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Sheffield v. Schering Plough Corp.

August 9, 1996

LODEAN SHEFFIELD, PETITIONER-APPELLANT,
v.
SCHERING PLOUGH CORPORATION, TRAVELERS INSURANCE COMPANY, LIBERTY MUTUAL INSURANCE CO., AND THE SECOND INJURY FUND, RESPONDENTS-RESPONDENTS.



On certification to the Superior Court, Appellate Division.

The opinion of the Court was delivered by Stein, J. Justices Handler, O'hern and Coleman join in Justice STEIN's opinion. Justice Pollock filed a separate Dissenting opinion. Justice Garibaldi did not participate. Pollock, J., Dissenting.

The opinion of the court was delivered by: Stein

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

LODEAN SHEFFIELD V. SCHERING PLOUGH CORPORATION, ET AL. (A-84-95)

Argued January 30, 1996 -- Decided August 9, 1996

STEIN, J., writing for a majority of the Court.

This appeal arises from a workers' compensation case. Lodean Sheffield worked for Schering Plough Corporation (Schering) for over twenty-three years in positions that required repeated bending and lifting. In July 1983, Sheffield had to stop working because of a disabling back condition. She did not file a claim for workers' compensation benefits until five and one-half years after her back injury rendered her unable to work.

The Workers' Compensation Act (Act) establishes time limits for the filing of workers' compensation claim petitions. In the case of occupational disease, the Act provides that the claimant must file a petition for benefits within two years after the date of which the claimant first knew the nature of the disability and its relation to the employment. The Act further provides that if part of a compensation has been paid by the employer, the claim is barred unless filed within two years after the last payment of compensation.

From 1983 through the start of this litigation, Sheffield received private-plan disability benefits and private-plan medical benefits from Schering's insurers. In February 1989, Sheffield filed two workers' compensation claim petitions alleging occupational injuries involving her back, lungs, stomach, internal organs, and nervous system. The Division of Workers' Compensation (Division or workers' compensation Judge) found that Sheffield's back injuries were causally related to her employment at Schering and that she was disabled as a result of those injuries. However, the Division dismissed her claim for back-related disability because it was time-barred. The Division dismissed Sheffield's other claims as not compensable. In dismissing her claims, the workers' compensation Judge concluded that Sheffield was made aware, through Schering's Benefits Department, of the distinction between workers' compensation benefits and long-term disability benefits and that this was not a situation where the company was paying long-term disability and medical benefits and lulling her into a false sense of security that she was receiving workers' compensation benefits. Because all of Sheffield's claims for workers' compensation benefits had been dismissed, the workers' compensation Judge also dismissed Sheffield's claim for Second Injury Fund benefits.

The Appellate Division affirmed in an unpublished opinion. The Supreme Court granted Sheffield's petition for certification.

HELD:

The private plan disability and medical benefits provided to Lodean Sheffield pursuant to Schering Plough Corporation's scheme of compensation for disabled employees constituted payments of compensation within the meaning of the Workers' Compensation Act. Because Sheffield filed her claim petitions within two years of receiving payments constituting payments of compensation under the Act, the court erred in dismissing her petitions as time barred.

1. Where medical treatment that could have been required under the Act is actually furnished by the employer, such treatment is considered payment of compensation and a claim petition filed within two years of such payment is timely filed. Medical treatment need not be furnished directly by the employer to constitute compensation under the Act. A payment or agreement to pay by the employer's insurance carrier is deemed payment by the employer. A claim petitioner may not be barred from the benefits of the Act if the conduct of the employer has created a situation designed to provide a false sense of security to the injured employee. (pp. 12-18)

2. There was credible evidence in the record to support the determination by the Division that more than two years prior to the filing of Sheffield's claim for workers' compensation benefits, she knew or should have known the nature of her back injury and its relation to her employment. As such, Sheffield's claim petitions were filed out of time. The statutory language contemplates actual knowledge of the nature of the disability and its relation to the employment. Nevertheless, Sheffield's awareness of the nature of her injury and its relationship to her employment is not dispositive of this appeal because the statutory limitations period was tolled by the payment of compensation to Sheffield. (pp. 19-20)

