State News

A cardinal rule in workers’ compensation is that an employee cannot sue his or her employer in civil court for a work injury except for rare circumstances involving intentional harm.   But what if the employee has two employers?  Does that rule apply to both employers?  The answer is yes, the rule applies to both employers, so the focus in many cases is on whether there really is an employer relationship to begin with.  The case of Carabello v. Jackson Dawson Communications, Inc. and Transcend Creative Group, LLC, A-3294-17T3 (App. Div. March 26, 2019) provides some helpful insight on the requirements to establish “the second employer.”

Mr. Carabello worked for the New Jersey Sports and Exposition Authority as a teamster truck driver. The NJSEA contracted with Transcend and Jackson Dawson for a Mercedes Benz event at the IZOD Center which the NJSEA owned.  Carabello was the only forklift operator at the IZOD Center during the event.  NJSEA assigned him to operate the forklift to unload the trucks of Transcend and Jackson Dawson Communications.  Carabello was told to report to Jackson’s head man for further instructions in securing the tent structure for Transcend and Jackson. 

The head man for Jackson instructed Carabello to transport barrels filled with water using the forklift.  Carabello proposed that it might be wiser to transport the barrels while they were empty but that suggestion was not followed.  While loading the filled barrels on the forklift, two barrels fell off.  As Carabello moved the last of sixteen barrels off the forklift, he felt a pop in his shoulder.  His injury was promptly reported to the NJSEA, and the NJSEA paid workers’ compensation benefits.

Carabello then attempted to sue Transcend and Jackson Dawson for negligence in a third party action.  Jackson and Transcend argued in essence that Carabello could not bring a civil suit against them because he was their “special employee.”  The trial judge agreed and barred the civil suit, leading to an appeal by Carabello.  In his appeal, Carabello argued that the five-pronged test of a special employee did not apply to his situation.

First, he argued that there was no express contract between Carabello and Transcend and Jackson.  Second, he argued that he was doing the work of the NJSEA.  It was on NJSEA property.   The Appellate Division agreed with Carabello on both of these points.

Next, Carabello argued that his work was not controlled by Jackson and Transcend.  The Appellate Division said this point was unclear.  NJSEA told Carabello to use the forklift to help the exhibitors set up the event.  Jackson and Transcend told him to move the filled water barrels to help secure their tent.  On balance, the Court felt that NJSEA really controlled the work.  “Plaintiff testified the scope of his employment for NJSEA included helping production personnel with event setup, which involved operating the forklift and assisting others during the production process.”

Fourth, Carabello argued that he was paid by NJSEA.  The Court noted that Transcend and Jackson paid a fee for operation of the forklift, but they did not pay Carabello’s salary. 

Lastly, Carabello argued that he could not be fired by any entity other than the NJSEA.  The Court agreed that the license to produce the exhibition at the IZOD center did not provide Jackson and Transcend with the authority to hire or fire Carabello. 

For these reasons, the Appellate Division reversed and allowed Carabello to sue Jackson and Transcend in a civil suit for their alleged negligence in contributing to his shoulder injury.  One key distinction between this case and other special employee cases involving assigned nurses is that Carabello was working on NJSEA property when he was injured.  In many of the nursing cases where special employment status is found, the nurses work on hospital property under direct control of the hospital.

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. 

It can be challenging to prove that a fairly common cancer occurring frequently in the general population is work related.  The case of Proscia v. Advanced Biotech, A-3017-17T2 (App. Div. April 26, 2019) offers interesting guidance on how an injured worker can prove such a case.  

Frank Proscia worked for Advanced Biotech (AB) from 2005 until 2013.  The company manufactures and sells natural flavor ingredients.  During his employment, there was occasional flooding in his work site in Paterson, N.J.  When that occurred, he would wear waders to walk through space to secure manufacturing materials, which included drums filled with chemicals.  He would examine and sample many containers when they arrived and supervised pouring of chemicals by others.  His desk was 15 feet away from the sealed-off storage room where drums of chemicals were stored.

