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Wade Stancil v. Ace Usa

August 1, 2012

WADE STANCIL, PLAINTIFF-APPELLANT,
v.
ACE USA, DEFENDANT-RESPONDENT.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 418 N.J. Super. 79 (2011).

The opinion of the court was delivered by: Justice Hoens

SYLLABUS

(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.)

Wade Stancil v. ACE USA (A-112-10) (067640)

Argued March 26, 2012 -- Decided August 1, 2012

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

The Court considers whether an injured employee may sue his employer's compensation carrier for pain and suffering caused by the carrier's delay in paying for medical treatment, prescriptions, and other services.

Plaintiff Wade Stancil was injured in 1995 while employed by Orient Originals. He received workers' compensation benefits from his employer's compensation carrier, defendant ACE USA (ACE). In 2006, following a trial, the court of compensation determined that Stancil was totally disabled. In 2007, Stancil filed a motion in the compensation court seeking an order compelling ACE to pay outstanding medical bills. During a hearing on the motion, the compensation judge commented that ACE had a history of failing to make payments when ordered to do so. On September 12, 2007, the compensation judge granted Stancil's motion, warned ACE against any further violation of the order to pay, and awarded Stancil counsel fees. On October 29, 2007, the parties returned to the compensation court for a further proceeding relating to the disputed bills. After finding that the bills identified in the September 12 order remained unpaid and that ACE's failure to make payment was a willful and intentional violation of the order, the court issued another order compelling ACE to make immediate payment and again awarding counsel fees. The court commented on its limited ability to ensure that carriers would comply with orders, noted that it lacked the authority to enforce orders through contempt proceedings, found that Stancil had exhausted his administrative remedies, and suggested that he seek further relief in the Superior Court. In 2008, Stancil underwent additional surgery and psychiatric treatment. Stancil's physician attributed the need for additional treatment to an earlier treatment delay caused by the carrier's delay in paying medical providers.

On April 15, 2009, Stancil filed this lawsuit in the Superior Court. In his complaint, Stancil claimed that ACE required him to undergo medical examinations by physicians of its own choosing and then rejected the recommendations of those physicians and refused to authorize the recommended medical care. The complaint stated further that Stancil obtained orders from the compensation court, but ACE failed to comply. Stancil contended that ACE's failure to authorize needed treatment caused him unnecessary pain and suffering, a worsening of his medical condition, and expenses that should have been paid by ACE. ACE responded by filing a motion to dismiss the complaint. ACE argued that the Workers' Compensation Act, N.J.S.A. 34:15-1 to -142 (the Act), is the exclusive remedy for the claims pled in the complaint and therefore no damages could be awarded. The trial court granted ACE's motion. The court analyzed the impact of then-recently adopted amendments to the Act and found that the Legislature had foreclosed resort to the Superior Court for the kind of tort-based relief demanded by Stancil.

The Appellate Division affirmed. 418 N.J. Super. 79 (App. Div. 2011). The panel agreed with the trial court that the Legislature's amendments to the Act foreclosed Stancil's claims. The panel also rejected Stancil's argument that ACE's willful disregard of compensation court orders met the Act's intentional wrong exception to the litigation bar. The Supreme Court granted certification limited to determining whether an employee who suffered a work-related injury has a common-law cause of action for damages against a workers' compensation carrier for its willful failure to comply with court orders compelling it to provide medical treatment when the delay or denial of treatment causes a worsening of the employee's medical condition and/or pain and suffering. 207 N.J. 66 (2011).

HELD: An injured employee does not have a common law right of action against a workers' compensation carrier for pain and suffering caused by the carrier's delay in paying for or authorizing treatment because 1) the workers' compensation system was designed to provide injured workers with a remedy outside of the ordinary tort or contract remedies cognizable in the Superior Court; 2) in amending the Workers' Compensation Act in 2008, the Legislature rejected a provision that would have given the compensation courts broader permission to authorize a resort to the Superior Court and adopted a remedy that permits compensation courts to act through a contempt power; and 3) allowing a direct common-law cause of action against a carrier would undermine the workers' compensation system

by substituting a cause of action that would become the preferred manner of securing relief.

1. Under the Workers' Compensation Act, employees relinquish their right to pursue common-law remedies in exchange for automatic entitlement to certain, but reduced, benefits whenever they suffer injuries from an accident arising out of their employment. Although there are exceptions to the workers' compensation bar to litigation, the exceptions are narrowly defined and carefully tailored to adhere to the Legislature's clear preference for resolution of work-related injuries in the courts of compensation. (pp. 10-15)

