Daniel Cotto worked as a forklift operator at Ardagh Glass in Bridgeton, N.J.  On November 1, 2016, Cotto hit his head on the roof of a forklift at work.  He was advised to see Premier Orthopedics in Vineland, N.J. for a medical examination, and a Premier Orthopedics doctor placed Cotto on light duty work with a follow-up appointment set for December 8, 2016.  The Safety Department asked Cotto to submit to a breathalyzer and urine test in order to return to work.  Cotto explained that he was taking prescription medications, including medical marijuana under the New Jersey Compassionate Use of Medical Marijuana Act (“CUMMA”).  He was also taking prescription Percocet and advised the company that he could not pass any urine or drug test.

Cotto alleged that he was told he could no longer work at Ardagh Glass because he could not operate machinery while on narcotics.  Cotto argued that he revealed his prescription medications to the company when he was hired.  His doctor had given him a note stating he could operate machinery while using these drugs.  The company advised that it was not concerned about his use of Percocet but was concerned about his use of marijuana.

Cotto was not fired but he was placed on an indefinite leave.  He was not permitted to return to work until he could pass a drug test.  Cotto’s doctor wrote that Cotto had lifting restrictions because of medical conditions, but Cotto maintained that he could perform the essential functions of the job.  He sought a “reasonable accommodation,” specifically asking that the company waive any requirement that he pass a drug test for marijuana.

Eventually Cotto filed a law suit asserting disability discrimination and failure to make reasonable accommodations.  Ardagh Glass moved to dismiss the complaint because CUMMA does not mandate employer waiver of a drug test.

Initially the federal court agreed that Cotto plead enough to satisfy coverage under the New Jersey Law Against Discrimination.  His back and neck pain met the standard of the NJLAD.  The Court also noted that Cotto appeared to be qualified to perform the essential functions of the job, having done it for five years.  Ardagh, however, maintained that Cotto could not show that he could operate machinery while using marijuana.  The company noted that use of Percocet was not illegal, but marijuana use was illegal under federal law.

The Court next reviewed CUMMA and said, “The New Jersey legislature found that ‘modern medical research has discovered a beneficial use for marijuana in treating or alleviating the pain or other symptoms associated with certain debilitating medical conditions.’”  The Court added that CUMMA provides an affirmative defense to patients who are properly registered under the statute and subsequently arrested and charged with possession of marijuana.  The Court commented that the decriminalization of medical marijuana does not shield employees from adverse employment actions.

The Court’s decision today is a narrow one, as it must be for the narrow issue presented by Plaintiff’s complaint.  Plaintiff’s discrimination claims turn entirely on the question of whether he can compel Ardagh Glass to waive its requirement that he pass a drug test.  It is plain that CUMMA does not require Ardagh Glass to do so.  We therefore find that Plaintiff has failed to show that he could perform the ‘essential functions’ of the job he seeks to perform.  Ardagh Glass is within its rights to refuse to waive a drug test for federally-prohibited narcotics.

Regarding Cotto’s argument that other injured employees with restrictions had been permitted to work light-duty positions, the Court said that Cotto failed to show that similarly situated employees asked for the specific accommodation he asked for, namely a drug test waiver.

The case can be found at Cotto v. Ardagh Glass Packing, Inc., No. 18-1037 (D.N.J. August 10, 2018).  It is the first decision of its kind in New Jersey on the issue of whether an employer must make a reasonable accommodation of waiving a post-injury drug test for an employee covered under CUMMA.

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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. 

Employees who are out of work due to work injuries or illnesses are eligible for temporary disability benefits at a rate of 70% of wages subject to an annual maximum.  In 2018 that maximum is $903 per week.  That means that the employee who earns $2,000 per week or even $20,000 per week is limited to $903 per week in temporary disability benefits.  But a substantial number of New Jersey employees – particularly public sector employees – receive full salary during their period of work absences and are not limited to the annual maximum.

There are two categories of full salary employees:  those who receive full salary by statute and those who receive full salary by collective bargaining agreement.  The difference is significant and is important to understand.

