Stancil v. Ace U.S.

• Decision Date: 01 February 2011
• Citation: 12 A.3d 223,418 N.J.Super. 79
• Parties: Wade STANCIL, Plaintiff–Appellant,v.ACE USA, Defendant–Respondent.
• Court: New Jersey Superior Court

418 N.J.Super. 79

12 A.3d 223

Wade STANCIL, Plaintiff–Appellant,

v.ACE USA, Defendant–Respondent.

Superior Court of New Jersey, Appellate Division.

Argued Oct. 4, 2010.Decided Feb. 1, 2011.

Steven L. Kessel, Red Bank, argued the cause for appellant (Drazin & Warshaw, P.C., attorneys; Mr. Kessel, on the briefs).Frances Wang Deveney argued the cause for respondent (Marks, O'Neill, O'Brien & Courtney, P.C., attorneys; Ms. Wang Deveney and Melissa J. Brown, Pennsauken, on the brief).Before Judges LISA, SABATINO and ALVAREZ.

The opinion of the court was delivered by

LISA, P.J.A.D.

In 2007, this court affirmed the dismissal of a Law Division action by a plaintiff, who had suffered work-related injuries, in which he sought from his employer's insurer common law damages for pain, suffering and increased disability. Flick v. PMA Ins. Co., 394 N.J.Super. 605, 607–08, 928 A.2d 54 (App.Div.2007). The plaintiff sought those damages because the insurer had failed to timely comply with orders of the compensation court authorizing certain medical procedures. Ibid. Our affirmance was based on the plaintiff's failure to exhaust available administrative remedies in the compensation court. Id. at 608, 613–14, 928 A.2d 54. However, we expressed our concern about the plaintiff's allegations of delay and recalcitrance by the carrier, id. at 616, 928 A.2d 54, and we questioned the adequacy of the enforcement provisions in the Workers' Compensation Act (Act), N.J.S.A. 34:15–1 to –128, and the corresponding regulations. Id. at 614, 928 A.2d 54. We noted that the then-applicable regulation, N.J.A.C. 12:235–3.14(b) (repealed 2009), was “silent as to whether traditional tort damages for pain and suffering caused by a respondent's recalcitrance in complying with an order are available under this provision, notwithstanding the Act's general exclusivity barring common-law claims.” Id. at 612 n. 1, 928 A.2d 54. Because of our disposition on exhaustion grounds, we declined to address “that hypothetical issue regarding the scope of a ‘compensatory levy or sanction’ ” under that regulation. Ibid. Finally, we invited the Legislature and the Division of Workers' Compensation (Division) to consider whether any reform of the statutory and regulatory enforcement measures might be appropriate. Id. at 614, 928 A.2d 54.

The case now before us is similar in all material respects to Flick, except that administrative remedies were exhausted here in the compensation court. ¹ In this case, the Law Division judge dismissed plaintiff's complaint for failure to state a claim upon which relief can be granted. See R. 4:6–2(e). We are therefore called upon to decide the issue reserved in Flick.

In the aftermath of Flick, decided July 17, 2007, and in response to a series of newspaper articles in April 2008 suggesting the need for reform in situations such as this, the Legislature amended the Act effective October 1, 2008. The Division adopted corresponding regulations effective October 5, 2009. The new provisions confer greater authority, including contempt powers, on compensation judges and, in our view, make clear that Superior Court remedies are limited to summary enforcement proceedings.

This action was filed in the Law Division on April 15, 2009, after the Act was amended. The Law Division judge rendered his decision and issued his order of dismissal on October 19, 2009, which post-dated the amendatory regulations as well. The amendatory provisions control the disposition of this case. See, e.g., Pizzo Mantin Group v. Twp. of Randolph, 137 N.J. 216, 235, 645 A.2d 89 (1994) (holding that under the time-of-decision rule, courts ordinarily apply the statute in effect at the time of the decision in order to effectuate current policy).

We hold that the remedies currently contained in the Act and regulations, which are enforceable in Superior Court under Rule 4:67–6, constitute the sole relief available to an aggrieved claimant arising out of willful noncompliance by an employer or its insurer with an order of the compensation court. The remedies were designed by the Legislature to provide adequate disincentives to such conduct and to empower compensation judges with sufficient authority to sanction the conduct. The legislative scheme in this regard is within the Act's exclusivity framework, thus precluding a common law action against the employer or its insurer. Accordingly, we affirm.

I

Plaintiff suffered a work-related injury on May 14, 1995. His employer's insurer, defendant ACE USA, stipulated that plaintiff's injuries were compensable under the Act. Defendant contends it has paid plaintiff in excess of $567,000 in compensation benefits since 1996.

On September 12, 2007, the compensation judge ordered defendant to pay certain outstanding medical and related expenses as required by prior orders ² and awarded plaintiff's counsel a $2000 fee for services rendered in procuring such enforcement relief. Defendant persisted in non-payment. On October 29, 2007, the compensation judge conducted a hearing on plaintiff's motion to compel compliance with the orders. Defendant's counsel conceded that defendant knew of its obligations under the orders but had not complied.

The compensation judge found that defendant's defalcation was blatantly willful and clearly intentional. However, he felt constrained because he lacked contempt powers. Although he acknowledged that he had “some ability to impose fines [and] sanctions,” he did not do so, although plaintiff requested it. It was his “position ... that any attempted imposition to fine, etcetera, beyond awarding [plaintiff's counsel] a [c]ounsel fee, would be arguably beyond [the compensation judge's] authority, and also, to some extent compromise the relief [plaintiff's counsel] would be seeking in the Superior Court.” He awarded plaintiff's counsel a fee of $1500, and referred him to the Superior Court for further relief. He concluded by stating: “This is, in my judgment, the complete exhaustion of administrative remedies. There is no further relief, viable relief that you could seek or obtain from this Division.”

Plaintiff then filed his Superior Court complaint. He alleged that defendant wantonly refused to comply with orders of the compensation court, resulting in a delay or denial of necessary medical treatment and causing him pain and suffering and a worsening of his medical condition. He asserted that the compensation judge had “referred” defendant's refusal to comply with his orders to the Superior Court for further action, pursuant to the then-existing regulation, N.J.A.C. 12:235–3.14(a)5. He sought compensatory and punitive damages, plus costs, interest, and attorney's fees.

The trial court granted defendant's Rule 4:6–2(e) motion. He found that, unlike in Flick, plaintiff had exhausted his administrative remedies and the matter was properly before the Superior Court. He further found, however, that amendments to the enforcement scheme enacted after Flick made it clear that the remedies specified in the Act and regulations were exclusive, no common law claim was permitted, and the role of the Superior Court was limited to enforcement proceedings. He therefore dismissed the complaint with prejudice.

II

The compensation court proceedings concluded on October 29, 2007. Until that time, the enforcement provisions of the Act and regulations were the same as we described in Flick. If an employer or its carrier unreasonably delayed or refused to pay temporary disability benefits, it could be assessed “an additional amount of 25% of the amounts then due plus any reasonable legal fees incurred by the petitioner as a result of and in relation to such delays or refusals.” N.J.S.A. 34:15–28.1. The dispute here, however, does not pertain to temporary disability benefits.

By former regulation, for an “unreasonable failure to comply” with any order, the compensation judge was authorized to impose various remedies, which included ordering attorney's fees and costs, and “refer[ring] matters for other administrative, civil or criminal proceedings.” N.J.A.C. 12:235–3.14(a)4, 5 (repealed 2009). The regulation also allowed a party or the compensation court on its own motion to move for enforcement of an order. N.J.A.C. 12:235–3.14(b) (repealed 2009). Under this provision, the noncompliant party was required to explain “the reasons for any noncompliance and manner and time periods to ensure compliance with the order at issue.” Ibid. Then, before taking any action under paragraph (a), the compensation judge would hold a hearing to determine “the appropriateness of the action and the reasonableness of any compensatory levy or sanction.” Ibid. Finally, “compensatory levy and sanction” was defined as “an amount awarded to compensate for actual losses, including, but not limited to, interest on monies due a party as well as attorney's fees and administrative costs to the Division.” N.J.A.C. 12:235–3.14(d) (repealed 2009).

In Flick, we concluded that the provisions of N.J.S.A. 34:15–28.1 and the then-existing N.J.A.C. 12:235–3.14 (including those we have described here and others) were plainly designed to assure compliance with orders of compensation judges. Flick, supra, 394 N.J.Super. at 613, 928 A.2d 54. We held that, after exhausting those remedies, an aggrieved party could bring an order to show cause in the Law Division under Rule 4:67–6. Ibid.

In the case before us, the compensation judge referred the matter to the Superior Court, pursuant to N.J.A.C. 12:235–3.14(a)5 (repealed 2009), for “other ... civil ... proceedings.” Plaintiff argues that the authorized nature of those proceedings includes a common law tort action. We need not squarely address the issue framed in that manner because N.J.A.C. 12:235–3.14 has been repealed and replaced by a new section, N.J.A.C. 12:235–3.16, effective October 5, 2009. 41 N.J.R. 3807(a) (October 5, 2009). The new regulation followed the legislative enactment of new...