.

Defense Digest

Penalties, Sanctions and Other Bad Employer Words

Defense Digest, Vol. 28, No. 3, October 2022

October 1, 2022

by Robert J. Fitzgerald

Key Points:

  • Permanency benefit awards must be paid in a timely manner.
  • The penalties awarded should be consistent the lateness of the payment, the amount of permanency benefits awarded and the possible bad faith of the parties.
  • The penalties awarded should be governed by permanency award factors, such as the amount of time it takes the litigation to resolve.

In Luis Ripp v. County of Hudson, 277 A.3d 1071 (N.J. Super. App. Div. 2022), the New Jersey Appellate Division addressed factors to be considered in awarding financial penalties for the late payment of permanency benefit awards. The petitioner worked for Hudson County as an assistant chief engineer/boiler operator. He sustained a work injury on February 11, 2013, and filed a claim petition. On January 26, 2021, he received an award of permanent/total disability. When the award was not paid within 60 days, the petitioner filed a Motion to Enforce.

The award was paid on April 12, 2021, 16 days after what the parties considered to be the due date. The respondent offered several excuses for the late payment, including that its third-party administrator failed to submit the payment request in time for the county commissioners meeting, that its third-party administrator was delayed due to the transfer of an adjustor and, of course, that there was delay due to the COVID-19 pandemic.

The Judge of Compensation noted in the underlying litigation that the petitioner needed to successfully make enforcement motions to obtain temporary disability benefits. The judge also noted that there were settlement discussions for a permanent/total award in August 2019, but the county did not authorize settlement until January 2021. She stated the petitioner was “without significant funding for quite a long time” and had written to the court on many, many occasions, sharing his dismay over the amount of time it was taking to resolve his claim. She said the petitioner was “anxious about money and the court was very sensitive to all of that.”

In granting the motion, the judge ordered the respondent to pay the petitioner an additional $43,370 within 60 days. The county appealed. In the subsequent written decision, the judge reiterated that the respondent agreed in early 2019 that the petitioner was totally disabled. She noted that the petitioner was receiving Social Security Disability benefits and that, because “Social Security is notoriously slow,” it delayed computation of the petitioner’s average current earnings, necessary so the order could be effectuated.

The judge also recognized that, given the size of the award, the county needed to involve its excess insurance carrier. The excess carrier’s authority to settle was not provided until December 2020.

However, the judge stated this delay “was to the dismay of [Ripp].” She cited “several letters” from the petitioner that she shared with counsel, detailing his emotional and financial distress as a result of not working. The judge cited the petitioner’s “life-altering injury,” lack of “wages for over four years,” and his “disabled child,” which left the judge very sympathetic. The judge also said the court had “bent over backwards to give the [county] the time to ‘get it’s ducks in a row,’” and it was “inconceivable” that payment was overdue. The judge found the county’s delay was “unreasonable” and concluded it was appropriate to impose the maximum additional assessment of 25% to enforce the order.

On appeal, the respondent argued the judge erred in her expansive application of Section 28.2 (Penalties and Sanctions) and, additionally, that she abused her discretion in imposing a manifestly excessive assessment under the circumstances. The court agreed and reversed the order. It first referenced Section 28.1 which provides:

If an . . . employer’s insurance carrier, . . . unreasonably or negligently delays or refuses to pay temporary disability compensation, or unreasonably or negligently delays denial of a claim, it shall be liable to the petitioner for an additional amount of 25% of the amounts then due plus any reasonable legal fees incurred by the petitioner as a result of and in relation . . .

Next, the court referenced the amendments to Section 28.2, which now provide:

If any employer . . . fails to comply with any order of a judge of compensation . . . , a judge of compensation may, in addition to any other remedies provided by law:

a.         Impose costs, simple interest on any moneys due, an additional assessment not to exceed 25% of moneys due for unreasonable payment delay, and reasonable legal fees, to enforce the order, statute or regulation;

b.         Impose additional fines and other penalties on parties or counsel in an amount not exceeding $5,000 for unreasonable delay, with the proceeds of the penalties paid into the Second Injury Fund

Additionally, the Division then adopted Rule 12:235-3.16(h)(1)(i), which allows a judge to impose an additional assessment not to exceed 25% on any moneys due if the judge finds the payment delay to be “unreasonable.” Unlike Section 28.1, which deals with delays in paying temporary disability benefits and defines a 30-day delay as presumptively unreasonable, the Legislature here chose not to specify what is a presumptively unreasonable delay in payment of settlement proceeds under an order entered under the statute.

