The Supreme Court Has Now Ruled On Suing a Workers’ Compensation Carrier For “Bad Faith”

By on November 28th, 2012

Posted in Personal Injury Law Journal

In the recent case of Stancil v. ACE USA, the Supreme Court of New Jersey considered whether an injured employee may sue his employer’s workers compensation carrier for pain and suffering caused by the insurance carrier’s wifull delay in paying for medical treatment.  Unfortunately the Supreme Court’s answer was “NO.”

The case arose out of a workers’ compensation claim filed by Wade Stancil after he was injured in 1995.  He received benefits from the carrier (ACE) and in 2006 the workers’ compensation Judge determined that Mr. Stancil was totally disabled. Thereafter Mr. Stancil filed a motion for  payment of outstanding medical bills.  During the motion hearing, the workers’ compensation Judge commented that ACE had a history of failing to make payments when ordered to do so.  The motion was granted on September 12, 2007, and the Judge warned ACE against any further delay in payment.  The parties returned to court on October 29, 2007 because the bills had not been paid.  The Judge found that the failure to pay the bills was a willful violation by ACE and issued an order awarding counsel fees to Mr. Stancil’s attorney and ordering ACE to pay the bills immediately.  The workers’ compensation Judge commented that he had exhausted all remedies available to him to enforce the order, and suggested that Mr. Stancil seek further relief in the Superior Court.

In 2008 Mr Stancil had additional surgery and psychiatric treatment.  His physician attributed the need for additional treatment to delay caused by ACE’s failure to pay medical bills in a timely manner.   Thereafter Mr. Stancil filed suit in Superior Court claiming that ACE had required him to attend examinations with physicians of their choosing, yet refused to provide the treatment that their own physicians recommended, to his detriment.   Mr. Stancil’s complaint in Superior Court alleged that the workers’ compensation court’s Orders for treatment were ignored by ACE, causing him pain and suffering, and a worsening of his condition.

The attorney for ACE filed a motion to dismiss the complaint arguing that the Workers’ Compensation Statute does not allow for such “bad faith’ suits against workers’ compensation carriers, and that the only remedy available to Mr. Stancil is that which is available in the Workers Compensation Act.  The trial court granted ACE’s motion to dismiss and stated that recent amendments to the Workers’ Compensation Act were enacted to address this type of situation.  The Appellate Division affirmed for the same reasons as the trial court, and  rejected Mr. Stancil’s alternative argument that the employer can be sued under the Workers’ Compensation Statute’s intentional wrong exception.

The Supreme Court of New Jersey granted certification for the limited purpose of 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.”
After a review of the statutory amendments enacted by the Legislature in 2008 — that adopted a remedy allowing workers’ compensation judges to use contempt powers against recalcitrant carriers — the Supreme Court held that an injured employee does not have the common law right to sue a workers’ compensation carrier for pain and suffering because of the carrier’s delay.  The Courts stated that the Legislature had considered this type of situation in 2008 when it amended the Workers’ Compensation Act, and rejected certain penalties in favor of granting contempt powers to workers’ compensation judges.  The Court felt that allowing law suits for pain and suffering would open the flood gates for injured workers to sue in Superior Court instead of pursing their cases in the Division of Workers’ Compensation, and would “obliterate the Legislature’s system of workers’ compensation…”  In short, the Court did not find it necessary to fashion an alternative way for injured workers to address their problems with carriers other than through the workers’ compensation court.

As a workers’ compensation practitioner, I disagree wholeheartedly with the decision of the majority in Stancil, and believe that the dissenting opinion by Justin Albin hit the nail precisely on the head.  The cases where one could potentially sue for the pain and suffering that Mr. Stancil experienced are far and few between.  Workers’ compensation carriers delay daily in payment of benefits to workers causing extreme hardship, however it is not that often that carriers wilfully refuse to obey the Order of a Worker’ Compensation Judge.   The Supreme Court should have allowed a common law cause of action for pain and suffering in the few cases where a carrier wilfully refuses to obey a Judge’s order.  As Justice Albin opined, “This case represents a carrier’s intentional and unilateral shredding of the social compact embodied in the Workers’ Compensation Act…..I do not believe that the Act was intended to protect a carrier that displays absolute contempt for the law, thus causing disastrous consequences to a worker within its charge.”

Marci Hill Jordan is a Shareholder in Stark & Stark’s Marlton, New Jersey office, concentrating in Workers’ Compensation Law. For more information, please contact Ms. Jordan.

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