Full Salary By Statute

One very large group of New Jersey employees receives full salary by statute – employees of boards of education.  Under N.J.S.A. 18A:30-2.1, a board of education employee receives full salary for one year from the date of injury.  So an experienced teacher, for example, earning $1,800 per week receives full salary for up to one year from the date of injury.  Here is the part that is not well known:  that teacher also has no state or federal taxes taken out of the paycheck!  Clearly, that was not the intention of the New Jersey legislature in passing this statute.  The IRS, however, has issued opinions that have resulted in a windfall to education employees such that they actually earn substantially more than they did while working.

How did this happen?  The explanation is really quite simple.  Workers’ Compensation laws are not taxed.  The IRS interprets N.J.S.A. 18A:30-2.1 as a workers’ compensation law because it is a statute passed by the legislature.  The law provides full salary compensation to those education employees who are injured at work for one year.  The IRS therefore concludes that the entire full salary payment is not taxable.  What is the result? Board of education employees keep virtually their whole paycheck while out on workers’ compensation absences up to one year, making more than they did while working.

Full Salary By Collective Bargaining Agreement

The other large category of employees which receives full salary does so by collective bargaining agreement, including those in the public or private sector.  These agreements are negotiated ones between union and management.  In the public sector, virtually all public safety workers, i.e., police, fire, EMT, receive full salary by collective bargaining agreement.  In some towns all municipal employees are covered by such agreements.  In the private sector, there are also comparable negotiated agreements.  The same principle applies:  the police officer earning $2,000 per week receives full salary by negotiated agreement but the employee must pay state and federal taxes from his or her paycheck.

Why the difference?  Because a negotiated agreement is not the equivalent of a law.  It is simply a written agreement between parties.  Therefore when the police officer earning $2,000 per week is out on workers’ compensation, all the same deductions come out of the paycheck.

The IRS would be more receptive to not taxing the entire full salary payment of a public safety employee if the municipality passed an ordinance, and the elected officials voted on it, as opposed to simply negotiating a collective bargaining agreement.

There are generally time limits for full salary under both scenarios.  Under Title 18A the full salary period ends at one year.  After that the third party administrator or carrier pays temporary disability benefits directly to the employee subject to the $903 maximum rate.  The same is true of most collective bargaining agreements.  Most public sector employers provide some limitation to the full salary period, perhaps six months or a year, but a good number remain unlimited, ending only at maximal medical improvement or return to work.

When an employee who was receiving full salary is reduced to the maximum rate of $903 per week for a 2018 injury, he or she may request that the employer allow supplementation of workers’ compensation benefits with accrued leave – sick time, vacation time, or personal days.  This is discretionary on the part of the employer, unless the collective bargaining agreement addresses the issue.  The FMLA does permit substitution of paid leave for those on workers’ compensation, but employees who have been out for a year are not eligible for FMLA since they cannot satisfy the requirement of having worked 1250 hours in the prior year.

The interesting question is what does an employer pay to an employee who is receiving full salary?  Is the police officer who is receiving $2,000 per week while out of work receiving workers’ compensation benefits?  Not really.  The officer is receiving something substantially better than workers’ compensation benefits.  He or she is getting full salary payments in lieu of workers’ compensation benefits. That is part of the negotiation.

Some public employees have argued that the workers’ compensation portion of their check (for example $903 of the $2,000 paycheck) should be tax free, but that would result in a windfall to the employee.  Our hypothetical police officer would be getting $903 tax free on top of $1,100 approximately taxable.  Viewed properly, the full salary employee is not getting workers’ compensation at all.   The 70% temporary disability check goes to the employer from the third party administrator or carrier as a partial reimbursement for the full salary check.

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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. 