Petitioner testified that there were multiple spills of hazardous chemicals over the years he worked at AB.  The chemicals would adhere to his skin and clothing.  There was one spill of acetic acid in February 2011. That caused petitioner to be hospitalized on account of breathing problems at work.  He left AB in October 2013.  Two years later, petitioner was diagnosed with colorectal cancer, and he filed a claim petition alleging that his work exposures either caused or contributed to the cancer.

A key fact in this case was that the expert for each side agreed that there were about 1,000 chemicals to which petitioner was likely exposed, and several of those chemicals were suspected carcinogens. 

The petitioner’s expert testified that Acetaldehyde and Diacetyl are carcinogenic, and they were two of the chemicals to which petitioner was exposed.  In fact, petitioner’s expert said that Acetaldehyde is a Class One carcinogen.

Petitioner’s expert provided statistical information on colorectal cancers, noting that 11 to 15 percent of such cancers are related to workplace chemical exposures.  The expert added that petitioner, who was 42 years of age at the time, could not return to work due to his stage three or four cancer.  He said that his cancer was not yet at maximal medical improvement and petitioner required more treatment. 

AB’s expert disputed the testimony that Acetaldehyde causes cancer.  AB’s expert said that there were no studies establishing such a causal relationship.  The Court noted that respondent’s expert was an oncologist.  The Court noted that petitioner’s expert was qualified in the field of environmental and occupational health medicine.  Respondent’s expert did agree that some of the chemicals to which petitioner claimed exposure were carcinogenic. 

The Judge of Compensation found that it was more probable than not that petitioner’s exposure on the job caused his cancer.  The Judge ordered further temporary disability benefits as well as further medical treatment. AB appealed. 

The Appellate Division first observed that petitioner did not have to prove direct causation; aggravation or exacerbation of a condition is sufficient.   The Court also commented that the Judge of Compensation is in the best position to weigh the credibility of the expert’s testimony.  “He could, at his option, decide to give petitioner’s expert testimony greater weight than the expert who testified on behalf of AB.” For these reasons, the Appellate Division affirmed the ruling in favor of petitioner.

Petitioner had several key advantages at trial. First, the experts agreed that some of the chemicals to which petitioner was exposed were carcinogenic.  Second, petitioner proved by his testimony that he had likely exposure to certain chemicals. Respondent did not present lay testimony disputing anything petitioner said on exposure.  That left no real dispute that there was serious exposure to chemicals.

The Judge of Compensation seemed to accept that the two named chemicals were carcinogenic.  There was nothing in the Appellate Division record showing that respondent offered medical articles debunking any relationship between Acetaldehyde and cancer.  Under these circumstances, petitioner made out a very strong case.  For respondent to win in a difficult case like this, its expert needed to offer into evidence persuasive scientific evidence based on medical literature establishing that there is no known causal relationship to colorectal cancer.  Alternatively, respondent needed to contest the alleged exposure through lay testimony. 

In a difficult case like this, the best argument that respondent had was that its expert was far more qualified than that of petitioner to give an opinion on causation, as only respondent’s expert was an oncologist. There is nothing in the appellate decision addressing that point, however, so it is hard to tell if that was argued.

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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. 

There are few cases in the Division involving assessments of penalties against an employer for late payment of a settlement.  Ramella v. Borough of Seaside Heights, A-3310-17T3 (App. Div. April 8, 2019) is therefore of interest to practitioners.

The petitioner, Shirley Ramella, brought a dependency claim against the Borough and its various workers’ compensation carriers alleging that her husband died from work-related chronic obstructive pulmonary disease due to alleged exposure to asbestos during his 15-year employment.  The total settlement against all carriers was $50,000, but the Borough itself agreed to pay $7,500 on a Section 20 basis for a period in which its insurance coverage was in dispute.  An order was entered on August 15, 2017 against the Borough.

Public entities need vouchers before they can make payment, and a voucher was mailed to Shirley Ramella on August 22, 2017, one week after the order was signed.   Mrs. Ramella did not sign or return the voucher for months.  The Borough’s counsel reached out to Mrs. Ramella’s counsel seeking the signed voucher. In January 2018, Mrs. Ramella executed the voucher and returned it to the Borough.  The Borough then promptly paid the $7,500 once it received the signed voucher.

