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Order in the Comp Courts: Rulings this Year Mandated Specific Evidentiary and Jurisdictional Standards
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Order in the Comp Courts: Rulings this Year Mandated Specific Evidentiary and Jurisdictional Standards

NJ Supreme Court Review 1996-97

This was the year that the Court mandated that workers’ compensation actions must comply with specific evidentiary and jurisdictional standards. In a series of cases, the New Jersey Supreme Court highlighted the necessity of strict adherence to the requirements of the Law for those practicing before the Division of Workers’ Compensation. 

The New Jersey Supreme Court adopted an evidentiary standard for the Division of Workers’ Compensation that balances the stringent Rules of Evidence utilized in the State judicial system and the informal approach of the executive branch’s administrative tribunals. Justice Coleman, a former judge of compensation, speaking for the majority of the Court, defined a standard upon which evidence may be admitted in a workers’ compensation action, which provides a rational basis for a judgment that will be consistent with the evidentiary requirements of appellate review. 

Even though the Rules of Evidence do not control the admission of evidence in workers’ compensation proceedings, the Supreme Court continues to insist that a judge of compensation’s determination be made on competent and relevant evidence. The issue becomes not whether the evidence admitted violates the Rules of Evidence but instead whether there is substantial credible evidence in the record to support the judgment when the proofs are considered as a whole. 

While a transcript of a prior workers’ compensation hearing involving another incident is admissible to attack the petitioner’s credibility, it may not be permissible to use the transcript to buttress the respondent’s conclusion that the petitioner tended to be untruthful. The transcript concerned exaggerated statements made by the petitioner to a newspaper reporter in a telephone interview which embellished her marathon running skills. The respondent’s attorney did not present the transcript as extrinsic evidence of past acts of untruthfulness. Even though the judge relied upon the transcript in support of the respondent’s conclusion, there was sufficient credible evidence, independent of the prior transcript, to support the conclusions of the trial judge. Therefore it was not so prejudicial as to require a reversal of the trial court decision. The Court found that there was sufficient credible evidence in the record, independent of the improper evidence, that supported the trial court’s findings which resulted in the ultimate dismissal of the claim petition.
Reinhart v. E.I. Dupont De Nemours, 147 N.J. 156 (1996).


Struggling with the continued erosion of the "exclusivity doctrine", several tribunals dealt with the application of issues concerning N.J.S.A. 34:15-8. In a case receiving national attention, the Third Circuit Court of Appeals recognized that an employee has the right to seek redress for emotional injury intentionally inflicted by the employer where the employer’s conduct was sufficiently outrageous to support the claim. An employee was permitted to sue her former employer for intentional infliction of emotional distress by N.J.S.A. 34:15-8. The employer made derogatory comments to the petitioner and intimidated her until she broke down and started to cry. It was his intention to verbally attack her until she quit. The court found that the employer unnecessarily placed stress upon the employee to force her out of the company even though the employer knew that the employee’s physician had specifically indicated that the employee’s condition would require her to avoid such stress. As a result of the badgering and intimidation, the employee developed a totally disabling traumatic stress disorder requiring the treatment of a psychiatrist. Subbe-Hirt v. Baccigalupi, 94 F.3d 111 (3d Cir. 1996). 

The exclusivity bar was not permitted to be utilized as a valid defense for criminal acts committed on the job site. Even though the employer’s subsidiary was the premises owner, the exclusivity defense of workers’ compensation could not be utilized to claim immunity from a civil suit. An employee of a convenience store, the mother of nine children, was shot to death by a robber at Krauszer’s Food Store. The store itself was operated by Dairy Stores and was owned by Convenience Management Services, Inc. (CMSI). The court reached its decision by evaluating the parent-subsidiary relationship and deemed it strongly supported, thus negating a workers’ compensation defense. The court disregarded whether or not the premises owner, CMSI, had exercised control over the employer’s operation of the convenience store. The court held that the premises owner had a duty to protect the decedent against the criminal acts of others and could not utilize the exclusivity doctrine of the Workers’ Compensation Act to bar such a recovery. Morris v. Krauszer’s Food Store, Inc., 300 N.J. Super. 529 (App.Div.1997). 

