State News

The Honorable Joshua Friedman decided an issue this month that has been pending for several years regarding calculation of the Social Security Disability offsets in workers’ compensation cases for petitioners under the age of 62.  A petitioner’s attorney had brought motions in five cases including one handled by our office, asserting that the SSD offset had been calculated incorrectly because the petitioner’s rate should change and increase every three years in accordance with rate changes in Social Security – the triennial recalculation.  While we do not normally write about cases decided in the Division of Workers’ Compensation, this case is an exception because it is the only decision that we know of in the state dealing with the issue of triennial recalculation.

The total and permanent disability provision of the workers’ compensation statute NJSA 34:15-95.5 indicates that offsets should be calculated in conjunction with the SSD statute 42 USC 424(a).  In most states, if a petitioner gets both SSD and workers’ compensation the SSD is reduced to insure that the petitioner does not earn more than his 80% average current earnings.  In a handful of states, including NJ, there is a “reverse offset” – if the combination of SSD and workers’ compensation is more than the 80% average current earnings (ACE), then the workers’ compensation rate is reduced, not the SSD.  This offset can make a total disability award very attractive monetarily for the respondent and the Fund.  This offset is only applicable for total and permanent disability resolutions.

The petitioner’s attorney had argued that since SSD re-determines the ACE every three years that workers’ compensation was required to do the same.  This would mean that every offset case would have the rate increased every three years by an amount determined by Social Security which takes in effect national wage factors, inflation, cost of living etc.  The effect of the change that the petitioner was seeking would be to both increase the exposure for every total disability case for a worker under 62 and also insert uncertainty regarding the amount of the award.  Another potential issue is that any change in the NJ workers’ compensation statute regarding the offset could result in the loss of the “reverse offset” for the entire state, converting NJ to a state where Social Security, rather than workers’ compensation gets the offset.

The motions were pending for a very long time with multiple briefs provided by each party and testimony offered regarding legislative intent regarding NJSA 34:15 – 95.5. and Social Security.  In his decision, Judge Friedman stated that the triennial recalculation is essentially a cost of living adjustment, which was not contemplated by the Workers’ Compensation Act.  He also found important the fact that Social Security does not make triennial recalculations in reverse offset states.  He believed that the calculations that the petitioner’s attorney provided were merely hypothetical, not official calculations from Social Security.  Judge Friedman also decided that the Supremacy Clause, which holds that Federal law pre-empts conflicting State law, was not applicable because there was no intent in the Federal law to “occupy the field” for payment of workers’ compensation disability benefits.

This decision is a very favorable outcome for the respondents and the Fund.  A contrary decision would have been extremely disruptive to both pending total and permanent disability cases and potentially cases already settled or tried.  At this time we do not know if the case will be appealed. Claire Ringel of our office handled this case for respondent Burlington County. Please direct any questions regarding this issue to her.

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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 DWC Appeals Panel has been busy cleaning up things ALJs have missed and/or advising them that they cannot do certain things at all.  We have it on good authority that this is an area of particular interest for the new Commissioner at DWC.

ALJ Can’t Order Payment for Alternate Certification.  In APD 182018, the ALJ heard issues in a medical fee dispute.  This was a network claim and the treating doctor referred the claimant to a non-network doctor for an MMI/IR evaluation.  At the CCH, on his own motion, the ALJ added the issue of whether the carrier had to pay for the non-network MMI/IR examination. Spoiler Alert:  the ALJ said the Carrier was liable.  The Appeals Panel said it was not the ALJ’s decision to make and reversed and rendered saying the dispute over payment for providing an MMI/IR examination is a medical fee dispute adjudicated through the MFDR process. 
 
If it’s Litigated, You Have to Make a Decision.  In APD 182017, the hearing was set on MMI/IR.  Apparently, however, extent of injury and the proper appointment of a second DD were also litigated at the CCH.  The crux of the matter was, apparently, whether the injury included one leg fracture or multiple leg fractures.  If there were multiple leg fractures, the DD appointed would not have been qualified.  The Appeals Panel reviewed the records and said that the parties did actually litigate the extent of injury and DD qualification issues.  As such, the ALJ’s MMI/IR determination could not be affirmed as the DD might not have been qualified.  The case was sent back to the ALJ to determine the extent of the injury, qualification of the DD and, ultimately the MMI/IR issues.
 
