Employment Law

New labor figures released

According to the U.S. Bureau of Labor Statistics, the median weekly earnings of all full-time workers in the United States is $695.00 per week. In New Jersey, the maximum rate of temporary disability for 2008 is $742.00 per week.

We have blogged before on this topic (here and here)- the way the Feds and the State calculate ‘average weekly wage’ is different with the net effect that the NJ State Temporary Total disability rates are artificially high.

How high? Well the state of New Jersey just released figures showing a state average weekly wage of of $1,031.28. (Figures released August 22, 2008).

Firm News

Appellate Division weigh in on Greg Lois' case

The Appellate Division affirmed the trial court in ‘Cucciniello v. The Sports Authority.’ Greg Lois wrote the Appellate Brief.

The Appellate Court found that a subsequent aggravating incident was not a “new injury” sufficient to break the chain of causation. This unpublished decision departs from the prior case law and basically holds that a superseding, new incident will not break the causal chains unless a doctor directly told the claimant not to engage in a specific activity.

Adjusters and risk managers are warned NOT to apply the reasoning of the Appellate Panel in reviewing specific cases; the poor reasoning employed by the Appellate courts basically serves to annihilate the ‘superceding/intervening’ defense which is one of the most well-settled tenets of western law/civil law.

Citation: Cucciniello v. The Sports Authority, App. Div. A-1235-07T3 (Decided September 24, 2008).

New Jersey

Defining 'Employment'

Who is a “volunteer” and who is an “employee”? The defense of “non-employment” is one of the few affirmative defenses left under the New Jersey Workers’ Compensation Act. This case explores the distinction between and ‘employee’ (whose injuries are compensable) and a ‘volunteer’ (for whom there is no workers’ compensation liability.)

The salient facts of the Flores v. Paragon case are as follows:

•Flores was an undocumented (illegal) worker who was employed by general contractor Bredbenner from April to November of each year. Bredbenner’s business was installing gutters.
•Returning to America after his usual winter stay in Mexico, Flores sought work with Bredbenner.
•Here the story conflicts: Bredbenner testified he had no gutter work for Flores, and instead offered to hire Flores to work at his hose, doing yard cleanup for two days. Pay was $100 per day. Flores testified that he was hiredin his usual capacity as ‘laborer’ without limitation or qualification on the amount or type of work to be done.
•Flores did do yard work for Bredbenner.
•After two days of yard work, Flores accompanied Bredbenner to a gutter worksite. According to Bredbenner, the gutter installation was for a ‘friend’ and the work was unpaid (although Bredbenner was reimbursed for materials).
•According to Bredbenner, Flores offered to help at the gutter installation job, and Bredbenner accepted the offer.
•Flores fell off the roof at the job site, breaking both arms, his nose, and one leg.

Bredbenner argued that Flores was a ‘volunteer’ at the time he fell of the roof – not an employee. Bredbenner argued that Flores ‘offered’ to help and there was no promise of payment for his help. The Judge of Compensation found that Flores was an employee of Bredbenner at the time of the accident. The Appellate Panel agreed.

The legal decision was based on the following factors:
1. Credibility. Basically, the trial judge found Flores more credible than Bredbenner.
2. The statutory definition of employee. N.J.S.A. 34:15-36 defines an employee as “a servant . . . who performs a service for financial consideration.”
3.The prior employment relationship. Flores was able to show a two-year history of working for Bredbenner.
4.The circumstances of the incident. Flores was transported to the work site by Bredbenner, used materials and tools provided by Bredbenner, and worked under the ‘direction and control’ of Bredbenner.

All of the judges acknowledged that the lack of a contract and the fact that Flores was a seasonal employee who had only been back in Bredbenner’s employ for two days complicated the decision.

Case: Flores v. Paragon Construction and Restoration, App. Div. A-1035-07T3, decided September 15, 2008 by Judges Payne and Alvarez. (Note: this blog entry discusses an ‘unpublished’ decision). Also note: I can’t find a copy of this decision online, either at the Rutgers Law Library or the Appellate Division’s page. If you would like a copy of this decision, please contact me directly – my office # is 973-622-3000.

