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Psychological Disability Claims
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Psychological Disability Claims

NJ Supreme Court Review 1992-1993

The 1992-93 court term produced a group of decisions that focused on some of the novel issues now being presented before the Division of Workers' Compensation. Judicial forums had an opportunity to review many aspects of the law including employment status, psychiatric disability, apportionment of disability in traumatic disease claims among multiple respondents, [the "safety net", the "coming and going rule", liens, the scope of spousal dependency, evidential concerns,] and the scope of the availability of a pension offset for employees of interstate agencies. 

The Appellate Division reviewed several claims involving employment status. It was determined that when an individual maintains the right to exercise discretion and professional expertise, that individual is considered to be an independent contractor and not an employee. A registered nurse, who offered professional service to the public after hospital care and in the patient's home was considered to be an "independent contractor" and therefore not an employee subject to the Workers' Compensation Act. While working in a patient's home, this registered nurse went to the garage where garbage cans were kept in order to throw away a used catheter. While placing a basket on the shelf at the request of the homeowner, she slipped and fell on oil residue severely fracturing her ankle. The court held that the registered nurse was an independent contractor and not an employee of the patient and/or homeowner. The nurse was required to follow doctors' orders based upon her own medical knowledge and was retained as a professional and specialist to operate medical equipment such as a suction machine. Additionally, even though payments were made directly to the nurse, she continued to forward a percentage of the payments to the Nurses Registry which had provided the job assignment. Swillings v. Mahendroo, 262 N.J.Super. 170 (App.Div.1993). 

The question of employment status is a major factor in determining what an insurance carrier must charge its insured for coverage. Where the employment relationship is ill-defined, and the insurance carrier cannot determine whether a worker is an independent contractor or an employee, the Appellate Division held that the insurance carrier must await a judicial determination in order to assess insurance premiums. In a specific instance, an insurance carrier was unable to review the actual payroll records of a trucking company in order to determine whether or not the outside truckers that the company hired were in fact employees. While the Compensation, Rating and Inspection Bureau described a formula under which outside truckers could be rated and charged as employees in its workers' compensation manual, the court indicated that this was not the procedure to be utilized. Since the employee has the burden of proof to establish an employer-employee relationship, the mere fact that the drivers were "owner-operators" did not subject them to the assessment of premiums. The court further rationalized that the workers' compensation carrier had the authority to charge back premiums to the employer if an injured worker was successful in establishing employee status and received workers' compensation benefits. Aetna Insurance Company v. Trans American Trucking Service, Inc., 261 N.J.Super. 316 (App.Div.1993). 

The 1979 Amendments to the Workers' Compensation Act specifically altered the definition of Part-time employment from an employment that did not exceed five days per week to an employment which was measured by the number of working days that were customary in an ordinary week for the character of the work involved. N.J.S.A. 34:15-37. Most recently, the New Jersey Supreme Court has been concerned with whether or not the disability incurred as a result of an injury during part-time employment represents a "loss of earning capacity" which would affect the injured workers' future capability of full-time work. 

A fifty-two year old newspaper carrier who worked approximately three hours per day, seven days per week was injured in an automobile accident during the course of her employment. The petitioner was also employed as a secretary on a full-time basis. The court noted that the petitioner was unable to return to her work as a newspaper carrier but that she did return to her full-time position as a secretary following approximately six months of recuperation. The lower court approved an award of 55 percent permanent partial disability based upon a reconstructed work week of 40 hours. The Appellate Division reversed and calculated the award based upon an actual work week of 17 1/2 hours. The Supreme Court concluded that the petitioner had lost only the ability to engage in her part-time employment and that she was not disabled with respect to her earning capacity either in contemporary or future full-time employment. It was the court's opinion that in cases involving permanent partial disabilities to part-time employees, diminished future earning capacity would be the standard upon which the calculation of compensation benefits would be based.
Katsoris v. South Jersey Publishing Co., 131 N.J. 535 (1993). 