Co-employee immunity was permitted to be invoked in a claim where the fellow employee was not on the actual job site during the time that the co-worker was injured. A supervisor at Acme Plastics, Inc., from 1983 through November of 1988, removed the safety tape from a computerized saw which ultimately resulted in another employee’s injury. The injured employee was hired in March of 1989 and suffered the accident in May 1989 because of the prior removal of the safety apparatus. The court recognized that both employees did work for a common employer and therefore invoked the immunity doctrine, which bars a liability claim for the negligent action of the "co-worker" of the same employer. The court reasoned that the former employee, who was alleged to have been negligent in removing the device, did perform the alleged act "in the course of" his employment. Therefore, even though the injured worker had not been hired when the negligent act occurred, a claim could not be brought against the "fellow employee.”
Estrada v. Hendricksaw Corp., et al., 1997 WL 336433 (App.Div.1997). 

Shifting trends in the employment sector have caused issues to arise regarding coverage of employment. The horse racing industry in New Jersey has been plagued with difficulties in attempting to ensure adequate workers’ compensation coverage. In the past, difficulties obtaining uniform coverage occurred because out-of-state horse racing owners were unaware of their obligation to provide workers’ compensation coverage and because jockeys often rode the horse of more than one owner. The New Jersey Racing Commission adopted a plan in September of 1989 requiring that workers’ compensation coverage be in effect as a condition of licensure for the year 1990. The Commission required that owners and trainers purchase workers’ compensation insurance coverage from Frontier Insurance Company exclusively. A class action was brought by owners and trainers who had purchased other policies embodying workers’ compensation coverage similar to Frontier’s.

Additionally, a class of insurance agents, who lost business due to the Commission’s Workers’ Program, brought additional plaintiffs to the action. While the Commission subsequently amended the plan to permit coverage by any company authorized to do business in New Jersey, damages existed for the year 1990, during which the original program was in effect. N.J.A.C. 13:70-3.41, N.J.A.C. 13:71-6.1 In an action for counsel fees by the plaintiffs against the New Jersey Racing Commission, the Appellate Division agreed that the plaintiffs had claims based in law even though the damages to the plaintiffs were minimized by the Commission’s discontinuance of the program. The plaintiffs were deemed a "prevailing party" entitled to attorney’s fees. Stockton v. Rhulen, 1997 WL 359069 (App.Div.1997). 

Even though the New Jersey Workers’ Compensation Act was amended to exclude coverage to longshore and harbor workers, questions initially existed as to the retroactivity of the amendment upon pending claims. The Appellate Division was persuaded by the parties' expectations that the Act did not warrant retroactive application of the amendment. Those petitioners who had a claim pending for two years before the adoption of the statutory amendment had a legitimate expectation that those claims would be resolved under the law of the New Jersey Workers’ Compensation Act, and the court ruled that they would be spared the burden, if not the injustice, of refiling the claims before the federal system for adjudication. In reaching its decision, the court recognized that the rule of statutory construction followed by the New Jersey courts favors the prospective application of statutes. However, the court recognized that the general rule did not have automatic application in every case and that the three exceptions to the general rule against retroactive application of the statute needed to be considered: the legislative intent; when the statute was ameliorative or curative; and when the expectations of the parties warrant retroactive application. Testimony was presented at the time of the trial that the employers, through a lobbying group, the New Jersey Coalition of Maritime Employers, sought to induce the New Jersey Legislature to exclude longshoremen’s compensation claims form the New Jersey Workers’ Compensation system. At the time of the trial, it was admitted that the bill would have been "killed" if its effect had been the dismissal of the pending cases. The coalition did not intend the amendment to be applied retroactively to pending cases.
Street v. Universal Maritime, 300 N.J.Super. 578 (App.Div. 1997). 


Policy issues concerning coverage were the subject of appellate review this past year. The racing industry has historically been threatened with problems concerning coverage due to the logistics of personnel and facilities. Frontier Insurance Company had written a policy opposing limitations of liability and modified rate classifications. The policy was developed in conjunction with the New Jersey State Racing Commission and was approved by the Commissioner of Insurance. The injured worker was employed as a trainer at a facility known as the Meadows Running, Training and Booting Center in Colts Neck, NJ. Since the policy expressly excluded coverage of that location, the claim was denied at the trial level for lack of coverage. 

