In the case of Calle v. DeJana Industries, decided October 7, 2011, the New Jersey Appellate Division found that "reconstructing" wages for a part-time seasonal worker to an earning level equivalent to a full-time employee was appropriate based on the claimant's testimony that he was an "off the books" worker elsewhere. The petitioner testified that when not working part-time working for the employer he "would stand on a corner waiting for work" as a day laborer. The Judge of Compensation considered this testimony as proof that the claimant was disabled from all full-time employment even though the claimant was only a part-time worker for the defending employer and did not produce any proofs of the alleged full-time work elsewhere. By making this determination, the claimant's wages were "reconstructed" to a higher rate, entitling him to a much larger award.

When wages are "reconstructed."

The first step in determining the appropriate rate of compensation is to determine "wages" as defined in N.J.S.A. 34:15-37. The rate of compensation may not exceed 70% of petitioner's wages at the time of the accident subject to the maximum and minimum rate in effect for the year the accident occurred.

In practice, claims adjusters should obtain “26-week wage statements” from insured/employers so that an average wage can be computed. Why 26 weeks? The Workers' Compensation Act (N.J.S.A. 34:15-37) uses "six months" as the appropriate look-back period for wages.

The New Jersey Supreme Court in Katsoris v. South Jersey Publishing Co., 131 N.J. 535 (1993) instructed that reconstruction of wages is appropriate when necessary to compensate the worker for loss of earning capacity, i.e., diminution of future earning power. The 'loss of earning capacity' includes a loss of "potential for full employment." Where an employee, who is permanently disabled due to an injury on a part-time job, also has a full-time job, use of a "reconstructed" work week is appropriate if there has been an impact on the employee's ability to return to a full-time job. (Citing Mahoney v. Nitroform, 20 N.J. 499 (1956). By contrast, where a worker with a part-time and full-time employment is permanently partially disabled from the part-time employment but able to return to the full-time employment, reconstruction of the work week as if the part-time employment were full time employment is improper. (Katsoris, 131 N.J. at 548).

In cases involving part-time employees with no full-time work, a judge of compensation must employ the principles of "fairness and equity" in determining if the circumstances warrant reconstruction of a part-time worker's wages. However, the Appeal court drew a distinction, as did prior cases, for part-time workers - concluding that reconstruction is appropriate when the "permanently disabling accident 'prevents or interferes with later full-time employment.'" (Citing Engelbretson v. AM. Stores, 49 N.J. Super. 19 (App. Div. 1957) aff'd, 26 N.J. 106 (1958).

Determining out the 'rate' at which compensation should be paid is often the central issue in claims involving part-time workers. If a worker makes $100 a week as a part-timer, the permanent disability rate (the rate at which permanent disability benefits is paid) would be $70 per week. For an award of 25% of the hand (at the 2010 rates) a part-time worker earning $100 per week is due an award of $4,285. A full-time worker, earning wages exceeding $290 per week, would be due a "full" statutory award of $12,585.

There are many instances where a judge of compensation is persuaded to "reconstruct" a part-time wage into a full-time wage. This results in a much-higher award (in our example, $4,285 versus $12,585). The Judge of Compensation can be persuaded to "reconstruct" wages to a full-time rate because the law allows for wages of a part-time employee may be reconstructed for purposes of fixing the rate for permanent partial disability in accordance with N.J.S.A. 34:15-37 based upon "diminished future earning capacity."

Case where wage reconstruction was rejected.

Another recent case which I've written about reached different conclusion regarding wage reconstruction. In Rose Gruzlovic v. Giovani's Trattoria, A-1519-08T1 (App. Div. Decided April 15, 2010), the appeals court reviewed the decision of a Judge of Compensation who had "reconstructed" part-time wages of a cafeteria worker, resulting in an increased award. In Gruzlovic, the claimant was a 76-year-old woman who worked nine hours per week, earning $10.50 per hour (average weekly wage of $94.50). During the thirteen years the claimant worked for the employer, she did not have or seek additional part-time employment. After the accident at work, the claimant no longer worked, stating simply, "I thought I had my share [of work]."

The Judge of Compensation awarded Gruzlovic 25% permanent partial total benefits, and "reconstructed" the rate so that the claimant received the "full" statutory award ($30,420).

The Appeals Court overturned this ruling, and ruled that the claimant was only due an award only on her part-time work - which would equate to 150 weeks of compensation payable at $66.15 per week, totaling $9,922.50.

In Gruzlovic, the Judge of compensation was reversed and the wage reconstruction was remanded for further proceedings. The Judge was asked to find out whether the accident and resulting residual disability "had any impact on Gruzlovic's capacity or inclination to work full-time as opposed to part-time. Based on the fact that the claimant had only worked one day per week for the thirteen years leading up to the accident, the Appellate Court stated 'there is no basis for an inference" that Guzlovic would have pursued other full- or part-time jobs "but for" her partial disability. The Appeals Panel further stated "When an inference of a loss of potential full-time employment attributable to the accident is not available from the evidence presented, principles of fairness and equity developed to compensate for that lost potential are not implicated and reconstruction of wages is not appropriate."

Applying Gruzlovic to Calle.

