the union. He added, “Unions have the same safety incentive as employers do, so I suspect the employer would not get very much pushback on requiring mask usage and disciplining for non-use, short of termination for a first violation.”
Finally, Ralph made an important point about reasonable accommodations. “In both union and non-union contexts, an employer might have to accommodate someone who refuses to wear a mask, or is unable to do so, because of health reasons. This is an exception even under Governor Murphy’s Executive Orders.” He added that the employer may need to address whatever the underlying disability is which precludes mask use just as the employer would for any disability. The question becomes whether the employer can make adjustments that accommodate the health problem and still maintains a safe working environment.
Thanks to Judge Farrington and Ralph Smith, Esq. for their contributions to this blog.
--------------------------------
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.
Proposed Senate Bill 2380 sponsored by New Jersey Senate President Stephen Sweeney seeks to create a new legal presumption of compensability for “essential employees,” including public safety workers and virtually all health care workers who file COVID-19 workers’ compensation claims. This proposed presumption would require the Judge of Compensation to presume that any COVID-19 claim for public safety and health care workers must be found to be work related unless the employer could rebut the claim by “clear and convincing evidence.” There exists no presumption in the New Jersey Workers’ Compensation Act that requires an employer in any circumstance to rebut a claim by clear and convincing evidence. There is a very good reason for that: the standard would be impossible to meet for employers, and it would in effect make employers strictly liable for all COVID-19 cases, whether the claims are causally related or not.
There are both legal and practical reasons that enhanced legal presumptions do not make sense in the context of this pandemic. Consider the legal issue first. For an occupational disease to be compensable it must be proven to arise out of the employment and be produced by causes which are characteristic of or peculiar to work under N.J.S.A. 34:15-31. But the COVID-19 virus is ubiquitous. It spreads wherever people congregate: including churches, grocery stores, post offices, and crowded beaches. Millions of people have the virus and don’t know it. COVID-19 claims are not like traditional occupational disease claims such as black lung among coal miners or Legionnaire’s Disease among workers in an infected building who breathe in the bacteria. These kinds of occupational disease claims clearly meet the test of being peculiar to a particular work environment.
COVID-19 illnesses arise when the virus spreads in any close human contact, whether it is through work or outside work. We all understand how easily the virus can be spread in any life circumstance. A New Jersey family had a gathering in late February that led to the tragic death of four family members from the coronavirus. Other family members also got sick. Sixty choir members in the State of Washington met to practice on March 6, 2020. They sanitized and kept their distance from one another. Within days 45 of 60 choir members became ill because the virus was spread through the air when they sang.
Hospitals, health care providers and public sector employers, their carriers and excess carriers, are now inundated with COVID-19 claims. This is putting enormous financial strain on public sector and hospital budgets at a time when Americans have expressed profound concern about rising health care costs, high taxes, and unfunded pension plans. These claims are now beginning to work their way into the workers’ compensation systems of each state. The good news is that there are already adequate laws In New Jersey to deal with COVID-19 claims without creating an ultra-high legal presumption for a virus that is in every state and every country.
Judges understand that health care workers and public safety workers often work in close proximity to people who may be infected. They may also have non-work exposures as well. In assessing whether any COVID-19 virus arises from work, workers’ compensation judges draw on their expertise in sorting out complex causation issues, factoring in work and non-work exposures. For example, they evaluate claims for alleged cancer from second-hand smoke, Lyme disease, lead exposure, and other environmental claims. In doing so, workers’ compensation judges use a more probable than not legal standard. In fact, there already is a presumption in the 2019 Thomas Canzanella Twenty First Century First Responders Act that shifts the burden to employers to disprove certain claims involving public safety workers by the more probable than not standard. The proposed coronavirus presumption not only shifts the burden of proof to employers but it imposes an extremely high legal presumption on employers that directly conflicts with the 2019 legal presumption created under the Thomas Canzanella law.
Public policy is important, and the wrong policy is to vastly increase the financial burden on health care, government and their carriers by making virtually all COVID-19 claims compensable through an unrealistic new legal presumption. Carriers did not collect pandemic premiums from their insureds. Requiring government, health care employers and their carriers to pay all COVID-19 claims regardless of causation will add create enormous financial pressure on governments, taxpayers, health care providers and the insurance industry. These are the unintended consequences that can be foreseen by proposed S. 2380. Instead of creating an unrealistic legal presumption that makes a bad situation worse, elected leaders should focus on creating the equivalent of the current federal Paycheck Protection Program to help injured workers and to alleviate the insurance burden on health care, government and carriers.
--------------------------------
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.