The Appellate Division noted that N.J.S.A. 34:15-87 mandated coverage requirements that could not be circumvented by either the Commissioner of Insurance or the New Jersey State Racing Commission. The Commissioner of Insurance has the authority to approve classifications, rules, base rates, and a system of merit or schedule of ratings, but it is not permitted to modify the mandatory coverage requirements. Both policy and law clearly require state-wide workers’ compensation coverage absent a concurrent policy or self-insurance. The court concluded that the petitioner was covered under the Frontier policy.
Lohmeyer v. Frontier Insurance Company, 294 N.J.Super. 547 (App.Div.1996).

Employers are sometimes disgruntled by the way insurance carriers handle claims arising out of workers’ compensation matters. President Container, Inc. was insured by Liberty Mutual Insurance Company (Liberty) and was afforded coverage from November 1, 1985, to November 1, 1988. The policy dictated that the insured was to pay retrospective premiums after a retrospective determination of the insured’s premium obligations based on the insured’s past claims and loss experience. Therefore, the premiums under the policy were to be calculated after the payment of claims. President was charged $131,072.00 in retrospective premiums following payments made under the policy. The employer protested the charge, and litigation resulted. President alleged that Liberty was negligent in handling the claims and that Liberty had the burden of proof to demonstrate that the claims had been handled reasonably. The court held that the presumption of reasonableness shifts to the defendant insured and that the employer had the burden of going forward with evidence to rebut the presumption once payment had been made. The insured alleged that the insurance carrier had breached its agreement by failing to inform the insured of loss reserves and claims on an ongoing basis so that the employer could review them for compliance with fair and reasonable standards. The trial court held that there was no competent evidence indicating that the reserves were set unreasonably or unfairly high by the 1983 agreement between the parties. The Appellate Division affirmed, indicating that there was nothing in the agreement, the binder for the workers’ compensation policy, nor the evidence at trial that suggested that the insurer’s compliance with the terms of the agreement was a condition to the insured’s payment of premiums. The burden of proof remains with the insurer that it has acted in good faith for its insured until such time as the insurer makes payment of the claim. After payment has been made by the insurer, the burden of proof that the insurer acted unreasonably in handling the claim shifts to the insured in an action against the insurer for bad faith. Liberty Mutual Insurance Company v. President Container, Inc., 297 N.J.Super. 24 (App.Div.1997). 

The gray area of what constitutes an employee continues to be a current topic of interest before the Appellate Division. A sheetrock worker with thirty years of experience in the industry, who had been in the independent business of installing sheetrock and employed others in connection with his unincorporated business, undertook work at a job site to finish a sheetrock job. He was required to bring his tools and truck to the job site. The sheetrock, nails, and supplies needed were provided by the contractor. The employee fell while working on the job site, and the employer denied workers’ compensation benefits to the injured worker relying upon the theory that the injured employee was an "independent contractor.” The court applied both the "control test" and the "relative nature of the work test," concluded that employment status did exist, and deemed the incident to be compensable. Even though there was an absence of control of the work details, the court took into consideration the skill level of the employee and the circumstances under which the work was performed to determine the significance of control as a dispositive factor. The court concluded that where an employee with thirty years of experience in sheetrocking failed to need instruction as to what was required to be done, that in and of itself did not mean that the employer did not have control over the employee.
Kertesz v. Korsh, 296 N.J. Super. 146 (App.Div.1996). 

Psychological Disability 
One of the most significant areas on which appellate review is now focused are claims involving psychological disability resulting from the harassment of employees in the workplace. The stringent standards imposed for workers’ compensation benefits and the increased volume of claims have resulted in novel and creative causes of action for relief. In December of 1990, Lisa Schmidt was hired by Dennis Smith, the President of Personalized Audio Visual, Inc. (PAV), a closely held corporation under contract with the Somerset Hilton Hotel, to run the hotel’s business center. Schmidt was to work as the office manager of the business center. After she was hired, but before she was to begin work for PAV, Smith invited her to attend a Christmas party at the Hilton. Following the party, Smith tried to kiss the plaintiff in the elevator and later attempted to have oral sex with her. He repeatedly requested sex with her on several occasions and also grabbed her buttocks and breasts, and tried to kiss her. Following these events, Schmidt suffered severe emotional distress, had relapses of anorexia and bulimia, became an alcoholic, and attempted suicide on four occasions. 

Schmidt filed a Law Against Discrimination (LAD) claim against Smith and PAV. N.J.S.A. 10:5-1 to -42. The defendants impleaded their workers’ compensation carrier, United States Fidelity and Guaranty Company (USF&G), alleging coverage based upon the comprehensive general liability policy and the workers’ compensation policy. A third-party action for declaratory judgment followed, seeking defense costs and coverage. 

The court held that the employer is deemed to be vicariously liable as a matter of law for the intentional acts of the employee. An employee whom a co-worker sexually harasses has the right to file an additional tort claim against the employer for the intentional acts of the co-employee. The workers’ compensation carrier must defend the claim under the employer’s liability portion of the workers’ compensation policy.
Schmidt v. Dennis Smith and Personalized Audio Visual, Inc., 294 N.J. Super. 569 (App.Div.1996) Certif. Granted 148 N.J. 461 (1997). [Note: Affirmed - Schmidt v. Smith, 713 A. 2d 1014 - NJ: Supreme Court 1998.]

In another harassment case, the Appellate Division decided that where there is a specific traumatic event caused by the employer's actions, the petitioner’s psychiatric disability is said to be causally related to the employment. An employee was accused of searching through the desk of another employee, and a criminal investigation was conducted concerning the theft of an expensive bracelet from the other employee’s desk. The injured worker suffered depression, high blood pressure, and post-traumatic stress disorder due to falsely imprisoned and harassed by the New Jersey State Police detectives. The employee became very emotional, began to cry, and became nauseous during the investigation. She was threatened by the State Police with an arrest warrant and informed that she could go to jail for 5-7 years. The employee was denied a request to call her sister or her cousin on the telephone. Detectives detained her for over 2 ½ hours in the basement of the Justice Complex. Approximately 3 weeks after the investigation, she was advised that she was no longer a suspect in the theft of the bracelet. Prettyman v. State of New Jersey, 298 N.J. Super. 580 (App.Div.1997). 

An attempt to expand the law concerning occupational heart conditions was denied by the Appellate Division when the petitioner failed to produce a sufficient evidentiary basis on which a claim could be founded. Where the petitioner cannot demonstrate by medical or scientific knowledge that his progressive disease of the heart muscle, known as idiopathic cardiomyopathy, was aggravated by the employment either because of physical exertion or emotional stress and strain, the condition is deemed not compensable. The petitioner offered no proof of any aggravation of the underlying condition. The petitioner testified that he was doing well and feeling fine and therefore suffered no psychiatric residuals.
Dietrich v. Toms River Board of Education, 294 N.J. Super. 252 (App.Div.1996), Certif. Denied 148 N.J. 459 (1997). 

The Appellate Division continued to erode the "Bond Doctrine" in a recent occupational disease claim. The court held that the liability for this occupational disease claim could be assessed exclusively against the first insurance carrier on the risk where an employee worked from August 18, 1971, through October 16, 1992, and was exposed to irritants and foreign substances resulting in a pulmonary disability. Allianz provided insurance coverage until June 30, 1992, the date when all manufacturing operations ceased. New Jersey Manufacturers Insurance Company (NJM) afforded coverage from June 30, 1992, through the termination of the petitioner’s employment. The petitioner’s medical expert examination occurred on July 6, 1992, after the termination of manufacturing operations and following the coverage of Allianz. The court concluded that there was no causation or actual contribution to the petitioner’s medical condition after the plant ceased operations and the Allianz coverage ended. Therefore, the subsequent carrier, NJM, bore no responsibility for the claim. Vastino v. MAN-Rowland, Inc., 299 N.J. Super. 628 (App.Div.1997). 

In a series of several cases, the court reviewed issues involving claims "arising out of employment and in the course of employment." In August of 1989, an armored truck security guard, who was required to carry a loaded handgun with him while on duty, was driving between job sites with two other guards in one of the employer’s armored trucks. The guard took out his handgun, put a bullet in the cylinder, spun the cylinder, then placed the gun against his chin and pulled the trigger. The gun did not discharge on the first try. The guard spun the cylinder again, aimed it at his chin, and pulled the trigger a second time. The gun fired, and the guard died. The court held that the decedent’s self-inflicted gunshot wound to the head, suffered while he was playing "Russian Roulette" at work, was not deemed to be compensable. Money v. Coin Depot Corporation, 299 N.J. Super. 434 (App.Div.1997). In two cases involving off-premises liability, the Appellate Division handed down opposing decisions. A police officer suffered a back injury while shoveling out her snowbound, unmarked police car from her driveway to go to work. The matter was held non-compensable as she was not on the authorized business of her employer even though the employee was operating an employer-owned vehicle. Perry v. State, Department of Law and Public Safety, Division of State Police, 296 N.J. Super. 158 (App.Div.1996) Certif. Granted 149 N.J. 143 (1997). [Editor's Note: Case affirmed on appeal and remanded, Perry v. STATE, DEPT. OF LAW & PUBLIC SAF., 708 A. 2d 688 - NJ: Supreme Court 1998].

