New Jersey has a sensible provision that protects employees of subcontractors who are injured on construction jobs.  If an employee of a subcontractor is injured on a job, and the subcontractor has no workers’ compensation insurance, the injured employee becomes covered by the general contractor’s workers’ compensation policy.  But what if the injured employee instead decides to file a civil suit against the general contractor for negligence?  Does the general contractor’s liability insurance policy cover the civil suit? Can the injured employee sue the general contractor and obtain workers’ compensation from the general contractor?

These questions were answered in DaSilva v. JDDM Enterprises, LLC, David Cohen, t/a JDDM Custom Construction, A-3302-16T2 (July 27, 2018).  The case involved an injury to Mr. DaSilva.  He was working for Hand Brothers on a construction job.  Hand Brothers was a subcontractor of JDDM, the general contractor.  DaSilva fell one story through a cut-out stairwell on the job and suffered injuries.  Hand Brothers had allegedly presented a fake certificate of insurance to JDDM and actually had no compensation coverage.

DaSilva sued JDDM and its principal, David Cohen, seeking damages in a civil action.  JDDM referred the suit to Utica Insurance, its liability carrier.  Utica declined coverage because its policy excluded workers’ compensation injuries.  JDDM and Cohen then filed a third-party declaratory judgment action against Utica, seeking an injunction to compel Utica to defend NJJD and Cohen in the civil action.  Utica then moved for summary judgement arguing that the declaratory judgment suit must be dismissed as Mr. DaSilva’s injuries arose from work. Utica further contended that DaSilva was covered by JDDM under N.J.S.A. 34:15-79 because JDDM was the general contractor.

The trial judge granted summary judgment in favor of Utica.  JDDM and Cohen settled the civil claim with DaSilva and then appealed the decision to let Utica out of the case.  The Appellate Division reviewed the language contained in Section 79.  “Under this provision, a contractor who retains a subcontractor becomes liable for workers’ compensation benefits owed to the subcontractor’s employees if the subcontractor does not provide workers’ compensation insurance.”

The Appellate Division also took note of the fact that JDDM’s workers’ compensation carrier in fact admitted liability under Section 79 to DaSilva. The Appellate Division ruled that Utica’s policy excluding coverage for benefits that are provided or are required to be provided under workers’ compensation was valid.  Since JDDM was required to provide workers’ compensation coverage under Section 79, Utica was well within its rights to deny coverage on the civil suit.

What about the right of DaSilva to sue the general contractor while at the same time asserting coverage for workers’ compensation against the general contractor under Section 79?  Does the exclusive remedy provision apply barring his civil law suit?  The Appellate Division commented as follows: “Because general contractors are not part of an employment contract between a subcontractor and its employees, they are ‘not required to provide workers’ compensation coverage, and do not enjoy the immediate employer’s immunity from tort liability,” citing to Eger v. E. I. du Pont de Nemours Co., 110 N.J. 133, 137 (1988).

So the Court was saying that DaSilva’s civil law suit against the general contractor was not barred under the exclusive remedy provision. That may seem unfair to the general contractor.  However, Section 79 does allow the general contractor to full reimbursement from the subcontractor which failed to carry insurance.  In addition, there would be subrogation issues here under Section 40.  DaSilva had a double recovery here.  He settled his civil suit against the general contractor and obtained workers’ compensation benefits from the general contractor by virtue of Section 79.  Therefore, the worker’s compensation carrier would be entitled to assert subrogation rights and thereby reduce its obligation to DaSilva.

Thanks to our friend Ron Siegel, 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. 

West Virginia Supreme Court Impeachments - Latest Developments and Update

August 9, 2018

On August 7, 2018, the Judiciary Committee of the West Virginia House of Delegates voted to move forward with 12 articles of impeachment against four sitting justices of the Supreme Court of Appeals of West Virginia stemming from alleged overcompensation of senior status judges, improper use of state property, and inappropriate use of state funds. Articles of impeachment were brought against Justices Allen Loughry, Margaret Workman, Robin Davis, and Beth Walker. No articles were issued against Justice Menis Ketchum, who previously resigned his position on the Court. Justice Ketchum's seat will be on the ballot in the November 2018 general election. Prior to that election, his position on the Supreme Court could be filled by an appointee of the Governor of West Virginia.

