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Defense Digest

Celebrating 30 Years of the Defense Digest: A Look at the Last 30 Years in New Jersey Workers’ Compensation

Defense Digest, Vol. 30, No. 4, December 2024

December 1, 2024

by Angela Y. DeMary

Key Points: 

  • The term “palliative” is not decisive as to liability to provide treatment.
  • When addressing requests for temporary total disability benefits from former employees, investigate entitlement beyond a doctor’s note changing work status. 
  • There are exclusions to the general principle that injuries during volunteering activities are not compensable.

Thinking back to 1994—30 years ago—many of us may not recall where we were or what we were doing. In fact, many readers may not have even been born at the time. However, the celebration of 30 years of Marshall Dennehey’s publication of Defense Digest provides a good opportunity to review a few significant New Jersey workers’ compensation judicial decisions from the last three decades that still impact claims handling today. This article will focus on one decision from each decade. 

1994–2004

The first decade, 1994–2004, brought the world such noteworthy events as the debut of the television show “Friends” (1994), the election of Nelson Mandela as President of South Africa (1994), and the unforgettable events of September 11, 2001. The decade also brought a notable New Jersey Appellate Division decision that still raises issues for practitioners today. 

In 1995, the Appellate Division analyzed the term “palliative” with regard to a respondent’s liability to provide medical treatment. In Hanrahan v. Township of Sparta, 284 N.J. Super. 327 (App. Div. 1995), the court held that an employer is required to provide such treatment if there is (1) competent medical testimony that (2) the treatment is both reasonable and necessary to (3) cure or relieve the effect of the work-related injury such as to improve ability to function. Prior to that time, defense counsel would use “palliative” as an indicator to cease liability. Per this decision, that is not the legal analysis.

However, according to the court, “palliative” treatment could cease if it is no longer curing or relieving the effect of the work-related injury to improve one’s ability to function. Therefore, a practitioner should determine whether these requirements apply when addressing this issue.

2004–2014

The next decade, 2004–2014, brought about additional significant events. The world was introduced to Facebook (2004) and saw the election of Barack Obama as President of the United States (2009). This decade also included the death of music icon Michael Jackson (2009). In addition to these events, this decade brought about important judicial decisions in New Jersey workers’ compensation. Next, we will take a look at one of them.

In 2006, the Appellate Division addressed the issue of entitlement to temporary total disability benefits when an injured worker is terminated from employment for reasons unrelated to the work-related injuries and is, thereafter, placed out of work or on modified duty status by the medical doctor. In Cunningham v. Atlantic States Cast Iron Pipe Co., 386 N.J. Super. 423 (App. Div. 2006), the court held that a former employee has the burden of proving that they would have been employed “but for” the work-related disability in order to receive temporary disability benefits. In other words, the work-related disability has to be the reason for the unemployment, not something else. 

It is important for practitioners to ask additional questions when a former employee is placed out of work or on modified-duty status following termination. Specifically, practitioners should inquire whether there was any active employment elsewhere, receipt of unemployment benefits, or proof of an active search for employment at the time of the medical change-in-work status. If the lack of employment was due to some other reason (i.e., simply had not sought employment since termination of employment or personal reasons unrelated to the work injury), there would be an argument that temporary total disability benefits are not due. Thorough investigation is key.

2014—2024

Lastly, 2014–2024. During this period, the world witnessed the marriage of Prince Harry and Meghan Markle (2018) and continues to be impacted by the COVID-19 pandemic (2020). In New Jersey, Chief Judge Maria Del Valle Koch was appointed as the first woman Director and Chief Judge of the Division of Workers’ Compensation (2022). In addition to these events, there continues to be important legal decisions. Of those, we will take a look at one New Jersey Supreme Court decision. 