An employee of the Division of Youth and Family Services was assigned to answer a call at the Jersey City Medical Center as part of her job to be on-call over the weekend. After completing the call she returned to her residence in Newark at 1:30 a.m. Sunday morning. She was then approached by a man in the common area of the two-family home she was occupying. The man, who was armed with a knife and wearing only underwear, pushed the door in and raped her, then dragged her down the stairs and raped her again in her girlfriend’s apartment. He threatened to kill her if she reported the attack to the authorities. The employee testified at the time of trial that she had intended to complete her paperwork that morning and to handle any calls that were received over the rest of the weekend. The court held that the petitioner was entitled to receive an award for permanent psychiatric disability as the incident arose out of the employment and could be considered part of the risk that would have been contemplated by a reasonable person entering the employment. The court concluded that the rape would not have occurred if the employee had not been returned to her home at 1:30 a.m.
N.G. v. State of New Jersey, 300 N.J.Super. 594, (App.Div.1997). 

The Appellate Division continued its restrictive application of the "coming and going rule" when it denied benefits to an individual who appeared on the job site one hour before the starting time and who, while attempting to take a freight elevator to the fourth floor of the building where he worked, suffered the injury when he pushed the elevator door open, stepped in, and fell into the elevator shaft. The court reasoned that the area was not under the employer's control since multiple tenants were on the premises. The employer did not require its employees to use the freight elevator to gain entrance to the factory on the fourth floor, and many of the workers, in fact, used the stairs. Furthermore, the petitioner was not deemed to be acting "in the course of employment" since he arrived an hour before the employer’s premises was opened. He would usually"sit and wait" or have "a cup of coffee or maybe smoke a cigarette." Ramos v. M & F Fashions, Inc., 1997 WL 310186 (App.Div.1997). [Note: Reversed by the NJ Supreme Court - Ramos v. M & F FASHIONS, INC., 713 A. 2d 486 - NJ: Supreme Court 1998.]

In a series of decisions, the court has expanded defenses available to respondent employers in workers’ compensation actions. In a landmark case, the Supreme Court took a very restrictive approach to the notice requirement in occupational disease claims. It is anticipated that the consequences of this decision will have a significant impact on occupational disease practice under the New Jersey Workers’ Compensation Act. 

The Court interpreted the notice requirement as statutory. The workers’ compensation statute is intended to avoid prejudice to the employer, and therefore late notice is not permitted and will bar a claim. Consequently, if an employee fails to comply with the notice requirement of N.J.S.A. 34:15-33, the injured worker’s right to recover workers’ compensation benefits for an occupational disease will be barred. Under the statutory provisions, unless the employer had either actual knowledge of the condition or received written notice of the medical condition within five months after the employee ceased to be exposed to the irritant or within 90 days after the employee knew or should have known the nature of the disease and its relation to his or her employment, a claim will be barred for the payment of benefits for death or disability resulting from the occupational disease. 

Justice Stein, writing for a unanimous Court, reviewed the occupational claim of Arthur Brock, who worked in various capacities for Public Service Electric and Gas Co. (PSE&G) for approximately 30 years. During that time, the employee was exposed to asbestos fiber. Brock retired from PSE&G in 1987. In 1988 the retired employee consulted with both a lawyer and a doctor. In November of 1989, the former worker had actual notice that he suffered from asbestosis. In 1990, a third-party products liability claim was filed against the manufacturers, distributors, and suppliers of asbestos material due to his asbestosis, which he learned of when he received a copy of the medical report from his attorney. In March of 1991, the former employee received the proceeds of the first settlement from a defendant in the third-party action. On October 23, 1991, within two years after he knew about his occupationally-related disease, the former worker filed a workers’ compensation claim against his former employer. The court barred the claim because the employee had not notified his former employer, PSE&G, until the filing of the workers’ compensation claim, which was not within the 90 days provided by the Statute.
Brock v. Public Service Electric and Gas Co., 149 N.J. 378 (1997). 

