State News

As practitioners well know, many ADA law suits begin with a workers’ compensation injury.  But where is the line between an issue that must be handled in workers’ compensation and one that can be brought in civil court?  That was the issue that the New Jersey Supreme Court decided on March 25, 2019 in Caraballo v. City of Jersey City Police Department (A-71-17) (080467).

Caraballo joined the Jersey City Police Department (hereinafter JCPD) as a police officer in February 1973.  He injured his hands, back, and legs in August 1999 during a motor vehicle accident and filed a workers’ compensation claim.  He underwent anterior cruciate ligament reconstruction surgery on his left knee.

Two city-appointed physicians gave opinions that Caraballo would eventually need bilateral knee replacement surgery.  Caraballo’s workers’ compensation attorney contacted defense counsel for JCPD in 2008 and requested approval for the knee replacement surgery. Caraballo’s attorney also requested a specific physician to perform the surgery, noting that Risk Management had approved that physician.

Surgery did not take place for reasons that are not clear in the opinion.  In August 2010, Caraballo put in his retirement papers with the New Jersey Division of Pensions and Benefits effective March 1, 2011. Lieutenant John McLellan of the JCPD Medical Bureau was of the impression that Caraballo did not  intend to pursue the surgery.  McLellan also noted that Caraballo refused to see a certain doctor “who would be able to determine unequivocally whether or not he should have the surgery.”

Caraballo retired on March 1, 2011.  Thereafter Risk Management authorized an orthopedic surgeon to evaluate Caraballo for bilateral knee replacement surgery.  The doctor told Caraballo to contact the office to pick a date for surgery pending medical and cardiac clearance.  However, Caraballo never called the doctor’s office to schedule a date for surgery.

On March 4, 2013, Caraballo finally settled his workers’ compensation claim.  A short time later, he brought a civil suit alleging that the City violated his rights under the New Jersey Law Against Discrimination for failing to authorized the knee replacement surgery and failing to make reasonable accommodations to his disability.

The trial court ruled against Caraballo because he failed to enforce his rights to have knee surgery in workers’ compensation court.  Apparently, he never filed a motion for medical and temporary disability benefits. The Appellate Division reversed in favor of Caraballo.  The Appellate Division observed that Caraballo may have been able to perform the essential functions of his job had he obtained a reasonable accommodation of knee surgery.

The New Jersey Supreme Court accepted certification and reversed the Appellate Division.  The Court relied on prior case law to the effect that an employee must first exhaust all administrative remedies under workers’ compensation before seeking enforcement in the Law Division.  The Court said:

Here, Caraballo filed his workers’ compensation claim in 2001, retired in 2011, and settled his claim with the JCPD in 2013.  In the interim, Caraballo contacted Risk Management several times to obtain authorization for double knee replacement surgery but never sought to enforce his right to the surgery in the workers’ compensation court.  Caraballo’s failure to utilize the Act’s administrative remedies to obtain knee replacement surgery precludes his failure-to-accommodate claim under the LAD.

The court next went on to consider whether surgery can be considered a reasonable accommodation in New Jersey. The court first cited to the language in the LAD and ADA for specific examples of reasonable accommodation:  (i) making facilities used by employees readily accessible and usable by people with disabilities; (ii) job restructuring, part-time or modified work schedules or leaves of absence; (iii) acquisition or modification of equipment or devices; and (iv) job reassignment and other similar actions.

The Court observed that no New Jersey case prior to Caraballo had ever addressed the question of whether medical treatment qualifies as a reasonable accommodation under the LAD.  A case in Connecticut was instructive to the Court, Desmond v. Yale-New Haven Hosp., Inc., 738 F. Supp. 2d 331, 350 (D. Conn. 2010).  In that case the Connecticut District Court ruled against a workers’ compensation plaintiff who argued that in order to continue working she would need medical treatment, including pain management and physical therapy.  The Connecticut Court held that a reasonable accommodation must relate to workplace barriers.  There was no responsibility under the ADA or state civil rights law to make sure an injured employee is receiving appropriate medical treatment.

