January 8, 2010
KATHLEEN PATRY, PETITIONER,
WEST JERSEY HEALTH SYSTEMS (AS SELF-INSURED), RESPONDENT-APPELLANT, AND WEST JERSEY HEALTH SYSTEMS (AS INSURED BY NEW JERSEY MANUFACTURERS INSURANCE COMPANY), RESPONDENT-RESPONDENT.
On appeal from the New Jersey Department of Labor and Workforce Development, Division of Workers' Compensation, C.P. Nos. 1992-048045 and 1993-009199.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 9, 2009
Before Judges Stern and Lyons.
Scibal Associates (Scibal) appeals from an "order to enforce" entered by the Workers' Compensation court on September 17, 2008. The order requires Scibal to reimburse New Jersey Manufacturers Insurance Company (NJM) fifty percent of the amount NJM has expended since the parties' 1999 settlement and to continue to regularly reimburse NJM for any further costs incurred thereafter under the settlement.
The facts giving rise to this case concern two work-related injuries suffered by Kathleen Patry (Patry) while employed by West Jersey Health Systems (West Jersey). At the time of the first injury, which occurred on November 4, 1991, West Jersey was insured by NJM. When Patry was injured a second time, on October 20, 1992, West Jersey was self-insured and its plan was administered by Scibal. As a result of these injuries, Patry filed a workers' compensation action.
On March 31, 1999, an order was entered by the Workers' Compensation court after the parties agreed upon a settlement regarding Patry's action. The order declared Patry was totally and permanently disabled under N.J.S.A. 34:15-12b. It described Patry's medical condition as follows:
[t]he permanent disability resulting from said accident is orthopedic, neurologic and psychiatric in nature involving left wrist strain and sprain; neuroma of radial sensory nerve left wrist requiring excision; DeQuervain's tenosynovitis release left wrist; ablation of radial and lateral antibrachial cutaneoeus nerves left elbow; post-traumatic arthritis left wrist requiring arthrodesis with local bone graph and dynamic compression plate; rotator cuff tendonopathy left shoulder secondary to subacromial impingement; C6-7 cervical radiculopathy confirmed via EMG/NCV testing; centralized neuropathic pain syndrome left forearm and hand; chronic pain syndrome with reflect [sic] sympathetic dystrophy (RSD); implantation of spinal cord stimulator; chronic depression.
The order acknowledged that the disability was not a result of the two injuries alone but by the combined effect of pre-existing conditions and the two injuries.
The provision pertinent to this appeal provided that NJM would manage Patry's continuing medical care, NJM would pay for Patry's continuing medical care, and Scibal would reimburse NJM for fifty percent of the costs of continuing medical care.
In a letter dated April 2, 1999, which was addressed to Scibal's counsel, NJM's counsel inquired as to "the name of the person that [NJM] should contact at [Scibal] in the event there is [sic] any questions or difficulties in obtaining reimbursements for [the] payments of temporary disability as well as medical costs."
The record reflects that communications ceased between NJM and Scibal until an April 10, 2007 letter from NJM's counsel to Scibal requested reimbursement in accordance with the 1999 order. It was accompanied with an itemization of the medical bills paid by NJM.*fn1 The letter also stated, "[i]f you need additional documentation regarding the actual bills please advise. If you would like to discuss this matter further please do not hesitate to contact me." Scibal did not respond to NJM's correspondence.
Thereafter, on January 18, 2008, NJM moved to enforce the 1999 order. Scibal filed a certification, dated February 21, 2008, in opposition to NJM's motion, claiming the defense of laches. On July 11 and September 12, 2008, the Workers' Compensation court heard oral argument on the motion.
The court granted NJM's motion, and on September 17, 2008, the court issued an order to enforce, directing Scibal to abide by the terms of the 1999 order. However, the court determined that NJM would not be entitled to any interest. It is from this order that Scibal appeals.
A November 10, 2008 letter from NJM to Scibal requested reimbursement of fifty percent of $1,141,258.06, which is $570,629.03. Enclosed with this letter were reports, bills, and an itemization for medical bills paid or medical costs incurred from March 31, 1999, until October 2, 2008.*fn2
On appeal, Scibal raises the following arguments:
THE CLAIM FOR REIMBURSEMENT BY WEST JERSEY HEALTH SYSTEMS (NJM) SHOULD HAVE BEEN DENIED BY THE TRIAL COURT PURSUANT TO THE DOCTRINE OF EQUITABLE ESTOPPEL
THE CLAIM FOR REIMBURSEMENT BY WEST JERSEY HEALTH SYSTEMS (NJM) SHOULD HAVE BEEN DENIED BY THE TRIAL COURT PURSUANT TO THE DOCTRINE OF LACHES
THE WORKERS' COMPENSATION COURT ERRED IN DENYING WEST JERSEY HEALTH SYSTEMS' (SCIBAL ASSOCIATES) REQUEST FOR DISCOVERY IN THIS MATTER
In Point I of its brief, Scibal argues that the Workers' Compensation court erred in granting NJM's claim for reimbursement because NJM's claim should have been barred pursuant to the doctrine of equitable estoppel. According to Scibal, NJM's claim for reimbursement should have been barred because Scibal "relied to its detriment" on NJM's failure to provide any information regarding Patry's medical care.
Scibal did not specifically raise an equitable estoppel argument before the trial court.
"[We] will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available 'unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest.'" Nieder v. Royal Indemnity Ins. Co., 62 N.J. 229, 234 (1973 (quoting Reynolds Offset Co., Inc. v. Summer, 58 N.J. Super. 542, 548 (App. Div. 1959), certif. denied, 31 N.J. 554 (1960)); see Pressler, Current N.J. Court Rules, comment 2 on R. 2:6-2 (2009). "That general rule, however, does not apply where an issue was raised in the trial court even if argument before the trial court was based on a different theory from that advanced in the appellate court." Pressler, supra, comment 2 on R. 2:6-2; see, e.g., Docteroff v. Barra Corp. of Am., Inc., 282 N.J. Super. 230, 237 (App. Div. 1995).
Because Scibal advanced an argument based on delay and reliance before the Workers' Compensation court, although not referred to specifically as equitable estoppel, we will review the contention raised before us.
The doctrine of equitable estoppel is "founded in the fundamental duty of fair dealing imposed by law." Casamasino v. City of Jersey City, 158 N.J. 333, 354 (1999) (quoting State v. Kouvatas, 292 N.J. Super. 417, 425 (App. Div. 1996)). The doctrine is invoked "in the interests of justice, morality and common fairness." Knorr v. Smeal, 178 N.J. 169, 178 (2003) (quoting Palatine I v. Planning Bd., 133 N.J. 546, 560 (1993)). Equitable estoppel is designed to prevent a party from disavowing its previous conduct where that conduct amounts to a concealment or misrepresentation of material fact unknown to the party claiming estoppel, where the conduct was intended or expected to be acted upon by the adverse party, and where the adverse party does in fact rely thereon in good faith in prejudicially changing its position. [Pressler, supra, comment 15.1 on R. 4:5-4 (2009).]
The party asserting the defense bears the burden of proof. Miller v. Miller, 97 N.J. 154, 163 (1984). In order to assert equitable estoppel, Scibal must show that NJM "engaged in conduct, either intentionally or under circumstances that induced reliance, and that [Scibal] acted or changed [its] position to [its] detriment." Knorr, supra, 178 N.J. at 178.
Here, NJM did not request reimbursement from Scibal for eight years. NJM has not explained its delay. Despite this delay, Scibal's argument that equitable estoppel bars reimbursement fails because it has not proven that NJM concealed or misrepresented the costs or reimbursements it now seeks from Scibal, it has not proven that NJM wanted or should have expected Scibal to act in reliance to NJM's silence, and Scibal has not shown that it relied on NJM's silence to its own detriment.
The nature and extent of Patry's injuries, which were described in the 1999 order, demonstrate that Scibal should have anticipated that Patry would need continuing medical care after the entry of the 1999 order. Even the Workers' Compensation court acknowledged that there are "very few cases in this division where a person receives total permanent disability and had no additional medical treatment the remainder of their life." In fact, the settlement contemplated additional treatment and expense.
In arriving at its decision to reject Scibal's defense of laches, however, the Workers' Compensation court found Scibal had a copy of th[e]  order, they knew that it was an order for total and permanent disability, they had an equal obligation, in the opinion of this court, to inquire as to NJM as to whether any benefits were being paid. That doesn't relieve NJM of the responsibility that they should have notified [Scibal], but I think [Scibal] had a similar obligation as well.
As the court stated, because Scibal was under a continuing obligation to reimburse NJM pursuant to the 1999 order, Scibal should have inquired as to whether any ongoing medical costs had been incurred by NJM. NJM was not charged with a reporting duty in the 1999 order, but rather, NJM merely had an incentive to inform Scibal of Patry's medical expenditures. Hence, Scibal should have contacted NJM regarding the continuing medical costs.
Scibal also contends that it was deprived of the opportunity to manage Patry's file because of NJM's silence regarding the matter.
This argument does not establish an equitable estoppel defense. As we have noted, equitable estoppel requires a showing of conduct expected to induce reliance and actual detrimental reliance. Knorr, supra, 178 N.J. at 178. Whether Scibal had been deprived of managing Patry's file does not bear on whether NJM's conduct was such as to induce reliance and result in actual detrimental reliance by Scibal.
Scibal also argues that, even if Patry may have needed future medical care, she could have submitted those expenses to a collateral source. Scibal asserts, "[t]his often happens in workers' compensation cases due to the fact that the workers' compensation insurance carrier controls medical treatment in work[-]related injuries."
This argument also fails. First, this argument is speculative. Scibal provided no evidence to support the proposition that Patry may have in fact had a collateral source of insurance to whom she could have submitted her medical expenses. Second, Scibal's argument is inconsistent with the 1999 order that called for both NJM and Scibal, and not the workers' compensation insurance carrier, NJM, alone, to pay for Patry's future medical benefits. Hence, Scibal's argument is at odds with the established 1999 order.
Because the 1999 order informed Scibal that it would be responsible for Patry's ongoing medical care, because Scibal was aware of Patry's medical condition, and because Scibal did not demonstrate any detrimental reliance based on NJM's silence, the Workers' Compensation court's enforcement order should not be affected by Scibal's claim of equitable estoppel. Therefore, the defense of equitable estoppel is inapplicable to the case at bar.
We next turn to Scibal's claim that NJM was barred by the doctrine of laches from seeking reimbursement.
The Workers' Compensation court recognized that "the total disability award gives [Patry] the right... to medical treatment so long as [she] is totally and permanently disabled and is still under the auspices of the order of total permanent disability." The court rejected Scibal's laches defense "because that order is an ongoing order, as opposed to a claim for reimbursement where there had been no agreement to reimburse."
The Workers' Compensation court explained:
[t]hat agreement had a mutual obligation, the obligation not only by NJM, who failed, quite frankly to notify [Scibal] of the ongoing expenditures. I don't necessarily think that NJM is in the best of positions as a result of that.
However, I don't think that is sufficient to involve laches to bar their recovery of half of the monies that have been expended.
They have taken on the obligation of not only paying for the medical, but also providing the medical, so they have done the adjusting, if you will, on all of the medical treatment that's taken place. That obviously was sufficient for [Scibal] at the time of the agreement, and I don't see anything in there that they jumped in and I had to decide who was going to provide the medical, apparently it was agreed that all right, if NJM wants to do it, fine, we will let them do it. Well, they did.
Now, unlike a claim which is arising from an obligation which has never been memorialized, laches may very well be an appropriate defense.
The court found that, while the delay between the settlement agreement and NJM's request for reimbursement was significant and possibly unreasonable and inexcusable, the delay, alone, was insufficient to bar reimbursement. It explained:
[c]learly[,] the passage of time alone is not a basis of laches. There has to be a sufficient detriment to the moving party that seeks to rely upon laches as a basis to not make payments that may have otherwise be [sic] due and owing.
In this case I also find [Scibal] had a copy of this order, they knew that it was an order for total and permanent disability, they had an equal obligation, in the opinion of this court, to inquire as to NJM as to whether any benefits were being paid. That doesn't relieve NJM of the responsibility that they should have notified [Scibal], but I think [Scibal] had a similar obligation as well. I am not satisfied laches is appropriate here....
To be able to rely upon laches, the delay must be for a length of time which is unexplained and unexcused. I am not sure that has not been met, it is all together [sic] unreasonable, it must be unreasonable and it must be prejudicial to the parties asserting it.
Now, my problem with prejudice is that this is not an unanticipated obligation. It is an obligation that was clearly entered into... with [a] full understanding... that there would likely be additional medical treatment.
[W]hile I am not happy with the fact that NJM didn't notify [Scibal] more timely, I think there is an obligation on the part of [Scibal] to make an inquiry. The mere passage of time does not constitute laches, and this is... an ongoing contract.
So in order to show that there has been prejudice on the part of [Scibal], you can't indicate to me what might... happen if the excess carrier declines coverage, because that is as iffy as what will be the rest of the medical treatment for this individual for the rest of her life.
The scope of appellate review of workers' compensation cases is limited to "whether the findings made could reasonably have been reached on sufficient credible evidence present in the record, considering 'the proofs as a whole,' with due regard to the opportunity of the one who heard the witnesses to judge their credibility." Lindquist v. City of Jersey City Fire Dep't, 175 N.J. 244, 262 (2003) (quoting Close v. Kordulak Bros., 44 N.J. 589, 599 (1965)). We defer to the Workers' Compensation court's factual findings and legal determinations, "unless they are 'manifestly unsupported by or inconsistent with competent relevant and reasonably credible evidence as to offend the interests of justice.'" Perez v. Monmouth Cable Vision, 278 N.J. Super. 275, 282 (App. Div. 1994) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974)).
"The doctrine of laches 'is invoked to deny a party enforcement of a known right when the party engages in an inexcusable and unexplained delay in exercising that right to the prejudice of the other party.'" United States v. Scurry, 193 N.J. 492, 503 (2008) (quoting Knorr, supra, 178 N.J. at 180-81). The doctrine may only be enforced "when the delaying party had sufficient opportunity to assert the right in the proper forum and the prejudiced party acted in good faith believing that the right had been abandoned." Id. at 503-04 (quoting Knorr, supra, 178 N.J. at 181). The most important factors to consider when deciding whether to apply laches are "the length of the delay, the reasons for the delay, and the 'changing conditions of either or both parties during the delay.'" Knorr, supra, 178 N.J. at 181 (quoting Lavin v. Bd. of Educ., 90 N.J. 145, 152 (1982)). However, "the core equitable concern in applying laches is whether a party has been harmed by the delay." Ibid.
The Workers' Compensation court properly decided that laches should not be applied to this case. It appropriately acknowledged that the passage of time alone is not a sufficient basis for laches. See Lavin, supra, 90 N.J. at 153 (stating that "the mere lapse of time is insufficient"). Scibal has not offered any facts to prove that it was prejudiced by NJM's eight-year silence.
Scibal claims that it was denied the opportunity to possibly amend the 1999 order and "take over the medical management of [Patry's] case if it could [have] prove[n] that NJM was negligent" in managing the case. This argument is speculative as Scibal does not proffer any evidence to prove NJM was negligent in managing the case or that it could have managed the case better, in either event reducing costs. Scibal's inability to prove that NJM may have been negligent in managing the case is no fault of NJM's because in its April 10, 2007 letter, NJM advised Scibal to inform NJM if it "need[ed] additional information regarding the actual bills." Scibal neither responded to these letters nor requested additional information from NJM to pursue such an inquiry. Scibal declined the opportunity to review NJM's documents and determine if NJM had actually been negligent in managing Patry's file. In arguing that it could have been instituted as manager if it could have proven that NJM was negligent in managing the file, Scibal engages in speculation and conjecture rather than proving any actual prejudice.
Before the Workers' Compensation court, Scibal claimed it would be prejudiced if its excess carrier denies coverage. However, Scibal has not presented any evidence that its excess carrier denied coverage. Scibal has only indicated that the excess carrier required notification of a claim. In response to the trial court's inquiry as to whether Scibal notified its excess carrier, Scibal's counsel indicated that Scibal reported the claim for reimbursement immediately after receiving NJM's April 10, 2007 letter. Because Scibal has not demonstrated that Scibal's excess carrier denied coverage because of NJM's delay, Scibal has not established it was prejudiced.