In 2021, the court analyzed the compensability issue related to employee volunteers in Goulding v. NJ Friendship House, Inc., 245 N.J. 157 (2021). The court reiterated that an injury is compensable where there was compulsion by the employer for the employee to volunteer and that injuries during purely social or recreational events are not compensable. The court also reviewed the two-prong test used in analyzing the compensability issue for employees volunteering at employer-sponsored events: (1) whether the injury was a “regular incident of employment” and (2) whether the event provided a benefit to the employer beyond improvement in employee health and morale. 

When encountering this issue, practitioners should apply the two-prong test to the facts of the claim to determine if it is met. Analysis is very fact sensitive. As such, it is worthwhile to conduct a thorough investigation. 

The review of these decisions shows that, although a decision may have been rendered many years ago, it is necessary to be aware of it as it may continue to impact claims handling today. These decisions and analyses can influence your decision as to whether to provide compensation. Defense Digest will continue to be a source of information on legal trends, cases, and updates in the law. 

*Angela is a shareholder and member of our Workers’ Compensation Department. She works in our Mount Laurel, New Jersey, office. 

 

Defense Digest, Vol. 30, No. 4, December 2024, 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. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2024 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

United State District Court for the Middle District of Florida finds Evidence of Replacement Cost Value is Admissible and Recoverable Even When Repairs Have Not Been Made

The plaintiff filed a claim for damage as a result of Hurricane Ian. It claimed damages were over $24 million, but the carrier accepted partial coverage and paid $8,307.49 for secondary components. The carrier found hurricane damage to the building, but it was below the insurance policy’s $3.6 million deductible. The plaintiff sued for breach of the insurance policy. The carrier argued in a motion for summary judgment that plaintiff could not recover replacement cost value (RCV) because the property repairs had not been effectuated. The policy provided for RCV, but only after the repairs were completed. The carrier argued that because the repairs were not completed, the plaintiff was not entitled to RCV damages. The plaintiff argued the carrier could not withhold the actual cost value (ACV) due, which was the main allegation of the lawsuit, then fault it for not making the repairs to unlock the RCV. The United States District Court for the Middle District of Florida rejected the carrier’s argument, finding that when an insurer allegedly breached the policy by withholding coverage, it could not hide behind a repair-contingent provision to block the insured from RCV damages at trial. The court found the issue to be whether the contractual language designed to preclude certain coverage until after repairs are completed barred an insured from seeking those damages at trial when repairs were not complete. The court noted the Eleventh Circuit had not resolved this issue and neither side pointed to a definitive answer from the Florida Supreme Court. The court reasoned that it must look to the Sixth District Court of Appeal (6th DCA), which is the court which would have heard this case if it was in state court. The court noted the 6th DCA recently addressed this issue in Universal Prop. & Cas. Ins. Co. v. Rodriguez, 427 So. 3d 676 (Fla. 6th DCA 2026). The Rodriguez Court found that a breach of contract action is designed to adjudicate not only whether the contract was breached, but also evaluate the damages incurred had the breach not occurred, which the Rodriguez court found to be recovery of the RCV. This court also noted basic Florida contract principles compelled the same result, as a material breach frees the nonbreaching party to suspend its own performance and can demand the full benefit of its bargain, including RCV damages. Finally, the court found the distinction between a full denial and partial denial did not compel a different result. It found the policy required the carrier to acknowledge coverage and pay ACV for all covered damages, and the failure to do that is a material breach, entitling the insured to all of the damages available under the contract, which included the RCV.

Bret E. Dubbert Joins Marshall Dennehey’s Orlando Office as Special Counsel in the Casualty Department

News

Bret E. Dubbert Joins Marshall Dennehey’s Orlando Office as Special Counsel in the Casualty Department

graphic announcing our 6 2027 Super Lawyers & Rising Stars

News

Marshall Dennehey Announces 2027 New Jersey Super Lawyers And Rising Stars

Result

$19 Million Medical Malpractice Verdict Overturned

In this medical malpractice case, the trial court vacated $10 million of a $19 million verdict in post-trial motions and the Superior Court of Pennsylvania vacated the remaining $9 million on appeal.