Consistent with its prior statutory interpretations, to be used as a defense, intoxication must be the sole and proximate cause of the accident. The court awarded benefits to an inebriated employee who fell from a narrow, eighteen-foot-high scaffold while assembling a sheet metal roof. Even though there was evidence admitted that he had consumed one-half gallon of alcohol and two beers on the day of the accident and had a grossly elevated blood alcohol level of .29%, the accident was held compensable since the employee fell while attempting to fasten a defective assembly apparatus to the bridge of the scaffold. Alcohol consumption was deemed not to be the sole cause of the accident.
Warner v. Vanco Manufacturing, Inc., 299 N.J.Super. 349 (App.Div.1997). 

The issue of temporary disability benefits due to teachers during summer recess has become more confusing due to conflicting Appellate Division opinions. In a recent case, the Appellate Division decided that a worker who was not expected to work for the school district over the summer recess and who had already received his or her full salary was not permitted to collect temporary disability benefits over the summer recess. The court held that the workers’ compensation benefits would be paid with the same intent as sick leave benefits under N.J.S.A. 18A:30-2. Outland v. Monmouth-Ocean Education Service Commission, 295 N.J.Super 390 (App.Div.1996) Certif. Granted, 149 N.J. 141 (1997).[Affirmed on appeal to the NJ Supreme Court Outland v. MONMOUTH-OCEAN EDUC. SERV., 713 A. 2d 460 - NJ: Supreme Court 1998.] This decision conflicts with an opinion entered previously in Porter v. Elizabeth Board of Education, 281 N.J.Super. 13 (App.Div.), Certif. Denied, 142 N.J. 455 (1995). 

Medical experts who examine on behalf of an adverse party must examine the claimant and exercise reasonable professional care in rendering a diagnosis. The duty recently imposed by the Appellate Division is limited, at least concerning the symptoms and complaints presented by the claimants. While the court did not intend to impose upon the examining physician the same duty owed to the traditional patient, the examiner will be subject to third-party liability if the professional fails to diagnose a condition for which the claimant presents symptoms and complaints. A forty-year-old individual was unable to continue to work because of vision problems. The individual claimed he could not drive a car because of decreased vision. The claimant appeared at a physician’s office for an examination for Social Security Disability Benefits at the direction of the reviewing agency. The examining physician noted the petitioner’s complaint of poor vision, administered eye chart tests, and concluded that the claimant was in fairly good health, although his eyesight could be better. The claimant’s problems continued, and he saw an ophthalmologist who referred him for MRI studies. Diagnostic tests revealed a large brain tumor in the optic chasm, which was the cause of his visual difficulties. Surgical tumor excision was required, and follow-up radiation treatments were conducted. The Social Security Administration finally awarded disability benefits, and the claimant was permitted to proceed against the examining physician for professional negligence. Ranier v. Frieman, 294 N.J. Super. 182 (App.Div.1996). 

The Appellate Division further clarified the offset due to workers’ compensation insurance carriers due to a Social Security payment. Federal and state statutes mandate reductions for Social Security benefits paid to family members that are deemed to be auxiliary beneficiaries under the petitioner’s award. Social Security payments made to minors are offset until the minor reaches age 18 or has graduated from high school, whichever occurs later. These reductions, reverse offsets, can be taken by the workers’ compensation carrier even if the auxiliaries were not born at the time of the initial injury. 

An employee was awarded workers’ compensation benefits for injuries that occurred during the years 1978 through 1981. The initial award amounted to 50% of partial total permanent disability. In 1993, at a subsequent hearing, an award was entered for total permanent disability benefits. The award was by a settlement made with two insurance companies for the employer and the New Jersey Second Injury Fund. After the initial award for permanent partial disability, the petitioner had two children out of wedlock. One was born in 1984, and the other was born in 1990. The mother, who was living with the children at a separate residence in 1990, applied and received Social Security disability benefits based upon the injured worker’s Social Security disability award. Even though the children were born after the initial award and were not living with the father at the time of his settlement for total permanent disability, the court permitted an offset of workers’ compensation benefits.
McAllister v. Resorts International Hotel and Casino, 29 N.J. Super. 199 (App.Div.1997).