Statute discussed: N.J.S.A. 34:15-36
NEW CASE: FLORES V. PARAGON CONSTRUCTION – DEFINING “EMPLOYMENT”
9/15/08
New Case – Employment – Who Is an ‘Employee’?

Picture: View from via Del Corso, Rome, Italy
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Workers Compensation

Employer not entitled to credit for workers' compensation payments when settling co-defendant is a public entity

In a case of first impression, the Appellate Division held that where a public entity settles with an injured plaintiff for an at-work injury, the plaintiff’s independent contractor-employer is not entitled to a credit for workers compensation payments in a subsequent indemnity suit by the public entity. In Serpa v. New Jersey Transit, a construction worker was severely injured while working on a train station owned by New Jersey Transit — a publicly owned concern. He received some $900,000 in workers’ compensation payments from his employer, the general contractor for the job. New Jersey Transit paid the plaintiff $1.5 million to settle a personal injury suit, wherein the employer was named as a third-party defendant on an indemnity claim. The employer’s attorney agreed on the record that the $1.5 million was a reasonable settlement. However, after being apportioned 85% of the fault at trial on the indemnity issue, the employer sought a credit for its workers compensation payments. The trial court declined the requested relief and the Appellate Division affirmed. The court held that N.J.S.A. 59:9-2(e) precludes reimbursement to an employer from a public entity tortfeasor. Rather, the public entity or public employee receives a credit for the workers compensation payments, if a judgment is entered. Thus, in a settlement, a public entity cannot reasonably be expected to pay full value for a claim, knowing that if the case goes to trial, it will receive a credit against the damage verdict for the workers’ compensation payments. This was not accounted for by the employer in consenting to the reasonableness of the settlement.

Ultimately, the lesson taught by Serpa for carriers with insureds who work with public entities is that the public entity’s right to a credit for workers compensation payments made to injured employees must be taken into account before conceding as to whether a settlement proposal is reasonable. In this case, counsel for the employer should have argued that a settlement of $600,000 was appropriate.

Insurance

Statute of Limitations on 're-opened' claims

A settlement or judgment is not the end of a case in New Jersey (unless you close a case by way of Section 20 – a ‘lump sum dismissal.’ A claimant retains the right to ‘re-open’ their case if their condition worsens and the doctrine of res judicata does not apply.

The law (N.J.S.A. 34:15-27) states that the worker can ‘re-open’ their claim for “two years from the date compensation was last paid” which includes payments for medical benefits.

In the Pollock case, the claimant received ‘accelerated’ compensation payments, representing accrued benefits and interest (for late payment) on March 28, 2002. The carrier paid out all the benefits in one lump sum as ‘accrued’ based on a practice known as ‘filling in the gaps.’ In the ‘filling in the gaps’ practice, the payments due under an award (in this case, 203 weeks) are retroactively applied to periods of ‘accrued partial permanency benefits.’ In practice, this means that the carrier ‘looks back’ to periods where the claimant was not receiving temporary disability wage compensation and “fills in” those periods with permanency payments. This serves to decrease the number of payments due the claimant.

The claimant then filed a re-opener claim on September 7, 2004.

The carrier argued that the ‘accelerated’ “filling in the gaps” payments had reduced or shortened the statutory time period for re-opener. The carrier argued that the claimant had two years from the date the last payment was made (March 28, 2002) to re-open his case.

The claimant argued that the ‘filling in the gaps’ practice could not reduce/foreshorten his time for re-opener and that the time period for re-opener runs consecutively from the date of the award.

The Trial Judge and the Appellate Panel found that the period for re-opener should run consecutively from the date of award or settlement. This effectively ends the practice of ‘filing in the gaps.’

Case: Pollock v. Tri-State Motor Transit, Inc., 2008-WL-3539972 (App. Div. decided Aug. 15, 2008)(Judges Winkelstein & LeWinn, unpublished as of blog date). Link to: PDF version.

Statutes discussed: N.J.S.A. 34:15-27

Defending Employers