N.J.S.A. 34:15-79(a) is the source of considerable litigation in workers’ compensation. It provides that “Any contractor placing work with a subcontractor shall, in the event of the subcontractor’s failing to carry workers’ compensation insurance as required by this article, become liable for any compensation which may be due an employee or the dependents of a deceased employee of a subcontractor.” There are many cases on the back end where an employee of a subcontractor is injured and brings a claim against the general contractor after the employee’s subcontractor is found to have no workers’ compensation coverage. But the case of Fournier Trucking v. New Jersey Manufacturers Insurance Co., No. A-1353-18T2 (App. Div. April 9, 2020), deals with the situation on the front end – after the policy of insurance is written and before any accident should occur. The focus in this case was on inaccurate information provided by the policy holder to NJM about the risks inherent in its business in order to reduce workers’ compensation premiums.
To appreciate the ruling in this case requires some understanding of the details of the trucking business at issue. Shippers would hire Fournier Trucking to deliver goods primarily to west coast states when the shippers had to deliver less than a full truckload of product or when they had to make deliveries to multiple locations. Fournier Trucking (hereinafter “FT”) would use its own employees to collect loads from its shipping company clients in the tri-state area and then gather them in its New Jersey warehouse. FT would hire independent motor carriers to then haul freight to west coast states. FT would coordinate communication between its customers and the independent carriers, but the carriers provided their own equipment. FT would send the customers an invoice and then pay the carriers for transport services.
The relationship between FT and NJM began in 2003 through an assigned risk policy. At that time FT indicated that it had no owner operators. In its initial audit NJM was of the understanding that FT used no subcontractors or owner operators. For the 2014-2015 policy year, NJM estimated an annual premium of $43,193 with a total annual premium of $45,579. However, an NJM auditor years later happened to notice a discrepancy in the number of drivers reported by FT and the number of drivers which FT listed in a federal licensing database. A site inspection ensued and NJM learned for the first time that FT used between 15 and 20 independent motor carriers for shipping. Naturally, NJM was concerned that it was exposed to much more risk than it had ever appreciated since injured employees of carriers without workers’ compensation coverage could be covered under the above provision in Section 79(a). Therefore NJM unsuccessfully sought information from FT about these carriers and their insurance certifications.
By July 2015 NJM still had not received any Form 1099s or certificates of insurance for the carriers that FT worked with to ship to the west coast. FT refused to provide any such information. NJM was left with no alternative but to estimate the remuneration paid by FT to the uninsured carriers at an amount of $100,000. That raised the total standard premium to $57,043 with the total cost of $70,980. FT protested. While FT insisted that it had agreements requiring the many carriers to maintain insurance, FT would not provide any proof.
On December 23, 2015, FT’s lawyer acknowledged for the first time that their motor carriers “in certain cases employ their own employees.” FT denied that it issued any Form 1099s to the carriers. Two months later, the FT Vice President of Operations denied to NJM that the carriers had any employees, contrary to the admission of their own counsel. She also said that $100,000 would easily cover all payments that FT made to its carriers. Later at trial the Vice President of Operations had to recant her representations and admit as well that the company was in possession of Form 1099s for some motor carriers it worked with in 2015. She also admitted that she never knew whether or not the motor carriers had employees.
Since NJM could not receive information on coverage for FT’s carriers, it did a second audit in 2016 and adjusted the premium for 2014-2015 to $344,001 with a total audited cost of $426,359. NJM indicated that it would not charge FT for any additional risk if the company would just demonstrate proof that the many carriers it worked with maintained workers’ compensation coverage for their employees. FT then sued NJM seeking injunctive relief. NJM counter sued for breach of contract and fraud under N.J.S.A. 34:15-57.4.
During discovery FT listed a total of 81 carriers that it utilized, 15 of which had multiple drivers. The trial judge granted summary judgment in favor of NJM on breach of contract counts and ordered FT to provide copies of information relating to its carriers, including 1099s, certificates of insurances, and names and addresses of the 15 carriers. The trial judge held that NJM was entitled to charge a premium for amounts paid to the uninsured subcontractors pursuant to N.J.S.A. 34:15-79(a).
On June 15, 2018, FT provided documents showing amounts paid to 15 carriers in 2014 totalling $2.59 million dollars, more than 25 times higher than the VP of Operations admitted. Only one of the carriers had workers’ compensation for its employees. Fourteen of the carriers FT was using had no workers’ compensation coverage for their own employees. NJM revised the new premium at this point to $145,321. On the remaining fraud count, the trial judge found that FT was well aware all along that its carriers had employees and had been well aware that it paid far more than $100,000 to its motor carriers. The judge found that FT purposefully and knowingly made misleading and false statements to NJM to avoid payment of additional premiums and withheld material information from NJM in violation of N.J.S.A. 34:15-57.4, the New Jersey Fraud Act.
The trial judge awarded NJM $254,329.17 for unpaid premiums of $145,231, simple interest of $7,603.44, costs of $6,802.73 and attorneys’ fees of $94.692. The judge further found that NJM’s witnesses were entirely credible while finding that FT’s VP of Operations was less than credible.