The New Jersey Supreme Court agreed with the ruling in Desmond:

The medical procedure sought by Caraballo – his double knee replacement surgery – is neither a modification to the work environment nor a removal of workplace barriers.  Rather, it is a means to treat or mitigate the effects of his injuries, like the treatments at issue in Desmond.  We therefore find it consistent with the LAD, the ADA, and their regulations that Caraballo’s total knee replacement surgery cannot qualify as a reasonable accommodation under the LAD.

This case is truly significant for practitioners, carriers, third party administrators and workers’ compensation professionals.  Had the ruling gone the other way, employees would have been able to pursue civil action against employers for potential denial of benefits in workers’ compensation. The Court is undoubtedly correct that this would violate the basic rule that workers’ compensation is the exclusive remedy for injured workers regarding medical benefits.

Thanks to Rick Rubenstein, Esq. for bringing this case to our attention.

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

The ERISA Lien – – A Federal “Partner” In State Workers’ Compensation Litigation

By:  Alfred Vitarelli, Esq., Shareholder, Stark & Stark

If the workers’ compensation practitioner reading this otherwise dry blog finds his/her mind wandering to more exciting topics, let your mind focus on that ominous line from the 1987 classic “Fatal Attraction:” I will NOT be IGNORED!”

No, I am not comparing the great acting of Glenn Close to ERISA. I am, however, making the important point that like Close’s character, ERISA must never be ignored.

I’ll begin discussing ERISA liens by presenting a scenario played out with distressing frequency in New Jersey workers’ compensation courts. Petitioner’s attorney informs the Judge that a private disability plan (the plan) has provided treatment in the denied claim presently before the Court. An agreement has been reached with Respondent to settle the claim on a Section 20 dismissal. However, the plan has asserted a substantial lien for payments made on behalf of the petitioner. To make matters worse, the plan has not to date provided detailed billing records, medical documentation, etc., which the parties hope will allow the reduction of the amount of the lien, and this is delaying the settlement. Accordingly, petitioner’s attorney will be filing a motion requesting the court to rule out the lien if the plan does not appear on the return date of the motion.

See any problems with the above scenario? Well, yes. And yes.

First yes:  based on the facts given above there has been no consideration as to the status of the plan lien; since this is a discussion of ERISA, the parties are unaware if the plan is covered by ERISA. And why is this important? Because ERISA plans are created by federal law, and thus are subject only to federal jurisdiction. That’s why.

Second yes: because any order entered against an ERISA plan by a state court judge is ultra vires (meaning, acting beyond one’s legal power). Since ERISA plans are only subject to federal jurisdiction, they can ignore any such order as discussed above and sue in federal court to recover the amount of its lien. That’s why #2.

Ok, let’s get down to a serious discussion of ERISA. (Actually, I think this has been serious all along, but I’m sure there are those who will disagree).

Exactly what is ERISA? The Employment Retirement Income Security Act of 1974, ERISA, is a federal law which sets minimum standards for most voluntarily established pension, health and disability plans in private industry. ERISA allows an employer to establish self-funded plans. These plans are employee benefits which pay claims through either the assets of the employer or through a trust which is funded by contributions from the employer and employees. An ERISA health plan differs from a traditional health insurance policy which is purchased through premiums to provide coverage. ERISA expressly pre-empts “any and all state laws insofar as they may now or hereafter relate to any employee benefit plan.”

So, having said that, who or what entities are covered by ERISA? ERISA applies to private industry. In general, ERISA does not cover group health plans established or maintained by government entities, churches for their employees, or plans which are maintained solely to comply with workers’ compensation, unemployment or disability laws. A prime example of what plans are covered by ERISA are those provided to employees pursuant to a collective bargaining agreement between a labor union and an employer. These plans are funded either entirely by the employer or by contributions from the employees as called for by the employer/union agreement.

Ok, now we know what an ERISA plan is, and (hopefully) understand the necessity of directly addressing liens asserted by these plans. So how can an attorney faced with a private plan lien determine if the plan is covered by ERISA?  This can’t be determined by just looking at the client’s benefit card; they don’t say “This plan is covered by ERISA.”  When the status of a lien is in doubt the best way is to request from the Plan Administrator the Summary Plan Description, IRS Form 5500. The Administrator is required to furnish a copy of the latest updated plan documents, including the Master Plan Document. These should be reviewed carefully, since an ERISA plan must clearly state the existence of a right to recovery. NOTE: Never assume that because the lien is asserted by a “traditional” insurance carrier such as Aetna, Cigna, BlueCross/Blue Shield, etc., that the plan is paid by premiums and is therefore not a private benefit plan covered by ERISA. Such insurance carriers do act as TPAs for ERISA plans. When in doubt ask for the IRS form 5500. Another method to obtain the form 5500 is to register online at www.freeerisa.com. I have not used this yet, but some attorneys find this a very convenient method to obtain this information.

Federal Jurisdiction – what are the implications if a lien is not honored?

Earlier in this blog it was noted that ERISA plans are only subject to federal jurisdiction; the doctrine of federal preemption applies as well. If an ERISA lien is not honored when asserted in a workers’ compensation case the plan provider may file an action in federal court to enforce its right of subrogation as contained in the plan. This is authorized by Section 502(a)(3) creating an equitable form of relief in the recovery of payments. This equitable right of recovery was most famously recognized by the U.S. Supreme Court case of US Airways Inc. v. McCutchen, 133 S. Ct.1537 (2013). Here, the Court held that an equitable lien is created by the language of an ERISA Plan, and the language of the Plan controls absolutely, even to the exclusion of common-law principles of unjust enrichment, the make-whole doctrine and the common-fund rule.

Please note carefully, however, that McCutchen holds the language of the Plan controls. While most practitioners will be aware of the McCutchen decision, fewer know the ultimate outcome of the litigation. After the Supreme Court rendered its decision, it remanded the case to the lower court to review the language of the Plan documents. Surprise, surprise! It turns out that the attorneys in the case did not review the Plan documents before the Supreme Court remand. The lower court found that while the Summary Plan Description supported the recovery of the full lien, the Master Plan Document did not. As a result, US Airways was only entitled to a recovery on a small portion of the overall settlement below. ALWAYS READ THE DOCUMENTS!

The above points should make it clear that in ANY situation where a petitioner received unauthorized treatment through a private benefit plan his/her attorney must be aware as early as possible in the litigation whether the plan is covered by ERISA. There are too many pitfalls which may be encountered by ignoring the status of these Plans (including recovery of the lien by attaching attorney fees.) Of course, non-ERISA plan liens must also be addressed, but they at least may be covered by state laws on subrogation, something outside the topic of this blog.

Before ending, I feel it necessary to discuss the potential role of the respondent attorney in these situations. I can hear most of you already: ”what role? there is none…petitioner’s problem….not my fees that can be attached…that lien is just a darn nuisance, my role is to make it go away so I can close the file.” OK, so maybe that last comment was a stretch, but the others are heard…and wrong. Remember the definition of an ERISA plan? How it is funded? Entirely by employer or by employer and employees? Right, now you get it. Employer = Respondent (in many if not most cases.)

So, having also been a respondent attorney for many years, I feel that the employer should always be consulted in ERISA lien situations before settlement discussions begin considering the financial implications of the Plan paying for possibly work-related treatment. I have definite ideas about what approaches to take, but I’ll leave it to others to fill in the blanks.

Please keep in mind that both this blog and the study of ERISA liens generally are works in progress. This blog is intended to raise the awareness of the workers’ compensation bar of the necessity of seriously addressing ERISA liens, not to serve as a how-to guide in every case. Each case will have its own unique issues, so always keep this in mind, and whenever in doubt, request the documents, don’t ignore!!

(Editor’s Note:  Many thanks to Attorney Al Vitarelli for sharing this highly entertaining and educational blog on a topic most practitioners knew very little about but one that we all need to pay close attention to).

Editor:

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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. 

Legal Update by Attorney Alison Stewart

Recently, the Iowa Court of Appeals handed down some decisions relating to workers’ compensation.    

Timely Filing of a Review-Reopening Petition
Pella Corp. v. Winn,File No. 17-1545, 2019 WL 156579 (Iowa Ct. App. Jan. 9, 2019)

The Iowa Court of Appeals recently addressed the timely filing of a review-reopening petition and simultaneous payment of PPD and PTD benefits. InPella Corporation v. Winn, the Claimant applied for review-reopening of a prior award where only entitlement to medical benefits were addressed. The Court of Appeals held that it had no authority to disrupt the opinion of the Iowa Supreme Court inBeier Glass Company v. Brundige, wherein the Court held that where no weekly benefits have been paid, review-reopening is timely filed so long as it is within three years from the date of the award or memorandum of agreement. 329 N.W.2d 2d 280 (Iowa 1983). The Court of Appeals did indicate it sympathized with the employer’s position that the plain language of the statute compels a finding that an “award” eligible for review-reopening cannot include an award of only medical benefits, but that it had no authority to disrupt the authority of the Supreme Court. The Claimant was then allowed to have her entitlement to all benefits (weekly indemnity benefits included) reviewed.

Simultaneous Payment of PPD and PTD Benefits
This decision also addresses a Claimant’s ability to collect permanency benefits for one injury and permanent total disability injuries for another injury at the same time. This is something that has been addressed by the recently passed legislation in July of 2017, but the Court of Appeals confirmed here that it is possible for Claimants to receive such benefits at the same time for injuries occurring before the legislative changes.

Bad Faith Action Permitted Without Underlying Award of Penalty Benefits
Dunlap v. AIG, Inc., Commerce and Industry Insurance Company,File No. 17-1503, 2019 WL 141012 (Iowa Ct. App. Jan. 9, 2019)

In a bad faith case, the Iowa Court of Appeals faced whether it was reasonable for an employer to rely upon a medical opinion indicating medical causation did not exist where three other medical opinions indicated medical causation did exist. The Court of Appeals found that the district court erred when it dismissed the suit on Motion for Summary Judgment because a reasonable fact finder could find the defendant’s reliance was simply not reasonable since they were aware their other experts had opined causation existed and the expert opinion defendants relied upon clarified his opinion with a condition that could change his opinion from possible causation to probable causation. We do not have the ultimate outcome of this issue because the case was remanded, but it is significant because penalty benefits were not awarded at the agency level since a medical opinion supporting the causation denial was contained in the record; however, the bad faith survived Motion for Summary Judgment.

Employee’s Failure to Preserve Error Resulted in Reversal
Lynch Livestock, Inc. and Nationwide Agribusiness Ins. Co.,v. Kenneth Bursell, File No. 17-1629 (Iowa Ct. App. Mar. 6, 2019)

The Court of Appeals confirmed Claimant failed to preserve the issue of whether substantial evidence supported the agency finding that Claimant’s unauthorized treatment was reasonable and beneficial. As such, the district court had erred in concluding the employer owed the medical.  

In May of 2017, we reported that an Alabama Circuit Court Judge issued an Order declaring the entire Alabama Workers’ Compensation Act unconstitutional.  In June of 2017, we reported onwhat needed to happen to fix the Alabama Workers’ Compensation Act.  In November of 2017, we reported that theAlabama State Bar Association had appointed a task force to review the Act and make recommendations on how to fix it.  In April of last year, we reported onthe types of changes the task force was looking at making.  On October 17, 2019, the task force unanimously approved a proposed bill that would make substantial changes to the Act.  Unfortunately, the Alabama Council of Association Workers’ Compensation Self Insurance Funds was not invited to participate on the task force.  This was a major oversite as the Council represents self-insurance funds providing workers' compensation coverage for 16,200 Alabama businesses employing 375,000 people.  The Councilvoted against the proposed bill primarily because it raises legal fees for plaintiff attorneys by one-third and does nothing in the short run to reign in hospital, doctor, and other medical costs. It also more than doubles the cap on certain disability payments to injured workers and adds an inflationary adjustment.  Although it voted no to the proposed bill as drafted, it did state that it was open to discussing change. 

The Alabama legislature began its regular session this month.  Although our Governor called a special session to tackle Alabama’s “crumbling infrastructure,” nothing has been introduced regarding the workers compensation system.  Some would argue that the Alabama House and Senate have many new faces this year and, therefore, it would be difficult, if not impossible, to quickly effectuate any major change to the Workers’ Compensation Act.  But then it would be difficult to explain how a55% gas tax hike that was largely unpopular with the electorate was rushed through the legislature and signed into law in just 5 days.   

Despite forming the task force, the Alabama Bar Association is prohibited from throwing its support behind any proposed legislation.  Therefore, there is no organization pushing for immediate change at this time.  According to the Alabama Department of Labor, it is a state regulatory agency tasked with the responsibility of following and enforcing the laws put in place by the legislature.  As the regulator, it typically does not comment on proposed legislation.  However, it acknowledges that the current workers’ compensation laws are not ideal and that amendments are needed that benefit both injured workers and employers.  It will follow and enforce any changes that are made, if any. 

Meanwhile, our neighbor to the east has wasted no time pushing for change.  During its 2019 legislative session, the Georgia Senate unanimously passed abill that would raise the maximum weekly benefit for temporary total and permanent partial disability.  If approved by the House and signed by the governor, it would mark the largest increase to the caps in decades.  Is this change in response to a Georgia court recently declaring the entire Georgia Workers’ Compensation Act unconstitutional?  No.  Rather, it is the result of all interested parties progressively working together to effectuate needed change.  The last time that happened in Alabama was 1992.

What Happens Now?

Unless something is done legislatively, it is inevitable that another circuit court judge will, again, address the constitutionality of the Act.  Since nothing is going to be introduced or passed during this legislative session, at a bare minimum a committee comprised of all interested parties needs to be formed that can make recommendations for change.  The 1992 reforms were passed as the result of the Department of Industrial Relations (now Department of Labor) initiating discussions between the interested parties.  Informal discussions resulted in a reform bill being introduced in 1991.  The bill easily passed the House but was not voted on by the Senate.  Negotiations continued through the remainder of 1991 and into 1992.  Prior to the next legislative session (special session in January), Governor Hunt called for formal negotiations.  Still no consensus was reached.   Negotiations and lobbying continued and a revised bill was finally passed in the regular session a few months later.   If history is any indicator, negotiations need to begin now if there is to be any chance of change in 2020.

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About the Author

This blog submission was prepared by Mike Fish, an attorney with Fish Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Fish Nelson & Holden is a member of the National Workers’ Compensation Defense Network. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Fish by e-mailing him at mfish@fishnelson.com or by calling him directly at 205-332-1448.

                      NWCDN POLL ON EMPLOYER SET-OFFS AND LIEN RECOVERY RIGHT 

By

Kevin L. Connors, Esquire

     As the Pennsylvania Member Firm for the National Workers’ Compensation Defense Counsel Network, our Group, from time to time, provides national guidance to Employers, Insurers, and Third-Party Administrators, regarding how different states and jurisdictions deal with issues specific to the administration of workers’ compensation claims.

            Recently, the NWCDN was asked by a client to poll its State Members, concerning Employer Set-Off, for alternative disability benefit sources, to include short-term disability benefits, long-term disability benefits, severance benefits, and unemployment compensation benefits.

            Since some of you might be handling jurisdiction outside the four corners of Pennsylvania state lines, we are providing the NWCDN’s national service of how individual states deal with these issues.

            Should you have questions about any individual state, please do not hesitate to contact us, as we can then serve as a conduit to connect you with a Member State’s defense counsel, as all Member State Firms maintain A+ rating with Martindale-Hubbell, as well as maintaining requisite certifications in individual states to specialize as workers’ compensation attorneys. 

            The Honor is Ours!

ConnorsO’Dell LLC 

Trust us, we just get it!  It is trust well spent! 

We defend Employers, Self-Insureds, Insurance Carriers, and Third Party Administrators in Workers’ Compensation matters throughout Pennsylvania.  We have over 100 years of cumulative experience defending our clients against compensation-related liabilities, with no attorney in our firm having less than ten (10) years of specialized experience, empowering our Workers’ Compensation practice group attorneys to be more than mere claim denials, enabling us to create the factual and legal leverage to expeditiously resolve claims, in the course of limiting/reducing/extinguishing our clients’ liabilities under the Pennsylvania Workers’ Compensation Act.

Every member of our Workers’ Compensation practice group is AV rated.  Our partnership with the NWCDN magnifies the lens for which our professional expertise imperiously demands that we always be dynamic and exacting advocates for our clients, navigating the frustrating and form-intensive minefield pervasive throughout Pennsylvania Workers’ Compensation practice and procedure.

On March 1, 2019, the Alabama Supreme Court issued its opinion regarding the largest retaliatory discharge jury verdict ever recorded in Alabama.  Notable facts from the underlying case are as follows:

• The employee had a compensable workers’ compensation accident.

• The authorized doctor assigned work restrictions that could not be accommodated.

• The employee was on workers’ compensation leave for 4.5 months.

• He received TTD during that time period.

• While he was out, the employer hired another driver to replace him.

• When the employee attempted to return to work, he was told that he was no longer needed.

• The employer admitted that it did not follow its own return to work policies when it terminated the employee without making an effort at finding another position for him.

• The employer was actively looking for drivers during the same time period that the employee was terminated.

• Another employee was terminated for the same reason when he attempted to return to work.

• In an e-mail, the employer admitted to improperly terminating both employees.

The employee was allowed to claim lost future earnings even though he was earning more with a new employer at the time of trial.  This was because he was able to demonstrate that his higher earnings were due to his working longer hours (936 more hours per year) as opposed to his earning equal or higher wages.

At the close of the evidence, the jury returned a unanimous verdict in the employee’s favor in the amount of $1,259,451.52 (comprised of $314,862.88 in compensatory damages and $944,588.64 in punitive damages). 

On appeal, the Alabama Supreme Court affirmed the judgment.

My Two Cents

Employees are certainly not insulated from termination simply because they have filed a workers’ compensation claim.  However, employers should proceed with a high degree of caution when considering the termination of a claimant.   At a bare minimum, all applicable handbooks/policies should be thoroughly reviewed and an attorney that is well versed in such matters should be consulted.

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About the Author

This blog submission was prepared by Mike Fish, an attorney with Fish Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Fish Nelson & Holden is a member of the National Workers’ Compensation Defense Network. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Fish by e-mailing him at mfish@fishnelson.com or by calling him directly at 205-332-1448.

It is a remarkable coincidence that the three cases that best explain entitlement to permanent partial disability benefits in New Jersey all involve claimants with the last name of Perez.  The most important of the three Perez cases is Perez v. Pantasote, 95 N.J. 105 (1984). This case addressed the key statutory definition in N.J.S.A. 34:15-36, which provides:

‘Disability permanent in quality and partial in character’ means a permanent impairment caused by a compensable accident or compensable occupational disease, based upon demonstrable objective medical evidence, which restricts the function of the body or of its members or organs;

This case stands for the proposition that subjective complaints alone are not sufficient to meet the standard for an award of partial permanent disability.  Hence the emphasis on objective tests such as MRIs, x-rays, EMGs, CT scans, pulmonary function testing and other similar studies.  The Perez principle was next applied to psychiatric disability claims in Saunderlin v. E. I. DuPont Co., 102 N.J. 402 (1986).  Even in psychiatric claims, the emphasis is on more than just recapitulating the complaints and statements made by the injured worker.  The Supreme Court said that psychiatric experts should include observations of physical manifestations of the symptoms related by the injured worker.

The next two Perez cases dealt with the remaining aspects of the test outlined in N.J.S.A. 34:15-36.  The first was Perez v. Monmouth Cable Vision, 278 N.J. Super. 275 (App. Div. 1994), certif. denied, 140 N.J. 277 (1995).  This case focused on the following language in the statute:

Included in the criteria which shall be considered shall be whether there has been a lessening to a material degree of an employee’s working ability.

The Court rejected an interpretation of the above language which would require an injured worker to prove in every case a lessening to a material degree of working ability.  The Court said that the claimant can obtain an award of permanent partial disability by proving either a substantial impairment of non-work activities or a lessening to a material degree of working ability.  It is an either/or test.  In this case the employee complained of loss of grip strength, pain in the wrist while playing with his children, diminished ability to play volleyball and not being able to do as much weightlifting as in the past.   The Court held that these complaints were sufficient to meet the test of having an impairment of the ordinary pursuits of life.  Petitioner did not need to prove work impairment to get his award.

Perez v. Monmouth Cable Vision is very important for two reasons:  one, it shows that an employee with objective evidence of permanent partial disability who gets back to work doing the same job can still receive an award of permanency if he or she can prove a substantial impairment of the ordinary pursuits in life.  Two, it shows that the threshold required by the employee for testimony about impairment of the ordinary pursuits of life is not particularly high.

The third case is Perez v. Capitol Ornamental, 288 N.J. Super. 359 (App. Div. 1996).  The petitioner in this case suffered a herniated disc.  He worked as a farm laborer in Puerto Rico before doing landscaping and construction in the U.S.  After he had his laminectomy surgery, he continued to have back problems and applied to the Division of Vocational Rehabilitation for job training.  He was out of work for years and could not find work.  Respondent’s evaluating physician estimated 12.5% permanent partial disability but stated at trial that he did not consider petitioner’s employment problems when he provided his estimate.

The Judge of Compensation awarded 32% permanent partial disability, which was much less than what the petitioner thought he was entitled to.  The Judge wrote, “ . . . the award which I presented in my opinion was determined on a basis and with the purpose of being consistent with similar injuries previously presented to me for disability determination.”  The Appellate Division took this comment to mean that the Judge of Compensation had not really considered the difference between a person with a spine surgery who gets back to work and a person with spine surgery who cannot return to work.  It reversed the decision because the percentage of the award to Mr. Perez should have taken into account the severe impact on petitioner’s working ability.

Perez v. Capitol Ornamental makes an important contribution to the workers’ compensation formula for permanent partial disability by establishing a principle that cases should be valued higher where the injury causes a career change or career loss as compared to cases where no such career loss occurs.

Together the three Perez cases delineate the basic requirements for an award of permanent partial disability:  1) objective medical evidence of restriction of function; plus either 2) a substantial impairment of non-work activities or 3) a lessening to a material degree of working ability.

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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. 

We are please to announce that Cousineau, Waldhauser, & Kieselbach's Target Corporation team received the highest rating nationally for Workers' Compensation for the fourth quarter of 2018. The team graded at 3.92/4.00.

Jennifer Fitzgerald,Tom Kieselbach, andParker Olson make up the team. Congratulations to the team for their excellent work.

Natalie Lund, Shareholder at Cousineau, Waldhauser, & Kieselbach has been asked to be the defense co-chair for the 2019 Workers’ Compensation Institute on April 24 and 25, 2019, sponsored by Minnesota CLE.  

The Institute provides a complete update on all the workers’ compensation developments over the last year in Minnesota, with featured guest and attorney speakers. This is the premier Minnesota workers compensation seminar.

We congratulate Natalie for being selected as the co-chair.

On February 25, 2019, the New Jersey Legislature voted to send to the Governor’s desk Senate Bill No. 1967.  The Senate passed the bill on October 29, 2018 and the General Assembly passed it on February 25, 2019. The Governor is expected to sign the bill shortly.

The original bill was intended to provide a cost of living (COLA) for all workers rendered totally and permanently disabled, or to the dependents of workers, who died as a result of a workplace injury after December 31, 1979.  The stated purpose of the legislation was to mirror the Special Adjustment created in the 1979 amendments for that same class of workers injured or killed before December 31, 1979, (RS. 34:15-95.4).  The bill was amended to limit the payment to Public Safety Workers or their dependents in the case of work-related death from workplace injury.

The legislation defines Public Safety Workers in paragraph 4(e): “For the purpose of this section, ‘Public Safety Worker’ means a member, employee, or officer of a paid, partially-paid or volunteer fire or police department, force, company or district, including the State Police or a first aid or rescue squad.”  Note that this definition does not include hospital EMTs or private fire departments at large plants operated by the private sector.

Funding for the special adjustment comes from an increase in the assessment for the Second Injury Fund which is levied on insurance premiums payable by private employers for their workers’ compensation policies.  A like assessment is made on self-insured companies.  These assessments affect only private sector employers.  The State of New Jersey and its subdivisions are not liable for the Second Injury Fund assessment.  Therefore, the funding is collected from the private sector for which the benefits do not apply.  This results in the bill having no fiscal impact on the state or local budgets, but it will have a fiscal impact on private employers.

Those covered by this bill will be eligible for the special adjustment as of July 1, 2019 but not retroactive to the date of the award of Total Permanent Disability or death of the “Public Safety Worker.”  Going forward, the public employer shall identify those eligible and report them to the Office of Special Compensation.  The public employer will continue to pay at the rate set at the time of the award of permanent disability.  The Second Injury Fund, Office of Special Compensation will pay the amount sufficient to bring the total award to the same percentage to maximum rate for the current year.

Example:        Police officer is injured and deemed totally and permanently disabled as of July 1, 2002.  The officer is earning wages of $900 per week and the maximum rate for permanent total disability is $629 per week in 2002.  The officer receives an award payable at $629 per week for 450 weeks and continuing so long as the officer is permanently disabled under the terms of N.J.S.A. 34:15-12b. (Officer’s salary is sufficient for the maximum rate in 2002).  Effective July 1, 2019, the officer will be paid $629 per week by the employer and will receive $292 per week from the Second Injury Fund by way of the Special Adjustment bringing the officer to the maximum rate for 2019.  Because the officer qualified for the maximum rate at the time of the award, the officer is eligible for the maximum rate in the year of the special adjustment.

The COLA will be reduced for beneficiaries to the extent necessary to ensure that inflation adjusted benefits do not cause a reduction of Federal Social Security disability benefits. COLA benefits are also to be reduced by the original amount of any Social Security benefits (but not the amount of any Social Security disability benefits and any subsequent cost-of-living increase in Social Security benefits), Black Lung benefits, or the employer’s share of disability pension payments received from or on account of an employer.

The COLA will be denied to an otherwise eligible Public Safety Worker who is also eligible for SSD but will not apply.  In virtually all cases, the Public Safety Worker will be eligible for an Accidental Disability Pension, and the Division of Pensions and Benefits will take the offset.

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Prior to joining Capehart Scatchard as Of Counsel, Judge Hickey III (Ret.) served as the Compensation Administrative Supervisory Judge for the State of New Jersey from 1991 to 2009. Previous to his judgeship, he served as a Prosecutor in Gloucester County, New Jersey from 1986 to 1991.