The Appellate Division again addressed the issue of psychological disability and the elements necessary to establish the burden of proof under the "objective-material degree" standard defined by the New Jersey Supreme Court. The court ruled that there must be competent, objective medical evidence that the psychiatric disorder is, in fact, "due in a material degree" to the workplace stimuli. The court must determine whether, in fact, the petitioner, from his own perception, suffers from the disease. An employee suffered occupational exposure over 15 years in a dusty environment making aluminum cans. At one point during his career, the worker developed elevated aluminum levels reported in a series of blood tests. Eventually, the petitioner's aluminum levels returned to normal, and there was no evidence of aluminum toxicity. The petitioner continued to perceive that he was suffering from the disease due to his continuous exposure to aluminum dust and fumes. The workplace stimuli resulted in an alleged stress disorder. The court held that there were sufficient objectively stressful working conditions peculiar to his employment to sustain a claim for psychiatric disability even though there were no positive toxicity findings in his blood levels. Wernowski v. Continental Can Company, 261 N.J.Super. 269 (App.Div.1993). 

Evidential considerations were again focused upon by the Appellate Division in reviewing a claim involving a stress-induced stroke allegedly arising out of the petitioner's employment. In reviewing a mentally induced occupational event resulting in physical disability, the Appellate Court relied upon a judicially-established elevated standard of proof utilized in claims involving mental stress resulting in mental disability. In the case at bar, the petitioner had worked for St. Barnabas Hospital for 23 years as a volunteer and eventually became a coordinator and unit manager. From 1974 until 1988, when she retired, she organized and administered the patient relations department. The petitioner indicated that it was her belief that her supervisor, an Assistant Vice President of the hospital, did not like her. She stated that he never came to her office for informal meetings and never complimented her department, but the petitioner could not provide concrete examples regarding these negative statements. When the petitioner was recuperating from a surgical procedure, her assistant allegedly advised her that the departmental report was due approximately two weeks earlier than usual. The petitioner indicated that she was very upset and finished the report but suffered a stroke. In denying compensability for a stress-induced incident, the court indicated that the petitioner could not meet the higher standard of proof it had carved out as a requirement for stress-induced disabilities resulting in mental impairment. The court indicated that the employee must demonstrate that the workplace conditions were objectively stressful and that the claimant must react to them as such. Without a reasonable and objective basis in the record to conclude that the employment condition was stressful, the court concluded that there was no compensable event regardless of the conclusion that the physical disability was stress induced. Mathesius v. SAINT BARNABAS, 625 A. 2d 567 - NJ: Appellate Div. 1993. The court did not address the issue of whether or not the elevated standard of proof in mental stress-related claims is constitutionally permissible in light of the Americans with Disabilities Act barring discrimination against individuals with disabilities. 42 U.S. C.A. s 121 01, et seq. 

The standards utilized to determine whether or not there should be apportionment of responsibility in occupational disease claims have varied based on the evidence available for factual review. Apportionment of liability has historically presented a great challenge for hearing officials before the Division of Workers' Compensation and for appellate review tribunals. [See "Apportioning Liability in Workers' Compensation Claims," 121 NJLJ 1 (Feb. 4, 1988). 

The Appellate Division determined that in a traumatic claim, where the proofs demonstrated that each compensable accident contributed substantially to the ultimate disability but where there was a lack of proof as to the exact contribution of each to the ultimate result, the liability should be apportioned on an equitable basis between the two employers. An employee suffered two compensable injuries at work. In 1983, he fell, injuring his back, left shoulder, and head, received medical treatment, and lost some time from work. Approximately 14 months later, the employee again suffered back and left leg pain while working for a subsequent employer. The petitioner did not file a claim petition against the subsequent employer, and more than two years lapsed before the subsequent employer was impleaded as a respondent in the claim. The court recognized that traumatic claims differ from occupational injuries having an insidious etiology. The court distinguished occupational claims, which have a long latency period from the date of exposure to the date of manifestation, from traumatic claims. The incidents in this claim were fixed and determinable. Even though the allocation of responsibility may be difficult and proofs may not permit exact certainty, the court reasoned that the lack of certainty should not bar an award. The court concluded that even though the matter had been heard on 11 separate hearing dates, it should be remanded to the Division of Workers' Compensation for further proceedings, including the testimony of the doctors who treated the petitioner so that adequate information could be available for the court to render a decision and apportion the matter equitably.
Baimnath v. Eagle Plywood & Door Manufacturers, Inc., 261 N.J.Super. 309 (App.Div.1993)

