1 The New Jersey Workers Compensation Process from a Defense Attorneys Perspective Presented to: TRICO JIF Planning Retreat Benjamin F. Smith, Esq ; July 31, 2015
2 Overview How does the WC Statute Work? What are Section 20 Resolutions What are Section 40 lien reimbursements Why are Heart Attacks & Hernias treated differently Why is the Law so employee friendly? What can employers do to level the playing field Is there any hope of returning fairness to the system Recent decisions of interest
3 How does the NJ Workers Statute Work Overview No fault concept Limited Benefits in New Jersey Types of Claims Hearing Procedures Powers of Judges
4 No Fault Concept Like all other workers compensation laws employees can recover benefits regardless of fault Workers Compensation is an exclusive remedy which means that the employee may not sue his or her employer for injuries sustained Employees who intentionally injure themselves are excluded from coverage Employers who intentionally injure their employees can be sued outside of workers compensation
5 Limited Benefits in New Jersey Medical Benefits Temporary Disability Benefits Permanent Disability Benefits New Jersey does not require that an injured worker be rehabilitated as a condition of terminating benefits
6 Types of Claims Traumatic One time trauma that is physical or psychiatric in nature Occupational Disease Claims Involve injuries caused by repetitive activity or exposures over a period of time (days, months, years)
7 Compensability An accident or occupational disease must arise out of and in the course of employment to be compensable Arise out of the employment is a causation concept Arise in the course of employment is a time concept In addition, for an occupational disease to be compensable it must also be due to causes and conditions that are characteristic of or peculiar to a particular trade, occupation, process, or place of employment and the contribution must be in a material degree. An adjuster should review the claim petition, first report of injury and medical records carefully to determine the nature of the claim because of different proofs required, different notice provisions and different statute of limitations provisions.
8 Hearing Procedures Cases in New Jersey are listed in three week cycles Cases are organized by defense attorney or insurance carrier Motions for Temporary and Medical Benefits are considered emergent and take precedence over all other matters
9 Powers of Judges No power to reinstate terminated employees (exception is for a retaliation claim) No power to compel an employer to take an employee back on modified duty No power to order a respondent to reimburse sick, personal and/or vacation time No power to approve collateral agreements such as waivers of civil claims of an employment nature (i.e., cannot approve settlements that require a petitioner to resign as a condition) No contempt powers but can order penalties for failure to comply with a provision of the statute, rule, or prior court order.
10 Powers of Judges All settlements in the NJ Division of Workers Compensation must be approved by a judge Judges have the power to grant a commutation but must give the statutory discount of 5 percent
11 Discovery NJ significantly limits discovery unlike other states Interrogatories allowed only in occupational, dependency and re opener claims and questions are limited to form interrogatories published by Division No depositions in any type of claim without permission from the court Answers to interrogatories in occupational claims are due within 90 days. The time period may be extended by a judge of compensation Answers to interrogatories in other cases are due within 45 days after service. Again, may be extended by a judge of compensation
12 Ways to Resolve Cases Order Approving Settlement Section 20 settlement Option A does not include waiver of future potential dependency rights Option B includes waiver of future potential dependency rights Judgment Full trial Trial on reports with expert reports submitted into evidence with cross examination being waived by both parties
13 Section 20 Settlements N.J.S.A. 34:15 20 This settlement has the effect of a dismissal with prejudice, being final as to all rights and benefits of the petitioner and is a complete and absolute surrender and release of all rights arising out of the claim. In other words, the petitioner can never again re open the matter to seek additional benefits in the future. Great for employers because the claim is dismissed for good Serves to cap present and future exposure No admission of liability whatsoever Availability can be limited especially from judge to judge as they must be approved by a judge of compensation Only four reasons that a judge will permit a Sec. 20 settlement: 1. An issue of jurisdiction 2. A genuine issue of compensability 3. An issue of causal relationship 4. An issue of dependency
14 Liens and Subrogation Rights N.J.S.A. 34:15 40 Section 40 prevents double recovery for same accident Section 40 provides reimbursement to respondent and shifts the payment of the claimant s counsel fee in the third party case to the respondent to the extent that the third party recovery is less than or equal to the compensation payments. Right of reimbursement limited to amount of third party recovery If there is no third party recovery, there is no lien
15 Section 40 liens If the petitioner fails to file a third party action, the respondent may step in and file suit on behalf of the petitioner to pursue its lien. The procedure is as follows: The compensation carrier or employer must wait one (1) year; Then the carrier must make a written 10 day demand on the employee to either effect a settlement or institute proceedings against the third party defendant; The carrier must then wait 10 days and can file suit if the employee fails to settle or file suit Any money recovered in excess of the lien goes to the employee
16 Section 40 liens Recoveries from medical and legal malpractice are lienable IME expenses, legal expenses, investigation expenses are not lienable Rehabilitation nursing expenses may be lienable (must show that services benefited the employee and were not merely adjuster functions) Respondent does have a lien on a UM/UIM recovery Section 20 payments are not lienable but respondent can reserve lien on medical and temporary benefits paid prior to entering Sec. 20 settlement Respondent cannot assert lien and social security disability offset concurrently in a total permanent disability case
