Court Opinion

ID: 7328692
Source: CourtListenerOpinion
Date Created: 2022-07-25 22:05:21.442126+00
Date Added: 2024-06-11T16:20:07.152541
License: Public Domain

Justice ALBIN,
dissenting.
The Workers’ Compensation Act (the Act), N.J.S.A 34:15-1 to -128, represents an historic social compromise between employers and their workers. Under the Act, employers are required to provide their employees with relatively prompt medical benefits *294for workplace injuries, and, in exchange, employees relinquish their right to sue for a much larger recovery under the common law. In this case, a workers’ compensation carrier repeatedly refused to provide mandated medical benefits to a seriously injured worker — in defiance of several court orders — resulting in the worker suffering a severe aggravation of his physical injuries, needless pain and suffering, irreparable emotional distress, and a significant exacerbation of symptoms of depression and anxiety.
The worker filed a common-law action against the carrier in Superior Court, seeking to be made whole for the injuries directly caused by the earner’s intentional disobedience of its legal obligations under the Act and its contumacious disregard of court orders. The majority affirms the dismissal of the lawsuit on the ground that the worker is limited to certain remedies available under the Act, remedies that fall woefully short of making the worker whole for the damages he has suffered.
This ease represents a carrier’s intentional and unilateral shredding of the social compact embodied in the Workers’ Compensation Act. Yet, the carrier is now allowed to use the Act as a shield from a common-law suit that would hold it accountable for its willful refusal both to obey court orders and to provide timely medical benefits to a severely injured worker. Nothing in the language of the Act suggests that the Legislature intended to give shelter to a earner that not only breaches its covenant of good faith and fair dealing with a worker but also inflicts on him a new injury outside of the workplace. I do not believe that the Act was intended to protect a carrier that displays absolute contempt for the law, thus causing disastrous consequences to a worker within its charge. And neither do a number of other jurisdictions that have addressed this issue under their state workers’ compensation schemes.
I therefore respectfully dissent.
I.
In May 1995, plaintiff Wade Stancil suffered a serious workplace injury while employed by Orient Originals. Defendant Atlantic *295Employers (ACE USA) is the workers’ compensation carrier for Orient Originals. In July 2006, the Division of Workers’ Compensation entered an order declaring Stancil totally disabled.6 The order required that ACE USA pay for Staneil’s past and on-going medical treatment. ACE USA refused to do so, even for the medical treatments recommended by its own experts. That refusal persisted even as Stancil’s physical and mental health worsened. Eventually, Stancil sought relief from the Division of Workers’ Compensation. Compensation judges ordered ACE USA, on multiple occasions, to comply with its duty to provide medical benefits. ACE USA defied those orders. ACE USA would not refund Stancil for prescription medication, or make payments for presurgery testing or for surgery itself.
Because of ACE USA’s recalcitrance, Stancil’s physical and mental health severely deteriorated from lack of appropriate medical care. An orthopedic surgeon reported that “the delay in cervical condition treatment has contributed to the chronicity of [Stancil’s] problem.” A board certified psychiatrist noted that ACE USA’s refusal to provide for medical treatment caused Stancil “stress, anxiety, frustration, migraines and irritability,” “irreparable emotional distress!,] and a significant exacerbation” of symptoms of his “Major Depressive Disorder and Post Traumatic Stress Disorder.”
Faced with ACE USA’s brazen intransigence, Compensation Judge Geoffrey Rosamond stated that “it is rare to see a willful, deliberate violation of an Order after Order after Order.” From his experience, ACE USA exhibited “the most outrageous display of arrogance and disregard of Court Orders that collectively the Judges here in Jersey City have seen.”
In short, ACE USA’s repeated and deliberate refusals to comply with court orders caused physical and mental harm to a worker protected by the Workers’ Compensation Act.
*296II.
A.