The full House of Delegates is scheduled to convene on Monday, August 13 to consider the articles of impeachment put forth by the Judiciary Committee against the four remaining justices. Any articles of impeachment approved by the House of Delegates will go to the state Senate for trial. Impeachment of any justice would require a 2/3 vote in the Senate.

This is an historic event in West Virginia politics and for the judicial branch, for which the implications are unprecedented. Many questions remain regarding how cases on appeal before the Supreme Court will be addressed. The Supreme Court is currently in recess, with case conferences for the coming term scheduled to begin on August 28, 2018. The Court is scheduled to hear the first oral arguments of the new term on September 5, 2018.

This situation is fluid with many variables in play. Spilman is monitoring the situation on a daily basis, and will keep you updated with any breaking news. If you have specific questions, reach out either to your Spilman contact, or Andrew P. Arbogast (Chair, Litigation Department) aarbogast@spilmanlaw.com, or Don C. A. Parker (Chair, Appellate Group) dparker@spilmanlaw.com for more information.

Legislative Update by Attorney Alison Stewart       

WCES - Workers' Compensation Electronic System         

A new electronic filing system is tentatively scheduled to be implemented beginning in December of 2018. The new system will be known as Workers’ Compensation Electronic System, or WCES (pronounced “wick-ess”). Training will be provided by the Iowa Division of Workers’ Compensation for attorneys and other stakeholders who will be required to use the system. It is the intention of the Division that the system will provide for electronic filing of all pleadings and documents with the Division. The new system will also provide for more efficient scheduling of hearings, comprehensive case management, and greatly improved EDI transactions. The proposed administrative rules relating to the implementation of this system were recently sent out for comment and we are now waiting for them to be adopted. These rules will instruct parties how to appropriately navigate the new system.

CourtCall 

The Division of Workers’ Compensation is now providing a system to conduct hearings by phone or video through a system called CourtCall. This system allows attorneys and parties to avoid travel time and the cost of commuting to a hearing location. The system is currently available at the Des Moines hearing venue for any hearing the parties and the hearing deputy agree to. It may also be available for road venues with advanced arrangements. There are some expenses associated with use of this program. The cost is $45 for the first 45 minutes and $12.50 for each 15 minute increment thereafter. This could be an excellent tool for remote employer witnesses, for example.

More information on these systems can be found at:  https://www.iowaworkcomp.gov/news-and-updates

As discussed in last month’s newsletter, attorneys’ fees are a hot topic of discussion in the Texas workers’ compensation system. With the recent indictment of a claimant’s attorney alleging fraudulent billing, as well as the revelations of some incredibly high hourly billers in the system, the Division is now weighing in on the issue. Tim Riley, Deputy Commissioner for Compliance and Investigations, issued a July 11 memo to remind attorneys of the Division’s requirements for submitting fee applications as well as the Division’s right to enforce compliance. Deputy Commissioner Riley specifically warns attorneys that approval of an application for attorney’s fees does not foreclose the possibility of an enforcement action related to the application.

The full memo is available on the TDI Website.

-  Copyright 2018, Stone Loughlin & Swanson, LLP

According to an article in The Texas Tribune, Governor Greg Abbott’s office will be reviewing all Texas agency rules before they are posted in the Texas Register for public comment. Luis Saenz, the Governor’s Chief of Staff, wrote a letter to the agencies saying, “Prior to publication of a proposed rule in the Texas Register, the Office of the Governor will review the Notice of Proposed Rule as well as the agency’s internal analysis of the rule.”

Governor Abbott claims this approach will “eliminate redundancies and inefficiencies, and provide a dispassionate ‘second opinion” to the proposed agency’s rules.