In APD 182119, the Appeals Panel reviewed extent of injury.  The BRO report showed that the self-insured “accepted” a condition but, at the CCH, it declined to stipulate to the condition as compensable.  The compensability of that condition was litigated, and the ALJ discussed it in the decision, but made no findings of fact or conclusions of law about it.  The Appeals Panel reversed and remanded for the ALJ to address the missing condition in the extent of injury decision.
 
 ALJ Who Misquotes Expert Cannot Rely on that Expert. In APD 182350, the Appeals Panel determined that the ALJ misstated the evidence when she asserted that one of the experts said the claimant had diabetes, by way of explaining that EMG/NCV results were consistent with polyneuropathy rather than radiculopathy.  The ALJ stated that she found that expert’s opinion most persuasive and found that the claimant did not have lumbar radiculopathy.  The Appeals Panel said that the expert did not, in fact, say that the Claimant had diabetes.  The AP held that the decision of the ALJ was based on a misstatement of the medical evidence in the case and reversed and rendered the extent of injury determination.  They also noted in a footnote, that the ALJ incorrectly referenced the date of injury in the issue statement and the discussion section of the decision.
 
No Permanent Impairment and 0% Impairment are Different. In APD 182195, the Appeals Panel reviewed the ALJ’s determination that Claimant reached MMI with no permanent impairment and reformed the decision.  The certification adopted by the ALJ actually assigned a 0% impairment rating, which differs from a finding that there is no permanent impairment. 
 
Carrier Denied RME was An Abuse of Discretion.  In APD 182111, a complex case involving multiple injuries and multiple certifications of MMI/IR, the ALJ issued a Presiding Officer Directive to a DD.  Upon receipt of the report, the Carrier asked for a continuance and the opportunity to get a post-DD RME.  The ALJ denied the request and closed the record, finding MMI/IR per that DD.  The Appeals Panel cited 408.0041(f) of the Act and Rule 126.5(c)(2) which entitles the Carrier to a post-DD RME, and found that the ALJ did abuse his discretion in not allowing the Carrier to get a post-DD RME following the DD examination ordered by the ALJ.

-  Copyright 2018,Stone Loughlin & Swanson, LLP.

There has been an uptick in the number of “Monitoring Letters” from DWC. The issues include: failing to attend a BRC without good cause; failing to timely respond to Claimant requests for information; failing to timely file notice of coverage and claim administration contact information to the DWC; failing to electronically file Employer’s First Report of Injury; and, failing to provide all pertinent information to the DWC and parties prior to a BRC. 
 
We are not sure what has spawned the recent activity, but will continue to monitor the situation.  We do know that in two instances we requested withdrawal of the letter upon proof that the allegations were categorically unfounded.

-  Copyright 2018,Stone Loughlin & Swanson, LLP.

Alexis C. Norman, from Midlothian, Texas, and her co-conspirator, Karen Jones, created a fake business in Tyler, Texas and used stolen identities of licensed counselors and Medicaid recipients to submit false claims to Medicaid. 
 
Norman pleaded guilty and went to prison in April 2016.  Apparently, she and her cohort, Jones, didn’t stop there.  They created another fake company in Waco, and Norman supplied Jones with more stolen counselor and Medicaid patient identities from prisonby hiding pieces of paper in her shoe to give to Jones during visits.   Her motivation for continuing the criminal activity?  She needed to pay her criminal defense lawyer.
 
Meanwhile, in Dallas, Texas workers’ compensation claimants’ lawyer, Royce Bicklein, is scheduled for trial in federal court on February 19, 2019.  Bicklein was named in a federal court indictment concerning the Forest Park Medical Center and allegations against 21 people and involving over $40 million in alleged bribes and kickbacks.

-  Copyright 2018, Stone Loughlin & Swanson, LLP.

DWC announced this month that eligible spouses of first responders remain eligible for death benefits for life after remarrying (if they remarry on or after 9/1/17), if the first responder died in the course and scope of employment or while providing volunteer services, regardless of the date on which the death of the first responder occurred. If you weren't married to a first responder, you still shouldn't get remarried.
 
DWC also published its annual report of work-related deaths in Texas.  There were 534 fatal occupational injuries in 2017, which is a 2% decrease from 2016.  Trade, transportation and utilities was the category with the highest number of fatal work injuries (148), while construction ranked second (133).  The full report can be found at the following link:  TDI website.

-  Copyright 2018, Stone Loughlin & Swanson, LLP.