3. The medical benefits Sheffield received from Schering's private plan insurers were in the nature of payments of compensation for medical treatments that could have been required under the Act to treat and cure her back injury. In respect of disability payments, the majority rule is that such payments also toll the statutory limitations period if the employer is aware of the existence of the work-related injury and the employee reasonably would have understood that the payments constituted, wholly or in part, compensation for an injury compensable under the Act. The precise source of payment is irrelevant; because of Schering's direct involvement in inducing its health-insurance carrier to pay for medical expenses incurred by Sheffield for her work-related injuries, the fact that those payments were made by a health-insurance carrier rather than a workers' compensation carrier is irrelevant. What is critical is that the payment to the injured employee could have been compelled under the Act to compensate that employee for the work-related injury. It need not be determined whether or to what extent employers assume an affirmative obligation to inform their employees of the availability of workers' compensation benefits. (pp. 20-24)

4. The workers' compensation Judge's determination in respect of Sheffield's pulmonary-disability claim was based on sufficient credible evidence and must be upheld. Moreover, Sheffield's contention that the Division should have required respondents to furnish her with the trial transcripts that she was obligated to provide on appeal is without merit. (pp. 24-25)

5. Liberty Mutual contends that, as a prior insurance carrier, it is not liable on Sheffield's claims of occupational disability, regardless of the Disposition of this appeal. The Second Injury Fund also asserts that it is not liable on those claims. Neither the Division nor the Appellate Division addressed either of those contentions and respondents did not file cross-petitions for certification. Therefore, those contentions are not properly before this Court. (p. 25)

Judgment of the Appellate Division is REVERSED in part and AFFIRMED in part. The matter is REMANDED to the Division of Workers' Compensation for the imposition of an appropriate award of workers' compensation benefits.

JUSTICE POLLOCK, Dissenting, is of the view that, to reach its result, the majority ignores the finding of the workers' compensation Judge that Sheffield knew the difference between workers' compensation benefits and the private plan benefits. It also ignores the Judge's findings that Sheffield had accepted payments under the private plans and that Schering did not mislead Sheffield regarding the availability of workers' compensation benefits. The majority's opinion could discourage employers from buying health insurance to pay medical and disability benefits for employees, and extends the employer's exposure for liability in workers' compensation beyond the period contemplated by the Legislature.

JUSTICES HANDLER, O'HERN and COLEMAN join in JUSTICE STEIN's opinion. JUSTICE POLLOCK filed a separate Dissenting opinion. JUSTICE GARIBALDI did not participate.

The opinion of the Court was delivered by STEIN, J.

This is a workers' compensation case. Petitioner, Lodean Sheffield, worked for respondent Schering Plough Corporation for over twenty years in positions that required repeated bending and lifting. In July 1983, Sheffield ceased work because of a disabling back condition. She did not file a claim for workers' compensation benefits until five and a half years after her back injuries rendered her unable to work.

The Workers' Compensation Act (Act), N.J.S.A. 34:15-1 to -128, establishes time limits for the filing of workers' compensation claim petitions. In cases of occupational disease, the Act provides that

where a claimant knew the nature of the disability and its relation to the employment, all claims for compensation for compensable occupational disease . . . shall be barred unless a petition is filed . . . within 2 years after the date on which the claimant first knew the nature of the disability and its relation to the employment.

[N.J.S.A. 34:15-34.]

The Act further provides that if "a part of the compensation has been paid by [the] employer," the claim is barred unless filed "within 2 years after the last payment of compensation." Ibid.

From 1983 through the commencement of this litigation, Sheffield received private-plan disability benefits and private-plan medical benefits from Schering Plough's insurers. In February 1989, Sheffield filed two workers' compensation claim petitions alleging occupational injuries involving her back, lungs, stomach, internal organs, and nervous system. The Division of Workers' Compensation (the Division) found that Sheffield's back injuries were causally related to her employment at Schering Plough and that she is disabled as a result of those injuries, but dismissed her claim for back-related disability as time-barred. The Division dismissed Sheffield's other claims as not compensable. The Appellate Division affirmed in an unpublished opinion. We granted Sheffield's petition for certification, 142 N.J. 454 (1995), primarily to consider whether Sheffield's claims were filed within time.

