State News

On December 28, 2015, the Division announced that the interest and discount rate as of January 2,
2016 will be 4.19 %. The rate is effective as of January 1, 2016, and will remain in effect through
March 31, 2016. The rate was previously 3.96 %.
The Division is required to compute and publish the interest and discount rate quarterly, on January
1, April 1, July 1, and October 1. Prior to January 1, 1991, the rate was fixed at 4%. As of June 17,
2001, however, the Division is required to calculate the rate based on the treasury constant maturity
rate for one-year treasury bills.

A Dallas doctor and an Arlington pharmacist are among dozens charged in a "pill mill" operation
in Texas and Louisiana that allegedly hired homeless people to pose as patients and obtain
prescriptions for pain medications.
Richard Andrews, DO (of Dallas) and pharmacist Ndufola Kigham (of Arlington) were arrested on
January 20, 2016 on federal charges of conspiracy to distribute a controlled substance. The
indictment alleges that the clinic, McAllen Medical Clinic, allegedly handed out prescriptions for
more than 150,000 oxycodone pills between January 2013 and July 2014, despite knowing "there
was no legitimate medical purpose" for them. Prosecutors involved in the case described that these
operations typically utilize drivers to pick up recruits to pose as patients. The recruits are given
money to pay for their visit to the clinic, and are paid a fee (usually around $30) for their work. The
recruits are coached on what to say to get a specific prescription. The driver takes them to the
pharmacy and pays for the prescription; the drugs are then sold on the street for a profit. If convicted
of the conspiracy charges, Dr. Andrews and Dr. Kigham face up to 20 years in federal prison and
$1 million in fines.

Effective February 1, 2016, Fentanyl Transdermal Patches, MS-Contin, Levorphanol
(Levo-Dromoran), and Morphine ER/Naltrexone (Embeda) will change status from "Y" to "N" drugs
in the ODG's Appendix A. Accordingly, beginning February 1, 2016, prescriptions for these drugs
will require preauthorization. The Division is encouraging system participants to discuss and
coordinate the ongoing course of treatment of claimants who are currently being prescribed these
drugs.

The Division announced it will host two education conferences in 2016: one in Austin and one in
Dallas. The Austin conference will be September 19 and 20 at the Crowne Plaza Austin Hotel, and
the Dallas conference will be October 24 and 25 at the Renaissance Dallas-Richardson Hotel. The
conferences will be geared to health care providers, medical office staff, employers, employee
organizations, carriers, and third party administrators, and will feature general and breakout sessions
on a variety of topics and issues in the Texas workers' compensation system. Conference registration
will be available beginning Spring 2016.

Air Evac EMS, Inc., a provider of emergency air ambulance services, has filed suit in the U.S.
District Court for the Western District of Texas seeking declaratory and injunctive relief. Air Evac
seeks a declaration that the Airline Deregulation Act (ADA) preempts Texas Labor Code Sections
401.001–401.026, and related regulations (which establish a fee schedule and fee guidelines for
reimbursement for air ambulance services to workers' compensation claimants) as applied to
federally-regulated air carriers. Air Evac also seeks to permanently enjoin the Division from
enforcing any provision of the Texas Labor Code (and accompanying reimbursement rules) that cap
the price for Air Evac's services. Alternatively, Air Evac is requesting that the Court declare Texas
Labor Code §§ 415.021, 415.0215, 413.042, and any other section, rule, or regulation that
establishes or limits the price or rate charged, inapplicable to air ambulance providers, and to
permanently enjoin the Division from enforcing these statutes and regulations against air ambulance
providers.
Air Evac claims that the ADA preempts the above provisions because "the ADA requires that it is
the free market, not administrators or courts, that sets an air carrier's prices." The complaint alleges
that the Division establishes and enforces a fee schedule and fee guidelines under state law and
regulations that limit the amount that air ambulance providers can receive for emergency
transportation of injured workers, and that this reimbursement rate is "well below Air Evac's billed
charges, and the usual and customary fare it charges for its services." Air Evac alleges that the ADA
expressly preempts any state law or regulation that purports to restrict or economically regulate the
prices or services of air carriers within the United States, citing 49 U.S.C. § 41713(b)(1).
The complaint alleges that in 2015, Air Evac provided air ambulance services to several workers'
compensation patients, and has been paid only a "small fraction" of its billed charges because of the
Texas Labor Code's reimbursement scheme.