Thought Leadership

First DCA Reverses Excessive Jury Award Unsupported by the Evidence

In December 2019, the plaintiffs filed a claim with Universal for damages caused by a water and sewage back up through the plumbing system and existing through multiple fixtures including the washing machine drain, kitchen sink, dishwasher, bathtub and toilet. Universal investigated the claim, issued payment for resulting water damage totaling $7,000.00 in actual cash value ($12,000.00 in replacement cost value). The plaintiffs sought additional benefits for work needed to access the below-slab cast iron plumbing system due to the failure of the system from rust, deterioration, corrosion and breaks in the line. Universal denied any additional benefits for access. In 2021, the plaintiffs filed suit. During litigation, Universal sent a plumber to inspect the home and the plumber concluded the pipes were clogged but could be cleaned. The plaintiffs’ plumber testified that the plumbing system needed to be replaced due to holes and openings in the pipes. The plaintiffs introduced two estimates prepared by Triad Restoration services totaling $79,680.22 in replacement cost value and $50,219.97 in actual cash value and an executed contract with another company for repairs with the amounts of repair redacted. Since the insurance policy did not provide coverage for repair or replacement of the plumbing system, the jury only had to decide whether the plumbing system needed to be replaced, and if it did, Universal would owe for the access costs; the jury verdict form required the jury to determine both the replacement cost value and actual cash value amounts. The jury asked if it had to rely on the Triad estimates for their amounts. The trial court advised the amount awarded had to be based on the evidence presented at trial and the law given by the trial court. The jury awarded $335,000.00 in replacement cost value or $305,000.00 in actual cash value. Universal motioned for a new trial arguing the amount awarded was unsupported by the evidence and then moved for remittitur. The trial court denied both motions and this appeal followed. The court found that while a jury’s verdict should only be disturbed with caution and discretion, the trial court must give the properly challenged award close scrutiny and determine whether it bears a reasonable relation to the damaged provided, is supported by the evidence, and could have been reached in a logical manner by reasonable means §768.74(3), (5)(d)-(e), Fla. Stat. The court found the trial court did consider the statutory requirements at the hearing on Universal’s remittitur motion and was concerned about a reasonable relation to the amount of damages proved and injury suffered and whether the award was supported by the evidence, but ultimately denied the motion, reasoning that the jury had been properly instructed to fairly and adequately compensate the plaintiffs. The court noted the only evidence providing the basis for the jury verdict was Triad’s estimates and those valued the plaintiffs' claimed loss at $79,680.22 in replacement cost value and $50,219.97 in actual cash value; no valuation evidence reasonably supported the jury verdict. The plaintiffs argued that the jury was entitled to consider more than the estimates, but the court conveyed the evidence provided did not give the jury a way to reach the amounts they awarded. The court was also not swayed by the plaintiffs’ argument regarding inflation and later price increases, but the court noted that no evidence via the contract, nor testimony regarding increase in labor, material, fuel or construction costs were entered into the record.  The court concluded the jury may draw reasonable inferences from the evidence, but it may not supply a damages number by speculation. The court did not find any of the plaintiffs’ remaining argument persuasive either. The court reversed the denial of Universal’s remittitur motion and motion for new trial as to damaged and remanded the case. The court ended its opinion with advising the trial court must determine whether replacement cost value or actual cash value is the property measure of damages under the policy and order remittitur in an amount consistent with that determination and the evidence.

Result

$1.09 Billion Products Liability Verdict Overturned

In this products liability crashworthiness case, the Superior Court of Pennsylvania reversed a Philadelphia jury verdict of $1.09 billion, the largest verdict ever overturned by a PA appellate court.  The court ordered a new trial based on deficient jury instructions, clarified important aspects of crashworthiness law, and confirmed that so-called standard jury instructions may be incompatible with Pennsylvania law. 