While the move is intended to promote efficiency, it also significantly expands the power of his office. The process will ensure the involvement of the Governor’s Office in all agency rule-making decisions, including the Texas Department of Insurance and the Division of Workers’ Compensation.

Texas agencies have been directed to provide certain information to the Governor—including the draft rule and its expected impact on local employment and the economy—before posting the proposed rule in the Texas Register. The letter does not specify what power the Governor has over those proposed rules. 

For agencies that have statutory or programmatic deadlines for rule promulgation, this mandate will require them to reconsider their timelines, adding extra time to allow for gubernatorial review.

Click the link to read Governor Abbott's letter.

-  Copyright 2018, Stone Loughlin & Swanson, LLP

Computers, smartphones, and tablets are everywhere and seemingly make peoples’ lives easier.  A study conducted by UCLA found that young people spend upwards of 7 hours a day attached to their devices. Garry W. Small, et. al.,Healthy behavior and memory self-reports in young, middle-aged, and older adults, 26.6International Psycogeriatrics 981-989. 

The consistent use and dependence on these devices comes with some negative consequences.  Individuals who rely heavily on technology may suffer deterioration in cerebral performance such as short-term memory dysfunction. Research has shown that reliance on devices can lead to issues with memory and cognitive skills, dubbed “digital dementia.” “Digital Dementia” is a term coined by Manfred Spitzer and is used to describe how overuse of digital technology can result in the breakdown of cognitive abilities in ways that are commonly seen in people who have suffered head injuries or psychiatric illness. 

What impact does this have for employers and workers’ compensation carriers?  Digital dementia may become the new carpel tunnel syndrome, especially with older generations who were not exposed to technology before entering the workforce.  An employee could argue digital dementia is an “occupational disease” that naturally results from working with technology.

These “digital dementia” claims will likely be decided in a manner similar to “job stress” or mental trauma claims. The Texas Supreme Court has held that damage or harm caused by repetitious mentally traumatic activities does not constitute an occupational disease and is not considered a compensable injury under the Act.  However, if the event can be traced to a definite time, place, and cause, it could produce a compensable injury.  In most cases, it will be difficult for an injured employee to pinpoint a discernable time, place, and cause to the alleged “digital dementia,” because it is a “repetitive” type injury that occurs over time.

Click the link to learn more aboutDigital Dementia and the effects it has on the brain. 

-  Copyright 2018,Stone Loughlin & Swanson, LLP

Enrique Colon, a healthcare worker, was convicted of falsifying workers’ compensation claims.  Mr. Colon was indicted along with EME International, Inc. and two others on charges of engaging in organized criminal activity for over-billing for the exams. Mr. Colon was found guilty of submitting false medical claims to an insurer for more time than it actually took to perform functional capacity evaluations.

In response to the conviction, Cassie Brown, Commissioner of Workers’ Compensation, said: “Addressing fraud is vital to the health and success of the workers’ comp system here in Texas.  The [D]ivision is committed to protecting injured employees and policyholders from these schemes.”

Report suspected cases of insurance fraud by calling 1-800-252-3439 or visit www.tdi.texas.gov/fraud/.

-  Copyright 2018, Stone Loughlin & Swanson, LLP

In the past several years, there have been a litany of federal and state indictments (and convictions) for health care fraud involving healthcare providers and pharmacies. Most recently, a group of doctors, pharmacies, and federal worker advocates were indicted in connection with a compounded drug scheme that defrauded the federal workers’ compensation program and Tricare out of almost $40 million.

The court documents allege the fraud was coordinated by a Houston couple, John Cruise, CEO of the Injured Federal Workers Advocate Association, and his wife, Lashonia Johnson, the director of a group that helps federal workers who are injured on the job. The couple also ran a pharmacy in Texas that dispensed compounded medicine. The doctors involved in the scheme were allegedly taking kickbacks from Cruise and Johnson for prescribing expensive and unneeded compounds to federal workers referred by a therapy center.