17 Subrogation General Rules Section 40 does not allow double recovery from two sources for one accident Respondent recovers two thirds less $ for costs Lien is valid on temporary disability, permanent disability and medical treatment When to Compromise Lien Never: Always initial position When serious issue of liability in civil case Policy limit problems Splitting proceeds one third, one third, one third is not a compromise. It is respondent giving up one half its statutory right with neither plaintiff nor plaintiff s attorney giving up anything Better compromise is 50/50, with compensation carrier receiving one half of civil case settlement and remaining 50 percent being split between plaintiff and plaintiff s attorney as they see fit
18 Subrogation Other Subrogation Issues Section 20 settlements are not lienable Per quod payments are not lienable, but civil settlements cannot arbitrarily put high value on per quod claim in order to avoid lien Includes not only claims against third party tortfeasor responsible for accident, but also: Uninsured motorist claims (UM) Underinsured motorist claims (UIM) Legal malpractice Medical malpractice Perfecting Lien Right of reimbursement against petitioner/plaintiff without serving any notice Lien against defendant and/or defendant s insurance carrier by serving notice via certified mail prior to resolution of civil case Employer Subrogation Suits In name of employee Must give employee one year from accident date to file suit or settle After one year period, send notice to employee via certified mail advising that suit will be filed on employee s behalf if no suit is filed within 10 days
19 Why are Heart Attacks & Hernias treated differently
20 Heart Attack Claims Regular Employees First Responders police, fire and emergency personnel
21 Regular Employees N.J.S.A. 34: In any claim for compensation for injury or death from cardiovascular or cerebral vascular causes, the claimant shall prove by a preponderance of the credible evidence that the injury of death was produced by the work effort or strain involving a substantial condition, event or happening in excess of the wear and tear of the claimant s daily living and in reasonable medical probability caused in a material degree the cardiovascular or cerebral vascular injury or death resulting therefrom.
22 What does this mean? Measure the work effort against the wear and tear of the petitioner s daily living, not against the normal work activities Consider the petitioner s Medical History Consider the duration and intensity of the work effort Consider the time interval between the work effort and the manifestation
23 Factors that point to a compensable claim Worker engaged in an intense work effort for a considerable time period Time between work effort and heart attack is short Petitioner s non work activities are not stressful
24 First Responder s & Heart Attack Claims N.J.S.A. 34: For any employee covered under this Section there is a rebuttable presumption of compensability for any cardiovascular or cerebrovascular injury or death that occurs while in response to an emergency. What does this mean? We have to prove that the heart attack or stroke did not occur as a result of the work activity
25 Hernia Claims N.J.S.A. 34:15 12c(23) Where there is a traumatic hernia, compensation will be allowed if notice thereof is given by the claimant to the employer within 48 hours after the occurrence of the hernia but any but any Sunday, Saturday or holiday shall be excluded from this 48 hour period.
26 In practice, this notice requirement can also be met if an employee notifies his/her employer within 48 hours after they had reason to know of the existence of the hernia. Salerno v. McGrawEdison Indus., 59 N.J. 129 (1971). The courts have found that in the absence of noticeable swelling and/or advice from a physician, the claimant had no knowledge or reason to know of the existence of a hernia injury. Minardi v. Pacific Auto. Corp., 43 N. J. Super. 460, 467 (Law Div. 1957). So if the employee does not get an appointment to see a doctor for several days, the notice requirement can still be met as long as notice is given to the employer within 48 hours of that appointment where a diagnosis was given of a hernia.
27 Why is the Law so employee friendly Workers Compensation law is social legislation Prior to 1911 an employee had to sue his/her employer in common law Superior Court While the employer had many defenses available, the cases could take quite a long time, expenses of defense were high and if an employee was successful the awards were quite high
28 What can Employers do to level the playing field Train all supervisory personnel to properly report all complaints of injury in writing The best format is a typewritten memo placed in the employee s personnel file Even if the report of an injury comes up in a casual conversation at lunch, the supervisor must create the memo and report the claim to the TPA
29 Verify exact location, mechanics of accident and any eye witnesses ASAP Ask open ended questions concerning injuries sustained: What body parts did you injure when you slipped and fell? Ask follow up questions to rule out transient injuries: Other than your left knee injury, did you injury any other body part?
30 Is there any hope of retuning fairness to the system? Work closely with the Adjuster and Counsel Obtain an employee incident report in addition to completing the First Report of Injury Aggressive light duty programs Fraud Prevention Programs
31 Recent decisions of interest Planes v. Village Townhouse, A T3 (App. Div. November 25, 2014) Kost v. GPU Energy, A T3 (App. Div. 2015) Appellate Court rejects strict interpretation of one year rule on Dismissals for Lack of Prosecution
32 Recent Favorable Decisions Amedeo v. UPS, A T2 (App. Div. April 8, 2015) Appellate Court upholds Workers Compensation Judge s Dismissal of petitioner s Motion for Medical Benefits as nothing more than a fishing expedition
33 Hersh v. County of Morris, A (April 1, 2014 NJ Supreme Court reveres lower courts rulings and finds that an injury that occurred while walking from a employer paid for parking lot to the work premises was not compensable.
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