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New Jersey Manufacturers Casualty Insurance Co. v. Holderman

Decided: March 2, 1959.

NEW JERSEY MANUFACTURERS CASUALTY INSURANCE COMPANY, ET ALS., PLAINTIFFS,
v.
CARL HOLDERMAN, COMMISSIONER, DEPARTMENT OF LABOR AND INDUSTRY, STATE OF NEW JERSEY, DEFENDANT. ESSO STANDARD OIL COMPANY, ET ALS., PLAINTIFFS, V. CARL HOLDERMAN, COMMISSIONER, DEPARTMENT OF LABOR AND INDUSTRY, STATE OF NEW JERSEY, DEFENDANT



Conford, Freund and Haneman. The opinion of the court was delivered by Conford, J.A.D.

Conford

After hearing argument on the motions herein, the court requested supplemental briefs, which have been received and considered. Some aspects of the problems involved in these applications have not been fully dealt with heretofore by our courts.

These are consolidated proceedings for declaratory judgment brought in this court under R.R. 4:88-10 by various affected insurance companies, employers insured for workmen's compensation, and self-insured employers, to attack the validity of certain administrative regulations promulgated by the defendant and made effective October 1, 1958. The regulations deal with reports of accidents and occupational diseases by employers and insurance carriers. The effectuation of the regulations has been stayed pending determination of this cause.

Two motions were brought on by the petitioners. One was to strike the contents of a purported "record resulting in the promulgation of the rule being reviewed," filed by the defendant in attempted compliance with the requirements of R.R. 4:88-10. This motion was denied by the court, the ruling being that the "record" would stand for what it might be worth. More as to this anon. The other motion, which is the primary subject of this opinion, was for leave to take additional evidence on the issues in the case, pursuant to R.R. 4:88-11.

The new regulations are comprised of a notice by the defendant, in his official capacity, referring to the adoption by him of certain forms appended to the notice, to be used for reporting accidental injuries and compensable occupational diseases, these to take the place of forms previously required under and pursuant to the Workmen's Compensation Act and regulations adopted by the Division of Workmen's Compensation of the Department of Labor and Industry in the past. The most significant change in accident reporting practice under the new regulations, apparently, is that self-insured employers who previously had reported only accidents or compensable occupational diseases

causing disability extending beyond the waiting period or causing any permanent injury, are now required to report substantially every accident and disability.

The basis for the legal attack on these regulations is, broadly stated, three-fold. First, the new requirements are beyond statutory authorization and in conflict with the applicable statutes. Second, they are unreasonably burdensome, arbitrary and impossible of compliance. Third, they bear no reasonable relationship to the purpose of the Workmen's Compensation Act and its provisions relating to the reporting of accidents, and, in some respects, they are contrary to the best interests of affected employees.

The promulgation of the regulations in question was not preceded by any agency hearing whereby interested members of the public could give their views on the proposals. Although such a hearing is eminently desirable when practicable, Pennsylvania Railroad Co. v. Department of Public Utilities , 14 N.J. 411, 426 (1954), it was not an absolute legal requisite, as the regulations are quasi -legislative in character, and no positive statutory requirement for such a hearing exists in relation to such regulations as these. Bailey v. Council of the Division of Planning, etc., State of New Jersey , 22 N.J. 366, 372 (1956); and see Jamouneau v. Harner , 16 N.J. 500, 522, 523 (1954). The Bailey case suggests that when an agency is informed that its administrative action is likely to be challenged (and presumably, where its action has not been preceded by an agency hearing), it must "gird itself by preparing an appropriate ex parte record or, where statutory or practical considerations so require, a record based upon a preliminary hearing of the controversy" (22 N.J. , at page 375). This the defendant attempted to do after the petitions herein were filed by preparation of the "record" mentioned above.

The "record" begins with a statement by the defendant that accident reporting under existing regulations is inadequate, particularly by self-insured employers, and that the new regulations are needed for more effective administration of programs in his department involving reduction of

industrial accidents, rehabilitation of injured employees, enforcement of laws affecting employment of minors, and administration of the direct settlement program in compensation cases. Recommendations by "people who are directly in charge of these phases of the Department's activities" of a "more detailed reporting program" are stated to have led to the promulgation of the new regulations. Appended to the statement are six affidavits by various division, bureau or section administrators in the Department of Labor and Industry, stating briefly and generally (mostly in two legalcap pages) the relationship of the new regulations to the functions of the particular division, section or bureau.

On the motion of petitioner to strike this "record" as not being the "record of the proceedings resulting in the promulgation of the rule being reviewed" contemplated by R.R. 4:88-10, we permitted it to stand for what it might be worth, deeming it within the directions quoted above from the Bailey case, and affording the only "ingredients of [the] reasoned judgment" of the agency underlying its challenged action in the present case, and available to test the legality thereof. It is obvious, however, that such a record may ...


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