A Second Bite of the Lemon in West Virginia - Appellate Review and Aggravation of Preexisting Injury

In Arch Coal, Inc. v. Lemon, No. 17-0152, 2018 WL 2470654 (W. Va. May 30, 2018), the Court took the unusual procedural step to reverse a prior ruling and granted the appellant's motion for reconsideration of the Court's memorandum decision. The West Virginia Supreme Court of Appeals ruled the Court's prior opinion, reversing a decision by Worker's Compensation Board of Review, incorrectly applied the
appellate standard of review. Therefore, the court affirmed the Board of Review's decision that the claimant's injury was compensable.
This case is important to carriers for two reasons. First, the court clarifies the "discreet new injury" argument by applying the theory to new facts and rearticulating the rule. Second, the finding provides an example of how courts can grant benefits in a close case through the application of the correct standard of review.

The underlying injury was sustained by a general laborer at a mine, who had previously complained of back pain and had an MRI revealing mild concentric bulging. The claimant alleged, while driving a shuttle car, he hit a hole in the ground and bounced out of his seat. On landing, he claimed his back hurt so badly he could not breathe. Shortly thereafter, he left work early. After seeking treatment from a chiropractic physician, he was diagnosed with a disc protrusion and nerve root compression. A subsequent MRI revealed a herniated disc and bulge. The claimant filed the Employees' and Physicians' Report of Occupational Injury or Disease, claiming he injured himself in the course and scope of his employment, and the chiropractic physician likewise, designated the injury as occupational. However, the claim administrator denied the claim, because it was not work-related and was a result of a chronic condition. Subsequently, the claimant pursued additional medical reports and received a discectomy by a neurological surgeon. A physician, other than the surgeon, completed a Record Review and Opinion indicating that the claimant's injury was not traumatic in origin, but, "was the consequence of progressive, pre-existing degenerative disc disease." Id. at 4, 2018 WL 2470654 at *2. Finally, a diagnostic specialist conducted an Age of Injury Analysis and MRI Comparison and "concluded that [claimant's] condition was due to a progression of degenerative disc disease with chronic disc herniation…" Id.

Based on the additional medical reports, the Administrative Law Judge of the Office of Judges reversed the Claim Administrator. The ALJ found that, although some of the evaluating physicians concluded the condition was degenerative, the MRI after the alleged injury established the claimant exhibited a "right lateral disc herniation and disc bulge at L4-5…" The judge concluded the herniation "could certainly explain the claimant's assertion of severe low back pain…", and therefore, found the claim was compensable. Id. at 6, 2018 WL 2470654 at *3. The Worker's Compensation Board of Review adopted the findings and conclusions of the ALJ and affirmed the decision.

After appeal, the Supreme Court of Appeals "issued a Memorandum Decision in which [they] determined that the evidence showed that [claimant] did not sustain a work-related injury…" reversing the Board of Review decision. Id. The claimant asked the Supreme Court to reconsider its Memorandum Decision for failure of the court to "afford proper deference to the findings of the Administrative Law Judge and Board of Review." Id.

To begin their analysis, the court recognized that the standard of review for a worker's compensation case is provided by W. Va. Code § 23-5-15(b) which states a Supreme Court of Appeals decision that reverses or modifies a decision by the Commission or Office of Judges can only be reversed or modified if the decision "is in clear violation of constitutional or statutory provisions, is clearly the result of erroneous conclusions of law, or is so clearly wrong based upon the evidentiary record that even when all inferences are resolved in favor of the board's findings, reasoning and conclusions, there is insufficient support to sustain the decisions." Likewise, the statute states "the court may not conduct a de novo re-weighing of the evidentiary record." W. Va. Code § 23-5-15(b). In addition, the court is required to "state with specificity the basis for the decision" and how it falls under one of the three categories. Id. Finally, any issue regarding benefits shall be resolved by a preponderance of the evidence.

With this standard in mind, the previous Supreme Court of Appeals decision incorrectly stated the issue. Instead of asking whether the claimant's injury was properly found to be non-compensable, the court should have asked whether the decision of the Board of Review, favorable to the claimant and based on the evidentiary findings of the ALJ, should be affirmed, reversed, or modified pursuant to the standard of review found in W. Va. Code § 23-5-15. The court recognized that, in addition to the incorrect framing of the issue, the Memorandum Decision likewise failed to include an analysis stating "with specificity the basis for the decision" and how it falls under one of the three categories.

