NEW JERSEY WORKERS' COMPENSATION "EXCLUSIVE REMEDY OPTION" - SETTING THE IMMUNITY STANDARD

Defense Digest

By Lawrence Berg, Esq. and Deirdre Heine*

The onslaught against the exclusivity provision of the New Jersey Workers' Compensation Act continued with the New Jersey Supreme Court decisions in Tomeo v. Thomas Whitesell Construction Co., Crippen v. Central Jersey Concrete Pipe Company, and Mull v. Zeta Consumer Products. All three cases were decided by the court on May 22, 2003. In these cases, the Supreme Court delineated, and further weakened, the standard applicable to these claims and all but assured that these type of claims will increase in frequency.

To give some historical background, New Jersey enacted the Workers' Compensation Act ("the Act") in 1911 to address the problems facing injured industrial employees. Historically, many industrial employees injured in the workplace could not get financial compensation from their employers under traditional common law tort remedies. Although they were often at fault for the employee's injuries, employers used the common defenses of contributory negligence, assumption of the risk, and the "fellow servant" rule to bar injured employees from receiving any financial compensation. The Act helped to remedy this historical problem.

The Act represents a trade-off for both employers and employees. Injured employees give up their right to pursue potentially greater financial awards through common law actions against their employer in exchange for automatic entitlement to workers' compensation benefits. Similarly, employers accept absolute liability for workers' compensation benefits in exchange for immunity from common law tort actions.

The "bargain" struck by the Act is codified in Section 34:15-8, which is often referred to as "the Workers' Compensation bar" or "the exclusive remedy provision." This section bars an injured employee from filing a common law action against his employer, unless the employer engaged in an "intentional wrong" resulting in injury. The immunity also extends to co-employees. Section 34:15-8 states, in pertinent part, that:

If an injury or death is compensable under this article, a person shall not be liable to anyone at common law or otherwise on account of such injury or death for any act or omission occurring while such person was in the same employ as the person injured or killed, except for intentional wrong.

If an employer or a co-employee has engaged in an "intentional wrong," the statute allows the injured employee to pursue a common law action, rather than limiting the employee's financial recovery to workers' compensation benefits. Absent an "intentional wrong," however, employees can only receive workers' compensation benefits.

The two leading cases interpreting the "intentional wrong" standard are Millison v. E.I.du Pont de Nemours & Co., 101 N.J. 161 (1985) and Laidlow v. Hariton Machinery Company, 170 N.J. 602 (2002 ). Together, these cases created what is often referred to as the "Millison-Laidlow Standard." The Millison-Laidlow Standard provides a test to determine if particular conduct constitutes an "intentional wrong" and, thus, grants an injured employee the right to maintain a common law action. It is important to note that, even if an employee initially receives workers' compensation benefits, this does not bar him from pursuing a common law action at a later time.

Under the Millison-Laidlow standard, the employee must make a prima facie showing that he can establish the "conduct" and "context" prongs in order to survive a motion for summary judgment and proceed with a common law suit.

Prong 1 - "The Conduct Prong"

The first part of the Millison-Laidlow standard is the "conduct prong." Under this prong, the injured employee must establish that the employer knew, prior to the employee's injury, that the conditions that resulted in the employee's injury were substantially certain to result in harm or death to an employee. The Millison Court stated that, "We must demand a virtual certainty." Millison, 101 N.J. at 178. The court said that the mere knowledge and appreciation of a risk, short of substantial certainty, is not an intentional wrong. The exception to an employer's immunity is very narrow and limited. By adopting a strict substantial/virtual certainty standard, the court assures that only employers who act intentionally and who know there is a substantial certainty of harm will lose the immunity granted under Section 34:15-8.

What this means is that an employer commits an "intentional wrong" only if it knows of a dangerous condition AND knows that these conditions are virtually certain to result in harm or death to an employee if the conditions are not fixed. The court will look at the totality of the facts and, on a case-by-case basis, will determine if the facts of a case establish this prong. There is no bright line rule to apply in every case. In fact, the Laidlow court held that, even if there have been no prior accidents or close-calls resulting from the employer's conduct or dangerous conditions, this does not preclude the finding of an intentional wrong. "The absence of a prior accident does not mean that the employer did not appreciate that its conduct was substantially certain to cause death or injury." Laidlow, 170 N.J. at 622.