There is talk of a push by the Division to scrutinize DD analysis letters that "exceed the intent of
Rule 127.10(a)(2)." Rule 127.10(a)(2) allows treating doctors and insurance carriers to send the
designated doctor an "analysis of the injured employee's medical condition, functional abilities, and
return-to-work opportunities." The Rule states that the analysis "may include supporting
information such as videotaped activities of the injured employee, as well as marked copies of
medical records," and the analysis "may only cover the injured employee's medical condition,
functional abilities, and return-to-work opportunities as provided in Labor Code §408.0041." (Labor
Code §408.0041 states that the treating doctor and the carrier may send the DD an "analysis of the
injured employee's medical condition, functional abilities, and return-to-work opportunities.") If
the carrier sends an analysis, a copy must be sent to the treating doctor, the claimant, and the
claimant's representative, if any. (Likewise, if a treating doctor sends an analysis, a copy must be
sent to the above parties, as well as the carrier.)
There is no indication as to what language, exactly, the Division interprets as "exceeding the intent"
of Rule 127.10(a)(2). We suspect, however, they may be looking at letters that advocate strongly
for a particular position, cite one-sided legal authority, and/or give instruction to the DD on how he
or she is supposed to opine. Word on the street is that the Division is already looking at samples of
letters it deems possible violators.More to come, surely. To that end, we recommend carriers (or vendors who send letters on their
behalf) review their DD analysis letters to ensure they are not running afoul of the intent of Rule
127.10(a)(2).

The Division announced early this month that it is maintaining the four-region split of Field Offices
(North, Coastal, South, and West) and the respective Team Leads over each (Cheryl Dean, Ken
Huchton, Carol Fougerat, and now Teresa Hartley, replacing Don Woods). In an interesting twist,
however, it was announced that the Team Leads will supervise not only the Hearing Officers in their
regions, but the BROs as well. The former BRO team leads will now be acting as "liaisons" between
the BROs and the new Team Leads.
Jennifer Hopens and Allen Craddock will serve as regional Managers over the North/West and
South/East halves of the state, respectively.

In an extension of the principle established in Cunningham v. Atlantic States Cast Iron Pipe Co., 386N.J. Super. 423 (App. Div. 2006), the Appellate Division ruled on January 22, 2016 that an employee who was fired while on light duty was not entitled to temporary disability benefits because the firing was not related to his injury.   

The case, entitled Katzenstein v. Dollar General, A-1141-13T3 (App. Div. January 22, 2016) arose from a compensable accident on August 22, 2012 when Mr. Katzenstein, a store manager, injured his knee, requiring authorized treatment.  On September 19, 2012, Dollar General returned Katzenstein to light duty work.  On September 28, 2012, Dollar General terminated Katzenstein for leaving several employees in the store without supervision while he went to the bank to deposit the previous day’s earnings.

Following his termination, petitioner Katzenstein filed for unemployment benefits; however, he was denied benefits because he was terminated for misconduct.  On October 17, 2012, Dr. Basch, the authorized treating doctor, opined that petitioner could not work due to his knee injury.  Katzenstein continued to treat with Dr. Basch, who maintained the light duty restriction with no lifting over 25 pounds. 

Katzenstein filed a motion for medical and temporary disability benefits in the Division of Workers’ Compensation. He relied on Dr. Basch’s opinion that he could not work at all because he needed knee surgery. 

On February 28, 2013, a consent order was entered providing that the parties agreed without prejudice that petitioner would receive temporary disability benefits from November 14, 2012 to February 14, 2013.  When the three months ended, Katzenstein filed a motion to enforce the order and to obtain ongoing temporary disability benefits. 

In his motion, Katzenstein misstated the reason he did not get unemployment.  He asserted that he lost his unemployment claim because “was unable to engage in employment due to the injury to my right knee.” He did not mention that he had been denied benefits because he had been fired for misconduct.  The Judge of Compensation focused on this misrepresentation and the fact that Katzenstein’s injury was not the reason he left his job. Rather, he was fired for misconduct.  The Judge noted petitioner was lacking in candor and also noted that there was no evidence that petitioner had any prospect of new employment.  Petitioner then filed an appeal.

One week before the Judge of Compensation issued his decision, the Board of Review overturned the denial of unemployment benefits on the basis that petitioner’s conduct was reasonable and not an act of misconduct.  

The Appellate Division applied the rule in Cunningham and said that the two cases were similar because the petitioner inCunningham was injured on the job, returned to work, but was subsequently terminated and found not entitled to continuing temporary disability benefits while recovering from surgery.   In this case petitioner was injured on the job, placed on light duty, and then fired for a violation of company policy.  The court said that the burden was on petitioner to prove that he would have worked.  The Court said, “In determining that Katzenstein was not credible, the judge found he was neither offered employment after he was terminated nor declined employment due to his work-related disability.”  The Court wrote:

Here, the judge of compensation properly applied Cunningham.  The judge assessed whether Katzenstein, after being terminated, had a promise or prospect of employment that he had to forego due to his disability.  In determining that Katzenstein was not credible, the judge found he was neither offered employment after he was terminated nor declined employment due to his work-related disability.

