NJ Second Injury Fund Is In Financial Trouble

Governor Christie's transition team reported that the NJ Second Injury Fund (SIF) is insolvent. Several options were presented, if the SIF is going continue to operate.


The SIF was established to compensate totally disabled workers for their pre-existing disabilities shield the last employer from the total cost of the last compensable injury. The was enacted by NJ prior to the existence of the American With Disabilities Act (ADA) and theoretically was to encourage employers to hire handicapped workers.


Since the enactment of the ADA many states have felt that their was no need to continue the SIFs and the growing trend is to eliminate them. The SIF in NJ currently  supports the operating funds on the NJ Division of Workers' Compensation.


The transition report concludes:


"The SIF has been experiencing cash flow problems recently due to diversions from the fund in 2003 and 2004 and also as a result of legislative changes made in 2000 and 2003. Prior to 2000, the assessment against employers and insurance companies that finance the Division of Workers Compensation was determined by estimating the costs incurred to run all programs (including benefits) and multiplying that by 150%. In 2000, this was changed to 125% of estimated benefits and 100% of estimated administrative costs. These changes initially did not cause any significant cash flow issues; however, when the State began diverting money the combination of these factors resulted in an insufficient amount of cash being collected through assessments.

Solutions: Due to the legislative changes to the assessment calculations, the fund will never be able to restore solvency. The only solution requires legislative approval to phase out the $40 million “add back” and adjust the $5 million fund balance cap to a percentage of the prior years’ benefit payments. The only other option would be to find a supplemental appropriation to replenish the diverted money from FY2010."

Historically, surpluses in the NJ SIF have been raided by the Legislature and Governor and the funds diverted to the general treasury of the State. Like other NJ agencies, the NJ Division of Workers' Compensation has been challenged by mandated furloughs and short staffing issues. The fiscal problems of the SIF have compounded Medicare delays in the workers' compensation program in dealing with catastrophic and serious disability claims.

Click here to read more about The Second Injury Fund.

Requests to Preserve Evidence Must be Timely

The failure to act swiftly in both requesting preservation of evidence, as well as inspecting the physical evidence of a work related accident, can lead to a waiver of a cause of action for spoliation of evidence.  An attorney for an injured worker quickly requested that a potentially defective forklift be preserved, but did not hastily have an expert conduct a physical inspection.


Ciapinski v Crown Equipment Corp., 2010 WL 183903 (N.J. App. Div.) Decided Jan. 21, 2010.

Click here to read more about evidence and workers' compensation.

Perception of Claimant Insuffient to Meet Burden of Proof

The Chief Financial Officer of a day care center was denied her caim for psychological disability resulting from a claim of a heavy work load. The Court held the cause was not peculiar to her employment, that there was a lack of supporting objective mendical evidence, and that the underlying, pre-existing disability from childhood resulting in a compulsive disorder was the cause of the condition.

K.S. v Sunnydays Early Childhood Services, 2010 WL 173531 (N.J. Super.A.D.) decided January 20, 2010.

Click here to read more about hostile work environment claims and workers' compensation.

Workers Compensation Law Firm Absolved of Legal Malpractice for Negligent Advice

A NJ workers' compensation firm, successor to another firm representing the claimant in a workers' compensation claim,  has prevailed on appeal in defending against charges of  providing negligent advice to an injured worker. The successor firm was joined as a third-party defendant in a legal malpractice claim where the claimant alleged that he should have been furnished advice about his claim for retirement benefits.

While the court reasoned that the injured worker may have had a viable cause of action against the law firm, the mechanism of a third-party joinder was not an effective method of bringing a claim. The withdrawing defendant-law firm, that had previously presented the worker, was not entitled under the law to join the successor firm for contribution. The court concluded, "...that attorneys in this situation cannot be characterized as joint tortfeasors and that a successor attorney owes no duty to a predecessor attorney to correct the predecessor's errors."

Summary Judgement was granted the third-party defendant firm and it was awarded sanctions $16,622.49) and expenses ($15,555.20) against the defendant firm for filing a frivolous claim.

Arthur v Klitzman & Gallagher v. Ansell, et al. and Schebell, et al., 2010 WL 163194 (N.J.Super.A.D.) Decided November 23, 2009

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Silica Workers Prone to Fungal Infections

A just release study reports that silica workers have a greater risk of contracting fungal infections and dying from them:


"We found that persons who die with silicosis are more likely to die with pulmonary mycosis than are those who die without pneumoconiosis or who die with the more common pneumoconioses. Insofar as silica dust impairs cellular defense, silica-exposed workers (without silicosis) may be at increased risk for fungal infections, as they are for mycobacterial infections."


Concurrent Silicosis and Pulmonary Mycosis at Death,Yulia Iossifova, Rachel Bailey, John Wood, and Kathleen Kreiss, DOI: 10.3201/eid1602.090824 Emerg Infect Dis. 2010 Feb


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Subject of Smear Campaign Recovers for Psychiatric Condition

An employee, who was the object of a smear campaign that included being the subject of  circulated pornographic cartoons, was permitted to seek benefits for psychological residuals flowing from the humiliation, shock and anger that resulted in her loss of sleep. The worker was treated for an adjustment disorder with mixed anxiety and depressive mood.


The trial court, that was affirmed, had concluded:


"...[t]he aforementioned events cannot be characterized as an honest attempt to ensure that an office is running in an efficient and effective manner. Here, [p]etitioner was subjected, in part, to a resignation rumor, a potentially improper layoff, together with the aforementioned . . . sexual propaganda . . . . [I]t shocks the conscience that same would have occurred over such a long period of time without otherwise being addressed by the employer."


In affirming the Appellate Court held:


"In finding in petitioner's favor, Judge Leslie A. Berich applied correct legal standards.  The Workers' Compensation Act is 'humane social legislation designed to place the cost of work connected injury upon the employer who may readily provide for it as an operating expense.'"


Lori Ross v. City of Asbury Park, Docket No. A-0379-08T3 


Click here to read more about stressful conditions and workers' compensation.

Releasing 3rd Party Workers Compensation Liability Upheld

A security guard, who was injured on the premises of the employer's client, was prohibited from recovery in a negligence claim. As a condition of pre-employment, the employer had requested, and the injured worker signed, a waiver of liability against the third party.

The Court held that the waiver did not violate public policy and the release was enforceable. The third party workers' compensation release, signed as a condition of pre-employment, was upheld as the guard agreed to extinguish only her right under workers' compensation to recover only amount additional to what she already recovered under workers' compensation.

Bowman v Sunoco, Inc., 2009 WL 4828976 (Pa.Super.), 2009 PA Super 242