Does a failure to train or supervise constitute a 'foreseeable certainty'?

A new case (Cong Su v. David’s Cookies, 2009 N.J. Super Lexis 2145 (Aug. 10, 2009), serves as illustration of the original purposes of the workers’ compensation system.
The concept of ‘workers’ compensation’ embodies a historic tradeoff: a compromise between the rights of employees to sue for negligent harm suffered at the hands of a co-worker or employer balanced against the need to deliver medical and wage continuation benefits to injured workers in a timely manner and regardless of fault. The workers’ compensation system is a compromise: employees can’t sue their employers for injuries they sustain at work, and in return, employee are guaranteed medical and wage-continuation benefits regardless of fault. There is an exception to this ‘compromise’ system: an employee can sue their employer for injuries sustained in the workplace if the employee can show that the injuries were ‘intentional.’ In other words, if the employee can show that the employer’s actions were ‘substantially certain’ to place the employee in harms way where injury could result, and the injury was plainly beyond anything the Legislature intended the Workers’ Compensation Act to immunize’ the employee can sue the employer in civil court (where, presumably, a trial by jury could yield an award for pain, personal injury, and economic damages far in excess of the ‘scheduled’ loss the claimant could recover in workers’ compensation court.
It is because of this delicate compromise of rights that cases where the employee claims to have been ‘intentionally injured’ are scrutinized so carefully. Cong Su is such a case.
The claimant in Cong Su operated a biscotti machine for her employer. While operating the machine, her hand came into contact with a sharp blade causing severe injuries.
To prevent a hand from entering the area where the blade was housed, a metal guard was on the machine. The metal guard was designed to keep the workers’ hands nine inches from the metal blade.
The claimant filed a civil suit against the maker of the machine and her employer. The employer (David’s Cookies) moved to dismiss her claims, arguing that the claimant’s remedy was through the New Jersey Workers’ Compensation Act.
In the civil suit, the claimant produced an expert who opined about the safety devices on the biscotti machine. According to the claimant’s expert, the metal guard protecting the operator’s hands was insufficient: a worker could easily slip their hand under the metal guard, through a one-and-one-half inch gap and into the cutting blade. Further, petitioner’s expert testified that the claimant was illiterate, and was unable to read any warning signs or messages (also, the claimant spoke no English). Finally, it was argued that the claimant injured her hand on the first day on the job, and was inadequately trained to operate the biscotti machine.
As to ‘foreseeability,’ claimant’s expert testified that “it was not only reasonably foreseeable but substantially certain that somebody would have been seriously injured by this machine.”
Despite this opinion, the Trial court dismissed the claimant’s action against her employer, finding that her sole remedy against her employer was through workers’ compensation proceedings.
The claimant appealed this decision.
The appellate court reviewed the trial testimony, including testimony that no other worker had ever been injured by the biscotti machine.
The Appellate Court ultimately ruled to affirm the Trial court. In its decision the appellate court found:

  • The employer could assume that a rational person would not stick their hand into a running electrical machine without first turning off the power;
    The failure to “train” the employee did not arise to a level of being ‘certain’ to bring about a specific harm;
    The failure to supervise the claimant also did not amount to a ‘certainty’ that physical harm would occur;
    The failure to warn an employee about the potential danger (despite the fact that the employee was illiterate and did not speak English) was not ‘substantially certain’ to cause the employee harm; and
    No OSHA citations had ever been received in regards to the machine, which militated in favor of the employer’s uncertainty of the machine’s safety (i.e., no citations means the employer could presume the machine safe).

The workers’ compensation claim was the sole remedy for this petitioner.

New Guidance from Medicare: Best Practices for Set Aside Proposals

On September 26, 2009 Medicare issued guidance as to how Set-Aside proposals “could” be submitted to Medicare. We expect that these recommendations will now be ‘best practices’ for dealing with Set-Aside arrangements.
History.
In July 2001 CMS issued a memo to its regional offices. It suggests that under certain circumstances parties to workers’ compensation claims should not settle those cases until after CMS has had an opportunity to review the settlement and approve the allocation to future medical expenses. The memo discusses the circumstances under which the regional offices will “pre-approve” such an allocation. It discusses pre-approval in two categories of cases:
Cases in which the workers’ compensation claimant is currently entitled to Medicare benefits.
Cases in which the injured individual has a “reasonable expectation” of Medicare entitlement within 30 months of the settlement date and the settlement is over $250,000 (Patel 2001, Question 1).
This enforcement of a previously-quiescent right to reimbursement (or set-aside) was new, and it has considerably impacted the handling of workers’ compensation claims since. As the Social Security system (and Medicare) approach the “funding gap” currently projected to be reached in 2018, we can expect that CMS will get more creative in their demands for set-aside and conditional payment reimbursement and increasingly draconian in enforcing their rights.
Medicare announced that the ‘threshold’ for reviewing cases was to be set at $25,000. Medicare refuses to provide a pre-approval of set-aside unless the lump-sum payment to the claimant exceeds $25,000.

