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What's Hot in Workers' Comp

Appellate Division concludes judge relied on delays in litigation, prior to the entry of the order, to award maximum penalty.

Ripp v. County of Hudson, No. A-2972-20 (App. Div. Jun. 3, 2022) [approved for publication]

August 1, 2022

by Kiara K. Hartwell

The petitioner was injured in a workplace incident on February 11, 2013. He filed a workers’ compensation petition in June 2013, received benefits and was declared permanently disabled in 2016. On January 26, 2021, a judge entered an order for total disability, and it was undisputed that the employer was to pay a portion within 60 days of the order.

The petitioner filed a motion to enforce, seeking an additional fee and counsel fees, because the employer had not made the payment. It was noted that an answer to the motion was not in the record. It was undisputed the petitioner received his payment on April 12, 2021, 16 days after the due date, though the employer had not paid reimbursement of other expenses at that time.

Before the judge on May 11, 2021, the employer presented its argument that the third-party administrator did not submit the payment request in time, that this delay was due to the change in adjusters and COVID-19. The judge, in an oral decision, recognized some delays were inevitable due to the employer being a government entity and the involvement of an excess carrier. However, the judge noted the petitioner previously had to file motions to enforce to obtain his temporary total disability benefits. The judge also referenced the fact that the parties discussed voluntarily finding the petitioner totally disabled in August 2019 but that the settlement was not authorized until January 2021.

Although the judge found the employer’s explanation in the delayed payment of reimbursable expenses reasonable, a 25% penalty was imposed on the petitioner’s benefits due. The judge also indicated the prior delay in getting to settlement negatively impacted the petitioner. As such, she found the employer’s delay was unreasonable and imposed the maximum additional assessment.

The employer appealed, arguing the judge abused her discretion. The Appellate Division agreed, reversed and remanded. In the de novo review, the Appellate Division reviewed relevant case law, which notes a party’s obligations for timely payments, elimination of unreasonable delays and compliance with orders. Specifically, the Appellate Division noted that the Division of Workers’ Compensation adopted N.J.A.C. 12:235-3.16(h)(1)(i) for the additional assessment of up to 25% on any payment delay. However, the Appellate Division considered that the Legislature did not specifically define a presumptively unreasonable delay.

According to the Appellate Division, the judge erred in taking into account how long it took to settle the petitioner’s case after agreeing that he was totally disabled. As no payments were due until the order was entered, there was no delay for the first 60 days. Although the Appellate Division noted there was no standard of review of a penalty awarded due to a motion in workers’ compensation, after reviewing the standard for abuse of discretion, the Appellate Division found the judge mistakenly exercised her discretion. The Appellate Division concluded the judge relied on the delays in litigation prior to the entry of the order to award the maximum penalty, even though the delay was only 16 days and recognized there was a reasonable basis for the delay in payment.

 

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Firm Highlights

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

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Thought Leadership

U.S. Supreme Court Decides Key Issue Regarding Interstate Freight Broker Liability

Freight brokers are intermediaries.  They connect shippers of goods with trucking companies that transport those goods.  Freight brokers match a load of freight with a trucking company and oversee the logistics of the transportation. For a number of years there has been a division among the Federal Circuits regarding the potential liability of freight brokers when the trucking companies that they retain for interstate loads are involved in accidents.  At the center of this division was the Federal Aviation Administration Authorization Act of 1994 (FAAAA).  Some Federal Circuit Courts have held that state law negligent hiring claims against freight brokers were preempted by the FAAAA .  Other Federal Circuits Courts have held that even if preemption applied, the “safety exception” in the FAAAA saved state law negligent hiring claims from federal preemption.  On May 14, 2026, the U.S. Supreme Court addressed the conflict in Montgomery v. Caribe Transport II, LLC, et al, No24-1238. In that case freight broker C.H. Robinson selected Caribe Transport to haul an interstate load. The commercial truck driver employed by Caribe Transport allegedly caused an accident and the plaintiff, Montgomery, was seriously injured. Montgomery brought an action against the driver, Caribe Transport and C.H. Robinson. The allegation against C.H. Robinson was that it negligently retained Caribe Transport when it knew, or should have known, that it was an unsafe company. The Seventh Circuit Court of Appeals held that Montgomery’s claims against C.H. Robinson were preempted by the FAAAA. The plaintiff appealed to the U.S. Supreme Court.  The U.S. Supreme Court’s decision focused primarily on the safety exception in the FAAAA.  That provision provides that the FAAAA preemption “…shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” C.H. Robinson argued, as freight brokers historically have, that their function was not “with respect to motor vehicles” because they do not own trucks or employ drivers. They are merely intermediaries, connecting entities who need freight moved with entities who can do that job. Therefore, C.H. Robinson argued that preemption applied, not the safety exception. The U.S. Supreme Court did not accept that argument. The Court focused on the meaning of the phrase “with respect to” in the safety exception. The Court held that it means “referring to”, “concerning” or “regarding”. Therefore, writing for a unanimous Court, Justice Barrett concluded that “[r]equiring C.H. Robinson to exercise ordinary care in selecting a carrier therefore “concerns” motor vehicles—most obviously, the trucks that will transport the goods. So, Montgomery’s negligent-hiring claim falls within the FAAAA’s safety exception, which saves it from preemption.” Justice Kavanaugh, in his concurring opinion, noted the effect this ruling may have on freight brokers and their insurers throughout the country: Importantly, the Court's decision today should not be read to mean that brokers will routinely be subject to state tort liability in the wake of truck accidents. As even plaintiff's counsel stressed, brokers should be able to successfully defend against state tort suits if the brokers have acted reasonably and arranged transportation with reputable trucking companies. Tr. of Oral Arg. 27-29. In plaintiff's counsel's words, the brokers "just have to hire carriers that actually have a reasonable policy," and "the broker is not going to have a problem if it's asking the hard questions of the carrier." Id., at 42, 45. In addition, the proximate-cause requirement in typical state tort law should help protect brokers from excessive liability. Id., at 25. That said, the brokers rightly caution against naivete. In the real world, as the brokers forcefully respond, state tort law can be unpredictable, and the costs to brokers of litigation and insurance may be significant even when brokers prevail in lawsuits. Moreover, the costs of litigation and insurance, as well as the costs of brokers' conducting more substantial inquiries into trucking companies, will cascade through the economy and be paid in part by American consumers in the form of higher prices. The concerns expressed by the brokers are legitimate and weighty. The key point here is that freight brokers can no longer claim they are protected from negligent retention claims by the FAAAA (in cases involving interstate transportation). The challenge will be to determine what is considered ”reasonable efforts” used by brokers when retaining transportation companies. 

Thought Leadership

PA Middle District Dismisses Claims Against School District and its Superintendent, Principal, Special Education Director, and Classroom Teacher

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