In the days immediately prior to the return of the voucher by Mrs. Ramella, her attorney moved to enforce the August 15, 2017 order.  By the time the motion was listed in workers’ compensation court, the order had been paid.

The Judge of Compensation conducted no formal hearing and took no testimony.  The Judge found that the Borough should have prepared the voucher during the years that the case had been litigated. The Judge made no findings of fact concerning Mrs. Ramella’s failure to sign the voucher, nor her attorney’s failure to inquire about it, nor the promptness of payment by the Borough once it received the signed voucher. Instead, the Judge entered an order on February 20, 2018 assessing a $5,000 penalty against the Borough payable to the Second Injury Fund, plus $500 to her attorney.

The Borough appealed the penalty order, and the Judge later denied the Borough’s motion for reconsideration and a stay. The Appellate Division began by noting (incorrectly) that there is no statute establishing a specific timeframe for payment of workers’ compensation settlement proceeds.  Actually, N.J.S.A. 34:15-28 states: “Whenever lawful compensation shall have been withheld from an injured employee or dependents for a term of 60 or more days following entry of a judgment or order, simple interest on each weekly payment for the period of delay of each payment may, at the discretion of the division, be added to the amount due at the time of settlement.”  This statute was not mentioned in the decision but the Court did discuss another section dealing with penalties for failing to comply with orders generally.

The Appellate Division proceeded to observe that N.J.A.C. 12:235-3.16(e) requires a Judge to hold a hearing before assessing a penalty for failure to comply with an order.  The Court was critical of the Judge of Compensation for failing to hear any witnesses or place documentation in the record supporting the reasons for the penalty. 

The Court focused on N.J.S.A. 34:15-28.2, which states that a Judge of Compensation may assess a penalty for failure to comply with a court order not to exceed 25% of moneys due for unreasonable payment delay and to impose a penalty of up to $5,000 payable to the Second Injury Fund.  The Court said, “Here, it was entirely reasonable for the Borough to send Shirley a voucher for her signature. . . We do not agree with the judge’s observation that the Borough could have prepared the voucher and secured Shirley’s signature during the eight years that her amended claim petition was pending.” The Court commented that this was a contested matter, and there was no reason for the Borough to prepare a voucher during the contested period of the case.

The Court reversed the award of the penalty and the award of counsel fees.  It said: “Finally, the judge did not consider the inaction of Shirley and her counsel after her receipt of the voucher, the affirmative acts of the Borough’s counsel in seeking Shirley’s signature, or his client’s prompt payment once it obtained the signed voucher, when deciding whether a penalty was warranted.”

The facts of this case were unusual because the petitioner in this matter did not return for months a signed voucher that was sent to her one week after the settlement.  The use of a voucher does not occur in private sector settlements.  But this case is still important because it shows that judges need to conduct a full hearing with testimony from the parties before assessing penalties under the statute.

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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. 

Petitioner Joan Haggerty worked for Cape May Regional Medical Center (Crothall Service Group).  She tore her left rotator cuff and bicep tendon while working as a housekeeper.  Months later she injured her neck and left shoulder making a bed and stretching sheets.  She filed a workers’ compensation claim for each injury and later amended the left shoulder claim to include an overuse claim of the right shoulder. She had two surgeries on the left shoulder and one surgery on the right shoulder.

Petitioner obtained an order for medical and temporary disability benefits in 2015 approving treatment with Dr. Matthew Pepe.  He referred petitioner to Dr. Peter Corda for pain management, who in turn referred petitioner to Dr. Charles Krome. Four platelet rich plasma injections were recommended by Dr. Krome.

The issue in the case arose when it became clear that the platelet rich injections did not help petitioner.  Dr. Krome then recommended stem cell treatment for the right shoulder.  He felt that this would be a conservative measure but petitioner would still likely require total shoulder replacement surgery in a few years.  Petitioner then filed an amended motion to compel respondent to pay for the stem cell therapy.  Respondent opposed the motion by noting that the stem cell treatment was not approved by the U.S. Food and Drug Administration (FDA). 