Section 20 settlements are not technically payments of workers’ compensation benefits except for insurance rating purposes.  These settlements are popular with employers because the file can be closed for good with no potential for a reopener claim.  In many states, the Section 20 settlement is called a full and final settlement.  But does a Section 20 settlement mean that the employer has no subrogation rights as to medical, temporary or permanency payments when the injured worker has a good third party case arising from the work accident?

It is important for practitioners to consider at the time of a Section 20 settlement whether there is a third party case pending.  If so, the issue arises whether the employer has a lien on medical and temporary disability benefits paid prior to the settlement.  Example:  suppose the employer pays $30,000 in medical and temporary disability benefits to a claimant, who has a good third party lawsuit which he will eventually settle for $100,000.  There are causation issues in the workers’ compensation case such that the parties agree to settle the permanency claim petition months later for $45,000 on a Section 20.  On the day of settlement, no one mentions anything about the prior payments of $30,000 for medical and temporary benefits.  The Judge of Compensation approves the Section 20 settlement for $45,000.  A few days later the third party case settles for $100,000, and the employer requests reimbursement of two thirds of the $20,000 it has paid in medical and temporary disability benefits.

Does the claimant owe the employer $20,000 minus $750 in costs of suit?  The answer is yes, according to Aetna Life & Cas. v. Estate of Engard, 218 N.J. Super. 239 (Law Div. 1986).  The $45,000 payment under the Section 20 is not lienable, but the prior medical and temporary disability benefits made well before the case settled remain lienable.  Best practice would be to place all of this on the record so that the injured worker is well aware that only the $45,000 Section 20 payment will escape the respondent’s lien, not the prior medical and temporary disability benefits.

Suppose the defense attorney in the same case negotiated with the petitioner’s attorney to allow the $45,000 Section 20 payment to be lienable?  Can that be done in New Jersey when a Section 20 payment is not really a payment of workers’ compensation benefits?  Yes, according to Calle v. Hitachi Power Tools, No. A-1015-09T1 (App. Div. February 15, 2011).  This situation seldom happens in workers’ compensation court.  But the parties are free to negotiate the terms of a settlement whereby the petitioner agrees to permit a Section 20 payment to be lienable.  The Judge of Compensation must, of course, approve the entire settlement, including this aspect of the settlement.  The intention to make the Section 20 payment lienable should be placed on the actual court order and on the record, thereby making clear that respondent has a lien on the Section 20 payment itself.

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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. 

Legislative Update by Attorney Alison Stewart

In a recent decision by Iowa Workers’ Compensation Deputy Erin Pals, Reiter v. Incorporated City of Remsen,the agency determined it is appropriate to apply the upper extremity functional rating to shoulder injuries now that shoulders have been identified as a scheduled member injury under the post July 1, 2017 workers’ compensation legislation. Deputy Pals reasoned that the table consulted by the rating physician could be found in Chapter 16 of the5^th Edition AMA Guidelines, which is entitled “The Upper Extremities,” and historically the agency has not utilized whole person impairment ratings for a single scheduled member injury. The full decision can be found here:http://decisions.iowaworkforce.org/2018/October/Reiter,%20Craig-5059413d.pdf.

In light of this decision, it is prudent to take the upper extremity rating and multiply it by the 400 week value of the shoulder in order to determine permanency entitlement for employees who sustain work-related shoulder injuries post July 1, 2017. 

Legislative Update by Attorney Kathryn Johnson

In a 6-1 decision, the Supreme Court in Brewer-Strong v. HNI Corporation,913 N.W.2d 235, (Iowa, 2018), held as matter of first impression, an employer could regain control of the employee’s medical care and assert an authorization defense, even though the employer initially denied liability. The Court stated, “Holding otherwise would run contrary to the very purpose of Iowa Code chapter 85 to resolve ‘workplace-injury claims with minimal litigation’ by forcing employers to reach a conclusion about their liability for an employee’s injury without thoroughly performing their duty to investigate the claims, potentially creating more litigation and expenses in the process.”

In this case, a workers' compensation claimant, Brewer-Strong, contends the workers’ compensation commissioner wrongly denied her healing period benefits under Iowa Code section 85.34(1). Brewer-Strong filed a petition seeking workers’ compensation benefits after developing bilateral carpal tunnel injuries allegedly arising out of and in the course of her employment with the employer, HNI. HNI originally denied liability for the claimed injuries. Brewer-Strong filed a petition for alternate medical care that was dismissed on procedural grounds because HNI contested liability for the injury. A physician chosen by HNI examined Brewer-Strong, and the physician confirmed that the claimed injuries were work-related. HNI subsequently amended its answer to admit liability and authorized Brewer-Strong to undergo medical care with its chosen medical providers. However, Brewer-Strong sought medical treatment from a different, unauthorized physician who proceeded to perform two surgeries on her. HNI refused to pay Brewer-Strong healing period benefits for the time she was recovering from the unauthorized surgeries.

