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What's Hot in Workers' Comp

TOP 10 DEVELOPMENTS IN NEW JERSEY WORKERS’ COMPENSATION IN 2023

What’s Hot in Workers’ Comp, Vol. 27, No. 12, December 2023

December 1, 2023

by Kiara K. Hartwell

1.    The Appellate Division addresses the abuse of workers’ compensation judges’ discretion in awarding fees, costs and penalties.
Garzon v. Morris Cnty. Golf Club, No. A-1100-21 (App. Div. Dec. 23, 2022)

The Appellate Division addressed three cases regarding a judge’s abuse of discretion in 2022, including Garzon. In Garzon, the Appellate Division appeared to be so appalled by the abuse of discretion and the lack of any analysis in support of the fees, costs and penalties that it directed the case to be sent to a different workers’ compensation judge on remand. The Division’s decision pointed out that having the discretion to award fees up to a 20%, whether it be on medical and temporary benefits or permanency benefits, that authority “is not unbridled” and “cautioned against a reflexive application of a twenty percent award without a full analysis.” The Appellate Division conceded that “the amount of the award is a factor to be considered,” and it went on to explain that it has “limited significance in comparison to the more important factors including the nature and extent of the services and the responsibility involved.”

2.    The New Jersey Supreme Court finds insurance broker has duty to provide notice to LLC members of workers’ compensation coverage options.
Holm v. Purdy, 268 A.3d 1017 (2022)

The New Jersey Supreme Court found that an insurance broker has a non-waivable duty to an LLC to provide notice that workers’ compensation coverage is available to members of the LLC who can actively perform services on behalf of the LLC, but only if the coverage is elected when the policy is purchased or renewed. A member of the LLC died as a result of a work-related incident, and his widow filed a dependency claim in the workers’ compensation court. However, it was denied by the carrier, who argued the LLC had not elected coverage for its members. The widow then filed a civil suit against the insurance broker, alleging they were unaware they were not covered by workers’ compensation insurance and that, had they been aware, they would have elected to be covered. The Trial Court found the broker did not have a duty to inform the LLC members regarding their right to elect coverage. The Appellate Division reversed, and the Supreme Court upheld that decision.

3.    The Appellate Division affirms denial of motion for medical and/or temporary disability benefits based upon petitioner’s credibility issues and failure to establish objective evidence.
Richard Farhat v. Joe Leone’s, No. A-1311-21 (App. Div. Mar. 9, 2023)

The petitioner sustained a slip and fall while working for the respondent in December 2017. While the incident was reported, there was no injury identified. The petitioner treated three months later for his neck. He filed a Claim Petition and a Motion for Medical and/or Temporary Disability Benefits, requesting treatment to the low back based upon his expert’s recommendation. Testimony was taken, and the judge denied the Motion for Medical and/or Temporary Disability Benefits, noting that the petitioner recounted different versions of the accident throughout the medical records. The court further pointed to the credibility issues of not only the petitioner but also his expert. The Appellate Court affirmed the denial of the motion, indicating there were no errors in the findings of the workers’ compensation judge. 

4.    Bill S3095 was introduced in the Senate.

Bill S3905 concerns reduction of statute of limitations from six years to two years in medical fee disputes in workers’ compensation matters. On June 1, 2023, it was introduced in the Senate and referred to the Senate Labor Committee. Currently, case law indicates these types of claims are governed by the general six-year statute of limitations.

5.    The New Jersey Supreme Court affirmed the Appellate Division decision to reverse the trial court and reinstate the jury verdict in plaintiff’s favor.
Pantano v. N.Y. Shipping Assoc., et. al, No. A-19-22 (June 5, 2023)

The Supreme Court affirmed the Appellate Division’s decision to reverse the Trial Judge’s decision to vacate the jury verdict and award judgment to Marine Transport, Inc. In doing so, the court considered the application of the multi-factor test in Galvao v. G.R. Robert Construction Co., 179 N.J. 462, 471-73 (2004), to determine if a worker who negligently caused a plaintiff’s work injury is a “borrowed employee” of the plaintiff’s employer. The court then applied these principles to this case. In viewing the trial record in the light most favorable to the plaintiff as the non-moving party, the court found the trial judge erred in granting Marine Transport’s motion. While this would generally mean the case would be remanded for a jury to resolve the borrowed employee issue, due to the parties’ agreement, as the Rule 4:40-1 motion was denied, the court affirmed the Appellate Division’s decision to reinstate the jury verdict. This decision was authored by Judge Sabatino and joined by Chief Justice Rabner and Justices Patterson, Solomon, Pierre-Louis and Wainer Apter. Justice Fasciale did not participate. 

