CP #2001-21344 Aros v. USA Home Improvements, Inc.
Thursday, June 16, 2005 B E F O R E: HONORABLE DIANA FERRIERO A P P E A R A N C E S: GOLDSTEIN, BALLEN, O'ROURKE WEINER, LESNIAK, ESQS. REPORTED BY: ___________________________________________________________ GLOBAL COURT REPORTING SERVICES, INC.
THE JUDGE: We are here today on the matter of Louis Aros v. USA Home Improvements, Inc., C.P. 2001-21344. Counsel, appearances, please. MR. SCHWARTZ: Your Honor, Paul Schwartz of Goldstein, Ballen, O'Rourke & Wildstein for the Petitioner. MR. BLOOM: Mitchell Bloom of Weiner, Lesniak for the Respondent USA Home Improvements. THE JUDGE: There are two issues before the Court, one was Respondent's "voluntary tender" of 100% of the eye and 10% partial total bona fide and thus exempt from counsel fees under N.J.S.A. 34:15-64(c) and, two, whether it is appropriate for the Court to assess penalties pursuant to N.J.S.A. 34:15-28.1. To answer both questions requires that the Court set forth the tortured chronology of this case. Petitioner, Louis Aros, is a 52-year old Spanish speaking immigrant to the United States with limited education. On November 2, 1998, Mr. Aros, while working for USA Home Improvements (hereinafter "USA Home"), sustained a severe and life-altering injury when a piece of metal from the boiler he was attempting to remove flew up, striking his left eye, causing a complete loss of vision in his left eye. The Employers' First Report of Accidental Injury or Occupational Illness (hereinafter "L&I 1") was completed on or about November 11, 1998. The L&I 1 identified Mr. Aros as a subcontractor, listed the workers' compensation policy number and Legion Insurance Company as the workers' compensation carrier. According to the L&I 1, "debris" flew into Petitioner's left eye causing him to present at Hackensack University Medical Center Emergency Room. Incredibly the L&I 1 stated Petitioner could, and did in fact, return to work following the accident. Susan Hammer, an adjuster with D&H Alternate Risk Solutions, the third party administrator (hereinafter "TPA") for Legion, wrote a letter to Petitioner dated November 11, 1998 denying the claim on the basis that he [Aros] was a subcontractor, not an employee. It should be noted that the signature on the November 11, 1998 letter to Aros is identical to the signature on the L&I 1. Thus, the TPA, and not the employer, completed the L&I 1. The claim file reflects that on November 20, 1998, USA Home called and spoke to Hammer who noted, "English was not good. He stated that this claimant was an employee, not a subcontractor...He stated the claimant does not have his own business, nor his own workers' compensation insurance." (Emphasis added.) Hammer told the insured she needed "payroll records showing him [Aros] on the books for the date of loss." This last statement is without merit because an employee need not be "on the books" or a legal immigrant to be entitled to workers' compensation benefits. As of December 30, 1998, Hammer had not received the payroll records, so she sent a letter to the insured. On February 2, 1999, Hammmer noted she received a letter from T. Mihalopoulous, the insured, stating Aros was working as a subcontractor from June 1, 1998 to November 2, 1998. Hammer noted this contradicted their phone conversation. However, she wrote "But I do believe we have a language barrier problem" (Emphasis added.) Hammer made a notation about possibly referring the information to Pemaquid, the underwriter, for payroll fraud. Hammer wrote a letter to Aros dated February 2, 1999 advising "our investigation has revealed that the...incident is not covered under USA Home Improvements' workers' compensation coverage... On 2/1/99, I received a letter from USA Home Improvements that does not offer any proof of an employer/employee relationship, nor does it offer any proof that you have no workers' compensation coverage of your own. [Therefore], our denial of payments of these bills stands." (Emphasis added.) However, it is clear from the file that Hammer never conducted an investigation of any kind, nor did she retain an interpreter even though she recognized a language barrier problem existed between herself and her insured. Rather than seeking clarification through an interpreter, Hammer simply chose to close the file. On May 5, 1999, Hammer received a copy of the complaint filed in Superior Court alleging negligence against USA Home. Hammer wrote: "If claim petition received, will reopen file." Petitioner filed the complaint in Superior Court on February 10, 1999. The case languished in Superior Court until July 7, 2001, when the Honorable Peter E. Doyne entered an Order for Partial Summary Judgment determining Aros to be an employee of USA Home and transferring the case to the Division of Workers' Compensation for adjudication. The Notice of Motion seeking entry of Summary Judgment Order was unopposed. Prior to filing the Notice of