Under the Workers’ Compensation Act, an employee who suffers an injury “arising out of and in the course of employment” is entitled to medical treatment and compensation, “without regard to the negligence of the employer.” N.J.S.A 34:15-7. In return for those benefits, the employee’s right of recovery is limited to the terms of the Act, except in cases in which the employer commits an “intentional wrong.” N.J.S.A. 34:15-8. In essence, the Act is a social compact, “an historic ‘trade-off whereby employees relinquish their right to pursue common-law remedies in exchange for prompt and automatic entitlement to benefits for work-related injuries.” Charles Beseler Co. v. O’Gorman & Young, Inc., 188 N.J. 542, 546, 911 A.2d 47 (2006) (internal quotation marks omitted).
In this case, ACE USA breached the social compact by its willful refusal to pay court-ordered benefits, rendering a nullity the whole purpose of the Workers’ Compensation Act. As a direct consequence, Stancil suffered aggravation of his original work-related injuries and additional emotional and mental harm. Whether, under these egregious circumstances, a compensation carrier can be held accountable in a common-law action is a case of first impression for our Court. Neither the language of the Workers’ Compensation Act nor its legislative history provides ACE USA with a safe harbor from a common-law suit that would make Stancil whole for any damages he has suffered.
B.
In 2008, the Legislature empowered the Division of Workers’ Compensation with a non-exhaustive set of remedies to compel a carrier to comply with its statutory duties under the Act. N.J.S.A. 34:15-28.2 provides that “[i]f any ... insurer ... fails to comply with any order of a judge of compensation or with the requirements of any statute or regulation regarding workers’ compensa*297tion, a judge of compensation may, in addition to any other remedies provided by law,” impose certain enumerated penalties. (Emphasis added). Among the penalties a compensation judge may impose are an “assessment not to exceed 25% of moneys due,” N.J.S.A. 34:15-28.2(a); a fine not to exceed $5,000, to be paid into the Second Injury Fund, N.J.S.A. 34:15-28.2(b); closure of proofs, dismissal of claims, and suppression of defenses, N.J.S.A. 34:15-28.2(c); and exclusion of evidence or witnesses, N.J.S.A. 34:15-28.2(d). In addition, the compensation court can hold a contempt hearing, N.J.S.A 34:15-28.2(e), or take any other action it sees fit, N.J.S.A. 34:15-28.2(f).
The Legislature clearly allowed for “other remedies provided by law” in addition to the penalties that the compensation judge is authorized to impose pursuant to N.J.S.A. 34:15-28.2. That statute places no limitation on the filing of a common-law action against a carrier that causes a disabled worker either a new injury or the aggravation of an old injury — injuries caused outside of the workplace. Had the Legislature intended N.J.S.A. 34:15-28.2 to be the exclusive remedy for injuries caused by a compensation carrier’s bad-faith failure to provide medical treatment or benefits, it knew how to say so.
Several state courts have concluded that damages caused by the bad-faith failure to provide statutorily mandated medical treatment and benefits falls outside their jurisdictions’ workers’ compensation schemes. Those courts have presented persuasive reasons, grounded in fairness and logic, for allowing common-law causes of action.
C.
Some courts have held that “[a]n insurance carrier’s bad faith in failing to pay court-ordered benefits is not reasonably encompassed within the ‘industrial bargain’ by which the worker ‘gave up the right to bring a common law negligence action against the employer and in return received automatic guaranteed medical and wage benefits.’ ” Sizemore v. Cont’l Cas. Co., 142 P.3d 47, 52 *298(Okla.2006) (quoting Parret v. UNICCO Serv. Co., 127 P.3d 572, 578 (Okla.2005)); see also Hough v. Pac. Ins. Co., 83 Hawaii 457, 927 P.2d 858, 866 (1996); Franks v. U.S. Fid. & Guar. Co., 149 Ariz. 291, 718 P.2d 193, 197 (Ct.App.1985); Travelers Ins. Co. v. Savio, 706 P.2d 1258, 1265 (Colo.1985). That approach is rooted in the notion that “[a]n employee is an intended third-party beneficiary of an employer’s contract with [a carrier] for workers’ compensation coverage,” and therefore the carrier's duty to act in good faith also extends to its dealings with an employee. Hough, supra, 927 P.2d at 869 (footnote