In addition, the court held the ALJ's finding of compensability was, in fact, based on the preponderance of evidence. The prior Supreme Court of Appeals decision failed to address the chiropractic physician's statement that the MRI indicated a new injury at the L4-5 nerve root compression. The court recognized it almost entirely based its holding on the degenerative disc disease discussion in the Record Review and Age of Injury Analysis, but that the medical evidence was "virtually unanimous in establishing [the claimant] did not have a herniated disc prior to [the date of injury]". Id. at 10, 2018 WL 2470654 at *5. Other matters considered by the ALJ provided additional evidence indicative of compensability, including: a doctor's visit the day after the injury, the claimant reporting to work with a limp, statements by the claimant that his back was killing him and that after running a shuttle car his back hurt so bad he couldn't breathe, and that the claimant left work early. Therefore, the Supreme Court of Appeals held the Board of Review's order affirming the ALJ decision was supported by a preponderance of the evidence and should be upheld. 

Finally, the court recognized the accepted rule stated in Gill v. City of Charleston (2016) that “a noncompensable preexisting injury may not be added as a compensable component of a claim for workers’ compensation medical benefits merely because it may have been aggravated by a compensable injury.” "To the extent that the aggravation of a noncompensable preexisting injury results in a discreet new injury, that new injury may be found compensable." Id. at 11, 2018 WL 2470654 at *5. From this, the court held the preponderance of the evidence shows the claimant left his shift early, upon sustaining a compensable, discreet, new injury. Therefore, the Court withdrew its Memorandum Decision and affirmed the Board of Review order finding the claimant's injury compensable.

When faced with preexisting injuries or degenerative conditions, Arch Coal v. Lemon provides a few instructive practice pointers. A “discreet new injury" must be proved by preponderance of evidence. When analyzing a similar case, a claims administrator can use the Rule 20 treatment guidelines and treat a noncompensable preexisting injury which has aggravated a compensable injury. W. Va. C.S.R. § 85-20-21 (treatment of unrelated conditions).

 When does TTD overpayment actually occur in West Virginia? 

In Reed v. Exel Logistics, Inc., No. 17-0864, 2018 WL 2769041 (W. Va. June 6, 2018), the West Virginia Supreme Court of Appeals clarified the circumstances necessary for an employer to claim overpayment of temporary total disability (TTD) benefits. The question arose after the employer's claims examiner paid a claimant for an additional 156 days past the 104-week limit. The Court held this type of "overpayment" lacked the requisite statutory elements, and therefore, the employer could not seek reimbursement. 

The primary directive of this case is twofold. First, claim administrators must be vigilant in recognizing TTD overpayment. The Court will not sympathize with a carrier who has paid out more than is required. Second, claim administrators must issue the correct protestable orders to force the overpayment issues into litigation. The Court has made it clear without the satisfaction of certain procedural elements, overpayment cannot occur. A practical caveat may be of most importance - a claims administrator controls TTD under W. Va. Code § 23-4-7a(e). Claims administrators should develop a system to "red flag" TTD at 104 weeks, when TTD can be terminated or a claimant can request rehabilitation TTD if participating in an approved rehabilitation program. The facts of the Reed case are instructive. 

The claimant worked as a shuttle drive for the employer, when he stepped on the frame of a truck and slipped, fracturing his left ankle. After numerous surgeries, the claimant continued to have instability in his ankle. After two-and-a-half years of physical therapy, the claimant's doctor declared the claimant had reached his maximum degree of medical improvement (MMI) and was a candidate for vocational rehabilitation services. In response to this report, the claim examiner halted the benefits and refused to approve further physical therapy or vocational evaluations. In addition, the claimant was granted a 4% permanent partial disability award, valued at $7,553.44. Roughly six months later, the claim examiner discovered the TTD benefits should have been terminated two years after the claimant's injury, and the insurer had improperly paid the claimant for 156 days beyond the statutory limit of 104 weeks. The claim examiner maintained the insurer had overpaid $10,509.72 and refused to pay claimant's permanent partial disability, declaring the claimant had an overpayment of $2,956.28 to be credited against any future award. 