FT appealed to the Appellate Division which affirmed the trial judge on each issue. FT tried to argue that its motor carriers were independent contractors but not subcontractors under Section 79(a). The Court disagreed: “Because the shipping companies that hire FT for individual shipments exercise little control over FT’s transportation services, FT is clearly a ‘contractor’ for those shipping companies within the meaning of N.J.S.A. 34:15-79(a).” The Court added, “… subcontracting is merely ‘farming out’ to others all or part of work contracted to be performed by the original contractor.” The Court said:
Shippers hire FT to consolidate and transport goods. FT consolidates the goods itself and then subcontracts with the carriers to perform the transportation. Therefore, FT is a contractor, and the carriers it uses to fulfill part of its contracts with shippers are subcontractors.
Next, FT argued that carriers are not employees of FT but are independent contractors. For its part, NJM had already conceded this argument and had never argued that the carriers were employees of FT. Rather, NJM argued that the issue pertained to the employees of the motor carriers who might be injured. The Court said:
By operation of N.J.S.A. 34:15-79(a), to the extent these carriers fail to satisfy their statutory obligation, Fournier Trucking, as the general contractor, is obliged to provide benefits to any carrier employee who suffers an injury while providing services under Fournier Trucking’s general contract.
This opinion provides excellent clarity on the relationship between the terms “independent contractor” and “subcontractor” for purposes of Section 79. In effect, the Appellate Division was saying that for the purposes of Section 79, an independent contractor can be a subcontractor. The case also provides the best discussion of any modern New Jersey case on the duty of the policy holder to provide accurate and complete information to its workers’ compensation carrier and the ramifications of failing to do so. This case is unreported but merits reconsideration by the Committee on Publications.
--------------------------------
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.
Let me begin with a correction to a prior blog. A few weeks ago I wrote in a blog about a hypothetical scenario where an employer requires an employee to be quarantined because the employee was exposed to a fellow employee who tested positive for COVID-19. Several readers wrote to disagree that the period of lost time should be paid in workers’ compensation, even if the quarantined employee ultimately tested negative and no other workers’ compensation benefits were due. These comments led me to rethink the issue. Having reviewed case law in different states on preventive actions and workers’ compensation, I believe the readers are right that temporary disability benefits should not be paid in this situation.
The argument that the employee would make to the judge is that he or she was required to go out of work for a health condition occurring at work. The employer would counter that if the quarantined employee tested negative, then there is no workers’ compensation issue. This is the better argument: the employer’s action was simply preventive and therefore no temporary disability benefits should be paid. Any decision on payment of workers’ compensation temporary disability benefits and other workers’ compensation benefits should await the outcome of testing, appropriate investigation and the individual proofs in each case.
Many employers are paying full salary to quarantined employees, eliminating the issue completely. As of April 1, 2020 there is also a new law that addresses this situation. It is known as the Paid Emergency Sick Leave Act. This law helps employees get paid in precisely the situation addressed in the hypothetical scenario. The law only applies to companies with 500 or less employees. Attorneys Ralph Smith and Lara Ruggerio of Capehart Scatchard’s Labor Department have written on this subject. The following is an excerpt from their recent HR Blog. The purpose of the Act is to provide sick time to employees who are unable to work due to the following situations:
* Quarantine or isolation relating to COVID-19
* Self-quarantine ordered by a health care provider
* Employee experiencing symptoms of COVID-19 and seeking medical diagnosis
* Employee who is caring for an individual who is quarantined or is self-quarantined
* Employee is caring for a son or daughter due to school of child care closure due to COVID-19 precautions
* Employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and the Secretary of Labor
The Act applies to all public and private sector employees with less than 500 employees. Full-time employees are entitled to 80 hours of paid sick time. A part-time employee is to receive required compensation for two-thirds of the amount of their usual pay. However, in no case shall the paid sick time exceed the amounts below:
1. $511.00 per day (and $5,110.00 in the aggregate) if the employee is out due to:
1. Quarantine or isolation relating to COVID-19
2. Self-quarantine ordered by a health care provider
3. Employee is experiencing symptoms of COVID-19 and seeking medical diagnosis
2. $200.00 per day (and $2,000.00 in the aggregate) if the employee is out due to:
1. Employee is caring for individual who is quarantined or is in self-quarantine
2. Employee is caring for a son or daughter due to school or child care closure due to COVID-19 precautions
3. Employee is experiencing any other substantially similar conditions specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and the Secretary of Labor
Employers are to receive a tax credit for payments made to employees under this law. Moreover, employees may opt to use other forms of paid leave instead of this leave but the employer cannot require that use. A business with 50 or fewer employees may ask the DOL to exempt it from following this law if compliance will jeopardize the viability of the business as an on-going concern. The United States Department of Labor recently issued a guidance on what an employer must show to meet these requirements to obtain a potential exemption. The Department of Labor also has the discretion to exclude health care providers and emergency responders from eligibility.
--------------------------------
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.