Employment Status: Common Law Tests May Need an Update

The application of the common-law standard to determine employment status may no longer be relevant in the age of the gig economy. The NJ Appellate Division ruled that the common law test utilized to determine employment status could not be utilized in the interpretation of a medical malpractice insurance policy.

A medical malpractice claim was brought against Clara Maas Medical Center. The trial judge capped the liability of the hospital under the Charitable Act N.J.S.A. 2A:53A 1 to 11 in the amount of $250,000.00. The plaintiff then looked to the hospital's policies for additional coverage against the physician.

In a published decision, the Court rejected the common law tests, of "right to control test" and the "relative nature of the work test," in establishing the definition of "employee" for the physician.

In a concurring opinion by Judge Oster, J.A.D.,  the Judge stated that "This is an insurance case....it is irrelevant whether Dr.Copur satisfied the common law definitions of an employee, either by the right to control test or by the relative nature of the work test." Judge Oster went on to write, "I am wary of applying our traditional common law standards to increasingly complex and novel workplace relationships."

Judge Oster further went on to comment, "We might also consider whether the traditional control and relative nature of work tests should be modernized to account for the shift in the nature of the workplace relationships in our society, which affects far more than the hospital or, broadly, the health care sector."

Gil v Clara Maass Medical Center, et al., __A.3d___ (App. Div. 2017)  2017 WL 2625964, Decided June 19, 2017.

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Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). 

For over 4 decades theLaw Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.

Click here for related articles on "employment status"

Just Published: 2017 Update - Gelman on Workers' Compensation Law

Jon Gelman’s, newly revised and updated 2017 treatise on Workers’ Compensation Law is now available from  by West Group of Egan, MN within the next few weeks. The treatise is the most complete work available on NJ Workers’ Compensation law and integrated with WESTLAW™, the "most prefered online legal research service.'"

• The recent NJ Supreme Court case involving the jurisdictional issue of employment status is reviewed. This supplement reviews the analysis and mandates of the Court concerning the appropriate forum to resolve the concurrent jurisdiction issues. Other new case law, including dual employment status and its application to the Exclusivity Rule is discussed.
• A revised chapter has been added that discusses the responsibilities of a workers’ compensation attorney and ethical considerations while handing claims. The material includes how to identify and protect the client’s interest of protected personal in-formation confidentiality. Additionally, it reviews potential cybersecurity threats in light of the increased technology advancement of the practice and what attorneys should do to protect against and respond to the cyber attacks.
• This supplement analyzes the newly enacted expanded World Trade Center Health Program and the integration with workers’ compensation benefits.
• The section on cancer and the complex smoking defense has been expanded and updated. It now includes a review of current case law and literature encompassing the health effects of environmental tobacco smoke.
• Recent decisions concerning The Federal Influenced and Corrupt Organizational Acts (RICO) and workers’ compensation insurance companies, medical providers, and self-insured are discussed. The current Federal Court decisional activity involving NJ operating pharmaceutical distributors is reviewed.
• The new Centers for Medicare and Medicaid Centers (CMS) Secondary Payer Act Secondary Payer Act (MSP) offset procedures and adopted regulations, implementing The SMART Act are presented in this supplement. The rules for both beneficiary and applicable plans to process and to perfect an appeal, are reviewed. The method and manner of reporting, and communication, with the newly established CMS Commercial Repayment Center (CRC) for workers’ compensation conditional payment is reviewed. Additionally, the newly established procedures and formats for Workers’ Compensation Medicare Set-Aside Arrangements (WCMSA) are discussed.
• Newly proposed rules by the Occupational Safety and Health Administration (OSHA) concerning beryllium are reviewed. Additionally, a list of New Jersey Covered Facilities under the Energy Employees Occupational Illness Compensation Program is provided.
• The NJ Supreme Court decision involving “The Coming and Going Rule” and its application to parking lot cases is discussed. Cardiovascular disability claims are analyzed in accordance with the NJ Supreme Court’s recent decision involving what constitutes “work effort” that would trigger a compensable event.
• The application of the Fraud Prevention Act as a mechanism to bar compensability when information is withheld is reviewed in this supplement. The synergy between tort law and the Workers’ Compensation Act, as expressed in recent case law, is discussed. The recent decision involving the determination of employment status and independent contractors is incorporated in this material.
• New procedures regarding contacting insolvent entities administered by the NJ Product-Liability Insurance Guaranty Association are outlined. The recent Court ruling involving temporary disability benefits and third-party action liens are included in this supplement.
• The new Life Tables are included in this material. The updated Centers for Medicare and Medicaid Services reporting requirements for recoveries for environmental hazards and ingestion of particular substances are discussed.
• The utilization of new procedures for medical provider benefit recovery, motions for emergent medical treatment, counsel fees, and methods to correctly respond to the Court and notice requirements for hearing notice listings are described in this supplement.