-  Copyright 2018, Stone Loughlin & Swanson, LLP

Lynda Ferrari was injured at work falling down steps in April 2006.  She sought treatment for her right knee and lower back.  Dr. Joan O’Shea performed authorized surgery to address Ferrari’s right-sided herniated discs at L4-5 and L5-S1.  Ferrari experienced increased pain following surgery.  She saw multiple physicians after the surgery, seeking relief for her increased pain.

Ferrari filed a medical malpractice law suit on September 29, 2014 against Dr. O’Shea and Virtua Hospital.  The doctor filed an answer in January 2015 asserting that the law suit was barred by the statute of limitations.  Defendant relied on the employer’s IME in the workers’ compensation case performed by Dr. Anton Kemps in 2009.  In that report, Dr. Kemps opined that Ferrari developed arachnoiditis as a result of the surgery.  He provided an estimate of 5% permanent partial disability.  Defendant argued that more than two years expired from the date of Dr. Kemps’ 2009 report and the filing of the civil law suit.  The trial court ruled in favor of defendant and dismissed the case.

Ferrari appealed and argued that the two year limitations period should not have begun to run in 2009.  Both parties agreed that a medical malpractice case must be filed within two years of the accrual date, but New Jersey law makes clear that the cause of action does not accrue until the injured party discovers that he or she has an actionable claim.  Ferrari argued that the 2009 report from Dr. Kemps did not alert her that the surgery was a failure or that Dr. O’Shea may have committed malpractice.  It just said she developed arachnoiditis.

Ferrari maintained that she had no knowledge of potential malpractice until Dr. Kemps wrote another report in September 28, 2012.  In that second report, Dr. Kemps said that there was no indication that Ferrari “had any material placed within her disc spaces to replace the removed disc.”  He added that a review of the operative report did not show that any stabilization device was inserted to replace the removed disc.  There was also some evidence from a 2013 report of Dr. O’Shea that Ferrari experienced an additional herniation at the site of the operation at L4-5.

The Appellate Division disagreed with the trial judge.  “However, we agree with plaintiff that Dr. Kemps’ September 28, 2012 report was the first concrete information she received suggesting that Dr. O’Shea made a mistake in performing the surgery.  None of the other information defendant cites was reasonably likely to inform either plaintiff or her workers’ compensation attorney that Dr. O’Shea had done anything wrong.”  The Court added, “Until Dr. Kemps’ September 28, 2012 report, none of the doctors suggested that Dr. O’Shea was at fault.”

Based on this analysis, the Appellate Division reversed the dismissal of the civil law suit.  This does not mean that the Court found any evidence of medical malpractice:  it only means that Ferrari will have a chance to prove her medical malpractice case.

The case is interesting because it shows how an IME in a workers’ compensation case for permanency purposes can sometimes create the basis for a medical malpractice claim and indeed start the clock running on the injured worker’s potential civil law suit.  This is one compelling reason why parties need to read IME reports in workers’ compensation very closely.  Sometimes the tendency is to just focus on the overall percentage of disability and potential credits.  But both counsel have to pay close attention to discussions about the effectiveness of surgery.  In this case, the Appellate Division specifically noted that Ferrari’s workers’ compensation attorney would not have been alerted to potential malpractice until he read the September 2012 report.  Moreover, respondent’s lien rights depended on the revival of the medical malpractice law suit, so defense counsel must also be vigilant.  The case underscores why it often does not make sense for workers’ compensation counsel to hold onto IMEs until they get to court at a pretrial hearing.  A report such as this should be sent immediately to opposing counsel, since the Appellate Division in this case concluded that the cause of action accrued the very date of the September 28, 2012 report of Dr. Kemps.

This case can be found at Ferrari v. Joan F. O’Shea, M.D. A-3289-16T2 (App. Div. July 13 2018). We thank our friend Ron Siegel, 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.