2. At the time the orders on which Stancil based his complaint were entered, the ability of courts of compensation to ensure compliance with their orders had been criticized by the press and in Appellate Division opinions. In 2008, however, the Legislature adopted amendments to provide courts of compensation with tools to deal with recalcitrant carriers. In part, the Legislature rejected a proposal to give compensation courts the option to "[r]efer matters for other administrative, civil or criminal proceedings including referrals to the Superior Court for contempt proceedings." Instead, the Legislature provided a remedy, codified at N.J.S.A. 34:15-28.2, that permits a compensation judge to hold a separate hearing on any issue of contempt and, "upon a finding of contempt by the judge of compensation, the successful party or the judge of compensation may file a motion with the Superior Court for enforcement of those contempt proceedings." In sum, the Legislature removed the suggestion that courts of compensation would be authorized to refer matters for civil or other proceedings, and authorized those courts to make a finding of contempt that may be pursued in Superior Court. Additional enforcement tools provided in N.J.S.A. 34:15-28.2 permit compensation courts to impose costs, interest and an additional twenty-five percent assessment for unreasonable delay; impose additional fines and penalties for unreasonable delay; close proofs, dismiss claims and suppress defenses; and exclude evidence or witnesses. (pp. 15-22)

3. N.J.S.A. 34:15-28.2's references to "other remedies provided by law" and "other actions deemed appropriate" were not invitations to create a new cause of action of the kind involved in this case. The evolution of the bill that created the contempt remedy demonstrates that the Legislature enacted the precise remedy for the problem of the recalcitrant carrier that it deemed appropriate. (pp. 23)

4. The Court finds it unnecessary and inappropriate to create an alternative avenue of redress against recalcitrant carriers through a common law cause of action because 1) the workers' compensation system was intentionally designed to provide injured workers with a remedy outside of the ordinary tort or contract remedies cognizable in the Superior Court; 2) in 2008, the Legislature declined to grant a right to pursue a remedy in the Superior Court, adopting instead a narrower focus that gives greater authority to the compensation courts to act through a contempt power; and 3) Stancil's proposed remedy would threaten to obliterate the Legislature's system of workers' compensation, substituting for that mechanism a cause of action for damages arising from a carrier's delay in payment or delay in authorizing treatment that would quickly become the preferred manner of securing relief, even though the remedies provided in the Act are both adequate and appropriate. (pp. 23-26)

The judgment of the Appellate Division is AFFIRMED.

JUSTICE ALBIN, DISSENTING, is of the opinion that Stancil's common-law cause of action is supported by the penalty provisions of N.J.S.A. 34:15-28.2, which allows for "other remedies provided by law," and that the majority's decision permits ACE to avoid making Stancil whole for the damages caused by its willful refusal to obey court orders and provide timely medical benefits. Justice Albin asserts that nothing in the language of the Act suggests that the Legislature intended to give shelter to a carrier that not only breaches its covenant of good faith and fair dealing with a worker but also inflicts on him a new injury outside of the workplace.

CHIEF JUSTICE RABNER, JUSTICE LaVECCHIA, and JUDGE WEFING (temporarily assigned) join in JUSTICE HOENS's opinion. JUSTICE ALBIN filed a separate, dissenting opinion. JUSTICE PATTERSON did not participate.

Argued March 26, 2012

JUSTICE HOENS delivered the opinion of the Court.

In this matter, we are asked to create a common law cause of action that would permit an injured employee, who is separately entitled to receive workers' compensation benefits, to sue his employer's compensation carrier directly for pain and suffering when it results from the carrier's delay in payment for medical treatment, prescriptions, or related services. We decline this invitation to create a new cause of action for three essential reasons.

First, the workers' compensation system has been carefully constructed by our Legislature in a manner that serves to protect the rights of injured employees to receive prompt treatment and compensation. That system rests on the Legislature's decision to ensure that employees will be compensated by eliminating, except in precisely defined circumstances, their right to pursue litigation in the Superior Court. Seen in that light, were this Court to create a common law remedy in the nature of a claim for pain and suffering arising from a workplace injury, we would be authorizing an avenue for relief that would both conflict with and significantly undermine the system chosen by our Legislature. We therefore decline, as both unnecessary and unwise, the invitation to create such a remedy.

Second, we have been asked to create this new cause of action to address an alleged shortcoming in the workers' compensation system that our Legislature has already addressed through its recent amendments to the governing statute. The stated objective of the request to this Court is to arm employees with an enforcement tool through which they may combat the perceived evil of recalcitrant compensation carriers that intentionally delay making payments that the compensation court has ordered. Acceding to the request that we allow employees to respond in this manner to any such defiance by carriers, however, would directly conflict with the statutory framework, because our Legislature has chosen a different mechanism as its solution to this precise problem. The Legislature responded to the recalcitrant carrier problem by amending the statute to authorize courts of compensation to enforce their orders through contempt findings, which could then be enforced in the Superior Court. In doing so, however, the Legislature specifically deleted a provision, which had been included in an earlier version of the bill, that would have given the courts of compensation broader permission to authorize a resort to the Superior Court. We discern in that choice a clear direction from our Legislature concerning remedies to which we defer.

