Cancellation of Policy – Workers Comp Coverage

In Sroczynski v. John Milek, decided December 17, 2008 the NJ Supreme Court found that there can be no legally effective policy cancellation where a carrier fails to prove that it strictly complied with all of the requirements for canceling a workers’ compensation insurance policy. The NJ Legislature established clear and unambiguous requirements in the cancellation statute, which include the requirement that a carrier file with the Compensation Rating and Inspection Bureau the certified statement required in N.J.S.A. 34:15-81(b). However, the Court also held that only parties that have raised this particular filing issue can be granted relief from improper cancellations – past cancellations that were never challenged on this ground will stand because the policyholders waived their right to challenge them.

'Personal errands' and employment

One of the most basic questions we always ask when looking at a new claim is: Did the injuries arise out of the employment? There are probably more reported decisions on disputes about this question than any other issue in New Jersey Workers’ Compensation. I dedicate an entire chapter of my book to this subject and blogged extensively on this subject.

In an interesting new decision, an Appellate Panel found that that an employee’s injuries did not arise out of the course of employment while he was on a personal errand.

The claimant, William Garcia, was riding in his employer’s vehicle which was being driven by his foreman. The claimant was on his way to a bank to cash his paycheck. The claimant also alleged that he was riding between job sites or was going to return to the original job site at the time of the accident.

The claimant relied on the following facts to establish that he was actually working at the time of his accident:
• He was actually being driven in an employer-owned vehicle at the time of the accident;
•He was driven by his foreman; and
•He was on his way to or from a job site.

The workers’ compensation judge found that the claimant was not engaged in or assigned to work directed by the employer at the time of the accident. The Appellate Division agreed with this reasoning, and affirmed the denial of workers’ compensation benefits.

The Appellate Panel explored the possible legal arguments that would support the petitioner’s claims for benefits. First, they determined that the claimant failed to show “that the employee was performing his or her prescribed duties at the time of the injury.” (Quoting Jumpp v. City of Ventnor, 177 N.J. 470 (2003).

Next, the Appellate Panel discussed the Supreme Court’s decision in Sager v. O.A. Peterson Construction Company, 182 N.J. 156 (2004) and compared the facts in Sager to the facts of the Garcia case. In Sager, the claimant was “directed” by his site supervisor to extend his workday and have dinner with his co-employees and was injured while returning to the worksite after dinner. The Panel found that unlike the facts in Sager, no one ‘directed’ the claimant to go to the bank and cash his check (they found it to be a personal errand).

Finally, the Panel considered whether it was possible the claimant had a “reasonable belief” that his employer wanted him to go to the bank and cash his paycheck. This consideration was necessary in light of the Supreme Court’s decision in Lozano v. Frank DeLuca Construction, 178 N.J. 513 (2004), which held that even if an employee is not directly told to do something, the act may be found to be “in the course of employment” if the employee had a reasonable belief that his employer wanted the act done.

After considering every possible way that the accident could be considered “arising out of the employment” the Appellate Panel concluded that it did not. The decision of the workers’ compensation Judge dismissing this case was rightly affirmed.

Case: William Garcia v. Wagner Land Expansion, App. Div. A-3595-07T1, decided November 6, 2008 by Judges Stern, Waugh, and Newman. (Note: this blog entry discusses an ‘unpublished’ decision).

Statute discussed: N.J.S.A. 34:15-36

Contributed by: Greg Lois

How long we work

According to the U.S. Bureau of Labor Statistics, the average man working full-time logs 8.2 hours per day.

According to the same study, the average woman works 7.8 hours.

The average American spends 2.6 hours a day watching TV.

Commutation of Benefits

What is a “commutation”? Simply stated, a ‘commutation’ is the legal term for a petitioner asking the Court to accelerate the payment of an award to answer some pressing need of the claimant.

Commutation reduces exposure in two ways:

1)Any commuted payment made is discounted 5%. Therefore, payments of compensation which are made under Order For Commutation saved the insured money.
2)The payment of commutation is deemed to shorten the period of overall benefits. A claimant, under the New Jersey Workers’ Compensation Act, has two years to re-open a claim from the time last payment was paid. By commuting payments, the period for re-opener is shortened.

Generally speaking, a respondent does not usually object to paying a commuted award.

A recent case, Piskorz v. Beno Stucco Systems Corp., discussed the availability of commutation in a specific case. The Petitioner filed a motion for commutation of his workers’ compensation award, stating he wanted to leave America and open a business in Poland. According to the petitioner, he needed his money NOW because he had obtained the promise of a financial subsidy from the European Regional Development Fund for $60,000.00 to open the business, however, as a condition of the approval, he had to provide his own matching personal funds of $60,000, otherwise he will not receive the subsidy.

The Judge of Compensation inquired as to whether the petitioner (1) had the matching funds, or (2) had any experience running a business. The petitioner could not verify that even with the grant of a commutation e would have the funds necessary to get a matching grant and had no experience running a business.

The Judge of Compensation denied the motion because the petitioner failed to prove: (1) he planned to actually remove from the U.S., and (2) his particular circumstances warranted a departure from the usual method paying a workers’ compensation award.

Case: Piskorz v. Beno Stucco Systems Corp., 06-6559 decided August 15, 2008 by the Honorable Philip A. Tornetta, J.W.C. (Note: this blog entry discusses an agency decision which is not binding law).

Statute discussed: N.J.S.A. 34:15-25

Contributed By: Greg Lois

Defending Employers