Perez v. Pantasote, Inc.

• Decision Date: 17 January 1984
• Citation: 95 N.J. 105,469 A.2d 22
• Parties: Miguel PEREZ, Petitioner-Respondent, v. PANTASOTE, INC., Respondent-Appellant.
• Court: New Jersey Supreme Court

Page 105

95 N.J. 105

469 A.2d 22

Miguel PEREZ, Petitioner-Respondent, v. PANTASOTE, INC., Respondent-Appellant.

Supreme Court of New Jersey.

Argued Nov. 9, 1983.

Decided Jan. 17, 1984.

George J. Kenny, Newark, for respondent-appellant (Connell, Foley & Geiser, Newark, attorneys; Kathleen S. Murphy, Newark, on the brief).

Robert S. Sirota, Passaic, for petitioner-respondent (Goldstein, Ballen, O'Rourke & Wildstein, Passaic, attorneys).

The opinion of the Court was delivered by

SCHREIBER, J.

This case presents for our review the interpretation of the newly adopted provision of the Workers' Compensation Act, defining for the first time what constitutes "[d]isability permanent in quality and partial in character." N.J.S.A. 34:15-36 (West Supp.1983-84). The pertinent issues arose in a workers' compensation proceeding instituted by the petitioner, Miguel Perez, to obtain compensation for permanent partial disability due to an accident arising out of and in the course of his employment with the respondent Pantasote, Inc.

I

The accident occurred on January 23, 1980 when the petitioner, a material handler, was working for the respondent, his employer. While he was moving a drum down a ramp, his right foot slipped and he twisted his ankle. Petitioner worked for two days thereafter and was then out of work for six days. He received six or seven whirlpool treatments at respondent's clinic and was given an elastic bandage, which he used for some time.

Upon returning to work, petitioner resumed his original eight-hour-a-day, seven-day-a-week schedule. His work functions remained the same as before the accident. However, he claimed that he could not lift bags "as fast as [he] used to do it. I got to watch myself on it." He also testified that his ankle would swell up after he walked or ran, particularly in the summer. Finally, he asserted that he had pain in his ankle when he walked upstairs and when the weather changed.

Petitioner made no claim for temporary disability. With respect to his permanent disability claim, he asserted a claim for earnings of $400 per week because of his seven-day, 56-hour work week. It was conceded that, if the injury were compensable, he would be entitled to the maximum statutory allowance of $47 per week.

Dr. Sall testified for the petitioner. He had examined petitioner on July 25, 1980, approximately six months after the accident. His examination disclosed the following conditions: lateral malleolar fullness, inframalleolar doughiness and Achilles' thickening. He also noted that ankle dorsiflexion lacked 15 degrees; plantar flexion, 10 degrees; inversion and internal rotation, 15 degrees; and external rotation and eversion 10 degrees. He stated that the objective conditions that existed would restrict the function of the ankle in the described manner. He also testified that, assuming the petitioner could not carry as much weight or endure as much strain when lifting as before the accident, the injury had probably lessened petitioner's working ability. The doctor concluded that petitioner had suffered a lateral strain of the right ankle and evaluated permanent disability at 20% of the right foot. In his opinion, the condition was static.

Dr. Suermann testified for the respondent. He had examined the petitioner on January 27, 1981, approximately six months after Dr. Sall's examination. He found no abnormality in the ankle, a full range of motion, and no permanent disability. He did note, however, that the petitioner had complained that his ankle swelled "when he was on it a great deal."

The Judge of Compensation found that there was some residual functional disability; that there had been improvement since Dr. Sall's examination; and that the disability was "a little more than the normal here, some functional disability, which amounts to five percent of the foot; 11 1/2 weeks at $47, $554.50." Upon respondent's appeal, the Appellate Division affirmed. We granted respondent's petition for certification. 93 N.J. 310, 460 A.2d 702 (1983).

II

N.J.S.A. 34:15-36 reads in pertinent part as follows:

"Disability permanent in quality and partial in character" means a permanent impairment caused by a compensable accident or compensable occupational disease, based upon demonstrable objective medical evidence, which restricts the function of the body or of its members or organs; included in the criteria which shall be considered shall be whether there has been a lessening to a material degree of an employee's working ability. Subject to the above provisions nothing in this definition shall be construed to preclude benefits to a worker who returns to work following a compensable accident even if there be no reduction in earnings. Injuries such as minor lacerations, minor contusions, minor sprains, and scars which do not constitute significant permanent disfigurement, and occupational disease of a minor nature such as mild dermatitis and mild bronchitis shall not constitute permanent disability within the meaning of this definition. [ N.J.S.A. 34:15-36 (West Supp.1983-84).]

