Workers' Compensation: NJ Supreme Court to Review Workplace Insurance Exclusion

The NJ Supreme Court will review whether a workers’ compensation insurance company has a duty to defend an employer against personal injury claims brought by the employer’s employee under an employer's liability insurance policy.

The case to be reviewed concerns an employee injured at work and receiving workers' compensation benefits from his employer. The employee then filed a lawsuit against the employer, alleging negligence, gross negligence, recklessness, and intentional misconduct. The employer sought defense coverage from the insurance company under its employer's liability insurance policy. The insurance company denied coverage based on the policy's "Employer's Liability EII exclusion."

EXCLUSIVITY

The Workers' Compensation Act generally provides the exclusive remedy for workplace injuries, barring lawsuits against employers except for "intentional wrongs.” See, Millison v. E.I. Du Pont De Nemours & Co., 501 A.2d 505 (N.J. 1985). The "intentional wrong" exception, as defined in Laidlow v. Hariton Mach. Co., Inc., 790 A.2d 884 (N.J. 2002), requires showing the employer knew its actions were substantially certain to result in injury or death.

APPELLATE COURT’S ANALYSIS

The court found that the employee’s claims were "Laidlow claims" attempting to fit within the intentional wrong exception to the Workers' Compensation Act. The court determined that the insurance company’s Employer's Liability EII exclusion clearly and unambiguously excluded coverage for "any and all intentional wrongs within the exception allowed by N.J.S.A. 34:15-8."

The court distinguished the case from prior cases, New Jersey Manufacturers Insurance v. Delta Plastics Corp., 911 A.2d 477 (N.J. 2006), Beseler Co. v. O'Gorman & Young, 881 A.2d 770 (N.J. Super. Ct. App. Div. 2005), where similar exclusions were found ambiguous, The insurance company’s exclusion explicitly covered both intentional wrongs and acts "substantially certain to result in injury."

APPELLATE COURT’S HOLDING

The court held that the insurance company had no duty to defend the employer against the employee's claims because they fell within the policy's exclusion. The court rejected the employer's argument that the exclusion violated public policy, noting that the Commissioner of Banking and Insurance had approved the language.

IMPLICATIONS OF THE NJ SUPREME COURT APPEAL

This case reviews the effectiveness of clearly worded exclusions in employer liability policies that specifically address intentional wrongs and "substantially certain" conduct. It demonstrates whether the NJ Supreme Court is willing to uphold such exclusions.

The NJ Supreme Court will now review whether the insurance policy's exclusion relieves an insurance carrier of the duty to defend the employer against the employee's claims, which were characterized as intentional wrongs under the Laidlow standard. New Jersey’s highest court will review the importance of clear and specific language in insurance policy exclusions, particularly in workplace injury claims attempting to circumvent workers' compensation exclusivity.

Rodriguez v. Shelbourne Spring, LLC, 2023 WL 8868415, N.J.Super.A.D., Dec. 22, 2023, Certification Granted, 257 N.J. 247, 313 A.3d 412, May 10, 2024.

Recommended Citation: Gelman, Jon L., NJ Supreme Court to Review Workplace Insurance Exclusion, www.gelmans.com (08/13/2024) https://workers-compensation.blogspot.com/2024/08/nj-supreme-court-to-review-workplace.html

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ORDER NOW

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*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). For over five decades, the Law Offices of Jon Gelman 1.973.696.7900
jon@gelmans.com has represented injured workers and their families who have suffered occupational illnesses and diseases.