This case is an important one.  It is the first Appellate Division case dealing with the right of the employer to terminate temporary disability benefits following job termination after an employee has been placed on light duty. The case does not discuss the rule in Harbatuk, which is that an employer can terminate temporary disability benefits to someone who turns down light duty.  This employee accepted light duty and presumably thought his temporary disability benefits would continue until he could either return to work full duty or until maximal medical improvement.  The Katzensteincase now applies the Cunningham rule to situations where someone is fired while on light duty for reasons unrelated to the work injury.  Petitioner was not able to show that he was fired because of his injury or that he had prospects of employment which he was unable to perform because of his injury. 

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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. 

Penelope Bertolotti worked for Autozone, Inc. as a Divisional Human Resources Generalist.  She was hired in early 2012 and sought a leave of absence due to personal illness on October 15, 2012.  She returned to work on October 29, 2012 only to request another leave of absence commencing on November 5, 2012.  At first her doctor put her out of work until December 3, 2012, but in subsequent notes he kept her out of work until February 1, 2012.  Her doctor noted that she would need surgery for her condition, which was gastroparesis, an incurable disease that affected Bertolotti’s ability to digest foods and liquids.  She wore a pacemaker to assist in digestion.  Bertolotti ended up having surgery on January 3, 2013.

In a letter dated December 12, 2012, AutoZone advised Bertolotti that the company intended to replace her as Regional HR Manager but would attempt to place her in another position at such time as she might return to work. 

Bertolotti did not return to work on February 1, 2013.  Her physician indicated that he anticipated her new return-to-work date as March 28, 2013.  The doctor added certain permanent restrictions such as no exposure to theft detectors, power stations and no excessive or repetitive bending, twisting or stretching.  Plaintiff later contacted her supervisor to ask what position she would be offered when she could return to work.  She said she needed to know what the job would be to determine if she could perform it.  Her supervisor responded that he would not engage in discussions about accommodations until such time as Bertolotti was ready to return to work.

The next note that Bertolotti produced was on April 1, 2013, which added some other permanent restrictions which would remain in effect until May 24, 2013, but the doctor still did not provide a return-to-work date. 

On April 11, 2013 AutoZone wrote to Bertolotti to advise that the company hired someone to replace her as the Regional HR Manager, adding that when she could return to work, the company would engage in the interactive process with her. 

On May 24, 2013, Bertolotti’s doctor prepared another note stating that she could return to work without any restrictions effective August 21, 2013.  Bertolotti later sued under the New Jersey Law Against Discrimination.  After completion of discovery, AutoZone moved for summary judgment.

Plaintiff argued that there was direct evidence of discrimination by virtue of the December 12, 2012 letter from the company. That letter noted that plaintiff was not eligible for FMLA (having worked less than a year) and that she would be replaced as Regional HR Manager.  AutoZone countered that plaintiff was not qualified to perform the essential job functions because she had never been released to return to work.

The key document in the case was the December 12, 2012 letter.  Plaintiff argued that this letter proved disability discrimination. AutoZone argued that the letter did not really matter because the company did not actually terminate her position in December 2012 but waited until April 2013.  The Court disagreed:  “However, the crucial question is not how long it actually took Plaintiff to recover, or how long it took Defendants to hire a new employee, but what Defendants knew and expected of Plaintiff’s condition at the time they decided to remove her from the position of Regional HR Manager.” Plaintiff’s supervisor testified that the decision was made in December 2012 to replace her because of the uncertainty of her medical condition.  This decision was made at a time when the company expected plaintiff to be able to return to work by February 1, 2013.

The Court acknowledged a key principle of New Jersey law, namely that an employer is not required to provide a disabled employee an indefinite leave of absence if such a request would pose an undue hardship on the employer.  “Here, however, Plaintiff was not seeking an indefinite leave of absence at the time Defendants decided to remove her as Regional HR Manager.  She had an anticipated return date of February 1, 2013.  At that time, Defendants had no reason to believe that Plaintiff would not be returning on February 1, 2013 as planned.”

The Court was also critical of AutoZone for not engaging in the interactive process in a timely manner.  The Court noted that in 2006 the New Jersey Administrative Code was amended to remove language that exempted employers from engaging in the interactive process only when disabled employees were “presently” able to perform their job duties.  It said, “The interactive process requires employers to make a good faith effort to seek accommodations.”