Because the judge had questions for Dr. Krome, the judge called the doctor from his chambers on May 4, 2018 in the presence of both counsel.  The judge asked several questions, but neither counsel asked any.  At the next listing of the case on May 25, 2018, petitioner testified that she did not want another shoulder surgery.  She needed to work in order to care for her terminally ill husband.  She said she knew that the stem cell therapy was not FDA approved but she wanted to undergo it. She said she was also aware that it might only provide temporary relief.

Following petitioner’s testimony, the Judge of Compensation issued an order requiring respondent to provide the stem cell treatment.  The judge commented that Dr. Corda wrote a letter stating that this treatment was widely used in professional sports.  The judge also observed that respondent did not provide any expert report addressing this issue.  Finally, the judge found Dr. Krome to be credible.

On appeal Crothall argued that it was error to determine credibility of a physician based on an unrecorded phone call without formal testimony.  Crothall also argued that the treatment was not sufficiently accepted in the scientific community.

The Appellate Division observed the rules on motions for medical and temporary disability benefits, noting that respondent’s counsel had raised a defense that the treatment was not FDA approved.  “Under the regulations, the judge was required to hold a hearing where Crothall could cross-examine witnesses.”

The Court also questioned the validity of using a phone call to a physician as a basis to determine credibility. “Even if credibility could be determined in that manner, without a record there is no ability to review what was said.” The Court said that when an important issue is discussed in chambers, “a record must be made or a summary placed on the record of what transpired in chambers.”

The Appellate Division held that the procedures in chambers “lacked fundamental due process.”  The Court was critical of the failure to record the testimony of Dr. Krome and the failure to allow respondent’s counsel to cross examine the doctor.  For these reasons the order was reversed, and the matter was remanded.

The case can be found at Haggerty v. Crothall Service Group, A-4478-17T4 (App. Div. May 3, 2019).  This case reminds us that due process applies to proceedings in workers’ compensation court and that fundamental fairness to both parties is the lodestar of court proceedings.  The Appellate Division never ruled on whether stem cell treatment can be ordered but rather focused solely on the fairness of the process in the Division proceedings.

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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

Governor Reynolds has signed a bill relating to workplace idiopathic falls (SF 507). This bill has become law in response to the 2018 Iowa Supreme Court decision,Bluml v. Long John Silvers, where the Court said there was no blanket rule rendering certain categories of workplace idiopathic falls non-compensable, so long as the employee proved that a condition of the employment increased the risk of injury (e.g. a hard floor). In Bluml, an employee had a seizure while working and fell straight backward onto a ceramic tile floor, striking the back of his head. More information about this decision can be found in an earlier post on this blog, dated November 28, 2018. The Court had held each case like this should be considered on a case by case basis opening the door for an employee to establish an injury resulting from an idiopathic fall onto a hard surface could be found compensable. With this new bill now on the books, however, “personal injuries due to idiopathic or unexplained falls from a level surface onto the same level surface do not arise out of and in the course of employment and are not compensable under this chapter.”

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Ask any practitioner about the nature of Medicare and his or her response will usually be that it is a source of medical coverage for the very poor, such as those receiving SSI (Supplemental Security Income.) Alas, such an answer is no longer correct, nor is it safe. Why? Well, as in the case of ERISA liens, (Ah ha! Now you know where you’ve seen my name before!) we are again dealing with the dreaded “F” word. No, not that “F” word, the one which resulted in Ralphie enjoying the subtle flavor of Lifebuoy (remember, “A Christmas Story?”).  No, once again we have a federal Act, establishing both the benefit and the requirement of recovery of any claims paid for which a third-party source is legally liable. The (somewhat) good news is, however, that the recovery mechanisms (liens) are administered by the states. More on this later.