6.    On July 20, 2023, the Governor signed Bill A4832/S3309 into law, raising the maximum workers' compensation fees for evaluating physicians.

Bill A4832 was introduced on October 27, 2022, and referred to the Assembly Labor Committee. On February 13, 2023, it was report out of the Assembly Committee with Amendments for a second reading. S3309 was introduced on November 3, 2022, in the Senate and referred to the Senate Labor Committee. On February 9, 2023, it was report from the Senate Committee for a second reading. On March 20, 2023, it passed by the Senate (25-11) and was received in the Assembly.

This law raises the maximum workers’ compensation fees for evaluating physicians and expands circumstances for which physician legal fees are permitted. N.J.S.A 34:15-64 was amended the statutory language permits application effective immediately. The maximum fee was increased from $600 to $1,000 for expert reports. It also allows a psychologist, nurse practitioner, or licensed clinical social worker to be paid a fee for a report or testimony concerning course of treatment.

7.    The Appellate Division affirms interlocutory workers’ compensation order denying proposed section 20 settlement.
Gonzalez v. N.J. Transit Corp., No. A-1408-22 (Aug. 21, 2023)

The Appellate Division affirmed the interlocutory workers’ compensation order denying a proposed N.J.S.A 34:15-20 settlement. When the judge was presented with a proposed Section 20 settlement, before approving, the petitioner’s testimony was requested. In addition, the judge pointed out the defense permanency expert had provided permanency ratings on both the neck and back. The respondent appealed, which the Appellate Division granted, as well as amicus participation by the New Jersey Department of Labor and Workforce, Division of Workers’ Compensation. The Appellate Division noted the judge properly exercised her discretion to approve a Section 20 settlement based solely on an affidavit or to request testimony.

8.    The Appellate Division affirms workers’ compensation order denying petitioner’s motion for benefits.
Sykes v. George Harms Constr. Co. Inc., No. A-3320-20 (Sep. 28, 2023)

The Appellate Division affirmed the workers’ compensation judge order denying a petitioner’s Application for Medical and Temporary Benefits. The petitioner was working for the respondent when he suffered a work injury on April 30, 2019. After taking testimony, based on the fact that the petitioner lost consciousness and all witnesses testified that he was in a normal position in the seat, the judge found there was no evidence that his head hit any part of the cab. Rather, the judge found no evidence that the petitioner suffered the impact to his body and head and, rather, the evidence controverted it. He concluded the petitioner did not carry his burden of proof. The petitioner appealed. In applying the deferential standard of review to findings of fact, the Appellate Division affirmed for reasons expressed by the workers’ compensation judge, finding no reason to disturb the judge’s findings and decision.

9.    The Appellate Division affirms workers’ compensation orders, denying insurance carrier’s motion to dismiss for lack of coverage and finding petitioner was in course and scope of employment.
Pozadas v. Capital Iron Assocs., LLC and Hartford Underwriters Ins. Co., No. A-0162-22 (Oct. 30, 2023)

The Appellate Division affirmed two workers’ compensation orders. The petitioner was the owner and employee of the respondent, a structural steel company. An insurance policy, including workers’ compensation coverage for the petitioner, was obtained from Hartford, covering October 13, 2015, to October 13, 2016. The day after the policy expired, the petitioner was involved in a car accident while taking a longer route to enjoy the weather. He filed a workers’ compensation claim. Hartford filed an answer, denying coverage. Hartford was unable to produce any specific witnesses about the nonrenewal. As such, the judge denied Hartford’s original motion to dismiss with prejudice, holding coverage to be in effect, and rejected Hartford’s attempt to withdraw the coverage motion. Subsequently, another judge found the petitioner was in the course of his employment. Hartford appealed, but the Appellate Division declined to consider the due process argument as it was not raised below and rejected Hartford’s argument about course and scope of employment, noting the record supported the judge’s findings.