Motion, Aros served USA Home with a Request for Admissions pursuant to New Jersey Court Rule 4:22. USA Home never responded to the Request for Admissions, nor did USA Home request an extension of time in which to answer. Therefore, USA Home admitted the following in the Superior Court action: 1. Louis Aros began working for USA Home on a regular basis starting in or about June of 1998; 2. Aros' job was to assist subcontractors in various trades; 3. Aros performed this work for USA Home at various locations between June, 1998 and November 2, 1998; 4. USA Home directed Aros where to go to perform this work; 5. Aros sustained injuries on November 2, 1998 while performing work at the premises located at 221-223 DeGraw Avenue, Teaneck, New Jersey; 6. On November 2, 1998, Aros was performing work at the direction of USA Home and Taso Mihalopoulous; 7. On November 2, 1998, USA Home directed Aros as to the nature of the work he was to perform; 8. On November 2, 1998, USA Home was to pay Aros in cash for the work he performed; 9. On November 2, 1998, USA Home was to pay Aros on an hourly basis for the work he performed; 10. USA Home provided Aros with tools to perform the work requested; 11. On November 2, 1998, Louis Aros was an employee of USA Home; 12. On November 20, 1998, TASO Mihalopoulous advised Legion Insurance Company or its claim representative that Aros was an employee, not a subcontractor. Aros filed a claim petition with the Division of Workers' Compensation on June 28, 2001. Respondent counsel did not file an Answer to the claim petition until November 9, 2001. Despite the above admissions, Respondent's counsel, in answering the claim petition, denied the injury arose out of and in the course of Petitioner's employment and denied the employment was covered by N.J.S.A. 34:15-1. Incredibly, in an addendum to the Answer, Respondent denied the happening of a compensable event, put Petitioner to his proofs regarding all claims for compensation benefits and all jurisdictional issues. Respondent pled the defenses of lack of timely notice and statute of limitations. It must be emphasized that when Respondent filed its Answer to the claim petition on November 9, 2001, that it had been three years since Mr. Aros lost the vision in his left eye and he had yet to receive one cent in temporary disability benefits or any authorized treatment. Fortunately for Mr. Aros, Dr. Jonathan M. Kagen agreed to provide him with treatment even though he was not being paid at the time of service. Petitioner had no recourse but to file a Notice of Motion seeking medical and temporary benefits given the denial of the claim by Respondent. Said Motion was filed June 17th, 2002. On June 24, 2002 Respondent filed a letter in lieu of a more formal answering statement objecting to the Notice of Motion on grounds of hearsay; that the motion did not address Petitioner's ability to work; and that the Superior Court action did not decide the issue of whether the accident arose out of and in the course of Aros' employment. Given the content of the TPA's claim file and the Respondent's admissions in the Superior Court action, it is inconceivable to the Court how Respondent could have, in good faith, denied the claim and the Motion for Medical and Temporary benefits. At the time Respondent filed an Answer to the Medical and Temporary Motion it had been 30 months since Mr. Aros lost the vision in his left eye and he had yet to receive any authorized treatment or one dollar in temporary disability benefits. The hearing on the Motion for Medical and Temporary benefits was scheduled to begin July 11, 2002. However, Legion Insurance, Respondent's workers' compensation carrier, was in receivership. The Court understood the stay in effect at the time to cover motions for medical and temporary benefits. On the record, I questioned Respondent's counsel regarding the content of the claim file and the Superior Court documents. He claimed no knowledge of these documents. Respondent's counsel admitted to not reviewing the state file. He advised that in November 2001 he wrote for copies of the Superior Court pleadings and that he sent a follow-up letter in December 2001, but he did not follow up thereafter. He admitted to not issuing subpoenas for these documents. Respondent's counsel also admitted in response to my questions that he had received the claim petition from the carrier in August, 2001, but that he did not file the Answer until November 9, 2001. At no time did Respondent's counsel advise the Court that the Motion could proceed. Therefore, based upon the Court's understanding of the stay in effect, the Court adjourned the Motion until September 27, 2002. On the record, however, I had advised Respondent's counsel that I was considering assessing penalties against Respondent pursuant to N.J.S.A. 34:15-28.1 based upon the record before me. The next day the Court learned through an attorney who also represented Legion