Marshall Dennehey Named a Standout in Litigation by BTI Consulting Group

News

Marshall Dennehey Named a Standout in Litigation by BTI Consulting Group

Thought Leadership

Appeals Court Reverses Trial Court Order Awarding Attorney’s Fees Due to Lack of Evidence to Support Fee Awarded

The Fourth District Court of Appeal reversed the trial court’s order awarding appellate fees to People’s Trust Insurance Company based upon a lack of evidence to support the attorney’s fee award in RM & Assocs. Consulting, Inc. v. People's Trust Ins. Co., 2026 Fla. App. LEXIS 4654 (Fla. 4th DCA 2026). People’s Trust was the insurer of a residential property that had sustained water damage. RM & Associates Consulting was hired by the homeowner to perform mitigation services at the property. The homeowner assigned post-loss benefits to RM and RM subsequently filed suit against People’s Trust alleging that it had not been paid the money it was owed for the mitigation services. People’s Trust defended the lawsuit on the ground that the policy required the insured to notify the insurer before authorizing repairs so People's Trust could elect to use its preferred contractor. Because the owner did not comply with that provision, People's Trust asserted its liability was limited to the amount that its preferred contractor would have charged for the work, which People's Trust contended was $2,000. People's Trust paid that amount to RM before RM filed suit. People’s Trust filed a motion for summary judgment which was granted. RM appealed the summary judgment ruling and the ruling was upheld by the Fourth District Court of Appeal. The appellate court also granted People’s Trust’s entitlement to appellate attorney’s fees, subject to the trial court’s determination of the amount of fees, based upon an offer of judgment made by People's Trust. On remand, the trial court held an evidentiary hearing to determine the amount of attorney’s fees People’s Trust was entitled to. At the hearing, People’s Trust presented testimony from it’s fee expert, supervising trial counsel and appellate counsel. People’s Trust sought recovery of $24,866.17 for work performed by appellate counsel. The request primarily consisted of work performed in preparation of the answer brief. The fee expert testified that more than ninety hours spent preparing the answer brief was reasonable given the complexity and significance of the underlying issue. The appellate court found that the fee expert’s testimony fell short of meeting the necessary standard of demonstrating that the hours expended were necessary. The appellate court found that the billing records did not serve to cure the deficient testimony, as the billing records did not contain adequate details regarding the specific tasks performed. Rather the records contained entries such as “answer brief” which the appellate court found to be insufficient. The appellate court noted that neither the fee expert or counsel addressed how the prior research and briefing in the parallel litigation informed the work in the instant matter. The appellate court noted this was significant in that a court's attorney's fees award must exclude excessive, redundant, or otherwise unnecessary hours, citing Florida Patient's Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985). Based upon the record failing to support the finding of the trial court, the 4th DCA remanded the case to the trial court for a reconsideration and redetermination of reasonable appellate attorney’s fees supported by competent substantial evidence. The 4th DCA reiterated that the fee expert’s focus on the quality of the work and the importance of the work to People’s Trust did not make up for the perceived deficiencies in the position that spending over ninety hours on a single answer brief was reasonable. Whether moving for attorney’s fees or challenging the amount of fees being sought by an opposing party, practitioners should be mindful of the evidence being used to support the claims being made. Parties should pay close attention to whether the hours being sought may be impacted by prior litigation either party may have engaged in. A party must be prepared to address how prior litigation efforts did or did not impact the amount of hours being claimed in current litigation. Lastly, billing records must be sufficiently detailed so as to support any potential future fee claim.

Result

Statutory Employer Immunity Upheld

In this construction accident case that resulted in a $5 million verdict, the Supreme Court of Pennsylvania upheld the Statutory Employer Doctrine, which immunizes general contractors and other contractors on construction sites when certain elements are satisfied.

Event

CLM 2026 Focus Conference

Allison joins three insurance industry leaders to discuss how cyber coverage disputes, the growing impact of social inflation on bodily injury claim valuation, and the use of artificial intelligence are reshaping the bad faith landscape. The panel will examine emerging sources of extra-contractual exposure, including evolving cyber insurance coverage issues and the challenges of accurately valuing bodily injury claims. Practical approaches to claim evaluation using AI, along with defense strategies designed to help prevent or successfully defend against bad faith litigation, will also be addressed.