Third, the remedy that we are asked to create would be at odds not only with our longstanding jurisprudence relating to rights and remedies against workers' compensation carriers, but would, in our view, soon replace the compensation mechanism designed by our Legislature with a more general tort recovery system. Although we have previously recognized that in some circumstances an injured employee may pursue a direct cause of action against a workers' compensation carrier, that remedy arose only because, in those unique circumstances, the carrier undertook to provide treatment directly. In contrast, the cause of action we are asked to create in this appeal would not address an unusual and voluntary choice by the insurer. Instead, it would subject all carriers to the threat of a direct right of action at law that would so overshadow our system of workers' compensation that the Legislature's will would be thwarted.

Our statutory workers' compensation system has stood as a model of a fair and efficient mechanism for compensation of injured workers for nearly a century. To the extent that it has in recent years been criticized for shortcomings, including the existence of recalcitrant carriers, our Legislature has responded swiftly and decisively. For all of these reasons, we decline the invitation to create a common law remedy.

I.

Plaintiff Wade Stancil suffered a work-related injury in 1995 while employed by Orient Originals. As a result of that injury, plaintiff received workers' compensation benefits from his employer's compensation carrier, defendant ACE USA.*fn1 In July 2006, following a trial on the merits before the court of compensation, plaintiff was awarded an order concluding that he was totally disabled, by which time he had received temporary benefits from defendant that it asserts exceeded $560,000.

In 2007, plaintiff filed a motion in which he sought an order compelling defendant to pay certain outstanding bills for medical, prescription and transportation services. In the context of the hearing on plaintiff's motion to compel, the court of compensation commented that defendant had a history of prior failures to make payments when ordered to do so. As a part of its September 12, 2007, order granting plaintiff's request that the specific bills in question be paid, the court warned against any further violation of the order to pay and awarded plaintiff a $2,000 counsel fee.

On October 29, 2007, the parties returned to the compensation court for a further proceeding relating to the disputed bills. The court, after finding that the bills identified in the September 12, 2007, order remained unpaid, found that defendant's failure to make payment was a violation of that order that was both willful and intentional. Based on those findings, the court of compensation issued a further order to compel defendant to make immediate payment and awarded plaintiff an additional counsel fee. In issuing its order, the court commented on the extent of its enforcement authority and on the relatively limited means available to it to ensure that workers' compensation carriers would comply with its orders. In particular, the court pointed out that it lacked the power to enforce its orders through contempt proceedings and, finding that plaintiff had exhausted his administrative remedies, suggested that he seek further relief in Superior Court.

The record does not reflect whether the bills that were the focus of the September and October 2007 orders were then paid, but we presume that they were because plaintiff did not return to the compensation court seeking further enforcement. Instead, the record reveals that plaintiff underwent additional surgery and psychiatric treatment in 2008 that his physician attributed to an earlier delay in treatment and which, in turn, the physician blamed on the carrier's delay in making payment to treatment providers. Although the record does not reflect whether plaintiff pursued his available remedies in the workers' compensation court to secure payment for the treatment he received in 2008, there is no suggestion in the record before this Court that the health care providers were not compensated or that plaintiff has been required to undertake any further efforts to secure payment for medical bills. On the contrary, the record includes a certification that all bills relating to treatment that had been submitted to defendant were paid with the exception of bills for treatment in 2009 that the carrier contested as being not causally connected to the workplace injury.

On April 15, 2009, plaintiff filed his complaint in Superior Court in this matter. The complaint asserted that defendant had required plaintiff to undergo medical examinations by physicians of its choosing as part of its investigation into his claimed injuries, had rejected recommendations of those physicians, and had refused to authorize that recommended medical care for plaintiff. It further averred that as a result of defendant's refusal to authorize treatment and make benefits available to plaintiff, he had been required to obtain orders from the compensation court with which defendant had failed to comply. Plaintiff asserted that defendant's continued non-compliance then resulted in the compensation court's order referring the matter to the Superior Court for action pursuant to N.J.A.C. 12:235-3.14(a)(5). Further, plaintiff contended that defendant's failure to authorize needed treatment had caused him to sustain "unnecessary pain and suffering in addition to what he would have otherwise experienced from his injuries and . . . a worsening of his medical condition, and to incur expenses which should have been paid" for by defendant. Asserting that defendant had either failed to act in good faith or had acted in bad faith, the complaint demanded that plaintiff be awarded compensatory and punitive damages.

Defendant filed a motion to dismiss the complaint in lieu of answer, arguing that the complaint failed to state a claim upon which relief could be granted. See R. 4:6-2(e). That motion was based on defendant's argument that the Workers' Compensation Act, N.J.S.A. 34:15-1 to -142 (the Act), is the exclusive remedy for the claims asserted in the complaint and that therefore neither compensatory nor punitive damages may be awarded for the claims plaintiff had asserted. The trial court granted defendant's motion, setting forth its reasoning in its October 19, 2009, written opinion. In summary, the court analyzed the impact of then-recently adopted amendments to the Act on the historical ...


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