Based on these provisions, the court reasoned that the plain and unambiguous language of Section 28.2 limits imposition of a penalty to situations justifying the court’s enforcement of its order fixing the moneys due a petitioner pursuant to that order only if there is an “unreasonable payment delay.” In this case, the order was not entered until January 26, 2021. Therefore, it was not an “unreasonable payment delay” prior to March 26, 2021.

Accordingly, it was legal error for the judge to consider, for example, the length of time it took to resolve the petition after the parties agreed the petitioner was totally disabled. No payments were due the petitioner until the order was entered, and no payments were delayed for the first 60 days after that. Further, the judge recognized that there were ample, legitimate reasons why it took until January 2021 to enter the order finally settling the matter, and that those delays were not “unreasonable.”

Having said that, however, the county did not contest that it failed to pay the petitioner the moneys due under the order in a timely fashion. Rather, it offered various excuses for the delay, which the judge considered and, to some degree, accepted as reasonable. Nevertheless, the judge imposed the maximum statutory penalty for a 16-day payment delay.

In reversing the order, the court noted there was no reported case defining the appropriate standard of appellate review of a penalty awarded pursuant to a motion seeking enforcement of an order entered under the statue. In remanding the case, the court instructed that it would be appropriate to consider the length of the delay, the size of the late payment, and the effect a sizeable payment that is delayed beyond its due date would undoubtedly have upon a petitioner and his or her family.

Notably, a judge cannot consider delays in the litigation that predated entry of the order. Further, the court insinuated that an award of the maximum penalty under the statute, even though the delay in payment was only 16 days, and the certain extenuating circumstances that reasonably delayed payment in this case, would be struck down. Additionally, the court also suggested the lack of presence of bad faith, if any, would be factor to consider. Interestingly, the court indicated that the proceedings on remand could be conducted by a different judge.

This is the first case that addresses the factors to be considered in awarding penalties and sanctions for the late payment of a permanency benefit award. It is also very timely, given that many respondents are struggling to hire and retain claims professionals in the aftermath of the COVID-19 pandemic and The Great Resignation over the past couple of years. In its decision, the court confirms the long-standing requirement that workers’ compensation awards are required to be paid on a timely basis. When that fails to happen, Section 28.2 allows for various penalties, sanctions, etc., but maximum monetary punishments should not be awarded reflexively. Accordingly, respondents should continue to strive for full compliance in the timely payment of awards, or unnecessary and possibly substantial additional financial losses could result.

Firm Highlights

News

Stacey R. Gorin Installed as President of the Burlington County Bar Association

Thought Leadership

Appeals Court Reverses Trial Court Order Striking Complaint as Sanction for Violating Discovery Order

All Dry USA v. Savell, 2026 WL 816093 (Fla. 1st DCA 2026) The First District Court of Appeal reversed the trial court’s order denying All Dry USA’s complaint as a sanction for violating a discovery order. The appellate court found that All Dry USA’s failure to comply with the trial court’s case management order did not give the trial court the authority to strike All Dry USA’s pleadings. All Dry USA provided water mitigation, mold remediation, and a restorative tarp at the property owned by the Savells. The property had been damaged by Hurricane Sally. All Dry USA provided invoices for the three services it performed in the amount of $90,130.61. The Savells refused to pay the invoices, stating that while they had retained All Dry USA, there was no agreement reached regarding the cost of the services. All Dry USA proceeded to file a lawsuit against the Savells, alleging breach of contract and unjust enrichment. The Savells answered the lawsuit and served discovery upon All Dry USA. All Dry USA failed to respond to the discovery requests and the Savells moved for an order compelling discovery. The trial court issued an order compelling All Dry USA to respond to Savells discovery requests and comply with all outstanding discovery deadlines per the case management order. On the day its responses were due, All Dry USA filed a motion to extend the deadline to comply with the court’s order. Before the motion was ruled upon, the Savells filed a motion to have All Dry USA’s complaint stricken for violating the trial court’s order compelling All Dry USA’s responses. The trial court granted the motion to strike, and then granted the Savell’s request for entry of default final judgment, based upon there no longer being an operative complaint. The First District Court of Appeal reversed, ruling that an order striking pleadings is justified if it is found that a party has violated numerous discovery orders, or has shown a “deliberate and contumacious disregard of the court's authority.” Mercer v. Raine, 443 So. 2d 944, 946 (Fla. 1983). The appellate court stated that a trial court’s authority to strike pleadings is not unbridled and that the situation before the court did not justify the striking of All Dry USA’s pleadings. In reaching its decision, the First District focused on the fact that the trial court only addressed the potential prejudice to Savell by All Dry USA failing to respond to discovery and seeking an extension of the deadline. The appellate court stated that prejudice is not the only factor to be considered and that the trial court needed to address if All Dry USA’s behavior in failing to comply with the discovery order was willful and deliberate.  The First District also stated that nothing in rule 1.200 or 1.380 grants a trial court the authority to strike a pleading because certain case management deadlines are not met. The appellate court held that the Florida Rules of Civil Procedure allow trial courts to bring the parties in, order them to comply with the case management discovery deadlines, and then strike pleadings if the subsequent discovery orders are disobeyed. This ruling shows the importance of understanding the authority that is binding on the trial court a party is appearing in front of. The First District’s view on a trial court’s ability to strike pleadings is in contrast with other appellate court’s throughout Florida.