10.    The Appellate Division affirms summary judgment against employer due to the exclusive remedy provision of the Workers’ Compensation Act and summary judgment, in part, to an insurance carrier in excluding coverage for intentional wrong claims.
Cannon v. Bravo Pack, Inc. and Kraft Machines Inc. v. Employers Preferred Ins., No. A-1702-21 (Oct. 31, 2023) and Cannon v. Bravo Pack, Inc. and Bravo Pack, Inc. v. Employers Preferred Ins., No. A-1731-21 (Oct. 31, 2023)

In the first Cannon case, the Appellate Division affirmed an order granting summary judgment to the employer and dismissing all claims, cross claims and third party claims. The plaintiff sustained a left-hand injury the first day at work when attempting to remove a jam in a machine. He filed suit against his employer, who moved for summary judgment, arguing the exclusive remedy provision of the Workers’ Compensation Act barred the plaintiff’s claims. The judge determined the plaintiff did not have evidence to support a finding of substantial certainty of injury nor that this accident would fall into the narrow exception for injuries caused by an employer’s intentional wrong. The plaintiff appealed, but the Appellate Division found the employer’s conduct did not rise to the standard of an intentional wrong or substantial certainty of an injury.

In the second Cannon case, the Appellate Division affirmed the portion of an August 12, 2021, order granting partial summary judgment to the carrier as the insurance policy was clear in excluding coverage for intentional wrong claims. The relevant portion of the insurance policy was quoted, noting there was a specific exclusion for intentional wrongs. The trial court found the carrier did not have to provide coverage for the intentional wrong claims, but did have to for the negligence, gross negligence or reckless conduct claims. The employer appealed, arguing the exclusion was ambiguous and, even if it was not, it ran contrary to the public policy of the Workers’ Compensation Act. The Appellate Division rejected these arguments, noting the exclusion was clear and that the Workers’ Compensation Act was not inconsistent with an employer’s liability policy that excluded coverage for intentional wrongs.


 

What’s Hot in Workers’ Comp, Vol. 27, No. 12, December 2023 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2023 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

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

A five-year-old special education student was enrolled in the Wyoming Valley West School District and attended the State Street Elementary School during the 2024-2025 school year. The student refused to clean up classroom toys at dismissal. When his teacher allegedly grabbed him by the wrist to walk him back to his seat, the student dropped to the floor and began crying. The teacher then allegedly grabbed the student by the ankle and dragged him across the floor. Following an investigation, criminal charges were not advanced by the county DA, and the school permitted the teacher to return to the classroom. The student’s parents sued, lodging thirteen legal counts under both state and federal law, which sought monetary damages from the teacher, the school district, the superintendent, the principal, and the director of special education. The plaintiff’s 42 USC 1983 claims were dismissed as to the school district for failure to allege a policy or custom violation, and the failure to alleged deliberate indifference in the failure-to-train context. As to the superintendent, building principal, and special education director, the Section 1983 claims were also dismissed for failure to allege personal involvement on the part of the individuals. Regarding an equal protection claim asserted against all defendants, the motion to dismiss was also granted for a failure to advance a plausible equal protection claim, holding that “plaintiffs' single-act allegations do not include a factual basis to even infer that the act was motivated by discriminatory animus rather than some other non-discriminatory impulse.” The court further dismissed the plaintiff’s negligence-based claims including negligence against the teacher and district administrators, NIED, and vicarious liability under the Political Subdivision Tort Claims Act (PSTCA). The federal claims under the IDEA, Section 504, and the ADA were also dismissed in various respects. The IDEA claim was dismissed against all defendants with prejudice for failure to exhaust administrative remedies. The Section 504 claims against the individual defendants were also dismissed with prejudice, as districts, not individuals, are the recipients of federal funds under Section 504. However, the Section 504 and ADA claims were dismissed without prejudice as to defendant Wyoming Valley West, and the plaintiff was permitted leave to amend.

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict. 

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.