Medicaid was established by federal law, 42 U.S.C 1396 et. seq. (the Act.)  The intent of this Act was to provide medical coverage for people unable to afford their own coverage. Like other federally-established health coverage such as Medicare and Veterans Administration benefits, Medicaid (and as the title indicates, NJ Family Care – hereinafter NJFC) is intended to pay health care costs for illnesses, injuries, etc., where no other coverage is legally obligated to pay. In other words, they are “payors of last resort.” This is seen in N.J.A.C. 10:49-7.3(1)(b), “Medicaid and NJFC program benefits are last-payment benefits. All [third party liability medical benefits]…shall, if available, be used first and to the fullest extent in meeting the cost of the medical needs of the Medicaid or NJ Family Care beneficiary…”

While established by federal law, Medicaid & NJFC are state-funded and administered. Additionally, and most important to the purpose of this article, the Act contains a requirement that the states establish a mechanism to pursue the recovery of any payments made by Medicaid/NJFC for which a third-party source should be legally liable. These sources include, but are not limited to, workers’ compensation coverage and casualty insurance in tort recoveries. In New Jersey, recovery of improper payments is contracted to HMS.

In addition to recovery efforts by HMS, a provision in N.J.S.A. 30:4D-7.1(b) states “…every recipient or his legal representative shall promptly notify the division (Division of Medical Assistance and Health Services) of any recovery from a third party and shall immediately reimburse the division in full from the proceeds of any settlement, judgement, or other recovery in any action or claim initiated against any such third party…” Clearly, this places a duty to report such recoveries on the injured party’s attorney. However, respondents take note. The Statute on the Code speak of recovery from a third party. And, in Hedgebeth v. Medford, 74 N.J. 360, (1977) our State Supreme Court stated that New Jersey’s Medicaid law evidences an “…unmistakable intent to afford the State every opportunity to recoup its payments from third parties.” Thus, both petitioners and respondents have an interest in the outcome of petitions involving such liens. In the event that a petitioner fails to give notice where Medicaid/Family Care clearly provided treatment, a respondent could likely give notice or file a motion to compel petitioner to give notice.

OK, so with the legal background established, what should a claimant’s attorney do to protect his/her client, him/herself, and honor the law? Well, this process begins with the initial interview with a new client. No attorney should assume that a client has medical coverage through an employer; Medicaid is increasingly the coverage for many people, even those who work for employers which provide excellent coverage. Traditionally, Medicaid/NJFC covered people who were very poor, disabled or both. Now, however, more and more people are covered by Medicaid and NJFC. As a practitioner I have personally observed that more and more people no longer have coverage offered by their employers; in many such situations they can no longer afford the employee’s portion of the premium. And so, they are now covered by N.J. Family Care, a “payor of last resort.”

Accordingly, at this first meeting with a new client the workers’ compensation attorney must ask whether the client is covered by Medicaid/NJFC. If so, notice must be immediately given to HMS of the claim in question. This has always been done by mail; however, HMS now has a Web-Portal for submission of the necessary documents. The mailing address/portal information can be obtained on the HMS website for New Jersey Medicaid. (Sorry, this article is to raise awareness of these issues; I won’t do your work for you!) Once that is done, HMS will send the attorney a set of questions to be answered concerning the happening of the accident, is it workers’ compensation or tort, what body parts were involved, etc. These questions are designed to allow HMS to determine what payments, if any, have been made for which a third party is legally liable. HMS will then send the attorney an initial Statement of Aid Paid, if in fact payments were made. Later, after a settlement has been agreed to but PRIOR to seeking approval of the settlement by a Judge of Workers’ Compensation, the petitioner’s attorney MUST provide HMS a copy of the proposed Order Approving Settlement or Section 20 Order, inclusive of fees and costs. Thereafter, HMS will issue a Final Statement of Aid Paid.  In my experience, (fortunately, to date observing others,) delayed responses from HMS are frequently caused by incomplete/incorrect submission of documents.

OK, so now I’ve discussed the origin of these state-funded plans; what they pay for and, most importantly, what they DON’T pay for; law and mechanisms for recovering payments; and, how to provide proper documentation to HMS. Now, all of you are thinking, I will tell you what guidelines exist for negotiating these liens, the power of workers’ compensation judges to deal with them, etc., etc., all the things to make your lives easier, right? Well, time to cue the occasional chirping of crickets; no other sound to break the silence. Right, you guessed it, I’ve been unable to find any guidelines, code provisions, case law, etc. to smooth the process of closing workers’ compensation cases with HMS liens. Nothing. Nor have I spoken to anyone who has found such guidance. Of course, if the liens contain payments for treatment clearly unrelated to the work-related injury, write to HMS and ask them to please remove them. Still, I and many others believe there should be some guidance in this area.