The Laidlow Court approvingly cited Restatement (Second) of Torts §8A which essentially states that an intentional wrong includes not only the employer's actions taken with a subjective desire to harm, but also instances where an employer knows that the consequences of their acts are substantially certain to result in harm. The Laidlow Court pointed out that "what is being tested here is not the degree of gravity or depravity of the employer's conduct, but rather the narrow issue of intentional versus accidental quality of the precise event producing injury." Laidlow, 170 N.J. at 612-613. All in all, this substantial/ virtual certainty standard creates a very high burden for plaintiffs to pierce the statutory immunity provided in 34:15-8.

The conduct prong is a question for the jury. Therefore, in order to survive a motion for summary judgment, the judge must only conclude that a reasonable jury could find that the employer knew with substantial/virtual certainty that the existing dangerous conditions would result in harm or death to an employee.

Prong 2 - "The Context Prong"

If a judge concludes that the employee has made a prima facie showing that the conduct prong can be satisfied, the employee must also meet the second prong of the Millison-Laidlow Standard, known as the "context prong." Whether this prong has been met is strictly a question for the judge, rather than the jury, to answer. Under this prong, the judge will look at both the employee's injury and the circumstances under which the injury was sustained and must determine: (a) if the injury is more than a fact of life of industrial employment, and (b) if the injury sustained was one that is beyond what the Legislature contemplated as being appropriate for inclusion under workers' compensation. Egregious levels of risk-exposure caused by willful employer misconduct will warrant remedies beyond workers' compensation. The Millison Court said that willful employer misconduct should not go undeterred. Employers may be subject to common law suits for injuries resulting from risks beyond what the Legislature contemplated as normal risks in the course of an industrial worker's employment. Employers who subject their employees to abnormal risks which are virtually certain to result in harm should not be able to hide behind the Act's immunity.

In considering the context prong in Tomeo v. Thomas Whitesell, the court examined the employer's behavior in terms of a social contract and questioned whether the behavior fell outside the realm of what is acceptable within the social contract. The court questioned whether the conduct of the employer violated the social contract in such a way that it is clear that the Legislature would never expect it to fall within the Workers' Compensation bar.

The Standard Applied

To get an example of what conduct constitutes an intentional wrong, consider the facts in Crippen v. Central New Jersey Concrete Pipe Company, et al. In this case, the employee was responsible for moving sand and gravel into loading hoppers. In order to activate a lever to regulate the inflow of sand and gravel, Mr. Crippen had to walk across a wooden plank and stand on a six-foot high unsecured ladder that rested on the wooden plank. Mr. Crippen fell from the plank into the sand hopper and suffocated.

In the Fall of 1996, Occupational Safety & Health Association (OSHA) cited the employer for hazardous conditions at the work site, including the conditions of the wooden plank. OSHA labeled the existing conditions as "serious," indicating that the existing conditions could result in a substantial probability of death or serious harm. OSHA ordered the conditions to be remedied by February of 1997, sixteen months before Mr. Crippen's death. The record showed that the employer failed to make these changes, although they made representations to OSHA that they were implementing changes.

The Crippen Court held that a jury could reasonably find that the employer had knowledge that its deliberate failure to fix the OSHA violations created a substantial certainty of injury or death to an employee. Secondly, the court held that the deliberate deceit of OSHA and the failure to fix dangerous conditions resulting in Mr. Crippen's death were not conduct that the Legislature would consider part of everyday industrial life.

Similarly, in Mull v. Zeta Consumer Products, the court concluded that disabling safety devices with a clear understanding of the likely result would satisfy the test. In an extremely troubling twist, the court accepted a report by an expert retained by the claimant to conclude that the employer had an appreciation of the risk.

The only bright spot in the trilogy can be found in Tomeo v. Whitesell. In Tomeo, the employee was injured when he reached his hand into the discharge shoot of a snow blower. Even though the safety device on the blower had been disabled, the court concluded that the risk was open and obvious and easily avoidable by common sense.

In summary, while paying lip service to the "intentional" requirement of the statute, the court has continued its erosion of the doctrine by allowing extraneous evidence to satisfy the "conduct" prong of the analysis. Further, by leaving the issue to a jury to decide, the court has exposed employers to costly discovery and the threat of potentially large damage awards.

*Larry is a shareholder in the Cherry Hill, NJ office and can be reached at (856) 414-6031 or at lberg@mdwcg.com. Deirdre is a law clerk in the Cherry Hill, NJ office and is attending Temple University Beasley School of Law.