Set-Asides.
After a case is settled, CMS wants the parties to create some form of “set-aside” arrangement in which the funds for future medical expenses that would be covered under Medicare are placed in a trust or deposited in a separate account. Medicare will begin paying medical bills for the work-related condition only when set-aside is depleted and the funds are accounted for.
The New Forms.
Medicare has issued a 38-page ‘checklist’ including sample forms that it ‘recommends’ submitters utilize. According to CMS, “cases using this or similar format can generally be processed more quickly with fewer errors – resulting in faster determinations at less cost to submitters and the government.” The ‘recommended’ submission form is divided into numbered sections to correspond to the electronic folders in which CMS scans and files documents for review. For submissions by CD-ROM, grouping and naming documents by the CMS conventions is the preferred method of delivery.

CMS recommends the following numbered sections:

Section 05 – Cover Letter;
Section 10 – Consent Form;
Section 15 – Rated Ages;
Section 20 – Life Care/Treatment Plan;
Section 25 – Court/WC Board Documents;
Section 30 – WCMSA Administration Agreement;
Section 35 – Medical Records;
Section 40 – Payment Information;
Section 50 – Supplemental – Additional Information.

We are constantly providing guidance to clients regarding Medicare obligations and liabilities. By publishing these new ‘recommendations’ we expect that service providers drafting set-aside agreements and claimant’s attorneys will be better prepared to obtain CMS approval of set-asides.
The CMS ‘sample submission’ and ‘checklist’ can be downloaded here (waring: external link to CMS, link is to a PDF).

September Fraud Roundup

The owner of a contracting company in Happauge faces up to four years in prison for cheating his workers’ compensation insurer. The owner of “Colt Contracting” allegedly concealed the payroll of eight of his employees in order to perpetrate the fraud. The fraud was discovered on September 9th by the New York Insurance Bureau, the New York Insurance Fund, and the office of the Inspector General of the Workers’ Compensation Fund.

A second contractor in Long Island (Stephen Schiavoni) was arrested by local police for allegedly hiding 900,000 in contracting sales to defraud his workers’ comp insurer of $44,000 in premiums in a one year period (Story from Sept 18, 2009).

A New York police officer lost his claim for compensation benefits and was indicted on one count of offering a false report for filing (a felony) when it was determined that he stabbed himself to collected WC benefits. Johnson City police officer Matthew Romano claimed to have been stabbed by “two men while investigating a suspicious car” on December 30, 2006. After investigation it was learned that the stab wounds were self-inflicted. The officer has been suspended without pay (Sept 11, 2009). He now faces charges of using the mail system to perpetrate a fraud against the employer city.
Finally, a story as old as time: Monica Martinez of Freeport is accused of working a full-time at dental offices while collecting $39,000 in total disability benefits for neck and back injuries which allegedly prevented her from working. (Story Sept 16, 2009). She is charged with violating the WCL and could face four years in prison if convicted.

9/11 Claims Data Released

In September the New York WCB released data on the 45,000 workers who filed 9/11-related claims and special affidavits. The ‘special affidavits’ are not claims but rather “placeholders” for future claims, allowing the affiants to bring workers’ comp cases at a later date, preserving their rights to benefits.
Nearly 14,000 claims are currently pending before the Board. Of these active claims, about 50% are for victims of the attacks and about 40% are rescue and clean-up workers.
Carriers have challenged about 40% of the WTC cases, which is approximately double the rate of other claims. 90% of the claims for rescue and clean-up workers are for respiratory-related conditions.

TDB Rates rise again, despite economic realities

Why is this important?

Temporary disability wage-continuation benefits are one of the three main benefits available to injured workers under the New Jersey Workers’ Compensation Act.

Temporary disability payments of 70% of the injured workers’ wages for the year in which the injury occurred or his occupational disease became manifest, subject to the annual maximum and minimum, are payable until she is “able to return to work.” These payments continue even if the contract of hire has expired. Therefore a schoolteacher is entitled to receive benefits during the summer recess or the seasonal worker after the end of the season if she is unable to return to work.

Temporary disability payments continue if an employees’ disability is such that she can’t return to her normal job even if she is capable of performing light work and none is offered. The burden is the employer to show that light work was refused by the employee.

When an employee manifests an occupational disease years after her last employment with the respondent the rate of compensation is fixed by her wages at her last employment with that respondent. The rate of compensation is subject to the maximum and minimum rates in effect at the time of the accident or manifestation of occupational disease.

Temporary disability for a part-time employee is based upon her actual part-time wages subject to the maximum and minimum rates in effect at the time of the accident or manifestation of occupational disease. Russell v. Saddle Brook Rest. Corp., 199 N.J. Super. 186 (App. Div. 1985).

An employee who removes herself from the workforce is not entitled to temporary disability for any period after that removal. Tamecki v. Johns Manville, 125 N.J. Super. 355 (App. Div. 1973), cert. denied, 64 N.J. 495 (1974).

A penalty of 25% of the amount due for temporary disability and a reasonable counsel fee shall be imposed upon the respondent who unreasonably or negligently delays or refuses to pay temporary disability or delays the denial of a claim. A delay of 30 days or more gives rise to a rebuttable presumption of unreasonable and negligent conduct on the part of the respondent.

An award of temporary disability and/or medical treatment during the pendency of a workers’ compensation proceeding may be appealed as of right. Hodgdon v. Project Packaging, Inc., 214 N.J. Super. 352 (App. Div. 1986), cert. denied, 107 N.J. 109 (1987). Temporary disability is payable to an employee until he is “able to resume work” even if the contract of hire would have expired (in this case a school teacher during summer recess). Outland v. Monmouth-Ocean Educ. Svc. Comm’n, 154 N.J. 531 (1998).

Defending Employers