In a claim involving the occupational exposure of a firefighter to asbestos, the Appellate Division affirmed the trial-level decision of The Honorable Stephen Tuber in awarding full dependency benefits to the widow of the firefighters The decedent had been exposed to asbestos from 1945 to 1982 in his capacity as a firefighter for the Township of Weehawken. At the time of his deposition, he testified that he had been at the scene of between 600 and 700 fires per year during his employment. He testified that he was exposed to asbestos when certain areas, such as walls, ceilings, and floors, were opened up. Although the respondent attempted to defend the claim and reduce its liability by asserting prior exposure to asbestos in the navy and during brief employment at the Todd Shipyards, the respondent produced no evidence supporting their defense. The Appellate Division found that the trial judge's decision was supported by substantial credible evidence in the record. Cahill v. Township of Weehawkin, No. A-583-9OT3, (App.Div. Dec. 9,1992). 

The Appellate Division extended the "safety net" of benefits available to injured workers. The fact that an insurance company allegedly terminated workers' compensation temporary disability benefits prematurely based upon their examining physician's opinion did not prohibit the injured worker from receiving state/private plan temporary disability benefits while the workers' compensation claim was being adjudicated. The Appellate Court held that since the Temporary Disability Benefits Law, N.J.S.A. 43:21-30, and the Workers' Compensation Act, N.J.S.A. 34:15-57.1, provided reciprocal subrogation to the extent of the amount of disability payments made when a claimant is entitled to workers' compensation benefits, State and/or private plan disability benefits should be payable while the workers' compensation claim is being adjudicated. The court reasoned that State or private plan disability benefits were intended to fill the gap during the period between an initial termination of the workers' compensation benefits and the final resolution of the claim. This decision may lead to an avalanche of claims for State temporary disability benefits with subsequent liens against workers' compensation awards. Brinkerhoff v. CNA Insurance Company, 263 N.J. Super. 1 (App.Div.1993). 

It has been the public policy of the State of New Jersey to encourage the settlement of litigation. The Appellate Division reviewed a workers' compensation claim in which the attorney for the respondent offered to settle the matter for $7,500.00 at a conference in the presence of the trial judge. The attorney for the petitioner contacted her client by telephone, and consent was obtained for the offered amount. The judge was notified of the settlement by the parties, and he noted it on his calendar. The matter was adjourned in normal fashion to permit the petitioner to appear in court so that the settlement could be placed on the record. The insurance carrier unilaterally decided it did not wish to be bound by the oral settlement. On a motion to enforce the settlement, the trial judge heard testimony from the petitioner indicating that she had been informed of the settlement and that she had accepted it, knowing that it was final and that her claim would be closed. The court determined the settlement to be "fair and just" and an Order Approving Settlement with Dismissal was entered pursuant to N.J.S.A. 34:15-20. The Appellate Division held that the employer and insurance carrier's attorney acted as their agent and that when the offer was accepted by the petitioner, an executory agreement was made. The agreement was enforceable both against the employer and its insurance carrier. The Appellate Court concluded that, upon final review by the compensation judge and without a showing of compelling circumstances, the employer could not withdraw from the settlement unilaterally. Farrell v, Wyckoff Quality Bakery, No. A-1520-5lT5, (App.Div.Nov. 20, 1992), cert. denied, No. 36,081 (Jan. 26, 1993). 

The "going and coming rule" was again the subject of judicial discussion during the 1992-93 court term. An employee was injured while exiting the employer's premises on her way to a parking lot. She slipped and fell on ice while exiting the employer's premises after coming down a metal staircase that terminated at the exterior sidewalk, which she had to traverse before reaching the parking lot. The injured worker was awarded workers' compensation benefits. The court indicated that even though the accident occurred off the employer's premises, the employer exercised control over that area since the employer required its employees to enter and exit the store by using that route. Ehrlich v. Strawbridge & Clothier, 260 N.J. Super. 89 (App.Div. 1992). 