that the stay did not apply to Motions for Medical and Temporary benefits. The Court then contacted Respondent's attorney by telephone who confirmed that he could have proceeded with the Medical and Temporary Motion despite the stay but did not so advise the Court because the issue of penalties had been raised. The Court rescheduled the Notice of Motion to commence on July 17th, 2002 at 1:30 P.M. on a continuous trial basis. Finally, in a letter dated July 22, 2002, Respondent admitted compensability, agreed to pay medical bills pursuant to the statute and agreed to pay 52 weeks of temporary disability without prejudice at the rate of $286.36 for a total of $14,890.72. On July 24, 2002, an Order memorializing this agreement was signed. On August 15th, 2002, Respondent made a "voluntary tender" of 100% of the eye and 10% partial total. It is the Court's holding that Respondent's "voluntary tender" of 100% of the left eye and 10% partial total is not bona fide pursuant to N.J.S.A. 34:15-64 (c). Under N.J.S.A. 34:15-64 (c) "at a reasonable time, prior to any hearing, compensation has been offered and the amount then due has been tendered in good faith or paid within 26 weeks from the date of the notification to the employer of an accident...or the employee's final active medical treatment or within 26 weeks after the employee's return to work, whichever is later...the reasonable allowance for attorney fee shall be based upon only that part of the judgment or award in excess of the amount of compensation theretofore offered, tendered in good faith or paid." (Emphasis added.) Respondent did not make this "voluntary tender" at a reasonable time. Nor did Respondent make the voluntary tender prior to any hearing. Nor was the "voluntary tender" made in good faith. The offer came more than a year after the filing of the claim petition and after the filing of a Motion for Medical and Temporary benefits. Despite admitting to all jurisdictional facts in the Superior Court action and despite the Order for partial Summary Judgment, Respondent continually refused to accept the incident as a compensable event and continually refused to provide Aros with temporary disability and authorized treatment. A finding that the offer was "bona fide" is a prerequisite for allowing the reduction Respondent seeks in counsel fees. Lucia v. Mobility Elevator & Lifting Company, Docket Number A-567-02T1, (App. Div. 2003.) Respondent cannot claim ignorance of the Superior Court action because Respondent was a party to that action. It is irrelevant that the Superior Court action was being defended by a carrier other than Legion. Given the admissions in the Superior Court action, Respondent was estopped from asserting otherwise within the Division of Workers' Compensation. The Court is convinced beyond any doubt that Respondent made the "voluntary tender" for the sole purpose of denying Petitioner's counsel a fee on permanency aspect of the case. The "voluntary offer" came after a hearing. The case came before the Court on July 11, 2002 after Petitioner filed the Notice of Motion for Medical & Temporary benefits. As previously noted, Respondent opposed the motion. The motion was rescheduled to begin on a continuous trial basis beginning July 17, 2002 @ 1:30. On July 24, 2002 the parties appeared before the Court to resolve the med/temp motion and the July 24, 2002 Order was signed. On August 15, 2002, the "voluntary tender" was made. Clearly, the voluntary tender came after the first hearing on the case. See, Gorman vs. Waters & Bugbee, Inc. 374 N.J.Super. 513, 518 (App. Div. 2005). The case at bar came before the Court on July 11, 2002 on a Motion for Medical & Temporary benefits. This was not a listing merely to track the case's progress or to hold a status conference. Rather, Petitioner has assembled his medical proofs on the extent of his disability and was in a position to proceed on the motion. Respondent knew, or should have known, the extent of Petitioner's permanent disability. That the Court initially adjourned the motion because of its understanding of the stay of liquidation is irrelevant. Id. The letter brief submitted by Respondent arguing the voluntary tender was bona fide is disingenuous and misleading. For instance, Respondent states in its brief the Medical and Temporary Motion was filed June 12th, 2002 and "at that time Respondent agreed to admit compensation and offered a year of temporary disability benefits without a hearing." Respondent attempts to portray itself as throwing in the towel after the filing of the Motion. However, as previously stated, Respondent consistently disputed all jurisdictional aspects of the claim, even after the filing of the med/temp motion. Respondent's lack of bona fides was evident when its counsel failed to advise the Court that Respondent was permitted to proceed with the Medical and Temporary Motion despite the stay in effect. Respondent remained silent and