The Calle decision reveals a low threshold for the petitioner to prove a loss of future earning power - the claimant in Calle merely alleged that he was a day laborer working full time in other employments. The record does not reveal any wage information, pay stubs, or tax returns which were used to verify this claim. Nonetheless, the Appellate Division accepted the bald assertion of the injured worker that he sought full-time work in essentially unverifiable (and likely illegal) employments, and then relied on that low proof threshold to establish the petitioner's right to reconstructed wages.

Case: Calle v. DeJana Industries, A-0797-10T2 (App. Div. decided October 7, 2011).

An employer can deny a case for lack of notice, lack of employment, wrong carrier, or other jurisdictional or substantive reasons by filing a "notice of Controversy" (Form C-7). Once the C-7 is filed, the case will be set down for an expedited hearing within 30 days. The Act also requires that a "Pre-Hearing Conference Statement" (Form PH-16.2) must be filed 10 days before the Expedited hearing. See 12 NYCRR 300.38(f)(4). If the Pre-Hearing Conference statement is not filed on time, all defenses are waived.

We counsel our clients that if you are denying a case, file a Pre Hearing Conference statement at the same time - to avoid the potential for failing to file the Statement (Form PH-16.2) within the 10 days. There is just too much that can go wrong - late notice of the hearing date, no notice at all, etc! If you have enough information to justify a denial, you have enough information to fill out the Pre-hearing Conference Statement - so go ahead and file the PH-16.2 at the same time.

We think he best practice is to have outside counsel handle the entire process! More commonly, we see the carrier file a C-7, then refer the claim to outside counsel. This introduces delay and a possible dropped deadline into a time-sensitive process.

In March I reported on two cases where the Appellate Division upheld the suppression of defenses where the carrier failed to timely file the Pre-hearing Conference Statement. LINK

In a case decided September 29, 2011, the Appellate Division reviewed a situation where the employer denied the case (filed a C-7) but didn't file the PH-16.2 within the time limits. To fix the mistake, counsel immediately filed an "amended notice of controversy" and argued that the originally-scheduled Pre-hearing Conference was therefore "premature" and should have been rescheduled, thereby making the PH-16.2 timely.

The Workers' Compensation Law Judge refused to excuse the late fling, and stripped the employer of its defenses, ultimately establishing the claim.

In a decision dated September 29, 2011, the Appellate Division affirmed this outcome.

Best practice: be wary of the requirement that the Pre-Hearing Conference Statement be filed ten days prior to the expedited hearing - implement a plan to make sure this is done timely or risk a suppression of defenses!

Case: Butler v. General Motors, NY Slip Op 06634 (App. Div. 3d Dep't, Decided September 29, 2011).

It has been nearly a year since the Medical Treatment Guidelines become the mandatory standard of care for injured workers, regardless of the date of injury or accident for injuries to the back, neck, shoulder, or knee. N.Y.C.R.R. 324.2. Now the Board has proposed Carpal Tunnel Syndrome Medical Treatment Guidelines. This will impact handling of these claims as currently treatments (such as release surgeries) which cost more than $1,000 are subject to carrier approval for body parts not covered by the MTG. Under the proposed Guideleines, nearly all carpal tunnel release surgeries will be considered pre-approved.

What do the current Guidelines cover?

Under the current Medical Treatment Guideliness, medical care provided to injured workers must satisfy a two-prong test:

The Medical Treatment Guidelines include statements of "General Principles" in each MTG's first section. These are the key principles necessary to apply and interpret the MTGs. There are 23 general principles divided into 6 categories. Of these, the two most important are:

When are Authorizations Required?

All medical consistent with the MTG is pre-authorized and the health care provider is not required to obtain prior authorization. See N.Y.R.R.C. 324.2(d)(1). For carpal tunnel syndrome, all release surgeries will be considered pre-approved under the proposed Guidelines except where there is no electrodiagnostic evidence of carpal tunnel injury (must be EMG and NCV). Further, some therapies, including: low level laser, iontophresis, magnets, or "laser acupuncture" are specifically deprecated.

The Board is accepting comments on the proposed CTS Guidelines and will likely adopt regulations to incorporate the Carpal Tunnel Syndrome Medical Treatment Guidelines into the law after December 1, 2011. Of course, I will keep you up to date with the progress of this reposed change.

Now, where's that pain management guideline we need so badly?!?

All compensation rates are based on a calculation of the claimant’s weekly wage. In every case, the actual benefit amount requires reference to the National Average Weekly Wage as a ‘maximum’ on the possible benefits. The Department of Labor determining the National Average Weekly Wage as follows:

As soon as practicable after June 30 of each year, and in any event prior to October 1 of such year, the Secretary shall determine the national average weekly wage for the three consecutive calendar quarters ending June 30. Such determination shall be the applicable national average weekly wage for the period beginning with October 1 of that year and ending with September 30 of the next year.

See 33 U.S.C. §906(b)(3).

The U.S. Department of Labor has announced the annual rate increase effective October 1, 2011 based on a newly-calculated National Average Weekly Wage (NAWW).

The new NAWW effective October 1, 2011, is $647.60. This represents a 3.05% cost of living increase over October 1, 2010. All beneficiaries receiving permanent total disability or related death benefits as of September 30, 2011, receive a 3.05% increase in their weekly rate.

The new NAWW also establishes the new maximum and minimum rates under section 906(b); effective October 1, 2011, the maximum weekly rate under the Longshore Act is 200% of the NAWW, so the new maximum rate is $1,295.20 per week. The minimum rate is 50% of the NAWW, so the new minimum rate is $323.80 per week.