Gelman on Workers’ Compensation Law is exclusively integrated into the entire world-wide leading legal research network of West Group-Reuters-Thomson publications.

It is now available, in print, on CD-Rom and online via Westlaw™ and WestlawNext™. [Westlaw Database Identifier NJPRAC].

Now also available an an electronic edition/tablet edition as a ProView™ edition.

Click here now to order your copy.

Jon L. Gelman is nationally recognized as an author, lecturer and skilled trial attorney in the field of workers’ compensation law and occupational/environmental disease litigation. Over a career spanning more than three decades he has been involved in complex litigation involving thousands of clients challenging the mega-industries of: asbestos, tobacco and lead paint. Gelman is the author NJ Workers’ Compensation Law (West-Thompson) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson). He is the former Vice-President of The Workers Injury Law & Advocacy Group (WILG), a charter member of The College of Workers' Compensation and a member of The National Academy of Social Insurance (NASI). Lawyers. Jon is a founder of the Nancy R. Gelman Foundation Inc., which seeks to fund innovative research to cure breast cancer. He is also an avid photographer.

2016 Top Ten Workers’ Compensation Fraud Cases

Today's guest post is authored by Leonard T. Jernigan, Jr., Esq. of the North Carolina Bar. Mr Jernigan's nationally recognized annual employer fraud review highlights "misclassification of employment status" as a major issue. As the "shared economy" continues to expand exponentially the concept of "employment status" becomes increasingly challenged in a workers' compensation system crafted over a century ago.  

Four of the top ten cases in 2016 [valued at $412,000] are from perennial offender California, three from Florida, one each from Massachusetts and Texas, and one involving 20 different states. The misclassification of employees by employers continues to create dramatic financial fraud, with resulting cost shifting, lost tax revenues and hardship to inured employees. As we noted last year, while the “gig economy” pioneered by technology companies has lead to debate about new classifications for workers, these companies remain subject to our laws. We are starting to see widespread litigation and settlements like Uber’s $100 million payment to disgruntled drivers in California and Massachusetts. We’ll keep tracking these new developments in the context of the misclassification and fraud actions that we’ve been tracking for many years.

1. (National) FedEx to Settle Driver Lawsuits in 20 States for $240 Million  (6/16/16) FedEx Ground Systems, Inc. has agreed to pay $240 million to resolve claims by 12,000 FedEx drivers in 20 states. FedEx was labeling the drivers as independent contractors to avoid paying additional taxes, fringe benefits, health care costs, workers’ compensation insurance, and much more. The drivers were also not paid overtime or reimbursed for expenses.

2. (California) Seven People Charged in $98 Million Workers’ Compensation Fraud Case (6/7/16) Seven people have been indicted with 107 felonies in a business scheme designed to commit workers’ compensation fraud. The ringleader, Peyman Heidary, owned or ran numerous businesses, including law firms and health clinics, and used other people to disguise his involvement and create an illegal ownership structure. The clinics were found to have inflated billings to insurance companies by exaggerating patient injuries and treatments. The businesses fraudulently billed more than $98 million to 18 insurance companies, resulting in the businesses receiving over $12.4 million in payments.

