In the well known Rova Farms decision, the New Jersey Supreme Court held that a liability insurer who in bad faith refuses to accept a plaintiff’s reasonable settlement demand, will be liable for the amount of any judgment above and beyond the insured’s policy limits. In an opinion approved for publication on June 30, 2008, the Appellate Division held that a UM carrier cannot be exposed to Rova Farms liability in refusing to settle with an insured. The court in Taddei v. State Farm, was faced with a case where the plaintiff/insured made a settlement demand after non-binding UM arbitration of $87,500. A jury eventually awarded the plaintiff $2.6 million. However, the trial judge molded the verdict to the $100,000 policy limit. On appeal , the plaintiff argued that the carrier had acted in bad faith, in light of the refusal to settle. The Appellate Division was un-persuaded, reasoning that the Rova Farms bad faith model is inapplicable in the UM and UIM context because the insured is the claimant and, therefore, not exposed to an award in excess of the policy limit.
In a June 26, 2008 opinion from the Appellate Division in the case of Metta v. American Empire Surplus Lines Ins. Co. , the court again affirmed the principle that insurance coverage follows indemnity. Often times, parties seeking additional insured status take the position that when a party is added to another’s CGL policy, they are entitled to the same coverages as the primary insured, without respect to the circumstances underlying a given loss. To the contrary, the court in Metta held that under the pertinent contract, the insured was to indemnify the additional insured only for the insured’s negligence. Thus the court held that since those damages, if any, had not been determined, final resolution had to abide the outcome of the underlying B/I case.
It is important to remember this point of law in determining whether to accept an adversary’s tender demand. Very rarely will it be that one party has agreed to indemnify another for the latter’s negligence. Thus, the Metta court would advise that an additional insured should only be provided coverage where the primary insured is found negligent. However, all too many times, especially in the case of snow removal contracts and the like, tender demands are accepted prematurely and it is ultimately found that the contractor was not negligent. The carrier is then left to pay the judgment against an entity it does not insure.
Tompkins McGuire frequently advises insurers and TPAs on indemnity issues and related insurance coverage concerns. For more information, please contact Joseph Cobuzio, Esq.
On July 16, 2004 Alfonso Estrada Moron (A.K.A. Eduardo Zambrano) was shot and killed in a hold-up while working for Quik Chek as an assistant manager.
There was no dispute that the decedent died “in the course of employment” and that his weekly wages were sufficient to give rise to a dependency rate of $227.98 per week.
The dispute arose as to whether or not the claimant’s mother, who lived in Peru was “solely dependent” on the decedent as she claimed. If she could prove dependency, she would received $227.98 per week until she died. The claimant testified that the decedent sent her $600 per month for her support, plus $600 for her birthday and $1,000 at Christmas.
The claimant was unable to provide any evidence that she had ever received any money of any kind from the decedent. It turns out that all the monies were transferred to her in cash through a “middleman” and no records could be produced. Regardless of the lack of proof, the Judge of Compensation gave full credence to the claims of the mother, and awarded her full dependency benefits.
The employer appealed, arguing that the claimant failed to prove she was the claimant’s mother. The Appellate Court found that the Judge of Compensation was correct in awarding lifetime benefits and that counsel for the employer waived the issue of parentage by failing to raise it at trial.
Lesson for adjusters: choose counsel wisely!
Case: Estrada v. Quik Chek, A-1927-07T2 (App. Div. decided July 3 2008)(Judges Lisa & Lihotz, unpublished as of blog date).
Claimant Orsola Doria, sixty-eight years old at the time of her alleged “accident” filed occupational and specific accident claims against her employer alleging that as a result of her employment as a housekeeper for five years she was totally and completely disabled as a result of the following:
“occupational exposure to dust, fumes, pulmonary irritants, bending, lifting, repeated manipulations, standing, stress, strain, adverse environment causing occupational conditions and diseases . . . .she alleged impairment to her “chest, lungs, nose, throat, neck, back, knees, arthritis, nervous system, neurosis, and complications arising therefrom.”
The claimant presented the testimony of three doctors. Dr. Ahmad, an orthopedist, diagnosed “spinal sprain, arthritis, and [muscle pain.” Dr. Latimer, a psychiatrist, diagnosed her as suffering from “post concussion syndrome, chronic headaches, fatigue and depression” and Dr. Friedman, found that the claimant had “chronic bronchitis.”