Consistent with a line of previous decisions, The Appellate Court ruled that a workers' compensation lien pursuant to N.J.S.A. 34:1540 applies to underinsured motorist proceeds. However, the lien only applies if and to the extent that the proceeds, together with compensation benefits and the tortfeasor's insurance payment, exceed the full amount of the worker's damages. In the matter considered by the court, the arbitrator's award amounted to $125,000.00, and the underinsured motorist proceeds amounted to $100,000.00. It was determined that a lien could not be asserted by the workers' compensation carrier where the actual amount received from the underinsured motorist carrier amounted to $90,000.00, and the award from the workers' compensation carrier amounted to only $25,464.07. The court determined that the petitioner's net recovery of $115,464.07 was clearly less than the loss of $125,000.00, which had been set by the arbitrators. Stabile v. New Jersey Manufacturers Insurance Company, 263 N.J. Super. 434 (App.Div.1993). 

A strict interpretation was made about the eligibility of a spouse's dependency claim in a case in which individuals were living together for 12 years but were not married. The court determined that a marital relationship within the intent of N.J.S.A. 34:15-13 (o did not exist even though the individuals maintained an exclusive relationship for 12 years, maintained a joint bank account and utility accounts, and purchased a home as joint tenants with a right of survivorship. Despite the fact that they had planned to be married, they were not married on the date of the decedent's death when he was shot and killed during the course of his employment by a mentally disturbed boyfriend of a co-employee. The court held that, even though they had a close and long relationship since they had not participated in a ceremony legitimizing the marriage, they could not be deemed husband and wife and qualify for the statutory benefits of the Workers' Compensation Act. Toms v. Dee Rose Furniture, 262 N.J. Super. 446 (App.Div.1993). 

The Appellate Division again insisted that the rulings of a hearing officer before the Division of Workers' Compensation be based upon sufficient credible evidence to justify the entry of an award. In a claim involving a disputed factual situation, the appellate tribunal asserted that a compensation judge could not ignore statements made in hospital records, primarily dismissing them as taken under stressful conditions and therefore concluding that they were possibly inaccurate or incomplete. Additionally, the court could not ignore that certain witnesses were not brought forward to substantiate the factual situation as alleged by the petitioner, which was refuted by the respondent's medical expert. The Appellate Division concluded that the record was void of sufficient objective, credible evidence to justify the finding reached by the judge. Cancel v. City of Passaic-Police Department, No. A-3561-9lT2, (App.Div. Mar. 26, 1993). [Editorial Note: This case was reversed on appeal to the NJ Supreme Court. PEDRO CANCEL v. CITY OF PASSAIC POLICE DEPARTMENT, 639 A. 2d 298 - NJ: Supreme Court 1994.]

The Appellate Division was required to determine whether a disability pension paid by an interstate agency could act as a credit against a workers' compensation award in the State of New Jersey. An employee of the Port Authority of New York and New Jersey received a disability pension from the New York State Police Pension Fund as a result of a total accidental disability. The New Jersey employer and The Second Injury Fund were permitted to take an offset pursuant to N.J.S.A. 34:15-43. The court based its reasoning upon public policy against double recovery from a single employer, one governmental body. Wright v. Port Authority of New York and New Jersey, 263 N.J.Super. 6, (App.Div.1993). 

In their decisions over the 1992-93 term, the courts have continued to interpret the Workers' Compensation Act taking into account both the remedial social intent of the legislation and the economic realities of the 1990s.


The author, Jon L. Gelman, practices law in Wayne, NJ. He 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.,  Psychological Disability Claims, (1992),

© 1992-2023 Jon L Gelman. All rights reserved.

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This article is reprinted with permission from the September 7, 1992 issue of the New Jersey Law Journal,131 NJLJ 1586 (September 7, 1992)  ©1992 NLP IP Company. 

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