Medical examinations are considered to be a significant element in the authorization of temporary disability benefits. The suspension of workers’ compensation benefits for failure to submit to a medical examination required by the insurance carrier statutorily permits the suspension of benefits under N.J.S.A. 34:15-19. The Appellate Division considered that statutory section permitting the refusal of the payment of collateral benefits, commonly known as temporary disability benefits (TDB), during the period that the petitioner refused to submit to the examination. The court held that an employee’s failure to submit to a physical examination in a contested workers’ compensation claim where there is a payment of workers’ compensation benefits under a reservation of rights would act to bar an employee’s recovery of benefits available in a contested claim against the Division of Employment Security or a private plan employer. Matter of Paterson, 298 N.J. Super. 333 (App.Div.1997). 

The Appellate Division has continued to define what scientific evidence is admissible in the trial of a claim. Walter James was exposed to benzene-containing petroleum products and other chemicals during his twenty-six years of employment with Bessemer Processing Company Inc. James died of stomach and liver cancer in 1990. In a toxic-tort, failure to warn case against multiple oil companies for failure to inform the chemical workers about the dangers of the chemicals and residue in the drums that he worked with at a drum recycling plant, the court reiterated that "…the modern trend has been to relax or broaden the standard for determining the medical causation in toxic tort litigation." The court held that testimony by the plaintiff’s expert in toxicology, Dr. Myron Mehlman, provided sufficient epidemiological evidence to establish a causal link between the death of the worker from cancer and his exposure to benzene and polycyclic aromatic hydrocarbons that exists in gasoline and petroleum products. This evidence was buttressed by a report of Dr. Rowland D. Goodman, an internist, who indicated that the employee’s death was causally related to his exposure based upon the fact that the worker had absorbed the benzene through his gastrointestinal tract and lungs. The chemical then spread to the decedent’s stomach, causing a derangement of the DNA mechanism resulting in cells that grew uncontrolled. 

The court held that the evidence presented was admissible. In determining whether scientific testimony should be admitted, the court will take into consideration such factors as: (1) whether the theory being presented can’t be tested; (2)whether the theory has been subjected to peer review; (3) the error rate that is known or that is a potential of the theory being presented; (4) the existence and maintenance of standards controlling the theory’s operations; and (5) whether the theory has attracted widespread acceptance within a relevant scientific community.
James v. Chevron U.S.A. Inc., 301 N.J. Super. 512 (App. Div. 1997). 

The impact of obtaining a lump sum settlement of a workers’ compensation claim upon an applicant’s application for temporary disability benefits was considered by the Appellate Division. A worker involved in a motor vehicle accident resolved his workers’ compensation claim by way of dismissal and a lump sum payment under N.J.S.A. 34:15-20. After receiving $1,000.00 for the resolution of the workers’ compensation claim, the worker applied for State plan temporary disability benefits (TDB). The court denied the subsequent request for TDB benefits asserting that acceptance of a settlement under N.J.S.A. 34:15-20 constituted implied acknowledgment that the claimant’s disability was work-related and compensable under the workers’ compensation statute. The court asserted that payment would contravene the strong legislated policy against the duplication of benefits outlined in N.J.S.A. 43:31-30 and N.J.S.A. 34:15-57.1.
Sperling v. Board of Review, 301 N.J. Super. 1 (App. Div. 1997).[Affirmed, Sperling v. Board of Review, 720 A. 2d 607 - NJ: Supreme Court 1998.] 

Commutation of claims involving total and permanent disability has been controversial between the Appellate Division and the Executive Branch. A commutation of benefits was awarded to a paraplegic who was deemed totally and permanently disabled. The compensation judge commuted 60 weeks of the award, which effectively would discontinue payments for the last 74.6 weeks of the award. By obtaining a lump sum benefit of $20,373.60 the petitioner lost benefits of just under $5,000.00 in exchange for the present payment. While the respondent objected, the court permitted the award, indicating that the employee’s situation presented unusual circumstances and that it was in his better interest to award the commutation. The employee’s expenses, including food, exceeded his present income. He intended to use the commutation to supplement his income which was encumbered by a mortgage, child support, and insurance for a handicapped van. The court noted that a third-party action was pending and awaiting trial. It held that it was in the employee’s best interest to be able to maintain his home and means of transportation since both were uniquely suited to his needs and that to strip him of either would cause him "undue hardship." Vieira v. On Shore Construction Co., 297 N.J. Super. 518 (App. Div. 1997). 