I

Lodean Sheffield worked for Schering Plough Corporation from the early 1960s until mid-1983. She first worked as a matron, cleaning bathrooms at the company's Union, New Jersey, facility. The work required frequent bending and stooping and involved the daily use of chemicals and cleaning agents such as ammonia. After five or six years, Sheffield became employed as a machine operator and chemical inspector in one of Schering's pharmaceutical laboratories. The inspector job entailed lifting heavy cartons of chemicals off the floor, carrying the cartons a distance of three to five feet, and then placing the cartons onto a bench for inspection. After inspecting each carton, Sheffield was required to lift it off the bench and set it down on the floor again. The cartons weighed approximately seventy-five to eighty pounds each, and Sheffield would lift and inspect fifteen or twenty of the cartons each day. At trial, Sheffield described the work pace as "go, go, go, go, go. Just steady, steady, steady, steady. You don't have time to do [anything] but pick it up and keep going and keep moving." As a machine operator, Sheffield put stoppers into medicine bottles as the bottles passed through an automated machine and then placed the bottles on trays stacked from the floor up to five feet high. That work, also, involved repeated bending and lifting.

Sheffield began experiencing back problems in 1979, when she was treated for a back sprain and displaced disc. She returned to work with restrictions on lifting, pushing, and pulling. In 1980, Sheffield reported back pain to the company nurse. She informed the nurse that she had injured her back lifting boxes on the job. The nurse referred Sheffield to a chiropractor, who treated Sheffield for a period of time. Because Sheffield's back pain was not relieved, the chiropractor referred her to an internist, who admitted her to a hospital and called in Dr. Prada, a neurosurgeon, to consult on Sheffield's case. Dr. Prada determined that Sheffield needed back surgery.

From March to June 1983, Sheffield was out of work on temporary disability leave and received disability benefits from Prudential Insurance Company, Schering's private-plan disability insurer. Sheffield returned to work in mid-June, with restrictions on lifting. She worked for approximately three weeks and then went back on temporary disability leave in early July. Dr. Prada operated on Sheffield in July, performing a laminectomy and removing an extruded disc. Sheffield began receiving short-term disability payments from Prudential in September 1983 to supplement her temporary disability benefits.

In September 1983, Emily Androtti-Consone of Schering's Benefits Department sent Sheffield a memorandum instructing her to apply for long-term disability benefits from Travelers Insurance Company, Schering's private-plan, long-term disability insurer, and also to file for Social Security benefits. Schering's policy was to provide disabled employees with short-term benefits for up to twenty-six weeks and then to provide long-term benefits, offset by Social Security benefits.

Sheffield filed for long-term benefits in accordance with company policy. In January 1984, Sheffield began receiving long-term disability coverage from Travelers. Sheffield also filed for Social Security benefits, but her claim was denied. She subsequently consulted an attorney and filed a second claim for Social Security benefits, but that claim was denied as well.

In March 1984, Schering's Employee Relations Manager informed Sheffield by letter that she was entitled to six months of job protection and thereafter would be considered on "conditional leave." The letter also stated that Sheffield would "continue to receive disability benefits and have group insurance coverage as long as [she was] disabled."

Sheffield received regular medical treatments from Dr. Prada in 1984, 1985, 1986, and 1987. In July 1988, Dr. Prada readmitted Sheffield to the hospital for additional surgery to relieve recurrent, severe back pain and numbness and to remove scar tissue from the 1983 surgery. Following the surgery, Dr. Prada continued to treat Sheffield on a regular basis and was still treating her in 1991 at the time of trial. Sheffield filed a new application for Social Security benefits after her 1988 operation. That claim was approved and she received an award of benefits. At Travelers' request, however, Sheffield remitted a large portion of her Social Security award to the insurer to reimburse it for the long-term disability payments it had made to her.

In addition to receiving disability payments, Sheffield also received medical benefits from Schering's insurers. Throughout her course of treatment for her back condition and continuing through the time of trial, Sheffield's medical expenses were paid by Schering's health insurance carriers, first ...


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