omitted); cf. Price v. N.J. Mfrs. Ins. Co., 182 N.J. 519, 526, 867 A.2d 1181 (2005) (“[E]very insurance contract contains an implied covenant of good faith and fair dealing.”). Thus, an injury caused by a compensation carrier’s failure to honor its covenant of good faith and fair dealing with an injured worker gives rise to a cause of action premised on a “contractual obligation.” Coleman v. Am. Universal Ins. Co., 86 Wis.2d 615, 273 N.W.2d 220, 223 (1979); see also Gibson v. Nat’l Ben Franklin Ins. Co., 387 A.2d 220, 222 (Me.1978) (holding that mental distress resulting from deliberately withholding workers’ compensation benefits “arises not out of appellant’s original employment relationship but out of her relationship to the insurance carrier” as “compensation claimant with established remedial rights”).
These courts have reasoned that an injury resulting from a compensation carrier’s bad-faith refusal to provide medical treatment or benefits is separate and distinct from the original workplace injury and is wholly divorced from the employee’s work itself. See Gallagher v. Bituminous Fire & Marine Ins. Co., 303 Md. 201, 492 A.2d 1280, 1283 (1985). From that perspective, a carrier’s deliberate refusal to tender statutorily mandated benefits to an injured worker “does not ‘arise out of the worker’s employment” and “does not occur ‘in the course of employment.’ ” Sizemore, supra, 142 P.3d at 52; see also Franks, supra, 718 P.2d at 201 (“The injury resulting from the intentional tori of bad faith is not compensable under the workers’ compensation scheme because it does not arise out of or in the course of employment.”); cf. *299N.J.S.A. 34:15-7 (providing workers’ compensation benefits to employees only for injuries “arising out of and in the course of employment”). Thus, a common-law cause of action — outside of the workers’ compensation sphere — is available because the compensation carrier’s bad-faith withholding of treatment and benefits does not arise out of the original employment relationship, for it necessarily “occur[s] long after the employment ha[s] ceased.” Coleman, supra, 273 N.W.2d at 223.
This line of reasoning I find persuasive. It keeps faith with the penalty provisions of N.J.S.A. 34:15-28.2 that allow for “other remedies provided by law.” The enumerated penalties do not make Stancil whole for ACE USA’s bad-faith, deliberate refusal to abide by the Workers’ Compensation Act and various court orders. ACE USA’s defiance caused aggravation of old injuries and perhaps new ones, caused Stancil to suffer prolonged and unnecessary pain, and exacerbated psychiatric conditions, such as depression and post-traumatic stress disorder. “The penalty provisions of state schemes are not intended as remedies for intentional wrongdoings” by a compensation carrier. See Hayes v. Aetna Fire Underwriters, 187 Mont. 148, 609 P.2d 257, 262 (1980). As a matter of public policy,
[t]he [Workers’] Compensation Act should not be a “shield” which will insulate those who would engage in intentional wrongdoing in the settlement and investigation of workers’ claims. No one should be allowed intentionally and tortiously to cut off a claimant unilaterally for whatever purpose they choose and then hide behind workers’ compensation exclusivity____

[Ibid.]

III.
The provisions of N.J.S.A. 34:15-28.2 do not compensate Stancil for the needless injuries inflicted on him by a compensation carrier that has exhibited utter contempt for the law. We should not construe N.J.S.A. 34:15-28.2 to leave the victim without an adequate remedy. I believe that Stancil has alleged a common-law cause of action that survives outside the Workers’ Compensa*300tion Act and that dismissal of his lawsuit gives ACE USA an unwarranted windfall.
I do not share the majority’s concern that permitting a common-law action against ACE USA will open the proverbial floodgates of litigation outside the Workers’ Compensation Act. Hopefully, ACE USA’s outrageous conduct is idiosyncratic. If not, all the more need for the alternative remedy of a common-law bad-faith action.
I therefore respectfully dissent.
For affirmance — Chief Justice RABNER and Justices LaVECCHIA, HOENS and Judge WEFING (temporarily assigned) — 4.
For reversal — Justices ALBIN — 1.
Not Participating — Justice PATTERSON — 1.

 Apparently, Stancil suffered injuries to his neck, back, and shoulder, which required surgery, physical therapy, and pain management.