At the agency level, the workers’ compensation commissioner decided Brewer-Strong was not entitled to healing period benefits. Specifically, the commissioner found that HNI provided a valid authorization defense, and Brewer-Strong did not meet her burden to prove that her unauthorized care resulted in a more favorable outcome than the care she would have received from the authorized physician. On judicial review, the district court affirmed this decision on the same grounds.

The Supreme Court reviewed the commissioner’s interpretation of Iowa Code section 85.34(1), which deals with healing period benefits for work-related injuries. Brewer-Strong argued the district court erred in ruling that HNI could regain its right to control her medical care and treatment by admitting liability for her work-related injuries after it had initially denied liability. The Court noted that where the employer disputes compensability and the commissioner denies the claimant’s petition for alternate care on procedural grounds, “there can be no implicit finding that the employer has satisfied its duty to furnish reasonable medical care and has no obligation to furnish alternate care.” However, an employer is barred from asserting an authorization defense where the commissioner’s denial of the employee’s request for alternate medical care was based on substantial evidence in the record demonstrating the employer denied compensability for at least a portion of the employee’s injury for which she sought alternate medical treatment.

Thus, the workers’ compensation commissioner and the district court correctly found HNI acquired its authorization defense and the statutory rights and obligations to provide and choose appropriate medical care pursuant to Iowa Code section 85.27 once it amended its answer to accept compensability for the injury. HNI then retained its right to control medical care throughout the course of treatment for the compensable injury since it did not subsequently contest whether the injury was work-related or withdraw its authorization of care, and the commissioner did not order alternative care for Brewer-Strong.

The Court also reaffirmed the standard set out in Bell Bros. Heating & Air Conditioning v. Gwinn, 779 N.W.2d 193 204 (Iowa 2010), establishing that an employer can be ordered to pay for unauthorized care received by the employee only if the employee “prove[s] ‘by a preponderance of the evidence that such care was reasonable and beneficial’ under the totality of the circumstances,” with “beneficial” defined as “provid[ing] a more favorable medical outcome than would likely have been achieved by the care authorized by the employer.” The Court rejected Brewer-Strong’s claim that the burden of proof set an impossible standard, concluding the burden “respects the balance between the employer’s rights to control medical care and the employee’s right to seek alternative medical care under the statute. The mere fact that this creates a heightened burden for the employee does not require a modification of the test. This is all part of the balancing found within our workers’ compensation statute.” Justice Hecht dissented on this point, and would have overruled the Bell Bros. as a “flawed standard requiring proof based on sheer speculation.”

The Court further held that an employer is not required to pay healing period benefits when an employee is off due to unauthorized care, and stated that, “Iowa Code section 85.34(1) does not explicitly state that an employee cannot receive healing period benefits for unauthorized care.” The Court nonetheless concluded that “[a]n interpretation that requires an employer to provide injured employees with healing period benefits for their unauthorized care when they knowingly abandoned the protections of Iowa Code section 85.27 would be inconsistent with the overall intent of the statute.”

Today when I turned on my computer to start the day, I was alerted by LinkedIn that a good friend and client was celebrating 11 years with her employer.  I remember when she first took that job.  It was a third party administrator that had just opened an office in Birmingham and they handpicked my friend from a list of very capable applicants.  She was very excited and we went to a local steak establishment to celebrate.  Within the next year, she adopted a brand new baby boy.  He was her world and she was his.  Several years later, my wife and I were blessed to bring a son into the world.  We would occasionally get our families together.  Although there was an age difference, the two boys got along wonderfully, just like their parents.  My friend had more than her share of medical issues but we all thought they were behind her.  Unfortunately, that was not the case.  Recently, my friend passed away in her sleep.  Her son found her the next morning.  Every child’s nightmare became his reality.  We have set up a trust fund for her son that will provide future assistance as needed.  If you would like to make a contribution to the fund, please e-mail me (mfish@fishnelson.com) and I will provide you with the necessary information to do so.  No contribution is too small and all will be greatly appreciated.  May all your family and friends be safe and well over this Holiday Season and beyond.

