Workplace injuries – Exclusive remedies applies despite contract violation

In a case currently being considered for publication, Janela v. Roman Asphalt Co., the issue of dual employment arose in the context of a government construction contract. The employer/paving company, Raebeck Construction won a contract for paving at Newark Liberty International Airport, which called for it to exercise direct control over the project and to certify that it did not share staff with any other company. On the date of the accident, an employee was struck in the head by a compressor and killed. His estate was paid dependency benefits by Raebeck. However, the estate also brought suit against another company, Roman, who actually did the paving work. It was revealed that contrary to the contract, Raebeck had no role in the job and essentially leased all workers from Roman. Raebeck did actually pay all of the workers, however. Roman moved for summary judgment on the exclusivity provisions of the Workers Compensation Act. The Appellate Division upheld the dismissal of Roman using a five part fact sensitive test focusing on the control exercised over the employees, to determine whether Roman was also an employer. It found that even though Raebeck violated specific government contract provisions to avoid this precise employment situation, bidding qualifications and contract requirements did not negate the legal rules governing workers’ compensation.

Application:

When analyzing a new claim involving dual employment, an immediate and comprehensive investigation of the employment relationship is essential. Obtaining documentation such as contracts, job descriptions, employment handbooks, payroll records, and even incorporation documents is an essential strategy in evaluating the claim. Also, early identification and interviews of the owners, managers and contractors can further assist in determining the degree of control each entity had over the injured worker.

New Jersey Doctors get temporary relief from PIP Fee Schedule

A coalition of medical groups led by the Medical Society of New Jersey has succeeded in getting a temporary delay in the enforcement of a new list of fee limits for treatment of injured motorists under personal injury protection (PIP) coverage. Not surprisingly, the doctors have the support of the Association of Trial Lawyers of America-New Jersey. The significantly reduced fees were to take effect Monday October 1st, but the Appellate Division last Friday granted the stay pending arguments in Alliance for Quality Care v. New Jersey Department of Banking and Insurance. Doctors complained last year when the Department of Banking and Insurance (DOBI) proposed a fee schedule that for the most part used Medicare figures rather than “the reasonable and prevailing fees of 75 percent of practitioners within the region” as stated in the statute. DOBI officials said they used the Medicare figures because they couldn’t find out doctors’ current charges; it remains to be seen whether the courts – or the legislature – will accept that explanation.

Tompkins McGuire will keep you updated as this important case makes its way through the courts.

Vicarious Liability for homeowner

In an important decision rendered August 23, 2007, the Appellate Division conclude d that where a car rented in New York and driven by a New York resident was involved in an accident in New Jersey with a New Jersey driver, New Jersey law would apply to shield the vehicle’s owner, Avis, from liability. In Aria v. Figueroa, the defendant driver rented a van from Avis in New York City and struck the plaintiff, a New Jersey resident, while in New Jersey. There is a significant distinction between New York and New Jersey law concerning a plaintiff’s ability to sue the owner of a vehicle for negligence committed by the driver. Under the New Jersey common law rule, so long as the driver is not an agent of the owner, a vehicle owner is not liable for the actions of the driver. On the other hand, N.Y. Vehicle and Traffic Law 388(1) provides: “[e]very owner of a vehicle used or operated in [New York] for death or injuries to person or property resulting from negligence in the use or operation of such vehicle[,]” where such use is permissive will be liable. The court held that although New York and New Jersey both have interests supporting the application of their respective law regarding Avis’ vicarious liability, given the literal limitation on the scope of operation of the New York statute, New Jersey law should apply. This case is important for New Jersey auto carriers insofar as plaintiff’s attorneys will often attempt to apply the New York statute whenever an accident has any tie to New York. The Court was clear here that unless the accident occurs in New York, the statute is inapplicable.

Step Down Law Changes

Governor Jon S. Corzine has signed a bill, supported by both the New Jersey State Bar Association and the Association of Trial Lawyers of America-New Jersey, banning “step-down” clauses in commercial auto insurance policies. The clauses, in effect sanctioned by the New Jersey Supreme Court’s 2005 decision Pinto v. New Jersey Manufacturers Insurance Co., said drivers not specifically listed in a commercial policy would be limited to the uninsured and under-insured motorist benefits in their personal policies, not the policy of the company for which they were driving. The practice was argued as unfair to both the business paying premiums for full coverage and to new employees who, through no fault of their own, weren’t listed on the policy. The bill, S-1666, was passed unanimously by both houses of the legislature and was sponsored by Senator Nicholas P. Scutari (D-Union), a trial lawyer whose practice includes personal injury.