News

Marshall Dennehey’s John J. Hare Brings Home Attorney of the Year Honors; Firm Named Litigation Department of the Year in Two Categories

Marshall Dennehey took home top honors in three categories at the The Legal Intelligencer’s 2026 Pennsylvania Legal Awards, held June 11 in Philadelphia. The first place awards include: Attorney of the Year: John J. Hare, Chair of the firm’s Appellate Advocacy & Post-Trial Practice Group and Executive Committee member, together with Charles “Chip” Becker of Kline & Specter Litigation Department of the Year, Appellate – Third Win in a Row! Litigation Department of the Year, Product Liability/Mass Torts “There is no one more deserving of Attorney of the Year honors than John. This award is a testament to his exceptional skill, dedication, and leadership—qualities that truly exemplify the very best of our firm,” said G. Mark Thompson, Marshall Dennehey’s President & CEO. “These honors also reflect the strength and depth of our product liability, mass torts, and appellate practices across Pennsylvania and beyond, underscoring our ongoing commitment to delivering outstanding results for our clients.” Attorney of the Year – John J. Hare, Marshall Dennehey, together with Charles “Chip” Becker, Kline & Specter Over the past year, John and Charles were opposing counsel in many of the highest-profile civil appeals in Pennsylvania. John is renowned as a preeminent appellate lawyer on the defense side, and Chip on the plaintiff's side. They have opposed each other repeatedly, exhibiting peerless professionalism and exceptional civility, while zealously litigating under the unremitting pressure of high-profile litigation and record-setting verdicts totaling more than $3.5 billion. They have also collaborated, outside of litigation, on many commissions, committees, and projects of importance to the Pennsylvania judiciary and legal community. Litigation Department of the Year – Appellate Law, Winner (previous winner, 2025 and 2024) 2025 was another standout year for the firm’s Appellate Advocacy & Post‑Trial Practice Group, led by John J. Hare, which was retained to challenge many of Pennsylvania’s “nuclear” verdicts—awards exceeding $10 million. Notably, the department persuaded the Pennsylvania Superior Court to reverse a Philadelphia judgment of $1.09 billion, the largest judgment ever overturned by a Pennsylvania appellate court. The group’s 11 full‑time Pennsylvania‑based appellate lawyers are at the center of Pennsylvania’s most high-profile matters, bringing more than 150 years of combined appellate experience. They routinely handle post‑trial and appellate matters and are frequently engaged to participate in and monitor trials in high‑exposure cases to ensure that critical legal issues are properly raised and preserved for appeal. Litigation Department of the Year – Product Liability/Mass Torts, Winner This marks the first win for the firm’s Pennsylvania Product Liability and Mass Torts practices, which operate within our Casualty Department, managed by Matthew Schorr and Jeff Rapattoni. For almost five decades, Fortune 500 product manufacturers/distributors and their insurers have turned to these groups to defend their litigation. Led by Bradley D. Remick and Vlada Tasich, our Product Liability group’s success can be attributed to its commitment to keeping abreast of ever-changing legal theories, judicial viewpoints, and evolving technology impacting the product liability landscape. Our attorneys have successfully handled thousands of product liability matters in all jurisdictions across the state. Likewise, our mass tort litigation practice – divided into Asbestos & Mass Tort, and Environmental & Toxic Tort Litigation –  has defended manufacturers, distributors, contractors, and premises owners in thousands of personal injury and other claims. Led by Kevin E. Hexstall and Patrick T. Reilly, most attorneys in these groups have more than 20 years of experience, and our seasoned trial team has tried hundreds of cases to verdict, consistently achieving strong results through both trials and settlements. In addition to these awards, Marshall Dennehey was a Litigation Department of the Year finalist for Professional Liability.