So, what is the answer? Well, I have a definite idea as to what should be done. I may be told it’s unrealistic, that it is an area in which I have no business treading, I may even upset some people. But, as that increasingly popular little creature says, “Honey Badger don’t care.” (No, don’t ask. I won’t tell!)

Several years ago there were questions as to the proper method to close a workers’ compensation case where the Petitioner was in receipt of an Accidental Disability Pension. High ranking representatives of the Division of Workers’ Compensation met with similar representatives from the Division of Pensions to work out the issues, resulting in a Memo from former Director/Chief Judge Calderone outlining the accepted methods of closing such claims.

I believe similar actions need to be taken here. However, considering the fact we are dealing with benefits created under federal law, and considering the large sums of money which are the subject of HMS liens, I suggest that the Department of Labor and HMS should attempt to work this out. Obviously, the Division of Workers’ Compensation will provide more than significant input. May I also suggest (ok Al, now you are really going out on a limb) that the Commissioner’s Advisory Committee on Workers’ Compensation be reconstituted to provide valuable input here, and in other issues affecting the practice of Workers’ Compensation. Just a thought.

(Editor’s Note:  Many thanks for Attorney Al Vitarelli for educating us all on Medicaid liens.  This is an increasingly important part of the NJ workers’ comp practice.)

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Editor:  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. 

Vinno Verasawmi was the sole proprietor of VKR, which manufactured custom kitchen cabinets for residential and commercial customers.  The company had two other employees. Verasawmi would visit construction sites and meet customers in the ordinary course of business. He drove a Porsche Cayenne, registered in his own name, both for personal and business use.  He testified that he bought the Porsche to impress potential customers.

On April 24, 2012, Verasawmi left his house at 6:45 a.m. to go to his shop in Middlesex, N.J.  Then he proceeded to a construction site in Peapack, N.J. where he installed kitchen cabinets.  He also picked up architectural drawings and started driving back to the shop.  It was then that he noticed a red warning light on the dashboard of his car, indicating a need for service. 

Verasawmi drove to the shop, dropped off the drawings, and then proceeded to drive to an auto dealership in Edison, N.J. arriving at 10:00 a.m. He left the vehicle at the dealership and rented a replacement vehicle.  Subsequently he drove from the dealership in the replacement vehicle back to his shop in Middlesex.  On the way to the shop he was involved in an accident with a tractor-trailer.  He filed a claim petition alleging serious injuries that prevented him from operating his business. He also filed a third party suit.

Verasawmi argued that as the employer, he directed himself to take the Porsche to the dealership for servicing.  He contended that this trip and the return trip to the office were compensable because his employer directed him to make the trips. 

The Judge of Compensation ruled that petitioner was not in the course of his employment at the time of his accident.  The Judge held that the maintenance on his vehicle did not constitute a benefit to his employer.  The Judge also commented that Verasawmi initially claimed he was on the way to a job site when the accident occurred, but in the law suit against the operator of the tractor-trailer he conceded he had been returning to his shop when the accident transpired.  In the end, the Judge of Compensation found that petitioner’s actions were entirely personal in nature, and he would have had to get the vehicle repaired regardless of whether he was working for VKR or not.

On appeal Verasawmi argued that the use of the vehicle redounded to his employer’s benefit.  He maintained that since he owned VKR, and since he was an employee of the company, he had the sole discretion to decide whether he was engaged in his job duties at the time of the accident. 