Respondent’s doctors found no disability except for 2.5% of permanent partial total for “post-concussion syndrome” related to an incident where a ceiling tile fell on the claimant’s head.
After eight (8) trial days, the Judge of Compensation found a permanent partial disability of 30% of partial total and dismissed the petitioner’s claims against the Second Injury Fund. The claimant appealed.
The Appellate Panel cited the standard of review (exhaustively discussed in our book) found in Tlumac v. High Bridge Stone, stating that the appellate court will not disturb the fact findings of a Judge of Compensation provided they “are supported by substantial credible evidence in the record and not so wide off the mark as to be manifestly mistaken.”
Post-Tlumac, the ‘threshold’ for appellate review has been raised. A party seeking review of the decision of a Judge of Compensation has a difficult bar to surmount. The decision in Doria (above) should lend support to a Judge applying common-sense to a trumped-up claim.
Case: Doria v. Bayonne Hospital, A-4874-06T1 (App. Div. decided June 27, 2008)(Judges Coburn, Chambers, and Waugh, unpublished as of blog date). Attorneys for the claimant: Freeman & Bass.
Many Second Injury Fund Cases end with a Judge of Compensation ruling that the Fund is dismissed from the case. This usually happens when the Judge determines that (a) the claimant is not totally disabled, or (b) the claimant was totally disabled as a result of the last accident alone, or (c) the claimant’s pre-existing conditions were not disabling.
In the case of Vassilatos v. Mercer Wrecking Recycling Corporation, decided July 2, 2008, the Appellate Judges (Judges Fuentes and Grall) reviewed whether the workers’ compensation judge made specific-enough findings as to whether two intervening accidents “caused or contributed” to the claimant’s permanent disability.
The claimant in Vassilatos suffered injury to his right ankle and leg. He received medical treatment and was released from treatment approximately one year after the accident. The claimant then suffered a number of subsequent accidents – including claims for falling due to the “bad leg giving out.” The claimant underwent multiple surgical procedures to both knees and both shoulders and treatment to his cervical, thoracic, and lumbar spine regions.
The Judge of Compensation decided that the claimant was totally disabled and ordered total disability compensation be paid by the employer at the time of the original accident. The Judge of Compensation acknowledged that the petitioner had sustained subsequent accidents, and the injuries ( for which the majority of treatment occurred after) but failed to parse out exactly what degree of disability was related to the subsequent incidents (Id. at page 13). The case was sent back to the Judge of Compensation by the Appellate Court for the Comp Judge to “articulate, with particularity, what effect the 1999 and 2000 accidents had on the petitioner’s physical and psychiatric well-being.”
The remand of this case will allow the Respondent employer to argue that the petitioner’s condition worsened by an intervening accident which was not “directly connected in a physical chain of physical causation with the compensable injury.” In Vassilatos the claimant re-injured himself slipping on “wet stairs” in his apartment building (for which he maintained a civil action).
Case: Vassilatos v. Mercer Wrecking Recycling Corporation, A-4952-4878-06T3 (App. Div. decided July 2 2008)(Judges Fuentes & Grall, unpublished as of blog date).
In the case of Bolz v. Bolz, a published opinion relapsed in May 2008, the Appellate Division examined the combined effect of the New Jersey Tort Claims Act (TCA), N.J.S.A. 59:1-1 to 12-3; the Joint Tortfeasors Contribution Law (JTCL), N.J.S.A. 2A:53A-1 to -5; and the Comparative Negligence Act (CNA), N.J.S.A. 2A:15-5.1 to -5.17, when there is a collision between a private automobile and an automobile that is owned by a public entity and driven by a public employee. It was held that despite the fact that a public entity is not liable to pay damages unless plaintiff sustained a permanent injury as defined in the TCA, both drivers are deemed “tortfeasors” if they are found to have been negligent and their negligence was a proximate cause of the accident.
Therefore, allocation or apportionment of each driver’s negligence or fault must be assessed, even if there is a possibility that the public entity may not be liable for damages. Put a different way, although no damages can be awarded against a public entity or employee for pain and suffering if the injuries caused by an accident do not meet the threshold set by the TCA, the public employee is, nonetheless, a tortfeasor pursuant to JTCL and the CNA and this affects the judgment against the private tortfeasor.