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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.

One of the most significant cases to be decided by the Appellate Division with respect to subrogation rights was issued on December 4, 2018 in New Jersey Transit Corporation v. Sanchez, A-0761-17T3 (App. Div. December 4, 2018).  The case will have an impact on how employers deal with a very common scenario in New Jersey.

David Mercogliano was injured in a motor vehicle accident during the course of his employment. NJ Transit owned the vehicle driven by Mercogliano and paid workers’ compensation benefits to Mercogliano in the amount of $33,625.70 (comprising $6,694.04 in medical benefits, $3,982.40 in temporary disability benefits, and $22,949.26 in permanent partial disability benefits).  Mercogliano did not sue the driver of the other vehicle, Sanchez, or the owner of the vehicle, Smith.  Instead, NJ Transit filed a subrogation action pursuant to N.J.S.A. 34:15-40(f) against the third party defendant carriers.  That provision allows the workers’ compensation carrier or employer to file a suit after one year against a tortfeasor, if the tortfeasor has not filed suit.

The trial judge ruled against NJ Transit on the ground that the verbal threshold barred any such subrogation claim since Mercogliano himself could not meet the verbal threshold because he did not sustain a permanent injury as defined by N.J.S.A. 39:6A-8(a).  In essence, the trial court held that NJ Transit stood in the shoes of Mercogliano.   NJ Transit appealed.

In a decision that will surely lead to the filing of more subrogation suits, the Appellate Division reversed in favor of NJ Transit.  This decision has been published, so its impact will be great. First, the Appellate Division observed that the verbal threshold contained in so many drivers’ automobile policies does not apply to economic loss.  Rather, it applies to non-economic loss.  The Court said that an “injured worker may recover medical expenses from the third-party tortfeasor and N.J.S.A. 39:6A-12 does not apply,” citing Lambert v. Travelers Indemnity Co. of America, 447 N.J. Super. 61 (App. Div. 2016).  Since Mercogliano could have sued the tortfeasor to recover medical expenses, the Court reasoned that it follows under Section F of the workers’ compensation subrogation statute that the workers’ compensation employer could sue after the one-year waiting period.

The Court flatly disagreed with the reasoning of another published Appellate Division case, namely Continental Insurance Co. v. McClelland, 288 N.J. Super. 185 (App. Div. 1996).  The Court noted that the Continental case has not been followed by other court decisions in recent years.  The Court highlighted the fact that NJ Transit was seeking to recover benefits paid to Mercogliano for economic loss (medical expenses and wage loss), not noneconomic loss.  The Court said:

To be clear, Mercogliano’s automotive insurer paid him no benefits and incurred no costs, and the workers’ compensation carrier does not seek reimbursement from Mercogliano’s automotive insurer.  On the contrary, NJ Transit seeks reimbursement from the negligent third-party tortfeasors pursuant to Section 40.  If successful, NJ Transit’s workers’ compensation carrier would be reimbursed by the tortfeasors, subject to their right to indemnification from their own automotive insurers.  Therefore, allowing NJ Transit to pursue reimbursement does not conflict with AICRA’s collateral source rule, N.J.S.A. 39:6A-6.

This case provides a road map for employers to pursue tortfeasors for reimbursement of medical and temporary disability benefits paid in workers’ compensation arising from car accidents where the injured worker cannot sue due to a verbal threshold policy.

One key question is whether this decision is limited to payments of medical and temporary disability benefits as opposed to permanency benefits.  William T. Freeman, Esq. of Brown & Connery, whose colleague Shawn C. Huber, Esq. argued the case successfully for NJ Transit, notes that the Court cited language in Lambert that is very broad:  “As long as the employee’s injuries were caused by a third-party and not the employer, the WCA gives the workers’ compensation carrier an absolute right to seek reimbursement from the tortfeasor for the benefits it has paid to the injured employee.”  This language certainly supports the view that permanency benefits may be sought.

On the other hand, the NJ Transit opinion did not really focus on permanency benefits.  The Court initially framed the issue to be decided as follows: “In this appeal, we consider whether a workers’ compensation carrier can obtain reimbursement of medical expenses and wage loss benefits it paid from tortfeasors who negligently caused injuries to an employee in a work-related motor vehicle accident, if the employee would be barred from recovering non-economic damages from the tortfeasors because he did not suffer a permanent injury.”  Future cases will no doubt settle the question whether this important decision includes the right to sue for permanency benefits.

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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.