Portrait of Thomas Glassman. Text: Joining our Cincinnati Office as a Shareholder in the Casualty Department

News

Marshall Dennehey Adds Shareholder Thomas F. Glassman in Cincinnati, Expands Casualty Practice in Ohio and Kentucky

Result

Summary Judgment Secured, Preserving $750,000 in Coverage for Insured in Major Trucking Liability Dispute

Ray Freudiger and Michael A. Roberts (both of Cincinnati) successfully obtained summary judgment on behalf of their client in a coverage dispute arising from a May 19, 2022, motor vehicle accident. A permissive driver operated a box truck for an interstate trucking company and caused severe injuries to two tort victims. Prior to the accident, the insured had procured a commercial auto policy for the trucking company with stated limits of $1,000,000. Following the accident, the insurer initiated a declaratory judgment action asserting that only reduced bodily injury limits of $25,000/$50,000 applied and later counterclaimed, alleging it would not have insured the driver had he been properly submitted for approval under the policy. After extensive discovery, briefing, and oral argument, the court rejected the insurer’s attempt to shift responsibility for the $750,000 in coverage it was legally required to provide for permissive drivers under Ohio law, granting summary judgment in favor of the insured and preserving $750,000 in liability exposure.

Thought Leadership

Court Reaffirms That Actual Cash Value Includes Labor and Overhead, Not Just Materials

Greenaker v. Universal Prop. & Cas. Ins. Co., Case No. 2D2024-1964, (Fla. 2nd DCA May 8, 2026). The plaintiffs filed a breach of contract suit against Universal for refusal to pay for all of plaintiffs’ damages from a storm in November 2020. Universal filed a motion in limine to prevent the plaintiffs from introducing evidence concerning both actual cash value and replacement cost value of the loss. They argued that the plaintiffs did not complete repairs or incur any expenses in repairing the damaged property, thus being limited to actual cash value as their measure of damage and the plaintiffs’ submitted estimate of damages contained labor costs necessary for repair and, therefore, not an actual cash value estimate. Universal further asked for a directed verdict at the hearing because the plaintiffs would have no evidence to support the claim for damages. The trial court agreed and granted Universal’s motion, entering a final judgment in Universal’s favor.  The plaintiffs filed a motion for rehearing and reconsideration due to the court improperly converting Universal’s motion in limine to a motion for final summary judgment. The court denied plaintiffs’ motion and the plaintiffs appealed. The Second District Court of Appeal agreed with the plaintiffs and determined that the trial court improperly entered a final judgment based on a pretrial ruling in limine, advising there was recognized procedures, including summary judgment, judgment on the pleadings, and default judgment that could have been exercised. Further, the court continued that the improper procedure was not the only reason for the judgment to be reversed. They noted the insurance policy did not provide a definition of actual cash value nor how to calculate it, and the parties disputed the definition and calculation of such.  Universal argued that actual cash value is defined as the value of the property that suffered the direct physical loss less depreciation and deductible, i.e. costs of physical materials that were damaged.  The plaintiffs argued that actual cash value includes the amount of repair costs in addition to the value of the property that suffered direct physical loss because it is calculated as the replacement cost minus depreciation.  The court agreed with the plaintiffs, noting that Universal’s definition was not supported by the insurance contract, the statute governing replacement value insurance contracts, nor decisional authority.  The court noted that Universal “cherry-picked” the phrase “direct physical loss” from the perils insured against provision and applied it to the loss settlement provision, which doesn’t state “direct physical loss,” but instead states “insured loss.”  Further, the court conveyed that application of “direct physical loss” would be used on both actual cash value and replacement cost value, as they are both present in the loss settlement provision, which would mean insureds never got payments beyond costs of physically damaged material, which is contradictory to the replacement cost value definition.  The court advised that the Florida Supreme Court had approved the court’s interpretation of actual cash value as including costs other than damaged physical property, including overhead and profit, noting that these costs can be included in actual cash value to which a portion, like all other costs, could be depreciated. The court noted the difference between actual cash value and replacement cost value is not between types of costs, i.e. materials vs. labor, but between the valuation of the costs with the distinction of being a depreciated vs. undepreciated value. The court refused to exclude intangible costs such as labor, profit and overhead from actual cash value, finding these costs inclusions were consistent with statutory and contractual language as well as Florida Supreme Court precedent. The court reversed the judgment and remanded the case back to the trial court.