After the claims examiner notified the claimant of the overpayment, the claimant protested the overpayment order to the Office of Judges (OOJ), which reversed the order. The OOJ found the examiner failed to timely seek termination of the benefits, or otherwise comply with the laws regarding modification or overpayment of TTD benefits. The Worker's Compensation Board of Review reversed and reinstated the examiner's decision. On review, the Supreme Court of Appeals recognized the Board of Review's decision involved the interpretation of law and, therefore, analyzed, de novo, the question of whether an "overpayment" of TTD benefits occurred. 

The insurer insisted the law governing TTD benefits was clear, "no person may receive temporary total disability benefits under an award for a single injury for a period exceeding one hundred four weeks." 2 W. Va. Code § 23-4-6(c). The insurer argued any benefit paid to the claimant in excess of the 104-week limit should "automatically" qualify as an overpayment. The claimant countered the workers' compensation scheme expressly limits an examiner's ability to declare overpayment of TTD benefits. The claimant asserted overpayment only occurs in a certain circumstance. First, the examiner must try to modify or terminate TTD benefits. Then, during an adversarial proceeding, which later results in a decision favoring the employer, the carrier is required to continue payment. Therefore, the overpayment only consists of the benefits awarded between the date of the attempted modification or termination and the ruling. More specifically, the claimant argued because the examiner never objected or sought modification to the claimant's TTD benefits, the excess benefits do not qualify as an overpayment. 

The Court analyzed the TTD statutory scheme, recognizing W. Va. Code § 23-4-1c(h) governs overpayment of TTD benefits, and requires two circumstances must occur for an employer to overpay a claimant. First, an employer must timely object to an order denying an application for modification or termination of TTD benefits. Second, there must be an adversarial proceeding which results in an order that the claimant was not entitled to TTD benefits. 

However, before the court could dismiss the employer's argument, the employer asserted that the overpayment statute was "a meaningless relic of a bygone era." Reed, at 9, 2018 WL 2769041 at *5. The employer claimed that employers no longer object to the decisions of private insurance carriers, but instead, the carrier has sole authority to act on the employer's behalf in all litigation related aspects of the claim, and enter final decisions. The claimant responded to this argument by asserting that a claims representative for an insurer is still the representative of the employer, and that the workers' compensation scheme allows the representative to make applications for a modification of any award made to an employee of the employer, including to modify or terminate TTD benefits. The claimant reiterated that W. Va. Code § 23-4-1c(h) delineates a clear process for overpayment which requires the employer or its representative to object to an order denying modification or termination and a final decision in the employer's favor. As neither the employer nor the claims examiner gave notice, objection, or an appealable order indicating the benefits should be terminated, an overpayment did not occur. 

The court agreed with the claimant and outlined the legislative history of the TTD benefits modification process prior to 1974 amendment, currently enshrined in W. Va. Code § 23-4-1c(h). Previously, the payments of TTD benefits were halted immediately after an employer protested, which would cause substantial economic hardship on the claimant due to the extended adversarial proceedings. The Legislature amended the statute for the purpose of limiting the employer's ability to "stymie a claimant's receipt of temporary total disability benefits." Id. at 11, 2018 WL 2769041 at *6. Based on this history, the court held that W. Va. Code § 23-4-1c(h) provides a baseline that once a claimant has been awarded TTD benefits, the claimant continues to receive those benefits until the employer (or representative) properly seeks to modify or terminate them. Then, while the order is under review, the 3 employer must still continue to pay the TTD benefits. But if the claimant is later found not to be entitled, only then does an overpayment legally exist. In the instant case, the Court found the examiner did not follow these procedures and, therefore, an overpayment did not exist. 