Failure to Preserve Evidence may increase exposure in workplace injury cases

Upon the occurrence of a workplace injury involving industrial machinery or equipment, it is often the case that an employee will sue the manufacturer of the machine as a companion to his/her Workers’ Compensation petition. At the same time, the employer might seek to effectuate changes in order to make the culpable machine safer for employee operation. However, before any such changes are made, careful consideration must be given to the potential for a claim for “spoliation evidence” against the employer. This can have significant consequences either in connection with pending litigation against an employer or to the extent that it may give rise to an independent cause of action in tort. The following provides a brief summary of the state of the law in this area, along with some general guidelines which may prove useful in reducing liability exposure.

In Gilleski v. Community Medical Center, 336 N.J.Super. 646 (App. Div. 2001), the plaintiff sustained injuries while in a hospital x-ray room when a chair collapsed. After the accident, the defendant-hospital disposed of the chair to the detriment of the plaintiff’s claim against the manufacturer. However, it was found by the court that there was no duty to preserve evidence. The record was clear that the defendant did not accept responsibility for the evidence with knowledge of a potential or pending lawsuit. While hospital staff received calls from the plaintiff complaining of the incident, there was no request that the chair be preserved, nor was there any indication that a lawsuit was forthcoming against the hospital or the manufacturer of the chair. The defendant did not receive notice of a potential suit until fourteen months after the incident occurred, when it received a letter from the plaintiff’s attorney. However, no mention was made of a potential claim against the manufacturer of the chair, nor did the attorney request that the defendant preserve the chair for purposes of a third-party action. Accordingly, the court determined that no liability for the chair’s disposal should attach.

Similarly, in Allis Chalmers Corporation Product Liability Trust v. Liberty Mutual Insurance Company, 305 N.J.Super. 550 (App. Div. 1997), an employee was killed on the job while operating a forklift. The decedent’s wife subsequently instituted a Workers’ Compensation petition along with a products liability action against the manufacturer of the forklift. At the outset , the Workers’ Compensation carrier along with the plaintiff’s products liability counsel agreed to split the cost of inspecting the forklift. Thereafter, the employer offered to sell the forklift to the Workers’ Compensation carrier to preserve it for the pending lawsuit. The employer further advised that if the forklift was not purchased, it would be “scrapped.” The Workers’ Compensation carrier refused to purchase the forklift and did not advise the employer to preserve the forklift. Following settlement of the products liability action, the manufacturer of the forklift brought an action against the Workers’ Compensation carrier for spoliation of evidence under both fraudulent concealment and negligence theories. The carrier successfully moved for summary judgment, with the court declining to impose a duty on the carrier to affirmatively obtain ownership and control of the forklift for the defense of the manufacturer.

Conversely, in Callahan v. Stanley Works, 306 N.J.Super. 488, 498 (Law Div. 1997) the plaintiff, a Home Depot employee, was injured while moving a pallet of storm doors with a forklift truck. The doors tipped off the forklift and struck the plaintiff. Immediately after the accident, Home Depot voluntarily took steps to preserve the pallet in connection with investigating the inevitable Workers’ Compensation claim. However, at some point, the pallet was destroyed. The plaintiff subsequently sued the distributor of the doors and added Home Depot to the lawsuit, claiming that it lost or destroyed the pallet which was the “instrument of the injury.” In light of the fact that Home Depot attempted to preserve the pallet and also asserted a lien on any damages recovered by the plaintiff in the third-party action, the court concluded that there was a duty to preserve the evidence, and reasoned that “a jury could find that Home Depot should have foreseen that the evidence was material to a potential civil action.”

Conclusions: Practical Applications

Where an employer makes post-accident modifications/repairs, absent knowledge of an impending suit concerning a given piece of machinery or an agreement to preserve the same, a claim for negligent spoliation should not be feared. Consequently, it becomes of great importance to document when any modifications/repairs are made in comparison to when notice of suit is received. Additionally, it is ill-advised to enter into any agreement wherein an employer promises to preserve a given piece of evidence for purposes of contemplated or pending litigation. Equally important, upon receipt of a request to preserve evidence from a prospective litigant whether it be a plaintiff or defendant, an employer should promptly reply in writing that it takes no responsibility for evidence preservation so as to obviate any potential claim that the employer’s silence equated to acquiescence to the request. Finally, upon receipt of a formal or informal notice that a lawsuit is forthcoming, it is best to forward written notice to all potential litigants prior to making any modifications/repairs and affording an opportunity to inspect the implicated machinery in the presence of counsel.

Contributed by: Jared DuVoisin and Joseph K. Cobuzio

Death benefits applicable to pending cases

In Cruz v. Central Jersey Landscaping, Inc., decided by the New Jersey Appellate Division on May 14, 2007, the majority found that amendments to N.J.S.A. 34:15-13 (which went into law effective January 14, 2004 setting a uniform 70% of the decedent’s wages as the death benefit amount in dependency cases regardless of the number of dependents) applied to pending workers’ compensation cases including claims where the worker’s death was prior to January 14, 2004.

Defending Employers