The Appellate Division affirmed the dismissal of Verasawmi’s claim.  It noted that the car was registered in Verasawmi’s own name, and he used it for both personal and business reasons. Further, he was returning to his shop, not to a construction site.  The Court said, “… Verasawmi was on a personal errand that he would have had to undertake regardless of whether he was working for VKR.  His action, which involved traveling from Middlesex to Edison and back, was not a minor deviation from any prescribed work duties.” This case is instructive because there are not many New Jersey cases involving the often heard contention that a sole proprietor has complete discretion in determining what is and what is not work related.  Clearly, if one’s boss requires an employee to perform a certain activity, like dropping off a car for repairs, that drive would be work related.  In this ruling the Court rejected the argument of the sole proprietor that he directed himself to perform what he contended later was a work mission.  The Court did not reject the concept of dual capacity, namely that the sole proprietor is both employer and employee, but it rejected the claim because the facts suggested that the vehicle was used for personal reasons and the work being done on the vehicle was fairly routine maintenance. The outcome might have been different if the petitioner had been driving to a construction site instead of returning to his office. The case can be found at Verasawmi v. Vino’s Kitchen Renovations, LLC, A-2273-17T3 (App. Div. April 23, 2019).

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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. 

Another bill, House Bill 4300 (authored by Rep. Jim Murphy, R-Houston), would propose allowing lump sum settlements, provided that appropriate provision were made for Medicare set-asides and for taking care of deceased workers’ beneficiaries. 

As those in the Texas workers’ comp system are well aware, Texas does not allow claimants to receive lump sum settlements for medical benefits.  The prohibition has existed since the 1980s, when laws were passed to prevent what many saw as an excess in litigation as well as misuse of settlement funds by workers’ compensation claimants. 

Some employers asked law makers to remove the prohibition on lump sum settlements, so long as the arrangement provided for a Medicare set-aside, the plan was overseen by a corporate trustee or professional administrator, and that any remaining interest on the settlement reverted back to the claimant’s beneficiaries when the claimant died.  Others have criticized the bill, arguing that settlements could result in litigation, particularly if the lump sum turned out not to be large enough to cover a claimant’s long-term care.  Still others were concerned that the money would be used for unnecessary medical treatment, leaving inadequate resources for legitimate treatment.  Ultimately, other businesses, insurance, and some labor interests put up enough opposition against House Bill 4300 to convince legislators not to support it.  Like House Bill 750, the bill has been left pending before the House Business and Industry Committee.

-  Copyright 2019, Erin Hacker Shanley, Stone Loughlin & Swanson, LLP.

Texas is the only state in which employers may “opt out” of the workers’ compensation system.  Most construction contractors have opted out, and testimony taken at the House Business and Industry Committee hearing on April 9 referenced studies showing that only 40% of Texas construction workers are covered.  The number of employers in mining, utilities, and construction that subscribe to workers’ compensation has fallen by half since 2004, to only 17%, according to a 2018 report by the Division of Workers’ Compensation.  And while contractors who opt out expose themselves to tort claims by injured employees, most plaintiffs’ attorneys will not take those cases given most construction companies are not big enough and do not have deep pockets to pay damages. 

House Bill 750 (sponsored by Rep. Armando Walle, D-Houston) proposes to require all construction contractors and subcontractors to subscribe to workers’ compensation insurance.  He says that studies show that construction workers in Texas are four times more likely to be killed at work than in any other industry.  Per the U.S. Department of Labor, Texas had 129 fatal construction injuries in 2017, by comparison to California, which had 69. 

The bill was left pending in committee with no action after the April 9^th hearing, but there is always the possibility that the committee might vote on it at a later hearing.  The Texas Legislature’s House committees have until May 6 to report bills or pass them to the floor for a vote.

 -  Copyright 2019, Erin Hacker Shanley, Stone Loughlin & Swanson, LLP.

The Houston Appeals Court recently found that an insurance carrier was not able to recover subrogation funds from a wife who collected death benefits as the administrator of the deceased’s estate from a third party.  After receiving workers’ compensation death benefits, the children of the deceased filed a wrongful death claim against a third party.  As part of the settlement, the third party agreed to allocate a portion of the funds to the deceased’s estate.  The wife was the administrator of that estate.  The court reasoned the carrier was not entitled to subrogation funds because the wife did not individually recover funds from the third party settlement.  Therefore, the collective-recovery standard did not apply.  Fort Bend County v. Norsworthy, No. 14-17-00520-CV, 2019 WL 1291526 (Tex. App.—Houston [14th Dist.], March 21, 2019).

-  Copyright 2019, Erin Hacker Shanley, Stone Loughlin & Swanson, LLP.