Within several weeks of the Vieira decision, the Department of Labor adopted a rule to the contrary. The new Administrative Rule prohibits the commutation of total disability benefits or dependency benefits. N.J.A.C. 12:235-83, 29 N.J.R. 805, adopted March 3, 1997. 

Employment Discrimination 
Discrimination claims continue to be an active area of litigation and review by Appellate forums throughout the state. Collateral remedies continue to provide significant areas for recovery. The prohibition against retaliation embodied in the New Jersey Workers’ Compensation Act, N.J.S.A 34:15-39.1, provides a statutory basis upon which employees may file a civil action based upon the retaliatory conduct of the employer. In a legal malpractice claim, the Appellate Division ruled that a civil action based upon the Workers’ Compensation Act is not considered a true tort claim since the legislation did not intend that claims of discrimination would be subject to the notice requirements of the Law Against Discrimination. Therefore, failure to notify a public entity within 90 days of the accrual will not result in a bar of civil action for discrimination. Brook v. April, 294 N.J. Super. 90 (App. Div. 1996). 

In another discrimination claim, the court determined that the appropriate statute of limitations for a civil action that is based upon the statutory scheme of the Workers’ Compensation Act is two years. The two-year statute of limitations of N.J.S.A. 2A:14-2 applies to all civil actions for damages related to retaliatory discharge for seeking workers’ compensation benefits. A claimant was hired by an employer in June of 1981 and sustained a work-related injury in May 1989. While the company doctor notified him that he could return to light duty work on at least two occasions, light duty work was unavailable. Subsequently, the employee was terminated in May of 1990. In June of 1991, a workers’ compensation claim petition was filed for benefits due to the injury at work. The court interpreted that a subsequent claim for damages in a civil action for retaliatory discharge was similar to claims in personal injury tort actions. Since the employee did not file the claim for retaliatory discharge until more than two years after his termination, the complaint was dismissed as time-barred.
LaBree v. Mobil Oil Corporation, 300 N.J.Super. 234 (App.Div.1997). After this September 30, 1996 decision, the New Jersey Department of Labor promulgated an administrative rule requiring that a discrimination complaint be filed within 180 days of the last alleged act of discrimination. N.J.A.C. 12:235-9.4(b), 29 N.J.R. 805, adopted March 3, 1997. 

An injured worker brought a federal discrimination claim against her employer in the United States District Court based upon diversity of citizenship and an amount in controversy exceeding $50,000.00. The court was required to determine whether or not the employee failed to create a genuine issue of material fact regarding whether she was terminated for filing a workers’ compensation claim. Her claim for retaliatory discharge failed since she was unable to establish a prima-facie case. The employee alleged that she was discharged in retaliation for attempting to obtain workers’ compensation benefits. The court reasoned that, even though the timing of a discharge may be significant, the timing alone can not raise an inference of causation sufficient to establish that a prima-facie case of retaliation exists. 

The employee alleged that her discharge from her employment occurred after a 90-day medical leave period and that in and of itself was sufficient to bring a retaliatory discharge claim. She began working for a computer company in March 1982, and approximately seven years later, on April 4, 1989, she was injured at work and suffered from severe lower back pain and cramps in her right leg. After a 90-day medical leave period, the petitioner was terminated, which was also the time when she applied for workers’ compensation benefits with the Zurich-American Insurance Group. The insurance carrier notified the petitioner that it was a denied case, and approximately one month later, she filed a formal claim for workers’ compensation benefits. The court held that there was insufficient specific evidence showing that the worker’s discharge was in retaliation for filing a workers’ compensation claim. The court held that the mere unsupported conclusory allegations in the complaint were insufficient to establish a material issue of fact and dismissed the matter by way of summary judgment.
Morris v. Siemens Components, Inc., 928 F.Supp.486 (D.N.J. 1996), Reargument denied by 938 F.Supp.277 (D.N.J. 1996).


By Jon L. Gelman, Attorney at Law. Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (Thomson-Reuters). For over five decades, the Law Offices of Jon L Gelman 1.973.696.7900 have represented injured workers and their families who have suffered occupational accidents and illnesses.

Recommended Citation: Gelman, Jon L.,  Order in the Comp Courts: Rulings this Year Mandated Specific Evidentiary and Jurisdictional Standards, (1997),


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This article is reprinted with permission from the September 1, 1997 issue of the New Jersey Law Journal. (c)1997 NLP IP Company,149 N.J. L.J. 850, Sept. 1, 1997 . 

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