Justice Walker dissented from the majority, claiming the majority conflated the overpayment of claimant's benefits pursuant to § 23-4-6(c) and the dispute of his initial entitlement to TTD benefits pursuant to § 23-5-1. The dissent argued that any discussion of § 23-4-1c(h) is unnecessary because the section applies only where the Commissioner, in a §23-5-1 proceeding, determines the claimant was not originally entitled to TTD benefits because the claim did not jurisdictionally qualify. The purpose of a protest under a § 23-5-1 proceeding is to dispute the claimant's original entitlement to TTD benefits, not the overpayment of benefits to an originally entitled award. "Exhausting one's statutory entitlement to TTD benefits is different from failing to satisfy the jurisdictional requirements necessary to qualify for workers' compensation benefits, initially." Id. at 3 (WALKER, J., dissenting). Therefore, the claimant simply received TTD benefits to which he was not entitled and must repay those benefits. 

The lessons of Reed are that a claims administrator should be proactive about TTD closures at 104 weeks, be mindful of W. Va. Code § 23-4-7a(e), and issue timely suspensions and closures where appropriate. 

Everyone knows that New Jersey has a minimum rate for temporary disability benefits, but it is not as widely understood that New Jersey also has a minimum rate for permanency.  In 2018 the minimum rate for temporary disability benefits is $241 per week.  But the minimum rate for permanency remains $35 per week, as it has for many decades.

Why is this important?  Part-time employment is at an all-time high in the United States, and millions of Americans have second jobs. There are many situations where an employee will have a high-paying full-time job but the injury occurs on the part-time job.  The question for adjusters and professionals is how to set the rate and thereby determine exposure and reserves.

Consider a cafeteria worker in a private business who works part-time earning $100 per week.  He falls, fractures his hip and develops problems with walking.  What do we pay this worker for temporary disability benefits?  The answer is $241 per week until he reaches maximal medical improvement or can return to work either full-time or on a light duty basis.  It does not matter that $241 per week is higher than the wage of $100 per week.  That is the minimum rate.

Now fast forward to the permanency stage of the case.  The injured worker has had a hip replacement and has permanent gait issues.  The Judge of Compensation has reviewed the permanency estimates for both sides and recommends 50% permanent partial disability as a compromise for settlement purposes.

What do we pay this worker for a 50% award?  He is back to work at the cafeteria job and back to work full-time at his regular job at a grocery store, but he clearly has objective evidence of a significant impariment.  The rate chart which we all have at our desks says that 50% permanent partial disability equates to 300 weeks of compensation at a rate of $657 per week for a 2018 injury for a grand total of $180,600.   But remember that his wage is $100 per week in the part-time job.  That is the wage we focus on, not the worker’s full-time job at the grocery store.  Can we pay less than $241 per week, which is the minimum for temporary disability benefits?  Yes we can because there is a different minimum for permanency purposes.

This is an area of practice that every good practitioner must master.  We do not pay $180,600 over 300 weeks.  That would be an enormous overpayment.  We take the wage of $100 and multiply it by 70% for a rate of $70 per week.  We then multiply $70 per week times 300 weeks and get an award of $21,000.  That is about $160,000 less than the rate chart provides for someone with a 50% disability!

So the lessons in understanding the minimum rate for permanency are crucial to grasp.  Countless workers’ compensation cases get overpaid for failure to understand that the minimum for permanency is far less than the minimum for temporary disability benefits.

*  Remember not to use the rate chart on your desks for low wage employees. The rate chart is only relevant for high wage employees

*  Do not count the other job’s wages in New Jersey in calculating the amount due for temporary disability or permanent disability purposes.  You use the wage for the job where the injury occurred.

*  For permanency awards, take the average weekly wage, multiply by 70% and that becomes what we refer to as the “capped rate.”  The rate never goes higher than that number.  In the above case, the capped rate is $70 per week.

*  Set the wage and rate at the start of the case for both temporary and permanency purposes.  All accurate reserves and exposure analysis depend on this.

