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Sunday, October 20, 2013

Where is the Deep Water?

NJ Appellate Court allowed the assertion of a workers' compensation statutory lien against a liability award (NJSA 34:15-40), where the compensation insurance company paid the initial medical benefits without prejudice following a detailed dismissal by the Compensation Court before trial. This decision has far reaching consequences in defining when, on the timeline,  an insurance carrier's actions should trigger responsibility.

Workers' Compensation was designed as a summary and expeditious system paying injured workers who suffer an injury or illness at work. The benefits of treatment and temporary disability benefits are triggered by the event or manifestation of injury, and should flow quickly to the injured worker without a long, burdensome, and litigious process.

The payment of  major medical benefits by an employer, in the past, under The Sheffield Doctrine, has been considered to act as an estoppel, barring the denial of the compensation claim. The NJ Legislature modified its Workers' Compensation Act several decades ago, and allowed for the payment of medical benefits, without prejudice. The consequence  is that the injured worker is lulled into a sense of false security relying upon the implied acceptance of compensability. Albeit, the payment extends the statute of limitation for filing a formal claim.

The Court's dismissal, in the Greene matter, barring the assertion of the lien by the workers' compensation insurance company, was reversed and the lien enforced from the liability award.

Interestingly, the Court did not note that the technique of ordinary settlement, by payment of unauthorized medical payments, and/or for waiver of the right to appeal, was a common practice before the legislative enactment of NJSA 34:15-20. AIG in this case chose to "have your cake and eat it too."

Historically, prior to the legislative enactment of lump sum payments, pursuant to NJSA 34:15-20, voluntary dismissals were utilized as vehicle to compromise dependency, and other claims, for settlement. In those instances, following the dismissal of the workers' compensation claim, the parties would enter into a settlement, albeit a fiction, to settlement of the right to appeal and a letter of payment would be exchanged and/or a Release would be executed. Any potential was extinguished.

Beside the increased necessity of reducing the dismissal terms to writing, and/or stipulation of dismissal, the issue is generated of far the insurance company can step into the deep water before it comes committed to a decision. The Legislature needs to revisit this issue, and redefine the timeline for irrevocable commitment of responsibility, otherwise the initial Legislative intent for an expeditious, remedial administrative system will be defeated.

NJ App Div 2013 (Decided October 16, 2016) --- A.3d ----, 2013 WL 5629045 (N.J.Super.A.D.)

Jon L. Gelman of Wayne NJ is the author NJ Workers’ Compensation Law (West-Thompson) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson). For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  have been representing injured workers and their families who have suffered occupational accidents and illnesses.