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. 

Result

Unanimous Verdict Obtained in a Medical Malpractice Matter in Bergen County, New Jersey

Thought Leadership

Sixth DCA Rejects Prejudice Requirement for Excluding Late‑Disclosed Expert Opinions, Certifies Conflict with Sixteen DCAs

Michael John Crecelius v. Mildred Rizzitano; (February 27, 2026) Crecelius involved an appeal by a defendant of the trial court’s exclusion of its late disclosed experts at trial. The defendant was involved in a vehicle accident, in which he made a left turn into an intersection and collided with the plaintiff, killing him. Plaintiff’s estate sued for negligence. The defendant disclosed two experts after the deadline imposed by the court. The disclosure described each expert’s anticipated scope of work, but did not contain their respective substantive opinions. Approximately three-weeks before trial, both expert reports were provided. The plaintiff moved to strike the experts’ testimony, arguing it was prejudiced because their expert had insufficient time to prepare rebuttal testimony before trial. The defendant argued the late disclosures were due to the experts’ not diligently providing reports and opinions to the defendant and there was no bad faith. The trial court granted the motion to strike. The plaintiff obtained a verdict in its favor, finding the defendant 100% at fault, to which the defendant appealed. The defendant argued on appeal that the experts’ opinions were received three weeks before trial, so any prejudice to the plaintiff was insufficient to warrant exclusion of his experts, and any prejudice could have been cured by a brief continuance. The defendant argued that he suffered extreme prejudice, as striking his witnesses left the plaintiff’s experts uncontradicted. In reaching its decision in Crecelius, the 6th DCA addressed the opinion of the Florida Supreme Court in Binger v. King Pest Control, 401 So. 2d 1310 (Fla. 1981) at length, which addressed late disclosed experts. The Crecelius court found that its sister courts have consistently misapplied the Binger opinion, which “has severely ambered the ability of trial judges to effectively manage civil lawsuits and . . . prevent surprises at trial and to assist arriving at the truth.” The court wrote, “if the trial court finds that the undisclosed witness will not prejudice the other party after considering the factors listed in Binger, then the witness should be allowed to testify – as binding holding,” highlighting that its sister courts improperly expanded the Binger opinion to apply to undisclosed opinions of disclosed experts. The court criticized this approach, finding it meant that a trial judge could not enforce pretrial orders and exclude undisclosed testimony without first finding that the opposing party was prejudiced. The court noted that approach puts the burden on the opposing party to make an adequate showing of prejudice, potentially in the middle of trial and with no notice, which is inappropriate and incentivizes non-disclosure. The court explained that completing a last-minute deposition prior to trial to cure any prejudice also places a burden on the non-offending party, and even offering a continuance, puts that party in a position of having to choose between inadequate time to prepare or delay the trial, none of which is proper. The Crecelius court found that “Binger concerned undisclosed witness testimony that was improperly allowed and should have been excluded due to prejudice to other party. Binger did not concern undisclosed testimony that was improperly excluded or what the trial court should have considered before excluding undisclosed testimony.” Additionally, the Crecelius court found the statement in the Binger opinion “about what a trial court considers before excluding an undisclosed witness’s testimony was pure dictum” and that nothing in that statement led to the judgment, and thus, was not binding on it or on trial courts. The court noted that Binger expressly stated trial courts can issue pretrial orders that prohibit the introduction of undisclosed opinions, and those orders do not derogate from its decision. Trial courts are permitted to strictly enforce pretrial orders and to require them to make a finding of prejudice before doing so makes the ability to enforce court orders meaningless. The court ultimately affirmed the trial court’s order, striking the defendant’s witnesses, finding that Binger imposes no requirement that a trial court find that the opposing party would be prejudiced by the introduction of an undisclosed or late-disclosed expert opinion before excluding the opinion and certified conflict with 16 decisions out of the 1st DCA, 2nd DCA, 3rd DCA and 4th DCA.

blue facade of a hospital sign against blue sky

Result

Defense Verdict in Complex Medical Malpractice Trial