*  We do not reconstruct wages for temporary disability benefit purposes.  In some cases a worker’s part-time wage may be reconstructed to a 40-hour week if the worker can show a permanent diminution of working ability.  It is our position that someone who is back to work on both jobs cannot meet this test for reconstruction of wages.

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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. 

On August 24, 2018, Governor Murphy signed a bill that for all practical purposes ends the right of employers to make bona fide offers of permanent partial disability free of counsel fees.  The statute that enabled employers to make bona fide offers within 26 weeks of maximal medical improvement, or return to work, whichever is later, without the offer being feeable, was passed on April 3, 1928.  For almost a century, employers made such voluntary offers to tide injured employees over while their workers’ compensation cases were pending.  The inducement to employers was the savings on counsel fees.  Neither petitioner nor respondent paid a counsel fee on the amount of a timely voluntary offer.

Under the new law signed by the Governor, counsel for petitioners are entitled to a fee on all benefits paid to the petitioner if those payments occur after the date of a signed agreement between counsel and the injured worker.  An employer can still make an offer of permanency if the employer so desires and get a dollar credit, of course, but for practical purposes there will be no way to know whether the voluntary offer will be feeable.  There is no obligation on the part of the injured worker to disclose to the employer or carrier whether he or she has a signed agreement with counsel.  In many cases the adjuster may be well aware that the injured worker has an attorney and can therefore infer that there is an attorney-client relationship.

One question practitioners have is whether an attorney for the injured worker can still agree with the employer or carrier not to take a fee on a voluntary offer of permanency as an inducement for such an offer to be made.  Voluntary offers of permanency are popular with injured workers because they help with the employee’s finances while the case is pending.  This sort of agreement by petitioner’s counsel to waive a fee on an amount offered would almost certainly be honored by a Judge of Compensation, even if there is a written agreement predating the offer of permanency.

One other important legislative development in New Jersey is the potential loss of the “reverse offset.”  New Jersey is one of 15 states that has an agreement with the Social Security Administration giving the offset for total disability payments to the employer.  In most states the offset goes to the Social Security Administration.   In a reverse offset state like New Jersey, workers’ compensation benefits in total disability award cases are reduced by the amount of SSDI benefits in certain circumstances.

The proposed 2019 federal budget eliminates the reverse offsets in the 15 states that currently are permitted to offset against SSDI benefits.  There is a formula that limits the employee to 80 percent of the employee’s average current earnings between workers’ compensation and SSDI benefits.  In New Jersey, the benefit from workers’ compensation is reduced rather than SSDI in achieving the 80% limit.  This has saved employers and carriers countless millions of dollars over the years.  The current budget proposal would eliminate this practice in all 15 states that have a reverse offset.  The reason for the budget proposal is that it will allegedly save the federal government $164 million over 10 years.

Thanks to Craig Livingston, Esq. for bringing this budget proposal to our attention.  Employer groups need to speak to their federal legislators about opposition to this budget proposal.  This would be a very costly change for New Jersey employers, and such a change will generate much more litigation in total disability claims.

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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 hear the term “idiopathic claim” quite frequently in workers’ compensation, but what does it really mean?  To begin with, “idiopathic” is a combination of two Greek words:  “idio” relating to “one’s own” and “pathic” suggesting suffering or disease.  It has come to mean any disease or condition of unknown cause.  Lawyers and practitioners have borrowed this term to argue in workers’ compensation that if a condition is idiopathic, it must be considered not causally related.  Yet the word “idiopathic” does not appear anywhere in the New Jersey Workers’ Compensation Act, and there are precious few New Jersey cases that even refer to it.

A more useful way to understand the defense is to think about the two fundamental requirements for any workers’ compensation claim:  the injury must occur during the course of employment, and the injury must arise from employment.  So a police officer is walking down steps at work and feels sudden pain in his knee.  He does not fall; he does not strike the ground.  A piece of bone broke off in the knee spontaneously for no known reason.  Is this compensable?  No, according to Meuse v. Egg Harbor Township Police Department, No. A-4553-90 (App. Div. May 6, 1992).  It is idiopathic, or more precisely, the injury did not arise from the employment.