would have been content to have Mr. Aros continue not being compensated were it not for the Court learning, on its own, that it had been mislead through Respondent's silence. Respondent argues in its brief that any payments made within 26 weeks of the last payment of disability benefits constitutes a "bona fide" offer. That same argument was put forth by the Respondent in Lucia and rejected by the Appellate Division which held that such a finding "would contravene” the policy behind the Moore [42 N.J. Super 425 (App. Div. 1957) aff'd 27 N.J. 82 (1958)] and Coponi, [31 N.J. (1959)] decisions and N.J.S.A. 34:15-64(c) itself. The principles espoused in Moore and Coponi "require prompt payment upon learning of the permanency of a petitioner's disability." Lucia at 6.Clearly, Respondent knew or should have known of the extent of Petitioner's permanent disability at the time the claim petition was filed because Respondent had been a party to the Superior Court action where there had been two years of discovery. In Torres v. Miller, 238 N.J. Super 158, 162 (App. Div. 1990), the Appellate Division held that N.J.S.A. 34:15-64(c) "serves the remedial purpose of encouraging employers to comply promptly with their affirmative obligation to pay compensation benefits when they first receive notice of a work connected accident and resulting [permanent] disability." The claim petition was filed June 28, 2001. Respondent attorney received the claim petition August 1, 2001. In the Court's opinion the 26 weeks began to run on August 1, 2001, for that is when the Respondent first received notice of a work connected compensable accident and the resulting permanent disability. The jurisdictional issues had been decided in the Superior Court action. Respondent had or should have had the discovery in the Superior Court action and knew or should have known that Mr. Aros suffered a permanent injury to his left eye. Respondent, therefore, was estopped from disputing same. The second issue is whether it is appropriate for the Court to assess penalties against the Respondent pursuant to N.J.S.A. 34:15-28.1. Under that portion of the statute penalties are appropriate when "an employer's insurance carrier, having actual knowledge of the occurrence of the injury, or having received notice thereof such that temporary disability compensation is due pursuant to R.S.34:15-17, unreasonably or negligently delays or refuses to pay temporary disability compensation, or unreasonably or negligently delays denial of a claim, it shall be liable to the petitioner for 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." A delay of 30 days or more gives rise to a rebuttable presumption of unreasonable and negligent conduct on the part of the carrier. Id. It is the Court's opinion that it is appropriate to assess penalties in this case for several reasons. From the inception this claim was poorly managed. The adjustor completed the L&I 1, not the employer. Where she obtained the information and from whom is not clear. There were conflicting reports in the claim file as to Aros' employment status, general contractor versus employee. The claim file also reflects a language barrier problem between the adjuster and the insured. However, the adjuster simply opted not to investigate and denied the claim. After languishing in Superior Court for two years the case was transferred to the Division. Extensive discovery, including Requests for Admissions took place. Mr. Aros was deemed an employee who worked for Respondent at the time he was injured. Respondent attorney received the claim petition in August of 2001 and did nothing with it until November 2, 2001 when he filed an Answer denying compensability despite the admissions and the ruling in the Superior Court action. Respondent continued to deny Mr. Aros treatment and temporary disability benefits, thereby compelling Mr. Aros to file a Notice of Motion for Medical and Temporary benefits. Again, Respondent, in its answer to the motion, argues issues that had been resolved in the Superior Court action. When the Court was misinformed about the effects of the stay on the Motion for Medical and Temporary benefits, Respondent's counsel intentionally remained silent, intentionally deciding not to advise the Court that the Motion could proceed. Respondent's counsel admitted he remained silent because the Court had raised the possibility of penalties. All of these actions and omissions by Respondent constitute negligence under the statute. I, therefore, am assessing a 25% penalty against Respondent on the one year of temporary disability benefits paid to Mr. Aros and I ask that Petitioner's counsel prepare a form of Order for me to sign. C E R T I F I C A T E I, STELLA M. DOUGLAS, a Notary Public and ____________________________________ STELLA M. DOUGLAS, CSR I HEREBY CERTIFY that this a transcript of my ___________________________________ DIANA FERRIERO DATED:__________________ |
