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Frappier v. Eastern Logistics

May 30, 2008


On appeal from the Department of Labor and Workforce Development, Division of Workers' Compensation, Case No. 2005-5767.

The opinion of the court was delivered by: Grall, J.A.D.



Argued May 6, 2008

Before Judges Coburn, Fuentes and Grall.

George Frappier, a truck driver and a New Jersey resident, was injured in a motor vehicle accident in New York. Frappier filed claim petitions with the Division of Workers' Compensation (Division) seeking relief pursuant to New Jersey's Workers' Compensation Act (the Act), N.J.S.A. 34:15-1 to -128. Frappier alleged that the accident occurred during and arose from his employment with Eastern Logistics, Inc. (Logistics) and Eastern Express, Inc. (Express). Logistics defended on the ground that Frappier worked as an independent contractor and was not an employee covered by the Act. Acuity Insurance Company, Inc. (Acuity) provided a defense to Logistics but reserved its right to disclaim coverage. Jersey Shore University Medical Center (JSMC) moved to intervene in Frappier's action to recover the cost of medical services it provided. The Uninsured Employer's Fund apparently was joined as a party on Frappier's motion because Express claimed that it is uninsured.*fn1

By leave granted, Acuity appeals from an interlocutory order estopping it "from denying coverage for truck drivers."*fn2

Because Acuity was not a party to the proceeding in the Division and the judge of compensation had not determined whether Frappier was an employee or independent contractor at the time of the accident, it was improper for the judge of compensation to exercise the Division's ancillary authority to address insurance coverage. Accordingly, we vacate the order and remand.

Frappier leased and operated his truck pursuant to an "independent contractor lease" with Express. The agreement requires Frappier to lease a tractor trailer and its driver to Express in return for a share of the revenues derived. The agreement gives Express exclusive possession and control of the equipment and full responsibility for its operation "as to all third parties and the public at large" without "modify[ing], alter[ing] or affect[ing Frappier's] status as an Independent Contractor, and not an employee of" Express. The agreement declares that personnel furnished by Frappier are his employees and requires Frappier to provide workers' compensation insurance for them. Frappier sought compensation for injuries he sustained while driving the truck.

As previously noted, Acuity provided and Logistics accepted a defense offered with a reservation of Acuity's right to disclaim coverage. Frappier claimed that he had no formal notice of Acuity's reservation of rights. After learning about the reservation of rights, Frappier's attorney moved to join Acuity in the proceeding and estop Acuity from denying coverage.

Acuity opposed Frappier's motion. The insurer objected to the Division's exercise of personal jurisdiction over Acuity and its exercise of subject matter jurisdiction over this coverage dispute. Acuity also raised its reservation of rights as a defense to Frappier's claim of estoppel.

The judge of compensation denied Frappier's motion to join Acuity on the ground that Acuity was already in the case. Without addressing Acuity's reservation of rights, the judge determined that, because Acuity had provided a defense, it was estopped from denying coverage.

"The Division of Workers' Compensation is an administrative agency. As such, the Division has the right to exercise only those powers that are expressly and duly delegated to it or that are impliedly incident to those expressly granted powers." Young v. W. Elec. Co., Inc., 96 N.J. 220, 225 (1984) (citations omitted); Sherwood v. Johnson, 246 N.J. Super. 530, 532-33 (App. Div. 1991); Hajnas v. Englehard Mineral & Chem. Co., 231 N.J. Super. 353, 361 (App. Div. 1989).

The Act gives the Division "exclusive original jurisdiction of all claims for workers' compensation benefits" where there is a sufficient connection with New Jersey. N.J.S.A. 34:15-49; Connolly v. Port Auth. of New York and New Jersey, 317 N.J. Super. 315, 323 (App. Div. 1998). The Division's jurisdiction over claims for accidental injuries extends only to claims by an employee against an employer. N.J.S.A. 34:15-49; Handleman v. Marwen Stores Corp., 53 N.J. 404, 412 (1969); Hajnas, supra, 231 N.J. Super. at 361. A person who is an "employee" is entitled to workers' compensation, and a person who is an "independent contractor" is not. Lesniewski v. W.B. Furze Corp., 308 N.J. Super. 270, 280-86 (App. Div. 1998) (stating the proposition and discussing various tests used to distinguish employees and independent contractors for purposes of entitlement to workers' compensation); see Caicco v. Toto Bros., Inc., 62 N.J. 305, 309-12 (1973) (discussing standards and this ...

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