Another way of restating this is that for an injury to be work related, it must occur during work and the premises at work must contribute to the injury.  In the above Meuse case, work had nothing to do with the injury.  It could have happened anywhere and it was pure accident that the bone broke off while walking at work.  The act of walking which the officer was doing was no different than his walking anywhere else.

Another example:  Iesha is getting ready to go home on a snowy winter day.  Her shoulder has been painful for weeks from heavy shoveling at home.  She puts on her winter coat, and as she raises her right arm, she feels a tear in the shoulder.  She is diagnosed with a rotator cuff tear.  This happened at work, but did work cause the injury to occur?  Arguably no, because Iesha puts on her winter coat all the time, whether at home or at work.  She did not slam into a door or bump into another employee when she was putting on the coat.  The shoulder just spontaneously tore while she was putting her coat on.  This is similar to the Meuse case.  The injury did not arise from work and would be considered idiopathic.

What about an employee who wears three inch platform heels to work.  While walking down the corridor, she turns right to go to the cafeteria for a cup of coffee. As she turns right, her right foot falls out of the platform shoe and she badly sprains her ankle at that very moment.  She does not fall and hit the ground.  Defense would concede that this meets the first test: it happened at work.  But did it arise from work?  Arguably no.  Work did not cause this to happen at all.  The bad sprain was produced by the act of walking with three inch platform heels.

Suppose in the above example that the employee with the platform heels slips and falls as her shoe is coming out.  She braces herself with her right hand, and she fractures the hand in two places while trying to protect herself from the fall on a tile floor.   Is the hand injury compensable?  Well, the injury occurred during work hours, and employees are generally covered while going for a cup of coffee on premises.  The act of falling and striking the hard ground caused the employee to fracture her hand.  This not only happened during work but the work premises – the hard tile floor – caused the hand to fracture in two places.  The floor is part of the work premises, and this hand injury is likely to be found work related.

In short, when we think of idiopathic claims, the better analysis is whether the injury arises from work or just from personal activities that could have happened anywhere.

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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. 

Last month we reported on fraud investigations pertaining to healthcare providers and pharmacies.  According to a recent Dallas Morning Newsarticle, such investigations are intensifying and expanding. The FBI is conducting raids of medical businesses in the hunt for further proof of illicit kickback arrangements in which doctors refer patients to specific pharmacies in return for remuneration. 
 
Most recently, Next Health, a Dallas-based network of labs and pharmacies, and its successive owners, Critical Health Care Management, were subject to search following a $100 million lawsuit filed by United Healthcare that the companies were involved in a kickback scheme. The owners of both businesses are already charged with health care fraud in another federal case involving Forest Park Medical Center. 
 
Among the allegations leveled against Next Health: that their pharmacies issued animal drugs, that they manipulated the ingredients of compounds to increase costs, and that unnecessary genetic and drug tests were administered as part of a “wellness study.” 
 
Other healthcare companies facing federal scrutiny include Medoc Health Services, Southwest Laboratories, Trilogy Pharmacy, and the ADAR Group.  However, the eight defendants from Ability Pharmacy may be the most impudent of all.  They are charged with committing a $158 million fraud for inflating the costs of so-called compound pain creams: on at least one occasion, one container of the miracle cream cost them $15.00 to produce; they charged $28,000.00 for it. That’s a mark-up of 186,667%. 

-  Copyright 2018,Dan Price, Stone Loughlin & Swanson, LLP

The Division of Workers' Compensation recently held hearings on the DWC proposed rules intended to provide guidelines for  penalties for Carrier administrative violations. The proposed rules, required by the Legislature, grew out of complaints by stakeholders that the Division's current method of levying penalties were inconsistent of overly harsh with little explanation of how a penalty was derived.

In Senate Bill 1895, the Legislature amended the Texas Labor Code Section 415.021, to require the Division to adopt rules to provide a degree of consistency and fairness to the administrative penalties imposed by the Division: