Appellate Division Approves, but Limits, Sanctions in New Jersey Workers’ Compensation Proceedings

By Robert J. Fitzgerald, Esq.*

In its latest decision on the subject, the New Jersey Appellate Division has approved the imposition of sanctions against an employer under the rules governing workers’ compensation proceedings. In Deborah S. Pschunder-Haaf v. Synergy Home Care of South Jersey, 2015 N.J.Super. Unpub. LEXIS 1199 (N.J.Super. App. Div. May 22, 2015), as with most cases involving issues for sanctions, the underlying facts were extensively detailed by the court. The petitioner was a home health aide who was injured when her patient fell onto her, causing injuries to her lower back, spine, neck and head. The compensation judge ordered her employer to provide medical and temporary wage benefits and required that the petitioner be evaluated by Dr. Luis Cervantes.

The compensation judge then entered an order on September 7, 2010, permitting treatment of the petitioner with Dr. Cervantes and continuing temporary wage benefits until either Dr. Cervantes cleared the petitioner to return to work or until her employer provided a light-duty work option authorized by Dr. Cervantes. The employer failed to pay the petitioner’s medical bills and terminated temporary wage benefits. The petitioner then filed motions to enforce the September 2010 order. The compensation judge entered orders requiring the employer to provide temporary wage benefits, medical care and counsel fees to the petitioner.

The petitioner then underwent fusion surgery, suffering post-surgical complications related to her left shoulder. The employer did not provide for post-surgical treatment, so the petitioner filed another motion seeking to enforce the September 2010 order, requesting sanctions and counsel fees. The compensation judge entered an order compelling the employer to provide treatment related to the post-surgical complications. The petitioner subsequently filed amended claim petitions to include the derivative injury to her left shoulder and a purported derivative injury to her left knee.

The employer again failed to authorize certain medical care and temporary wage benefits, and the petitioner filed another motion to enforce the September 2010 order. The compensation judge, again, entered an order requiring the employer to provide medical treatment and temporary wage benefits pending a hearing.

The compensation judge heard testimony from the petitioner, her medical expert, Dr. Craig Rosen, and the employer’s medical expert, Dr. Gregory Maslow. The compensation judge issued an oral decision compelling the employer to provide medical treatment for the petitioner’s primary and derivative injuries related to the incident and temporary wage benefits. The compensation judge denied the employer’s motion for reconsideration and entered an order in February 2014 that required the continuation of medical care and temporary wage benefits; imposed sanctions on the employer in the amounts of $5,000 and $10,000; and awarded the petitioner $7,500 in counsel fees and $5,654.10 in reimbursement for other expenses.

On appeal, the employer argued that the petition regarding the derivative injuries was procedurally deficient. The employer also asserted that the February 2014 order went against the weight of the evidence and that the imposition of sanctions and award of fees were erroneous.

The court quickly rejected the employer’s contention that the claim petition for derivative injuries was procedurally deficient. The court stated that, “[the Petitioner] filed an amended petition as it related to her knee and shoulder thus putting Synergy on notice of her claim. [The Petitioner’s] counsel requested a hearing; she was examined by multiple doctors, including [the employer’s] expert; and [the employer] had the opportunity to review the reports prior to the hearing.”

The court, likewise, quickly rejected the employer’s contention that the last order for medical treatment and disability benefits went against the weight of the evidence. In analyzing the compensation judge’s credibility findings, the court stated that, “[w]e find no reason to disturb the compensation judge’s findings which were aptly stated in her amplified decision. The compensation judge considered the evidence presented, and her conclusions that the left knee was a derivative injury and that the left shoulder required medical care are supported by credible evidence in the record.”

The court then went into a more detailed analysis of sanctions, fees and costs that were ordered as allowable under Section 64, Section 28.1 and the Special Rules. On the issue of sanctions, the court referred to Rule12:235-3.16(h) and particularly emphasized the following limitation under paragraph 2.:

Levy fines or other penalties on parties or case attorneys in an amount not to exceed $5,000 for unreasonable delay or continued noncompliance.

The court affirmed imposition of the $5,000 sanction, the attorney’s fees and other costs on the employer as not excessive and within the compensation judge’s discretion. However, the court remanded the case as to the $5,654.10 award related to Dr. Rosen’s $800 and $4,500 fees since expert fees are specifically limited by the Rules. Finally, the court vacated the $10,000 sanction, finding that the compensation judge abused her discretion in awarding a sanction in excess of the Rules, but essentially remanded to see if there is another type of sanction that is allowable.

The court’s decision again shows its acceptance of harsher financial penalties against employers who fail to comply with orders for medical and temporary disability benefits. While this decision confirms there are limitations on the assessment of expert fees and sanctions, it also shows that the court will give as much leeway as possible to compensation judges when it comes to enforcing orders for benefits. Employers should know that failure to comply with orders for medical and temporary benefits could dramatically increase their financial exposure and litigation costs, and they should take extreme caution to avoid expensive proceedings such as these. The financial ramifications could be, literally, almost endless.

*Bob is a shareholder in our Cherry Hill, New Jersey office. He can be reached at 856.414.6009 or rjfitzgerald@mdwcg.com.

_{Defense Digest, Vol. 21, No. 3, September 2015}

_{Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2015 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}