3. (Texas) Labor Department “Mole” Helps Business Maintain $30 Million Workers’ Compensation Scam (6/28/16) Lydia Taylor worked at the U.S. Department of Labor in Dallas and used her position to give her family members information about federal workers’ compensation claims and warn them when suspicions arose about their fraudulent billing. Taylor’s uncle, Tshombe Anderson, was the ringleader of the group. Anderson and others formed several businesses that fraudulently billed the federal workers’ compensation program $30 million for unneeded and unrequested medical equipment for rehabilitation patients.

4. (Florida) Fake Construction Company used to Process over $17.4 Million of Fraudulent Payroll (3/28/16) Orquidea Quezada set up Orquicely Construction LLC and used the company to process payroll for subcontractors who employed hundreds of people. In exchange for her services, Quezada kept a five percent fee. The scheme allowed the contractors to avoid paying payroll taxes, workers’ compensation insurance, and to conceal the employment of undocumented workers.

5. (Florida) Fake Construction Company Used to Cash $7.4 Million in Undocumented Worker Payroll (7/7/16) Two men set up a shell company, Sunrise All Contractor Corp., to receive payments and cash checks for a fee on behalf of other companies that would then pay their undocumented workers. The scheme enabled employers to avoid workers’ compensation premiums and payroll taxes. These schemes are popular among employers of undocumented employees because these employees are less likely to blow the whistle on the fraud out of fear of exposing their undocumented status.

6. (California) Insurance Company Agent Misappropriated $7.3 Million and Unable to Pay Workers’ Compensation Claims for California Indian Tribe (8/19/16) The operator of Management Resources Group California LLC, Gregory J. Chmielewski used more than $7.3 million from the company’s reserve accounts for his own personal investments. The company managed another company, Independent Management Resources, which sold workers’ compensation insurance to California Indian tribes. Chmielewski’s actions resulted in the company being unable to cover 117 claims.

7. (California) Contractor Cheated Workers’ Compensation Insurer Out of More Than $5.4 million in Premiums (10/5/16) Michael Harold Kreger, the owner of Michael Kreger Contracting was sentenced to 9 months in jail, 5 years of probation, 1500 hours of community service, and ordered to pay restitution of more than $5.4 million for underreporting his payroll and committing insurance fraud. Mr. Kreger cheated his company’s workers’ compensation insurer out of more than $5.4 million and his employees out of adequate protection for potential workplace injuries.

8. (Massachusetts) Construction Companies Ordered to Pay $2.6 Million for Fraud in Misclassifying Workers (8/2/16) Force Corporation, AB Construction Group, and employers Juliano Fernandes and Anderson Dos Santos were found by the U.S. Department of Labor to have misclassified the bulk of their employees to avoid paying overtime wages, workers compensation insurance, payroll taxes, and more. A consent judgment was entered requiring the companies and employers to pay more than $2.6 million in damages and penalties for their fraud.

9. (California) Company Underreporting Payroll Defrauds Insurer of $2.1 Million (6/7/16) Co-owners Alvin Shih Chen and Fiona Chen of Metro Worldwide, Inc., a trucking company, underreported payroll by $4.7 million. The owners paid their truck drivers in cash to avoid reporting them to the insurer and to reduce their payroll obligation. While the company reported nearly $3 million in payroll to California’s State Compensation Insurance Fund, the actual payroll amount was $7.6 million. An estimated $2.1 million in premiums was lost.

10. (Florida) Construction Company Defrauds Workers’ Compensation Insurer of $1.8 Million by Underreporting Payroll (4/6/16) Maira Chirinos, the owner of construction company Tocoa Builders, Inc. misrepresented information regarding the company’s operations, employees, and payroll when applying for a workers’ compensation policy. The misrepresentations enabled Chirinos to avoid paying at least $1.8 million in workers’ compensation premium payments. An investigation found Chrinos grossly underreported payroll to the insurance company. She reported a payroll of $76,000, but more than $11 million in payroll checks were cashed during the period covered by the policy.

Victimizing Undocumented Injured Workers

NY TIMES QUOTATION OF THE DAY

"I was shot by terrorists, and it feels like the people I worked with are 

victimizing me all over again."

VALERIE KALLIS-WEBER, 59, a victim of a mass shooting in San Bernardino, Calif., last year, on medical treatments that have been denied or delayed under the workers' compensation system that covers her care.

Click here to read the entire article, "‘Victimizing Me All Over Again’: San Bernardino Victims Fight for Treatment" NY Times 11.30.2016

In New Jersey, "...without benefit of a legislative directive to the contrary, undocumented aliens are entitled to workers' compensation benefits. While undocumented aliens are not performing any illegal work, the court has reasoned that the New Jersey Workers' Compensation Act is not subject to any prohibitions similar to the unemployment law of each state which must comply with Federal standards; granting unemployment benefits to undocumented aliens would violate these standards."
Montoya v. Gateway Ins. Co., 168 N.J.Super. 100, 401 A.2d 1102 (App.Div.1979), certif. den. 81 N.J. 402, 408 A.2d 796 (1979). "The need for medical treatment is not a benefit derived from immigration status but rather from employment status. Mendoza v. Monmouth Recycling Corporation, 288 N.J.Super. 240, 672 A.2d 221 (App.Div.1996)." Gelman, Jon L., 38 N.J. Prac., Workers' Compensation Law § 11.8 (3d ed.).

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Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). 

For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.

The Difficult Task of the Florida Supreme Court

The Florida Supreme has before it a constitutional challenge once again concerning workers’ compensation. The scope of the controversy remains undefined and the ultimate impact equally uncertain. I have found over the years that one cannot predict the outcome of a case by merely watching an oral argument.

After hearing the argument this week in Stahl v Hialeah Hospital one comes away with ambiguity over the issues before the Court. Complicating the controversy is a shallow record below, which, of itself, maybe not be so important. Landmark cases have been decided on limited trial court records before.

The constitutional challenge to the century old exclusive remedy for the injured worker was bolstered by both objective and philosophical concerns. They involve many present day social/economic issues facing the United States. Over one-hundred years ago, the enactment of the European based compensation system  of workers' compensation, established an administrative system of benefits for occupational accidents. Incidentally, the Europeans have already adopted universal health care. 

On the objective side of the argument the worker presented is concern on how to adapt a changing medical delivery scheme and benefit structure, i.e.. co-pays, scheduled impairment benefits and age payment limitations, to the needs of a changing employment market, ie. the shared economy. In the shared economy employment status has becomes elusive.

The employer argues that the record below lacked the constitutional challenges and supporting evidence. Also, the philosophical challenges are ill placed.  Even so, one cannot turn back the clock to an age when horseless wagons were emerging as a mode of transportation, and anesthesia and antiseptic were just ideas. 

Legislative intent alters to meet changing times.  Legislatures modify laws over time to meet the new demands of society.  Courts universally struggle to interpret laws in the continually changing arena of life. It is an awesome task.

Arguments before a Supreme Court usually seem academic and theoretical. Courts attempt to rationally approach an issue in an effort to resolve a controversy that most likely will have wide application. Justices handle these matters in an organized and structured framework so that an issue can be crystallized, researched and  reviewed. That process is defined by the record below, the briefs presented by the parties and discussion at oral argument.

The Florida Supreme Court will now be reviewing those elements as it weighs the arguments and issues. It is indeed a difficult task. The impact of which may have far reaching implications on a national scale.

Florida Supreme Court DocketCase Number: SC15-725 - Active DANIEL STAHL vs. HIALEAH HOSPITAL, ET AL.Lower Tribunal Case(s): 1D14-3077, 04-022489