Once Plaintiff requested an accommodation, Defendants were required to do more than tell Plaintiff that she could not return to work without a release.  While defendants argue that they needed to know a date certain for recovery and a medical release before engaging in the interactive process, at least one court in this district has rejected a similar argument. . . . ‘[t]he law does not require that the employer know that an accommodation is possible before making reasonable efforts to identify an accommodation.  Instead, the law requires an interactive process, the purpose of which is to search out accommodations that might suffice, not to explore those obvious to the employer before the process even occurs.’

For New Jersey employers, this case is a warning shot on the issue of the need for employers to engage in the interactive dialogue once an employee requests accommodations and not to wait until the employee proves he or she can return to work.  The problem with the defense in this case centered on the December 12, 2012 letter which the Court noted came only after three weeks from the commencement of plaintiff’s leave of absence.  The Court clearly thought that the company may have jumped the gun so soon after the leave began, allowing a jury to decide whether the company indeed acted in a discriminatory manner. 

This case reaffirms the rule that a request for an indefinite leave of absence is almost always unreasonable.  But what is a reasonable period of time?  There is no hard and fast rule but clearly, this Court is saying that three weeks did not seem reasonable in the context of these facts.  The Court felt that it was problematic for AutoZoner to make a decision to terminate an employee three weeks after commencement of leave,full knowing that the employee at that time expected to return to work in a couple of months.  One suspects that the outcome of this case would have been different if the employer had waited until April to advise that it was removing plaintiff from her position.  By that point in time, plaintiff still had not obtained a return to work date, and the company would have had a stronger argument.   The Court also questioned the company’s position that the HR position was so critical  that it had to replace plaintiff in December 2012.   If that were true, why did the company wait another four months to hire the replacement and how did the company manage for that four month period?  These questions clearly bothered the Court and raised questions for the jury to eventually address regarding the intent of the December 12, 2012 letter.

            This case can be found at Bertolotti v. AutoZone, Inc., 32 AD Cases 435 (D. N.J. September 22, 2015).  

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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 Monday, January 11, 2016, Governor Chris Christy issued vetoes of two bills long supported by the petitioners’ bar in New Jersey and strongly opposed by employers and carriers. 

S-374/A-3403 involved legislation sponsored by attorneys for injured workers to increase their legal fees.  This particular legislation was aimed at voluntary offers that employers have been making for many decades under the law.  N.J.S.A. 34:15-64 provides that if an employer makes a voluntary offer of permanency within 26 weeks of the date of maximal medical improvement or return to work, whichever date is later, the employer pays no counsel fees on the amount offered, and neither does the injured worker.  This provision is an inducement to employers to make offers of permanency long before the case settles.  The voluntary offers put money quickly in the hands of injured workers and save counsel fees for both parties. 

Claimants’ attorneys sought to eliminate the benefit to the employer and employee of not paying counsel fees on the amount offered.  The bill was pushed hard by attorneys for injured workers solely to augment their legal fees even though this would have meant that injured workers would pay more as well as employers.  For example, if an employer offered $5,000 early in the case within a few weeks of maximal medical improvement, the proposed bill would allow the claimant’s attorney to obtain a fee of $1,000 on the $5,000 offer.  That $1,000 fee would be paid $400 by the injured worker and $600 by the employer.  Current law provides that the claimant’s attorney gets no fee on the $1,000 early offer.  But current law does permit the claimant’s attorney to obtain a fee on any benefits paid to claimants at the end of the case in excess of the amount of the early offer.

S-264/A-1347 involved a series of proposals targeted to benefit certain public safety workers.  One of the provisions of this bill would create a rebuttable presumption that any cancer must be presumed to be work related to a New Jersey firefighter, if that firefighter has seven years of service.  In other words, even if the firefighter developed skin cancer in his foot, the judge must presume that it is work related unless the employer can prove that it is not.  All internal cancers – colon, prostate, liver, bladder, etc – would be presumed to be work related. 

Another aspect of this bill provided that illness due to vaccines received in connection with an employee’s employment would be work related, if the vaccine pertained to potential bioterrorism or epidemics.  This proposal applied to all employees, not just public safety workers. 

The bill also covered public safety workers who get exposed to communicable disease, biological warfare or epidemic-related pathogen in the course of employment.  Such workers would be covered under workers’ compensation as far as medical treatment even if the worker does not have the disease.  Should the worker subsequently contract the disease there is a rebuttable presumption that the condition is work related. 

While the Governor rejected these two bills, he did pass one less significant bill which raised the amount that an evaluating physician can receive to $600 for an evaluating report.

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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.