State News

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

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

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

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

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

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

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

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

-----------------

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. 

On Thursday, August 11 and Friday August 12, 2016, the workers’ comp bar descended on Austin for the

Workers’ Compensation Section’s Annual Conference for a two-day event of continuing legal education,

networking, and camaraderie. In addition to several other informative presentations, attendees were regaled

with knowledge about the Division’s rule-making authority by our own Jane Stone, and provided with a

thorough update on the designated doctor system by our DD guru, Erika Copeland. The social events this year

included a bowling tournament presented by the Workers’ Compensation Section. Led by David “The

Kingpin” Swanson, SLS tied for first place in the tournament.

Preparations for the Inaugural Reception for Kids’ Chance of Texas are being completed and we are

excited! SLS Partner Jane Stone is in charge of the event which will be held October 22, 2016 at

The Bullock Texas State History Museum in Austin from 6 to 8 p.m. Governor Greg Abbott, TDI

Commissioner David Mattax, DWC Commissioner Ryan Brannan, and our first scholarship

recipients (we already have two!)are among the invited speakers. There will be food, drink, a

presentation and a silent auction. If you would like to attend, please send your name, mailing

address, and email address directly to jstone@slsaustin.com and we will send you an invitation.

Individual tickets are $150. If you cannot attend but would like to make a donation, you can go to

www.kidschanceoftexas.org for PayPal, or send a check to P. O. Box 30111, Austin, Texas 78755.

Rabiat Ngbwa has been hired as the newest Hearing Officer in the Division of Workers’

Compensation. Most recently, Ms. Ngbwa served as a reviewing attorney at the Texas Workforce

Commission, where she was a Hearing Officer. Between her stints at the TWC, Ms. Ngbwa worked

as a consultant at the Equal Employment Opportunity Commission and then as an attorney with

Synergy Legal Professionals. She received her B.A. from Texas Lutheran University in 1997 and

her J.D. from Houston College of Law in 2003. She is also certified in both human resources and

mediation. Ms. Ngbwa will be the third traveling Hearing Officer in the Division’s central office.

Last month we informed you of Commissioner Brannan’s decision to authorize contested case

hearings to be held in the Metro Center Building, a.k.a., “Austin Central.” The expansion of

hearings sites was initiated as a “quick fix” to the surplus of recent work comp claims in the Austin

area and the Division’s inability to set disputes within the statutorily-mandated 60-day deadline for want of docket space. Officially, Austin has just one Hearing Officer, and the field office has only

one hearing room. Originally this temporary solution was to have extended only into September,

but because the high volume of cases has continued without abatement, the project has been

extended through at least December. How much longer this “temporary” remedy remains temporary

is anyone’s guess.

Maximum Attorney Fees Rate MIGHT Increase. The proposed rule would establish a new

maximum rate of $200/hour for attorneys and $65/hour for legal assistants. The proposed change

serves as the Division’s recognition that the cost of goods and services has increased significantly

in the last quarter-century. However, the Division’s hourly rate for legal services, which it adopted

in 1991, has not been updated until now. The low rates were beginning to discourage attorneys from

taking workers’ compensation cases when other, higher paying work is available. The increased rate

will provide injured workers with greater access to quality representation which is important to the

health of the system. The proposed new attorney fee rules will be found at DWC Rules 152.3, 152.4,

and 152.6.

DD Requests to be Attached to the DD Orders . . . Finally. Over the last few years, the DWC has

more than once reminded (admonished?) system participants to exchange the DWC 32 with the

opposing party when a DD request is made to the Division so that all are informed of what

information is being asked of the DD. The reminders were ineffective. Frequently, Carriers would

receive an order for a DD exam on extent of injury, for example, without having received the DWC

32. In the absence of the DWC 32, the Carriers were left without an understanding of what was the

injury the DD was asked to address. To resolve the “failure to exchange” problem, the Division has

elected a practical solution. Effective September 1, 2016, the Division will attach the DWC 32 to

the DD Order. Despite this practical solution, system participants are reminded that DWC 32s must

still be exchanged with all parties.

The Hearing Officer determined that the claimant, a truck driver, who stopped to assist a motorist

injured in an accident that did not involve the claimant sustained a compensable injury when his

knee later began to swell. The road on which he had been traveling was still blocked by the

accident, so after he rendered his aid, the claimant turned around and followed an alternate route to

his office. The Appeals Panel disagreed with the Hearing Officer’s determination that the claimant

had remained in the course and scope of his employment when he stopped to assist the motorist.

Although such aid rendered in the event of an emergency could arise during the course and scope

of employment if the employment is not deserted and the claimant’s actions are reasonable for

advancing the employer’s work interests, there was no evidence in this case that the claimant was

performing any action that he thought necessary for the employer’s business interests. His assistance of the motorist did not serve to clear the road, and an alternate route was available to him

to proceed with his work duties.

No Way Around it: Evidence of Impairment is Limited on Judicial Review is Limited to that

Presented to Division

The long-running litigation related to injured worker Daniel Samudio’s correct impairment rating

continues following the Texas Supreme Court’s decision in American Zurich Ins. Co. v. Samudio,

370 S.W.3d 363 (Tex. 2012) (Samudio I). TEXAS LABOR CODE § 410.306(c), provides, “Except as

provided by Section 410.307, evidence of extent of impairment shall be limited to that presented to

the division. The court or jury, in its determination of the extent of impairment, shall adopt one of

the impairment ratings under Subchapter G, Chapter 408.” In Samudio I, the Court held that if on judicial review a trial court finds that no valid impairment rating was presented to the Division in

the underlying contested case, the trial court may remand the claim to the Division to determine a

valid rating. Samudio I, at 368. The case was remanded to the trial court following Samudio I.

On remand, Mr. Samudio filed a motion for summary judgment on the issue of the correct

impairment rating. Attached to the motion was an affidavit and medical report supporting the 20%

impairment rating awarded by the Division in the contested case. The Carrier objected that this

evidence of impairment was not admissible because it was not presented to the Division. The trial

court overruled the objection, admitted the evidence, and granted summary judgment for Samudio.

The Houston Court of Appeals reversed and rendered explaining, “the evidence that Samudio

presented at summary judgment is precisely the type of evidence that the statute forbids, and

therefore, the trial court could not consider it.” American Zurich Ins. Co. v. Samudio, No. 01-15-

00478-CV, 2016 WL 4485818 *6 (Tex. App.–Houston [1st Dist.] Aug. 25, 2016) (Samudio II). The

court held that the Carrier had established as a matter of law that the 20% impairment rating was

invalid. Id.

An analysis by the Texas Department of Insurance shows that Texas’ use of the closed formulary

for prescription drugs in the workers’ compensations system is having a positive impact on both

Carrier’s wallets and on injured workers. Reporting on the study, www.workerscompensation.com

noted that total drug costs fell by 15%, N-drug costs fell by 80%, and prescriptions for N-drug

opioids fell 81%. The combination of lower costs and better care through less addictive prescriptions

shows the closed-formulary is working in Texas. For more information, visit here. In regard to

states which legalized marijuana, reports are that although opioid use is down, accidental poisonings

of children are on the rise.

The 2016 Rio Olympic Games brought the Zika virus to the forefront of national worry. The tropical

disease can cause brain damage and birth defects to infants of mothers infected in the womb, and

new studies suggest that Zika may cause brain damage in infected adults as well. As Zika creeps its

way into the United States from the tropical climates to our south, employers and carriers will likely

be presented with claims from injured workers alleging they contracted the disease in the course and

scope of employment. These claims will likely be very fact specific and require a challenging

causation analysis showing if, when and how the claimant contracted the disease while working.