This provision was enacted as a part of extensive amendments of the workers' compensation law that became effective January 10, 1980. L.1979, c. 283. It has been said that these amendments "represent the most comprehensive reforms in the history of New Jersey's workers' compensation laws." Kumpf, "Occupational Disease Claims Under the Workers' Compensation Reforms," 12 Seton Hall L.Rev. 470 (1982). One of the most significant changes was the addition of the paragraph quoted above, which for the first time set forth a statutory definition of partial permanent disability.

Prior to this amendment, the workers' compensation statute had prescribed a schedule governing permanent partial disability, which provided for a specific number of weeks' compensation for the loss of certain members of the body. N.J.S.A. 34:15-12 c (1959). That section had also stated:

In all lesser or other cases involving permanent loss, or where the usefulness of a member or any physical function is permanently impaired, the duration of compensation shall bear such relation to the specific periods of time stated in the above schedule as the disabilities bear to those produced by the injuries named in the schedule. [ N.J.S.A. 34:15-12c.22.]

It had become well established that "the test of liability [under that provision was] not the immediate impairment of earning power; it [was] rather the loss ensuing from personal injury which detracts from the 'former efficiency' of the workman's 'body or its members in the ordinary pursuits of life.' " Everhart v. Newark Cleaning & Dyeing Co., 119 N.J.L. 108, 111, 194 A. 294 (E. & A.1937); see also Katz v. Township of Howell, 67 N.J. 51, 63, 335 A.2d 14 (1975); Burbage v. Lee, 87 N.J.L. 36, 38, 93 A. 859 (Sup.Ct.1915). See generally 2 Larson's Workmen's Compensation Law § 57.14(e) (1982) (summarizing and analyzing the New Jersey case law). Thus, although the amount of the award was measured by the employee's wages, the award was designed to compensate the employee for his physical impairment.

A practical effect of this understanding of partial permanent disability under the original statute was that virtually no claim was denied where the only issue was the existence or extent of disability. The costs of workers' compensation insurance became substantial. 1 Governor's Economic Recovery Commission Report 43 (1976); see Wyatt v. Metropolitan Maintenance Co., 74 N.J. 167, 174-75, 376 A.2d 1222 (1977) (Schreiber, J., dissenting) (discussing effects of exception to going-and-coming rule). Such problems led Governor Cahill to create the New Jersey Workmen's Compensation Study Commission (Study Commission) to study and evaluate the system, including the level and method of assessing benefits. Executive Order 39 (December 20, 1972), as amended by Executive Order 45 (January 30, 1973).

Upon completion of an in-depth analysis, the Study Commission issued a Report dated September 30, 1973. It was observed in the Report that:

New Jersey is paying an enormous number of relatively small awards which in the aggregate consume a very substantial proportion of workmen's compensation resources. Many of these awards are for injuries which do not actually involve permanent impairment or disability.

It is obvious that steps are required to remedy this conflict and that resolution of the permanent partial problem is the most critical challenge facing the New Jersey workmen's compensation system. [Report of the New Jersey Workmen's Compensation Study Commission 5 (1973).]

The Report also noted that "[a]ll of the statistics which we have seen show that New Jersey's proportion of expenditures for permanent partial claims exceeds that of every other state." Id. at 23. The Report concluded that awarding compensation for so many minor injuries had taken funds from the seriously injured workers, who were receiving grossly insufficient awards. Id. at 24.

The New Jersey Report alluded to a previous Report of the National Commission on State Workmen's Compensation Laws, July 1972, which had singled out New Jersey as a state in which benefits for minor injuries were particularly excessive. The national study had observed that "New Jersey expends over 35 percent of all benefit payments on minor permanent partial cases even though its maximum weekly benefit for permanent partial ($40) is far below the maximum for other classes of benefits ($101)." Report of the National Commission on State Workmen's Compensation Laws 66-67 (1972). The national study had also made the following pertinent comments:

A possible explanation of these imbalances is that the evaluation of the extent of disability in permanent partial cases permits considerable discretion for decision makers, including agency adjudicators and courts. In some States, officials apparently have stretched the rules out of sympathy for claimants with permanent partial injuries....