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Thursday, March 8, 2018

Federal Court Invokes the Abstention Doctrine in a Workers' Compensation Matter

A Federal Court decided that it would defer to a New Jersey Judge of Compensation to resolve an underlying issue of compensability in a contractor/sub-contractor claim. In abstaining, the Federal Court imposed the “Burford Abstention Doctrine” and dismiss the Federal action with the right to reopen the matter at the conclusion of the state workers’ compensation case.

A worker of a sub-contractor sustained injuries at a NJ employment site. In a filed NJ workers’ compensation claim, a dispute arose over compensability. A Federal Court action, based on diversity of citizenship, ground in negligence was also filed.

The Federal Court refused to exercise jurisdiction since a state administrative proceeding remained pending. It relied upon Burford v. Sun Oil Co., 319 U.S. 315 (1943) (The Burford Doctrine) in dismissing the Federal claim.

Under Burford, “a federal court should refuse to exercise its jurisdiction in a manner that would interfere with a state’s efforts to regulate an area of law in which state interests predominate and in which adequate and timely state review of the regulatory scheme is available.” Chiropractic Am. v. LaVecchia, 180 F.3d 99, 104 (3d Cir. 1999). ‘The purpose of Burford is to avoid federal intrusion into matters of local concern and which are within the special competence of local courts.” Matusow v. Trans-Cty. Title Agency, LLC, 545 F.3d 241, 247 (3d Cir. 2008) (internal quotation marks and citations omitted).’”

The Federal Court reasoned:

“As background, the State of New Jersey has a comprehensive statutory scheme that regulates workers’ compensation. Under New Jersey’s Workers’ Compensation Act, “ ‘[w]hen employer and employee shall by agreement, either express or implied ... accept the provisions of’ the Compensation Act, employers shall compensate employees for work-related injuries ‘arising out of and in the course of employment ... without regard to the negligence of the employer[.]’ ” Estate of Kotsovska, ex rel. Kotsovska v. Liebman, 116 A.3d 1, 10 (N.J. Sup. Ct. 2015) (quoting N.J.S.A. § 34:15-7). “The remedial purpose of the Workers’ Compensation Act” is “to make benefits readily and broadly available to injured workers through a non-complicated process.” Tlumac v. High Bridge Stone, 902 A.2d 222, 225 (N.J. Sup. Ct. 2006). In order to further this public policy, “[t]he Legislature has conferred ‘exclusive jurisdiction of all claims for workers’ compensation benefits’ upon the Division of Workers’ Compensation.” Greenberg v. O’Gorman, 491 A.2d 800, 803 (N.J. Super. Ct. Law Div. 1984) (quoting N.J.S.A. § 34:15-49)).

Moreover, New Jersey sets forth a stringent administrative process for individuals seeking workers’ compensation benefits. After filing a motion for temporary disability or medical benefits, a period of discovery commences, before a formal hearing is held before the Judge of Compensation. See N.J.A.C. §§ 12:235-3.2, -3.8, and -3.12. It remains the employer’s burden of proof to defeat an employee’s claim for workers’ compensation benefits. See N.J.S.A. § 34:15-7. In addition, upon rendering a decision at the administrative hearing, “[a]ny party may appeal from the judgment of a judge of compensation to the Appellate Division of the Superior Court,” which “shall be conclusive and binding” on the parties. N.J.S.A. § 34:15-66.”

The Federal Court noted that the two prongs of The Burford Doctrine were satisfied:
  1. A timely and adequate state court review is available; and
  2. The particular regulatory scheme involves a matter of substantial public concern, it is the complex, technical regulatory scheme to which the Burford abstention doctrine usually is applied, and the federal review of a party’s claims would interfere with the state’s efforts to establish and maintain a coherent regulatory policy
The NJ Division of Workers’ Compensation is a court administered by the executive branch of the State of New Jersey. “Vested with statutory authority, the Division of Workers' Compensation has original and exclusive jurisdiction over all claims for workers' compensation benefits. N.J.S.A. 34:15-49.” Gelman, Jon L, Workers Compensation Law, 38 NJPRAC 1.12 (Thomson-Reuters 2018). 

YURIEL MONDRAGON CALIX v A2Z UNIVERSAL, Civil Action No.: 15-cv-3169 (PGS), 2018 WL 1003270,  (Slip Copy (D. N.J. 2018)

Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters).