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K.S. v. Sunny Days Early Childhood Services

January 20, 2010


On appeal from the Division of Workers' Compensation, Claims 2003-13786 and 2003-38560.

Per curiam.


Argued November 16, 2009

Before Judges Rodríguez, Yannotti and Chambers.

Alea North American Insurance Company (Alea), as insurer for Sunny Days Early Childhood Developmental Services (Sunny Day Services), appeals from a judgment of the Division of Workers' Compensation, which found that K.S. sustained a work-related compensable injury, awarded K.S. temporary and permanent disability benefits and determined that Alea was entirely responsible for the payment of those benefits, as well as counsel fees and costs. K.S. has filed a cross-appeal from the judgment. For the reasons that follow, we reverse on the appeal and dismiss K.S.'s cross-appeal.


Sunny Days Early Childhood Center, Inc. (Sunny Days Center) and Sunny Days Services provide services to children with developmental delays. Sunny Days Center is a non-profit entity that provides services to children from birth to age three. Sunny Days Services is a for-profit entity that provides such services to children who are older than three years. Donna Maher (Maher) and Joyce Salsberg (Salsberg) are the owners of the Sunny Days companies. K.S. began working for the companies in August 1999.

K.S. testified that she served as the companies' chief financial officer. In that capacity, she was responsible for all of the companies' "financial records, statements, [and] financial documents." She also "handl[ed] all the insurance." In addition, K.S. was responsible for certain "human resource work," which included preparing the payroll every two weeks, reconciling the employees' 401K statements, tracking the employees' time off and ensuring that the employees' credentials were up to date. K.S. was not, however, involved in the hiring, firing or evaluating of employees other than those on the bookkeeping staff. K.S. also was responsible for the books and records of a real estate holding company for two buildings that Maher and Salsberg owned.

According to K.S., while she was working at Sunny Days, the companies "grew like topsy." She said that, at one point, the companies were providing services to between 400 and 575 children. In July or August 2001, Maher and Salsberg were planning to acquire an existing business in Long Island, New York, that employed fifty or one hundred employees. K.S. had to perform certain tasks, including working up cash flow projections and other financial information related to that acquisition.

K.S. testified that in September and October 2002, she told Maher and Salsberg that she "could not intelligently and responsibly handle" the work of the chief financial officer and human resources director for the companies. K.S. stated that she became very frustrated, angry, overwhelmed and concerned about her workload because "in [her] frenzy" to complete everything "[she] was starting to make some minor mistakes . . . and it caused [her] a lot of distress and anxiety[.]"

In December 2002, Maher and Salsberg put K.S. on probation. K.S. continued to handle the same workload but Maher and Salsberg gave K.S. permission to hire additional help. K.S. said that she "realized that [she] wasn't concentrating." She began to experience "panic attacks" and "stomach problems." She claimed that she "was functioning [like] a robot." K.S. stated that on morning of March 6, 2003, she woke up with what she described as "very tight bands around [her] head." She was experiencing "palpitations" and felt that her "heart was coming out of [her] chest."

K.S. went to see her primary care physician, Dr. Mark Gershenbaum (Gershenbaum), who had been treating her since 1994 for anxiety and elevated blood pressure. Gershenbaum provided K.S. with a note, indicating that she should remain out of work for several days. On March 17, 2003, Gershenbaum provided K.S. with another note, which stated that K.S. had "to be out of work indefinitely due to a work-related stress anxiety disorder."

That same day, K.S. advised Sunny Days' insurance agent that she intended to file a claim for workers' compensation benefits. She never returned to her position at Sunny Days. In November 2005, K.S. took a job as a clerk in a bookstore, and was working about twenty-five-and-one-half hours per week.

Maher disputed K.S.'s assertion that she was responsible for all of the financial documents for the companies. According to Maher, K.S. oversaw the work but it was done by the bookkeeping staff in each location. Maher explained that Sunny Days had a bookkeeper for its Pennsylvania operations and two full-time bookkeepers in New Jersey. Furthermore, in 2001, when Sunny Days began to operate in New York, a bookkeeper was hired for the New York office. In addition, in August 1999, Sunny Days hired Michael Rescino (Rescino) as an outside accountant to do the books and the company's audit.

Rescino testified that K.S.'s role was to perform "[b]asic controller-type activities" such a bank reconciliations, adjusting accounts, handling prepaid insurance accounts, and posting wage accruals at the end of an accounting period. Rescino explained that the companies did not want K.S. "to do any bookkeeping" but rather to oversee the bookkeeping work done by others.

Rescino further testified that K.S. "did a fine job in the beginning" but became unable to complete her work when the companies began to grow in 2002 and the work became more complex. He stated that K.S.'s office "was disorganized" and there were "piles of files and paper on her desk."

Maher said that, at the end of 2002, Rescino approached Maher and Salsberg and told them he was "very distressed" because he was preparing his year-end audits and discovered that "things were in shambles[.]" He noted that the bank and company accounts had not been reconciled, wage accruals had not been posted and building insurance had not been paid. Maher and Salsberg learned of other problems with K.S.'s job performance when she was out of the office.

On December 30, 2002, K.S. met with Maher, Salsberg and Rescino and they reviewed a list of her job duties and functions. They transferred responsibility for the payroll to another bookkeeper and hired an additional bookkeeper to assist K.S. on a part-time basis. K.S. stated that, after the meeting, she became concerned that she would be ...

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