The Workers' Compensation court appropriately noted that Scibal had only shown potential prejudice rather than the requisite actual prejudice for a defense under laches. See Mancini v. Twp. of Teaneck, 360 N.J. Super. 575, 583 (App. Div. 2003), aff'd, 178 N.J. 425 (2004) (noting that laches "requires more than merely the passage of time; it requires a showing of actual prejudiced caused by the delay").
If anything, Scibal obtained a benefit by retaining its share of Patry's medical costs since 1999 and thereby having the use of those funds. In fact, the Workers' Compensation court ruled that it would not award interest on the amount owed to NJM. Hence, no evidence has been proffered that demonstrates that Scibal has been prejudiced by NJM's delay.
Furthermore, Scibal could not have acted in good faith in changing its position due to NJM's silence. As we have already stated, the 1999 order informed Scibal of the nature of Patry's injuries and of its continuing obligation to reimburse NJM for Patry's ongoing medical costs.
Therefore, because Scibal is unable to show that it acted in good faith believing that NJM abandoned its right to demand reimbursement and that it was harmed by NJM's delay to seek reimbursement, the Workers' Compensation court appropriately determined that it would be equitable for NJM's claim to be enforced and that Scibal's defense of laches was inapplicable to this case.
In Point III, Scibal argues that the trial court erred "in denying its request for discovery on the issue and the manner and method in which NJM medically managed [Patry's] file and perhaps even the reasons why no notice was ever provided to Scibal" for the eight years.
On review, an appellate court will generally defer to the trial court's determinations regarding discovery, and these determinations are reviewed under the abuse of discretion standard. Pressler, supra, comment 4.5 on R. 2:10-2. See Rivers v. LSC P'ship, 378 N.J. Super. 68, 80 (App. Div.), certif. denied, 185 N.J. 296 (2005) (stating that "generally, [the appellate court will] defer to a trial court's disposition of discovery matters unless the court has abused its discretion or its determination is based on a mistaken understanding of the applicable law"). An abuse of discretion "arises when a decision is 'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Flagg v. Essex County Prosecutor, 171 N.J. 561, 571 (2002) (citation omitted). Stated differently, this standard examines "whether there are good reasons for an appellate court to defer to the particular decision at issue." Ibid.
At oral argument before the Workers' Compensation court, Scibal's counsel stated that it had an opportunity to review Patry's medical bills but it did not receive her medical records. Scibal's counsel said that he requested the records "[m]aybe orally, at one point." Counsel then stated, "[o]ne of my other arguments, or one of my other requests is that I think I should have some discovery in the case in the sense to look at the claim file, perhaps even depose the claims manager." Scibal's counsel, who was admittedly "theorizing," questioned whether NJM "goofed up" or was negligent in its management of Patry's file.
In concluding its oral decision, the court addressed this argument:
Do you have a right to see the actual bills, the actual services performed, and what the bills are for[?] I would say yes, you do. I think that that is to be provided to you, it may be a difficult situation for NJM to do after waiting eight years, but that's their problem they waited.
But I also believe that [Scibal] sat on their hands and didn't do anything, knowing that they had a future obligation under the terms of the order.
So failing to act on their part, I think counteracts any argument you could have for laches.
Here, Scibal seeks discovery for two purposes: to investigate the reasons for NJM's delay and to discern whether NJM negligently managed the file.
Despite the lengthy delay by NJM to request reimbursement, we have found that Scibal has not established NJM's claim should be barred by equitable estoppel or laches because no prejudice or detriment to Scibal has been shown. Thus, Scibal's first purpose for discovery, to determine the reason for NJM's delay, is irrelevant to this case.
Scibal's second purpose for seeking discovery, to determine whether NJM properly managed Patry's file, is relevant as to whether Scibal owes NJM the full amount sought for reimbursement. However, the court found that, while Scibal had the right to the information, Scibal did not act timely to obtain and review the information. In fact, the April 10, 2007 letter from NJM offered Scibal whatever additional documentation it wanted regarding Patry's medical bills, but Scibal never requested such until the close of oral argument, seventeen months later. Scibal's request was most untimely. Therefore, the Workers' Compensation court did not abuse its discretion by not granting Scibal its request for discovery in this matter at the time of oral argument. Before us the parties indicated that Scibal can seek relief if it finds an actual error or mistake in the bills for which it is obligated and has been informed as to how to make requests for information relevant to future medical services and billings.