SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-3049-96T2
A-3239-96T2
JAMES R. RASO,
Petitioner-Appellant,
v.
ROSS STEEL ERECTORS, INC.
Respondent-Respondent.
JAMES R. RASO, Individually and
on behalf of all other Workers
Compensation Lien Payees similarly
situated,
Plaintiff-Appellant,
v.
HARLEYSVILLE INSURANCE COMPANY OF
NEW JERSEY, A Workers Compensation
Line Payee, HARLEYSVILLE MUTUAL
INSURANCE COMPANY, HURON INSURANCE
COMPANY,
Defendant-Respondent.
Argued November 17, 1998 - Decided March 12, 1999
Before Judges Long, Wefing and Carchman.
A-3049-96T2 on appeal from Department of Labor,
Division of Compensation.
A-3239-96T2 on appeal from Superior Court of New
Jersey, Chancery Division, Atlantic County.
David H. Weinstein (Weinstein Kitchenoff Scarlato &
Goldman) of the Pennsylvania bar, admitted pro hac
vice, argued the cause for appellant (Westmoreland,
Vesper & Schwartz and Mr. Weinstein, attorneys; R. C.
Westmoreland and Robert S. Kitchenoff, on the brief).
Lance J. Kalik argued the cause for respondent
Harleysville Insurance Companies (Riker, Danzig,
Scherer, Hyland & Perretti, attorneys; James S.
Rothschild, Jr., of counsel; Mr. Kalik and Beth Ann
Stemmler, on the brief).
The opinion of the court was delivered by
CARCHMAN, J.A.D.
These appeals require us to determine whether expenses
incurred by a workers compensation carrier for the services of a
rehabilitative nurse are recoverable under N.J.S.A. 34:15-40
(Section 40) as medical expenses. We conclude that such expenses
are so recoverable if the carrier demonstrates that such expenses
are necessary to provide "medical, surgical and other treatment
. . . as shall be necessary to cure and relieve the worker of the
effects of the injury." N.J.S.A. 34:15-15 (emphasis added)
(Section 15). In this case the workers compensation judge (WCJ)
concluded that plaintiff "benefit[ted] economically as well as
medically by the rehabilitative nurse." We conclude the WCJ's
finding that the rehabilitative nurse's expenses were compensable
as medical expenses did not address the standard required by
Section 15. Accordingly, we reverse and remand to the Division
of Workers Compensation (the Division) to determine if such
expenses were "necessary to cure and relieve the employee of the
effects of the injury."
While the experts who testified before the WCJ disagreed as
to the nature of the rehabilitative nurse's services, the
underlying facts and procedural history are not in dispute.
Plaintiff James Raso was seriously injured in an employment
related accident on August 11, 1992, while in the employ of
defendant Ross Steel Erectors, Inc. Defendant Harleysville
Insurance Company of New Jersey (Harleysville) was Ross Steel's
workers compensation carrier at the time of the accident. When
plaintiff was hospitalized at the Cooper Hospital Trauma Center,
Harleysville assigned Angelina Giordano, a rehabilitative nurse,
to plaintiff's case. Giordano was an employee of American
International Health and Rehabilitation Services, Inc. (AIHRS),
which was under contract with Harleysville to provide management
services for Harleysville's insureds by coordinating their
medical treatment. Prior to assigning Giordano, Harleysville
sought and received authorization for Giordano's services from
plaintiff's brother and attorney, Frank J. Raso, Esquire. On
July 22, 1993, plaintiff initiated a third party negligence
action against CMC Equipment Rental, and others, for damages he
sustained as a result of the accident (third party lawsuit).
Plaintiff again retained his brother to represent him in the
third party lawsuit. Because of jurisdictional issues, the third
party action proceeded in Pennsylvania while the workers
compensation action proceeded in New Jersey.
Plaintiff obtained a settlement before trial in the third
party lawsuit in an amount exceeding $2,000,000. As part of its
workers compensation obligations, Harleysville provided
$187,163.08 in medical benefits, $42,691.21 in temporary
disability payments and $30,000 in permanent disability payments
to plaintiff. Thereafter, pursuant to Section 40, Harleysville
sought a lien on plaintiff's recovery in the third party lawsuit
for a sum equal to the benefits paid. Included with the lien was
$13,306.43 paid by Harleysville for Giordano's expenses.See footnote 1
Plaintiff refused to pay the portion of the lien attributable to
the services of Giordano, the rehabilitation nurse, arguing that
her services were not necessary for his medical treatment. It is
this expense which generates the issue before us.
The parties could not resolve the dispute, and on February
17, 1995, plaintiff filed a class action complaint against
Harleysville in the Chancery Division. Count one of the
complaint alleged that Harleysville improperly asserted the costs
of "rehabilitation nurse services" in its workers compensation
lien, violating Section 40 of the workers compensation lien
statute. The remaining counts of the complaint alleged
violations of the consumer fraud act (count two); common law
fraudulent and negligent misrepresentation (count three);
negligence per se (count four); common law breach of the duty of
good faith and fair dealing (count five); and unjust enrichment
(count six). The complaint sought an order certifying the case
as a class action, a judgment declaring Harleysville's conduct to
be in violation of the workers compensation act, injunctive
relief, and compensatory and punitive damages.
Judge Gibson first transferred count one of the complaint to
the the Division and dismissed that count in the Chancery
Division. He opined that the Division had the necessary
expertise to address the issue of whether the lien should
properly include the cost of Giordano's services. Additionally,
he dismissed the consumer fraud count. After the WCJ determined
that the lien included Giordano's services and in response to a
motion by Harleysville in the Chancery Division action, Judge
Gibson, without a review of the merits of the workers
compensation determination but consistent with its holding,
dismissed the remaining counts of the complaint. Plaintiff
appeals both the Division's order and the Chancery Division
order. We consolidated the appeals for consideration.
In determining the issue of whether the cost of the
rehabilitative nurse is recoverable by Harleysville, we first
identify the services provided by Giordano and Harleysville's
purpose in retaining Giordano. We quote from the detailed
findings made by the WCJ:
Petitioner was injured in a compensable
accident of 8/11/92, and taken to the trauma
care unit at Cooper Hospital, Camden, New
Jersey. Three days later, the Harleysville
Insurance Company assigned a rehabilitation
nurse through the services of AIHRS. That
nurse was Angelina Giordano, an RN. She
spoke to Frank Raso, Esquire, Petitioner's
attorney and brother, and received permission
to get involved in Petitioner's case. Ms.
Giordano performed many services for the
Petitioner, including but not limited to:
securing around-the-clock nursing, arranging
transportation, scheduling medical exams,
attending team meetings at Mediplex,
arranging therapy programs, and arranging
family counselling. The record is replete
with these types of services. The Court
found the rehab nurse Angelina Giordano to be
credible.
Also testifying for Harleysville was
Joyce Baker, a RN in charge as the
rehabilitation manager and supervisor of
rehabilitation. She explained the goals of
the company when utilizing rehab services.
"Harleysville certainly realized the benefit
of having somebody working with our claimant
to enhance their recovery, so that really was
the main program. Also recognizing in that
some instances, the impact of the injury and
the number of medical professionals and
facilities that have to be dealt with are
numerous."
As part of her job, Baker had occasion
to review the bills submitted by AIHRS, an
approved company at the time in the Raso
case. AIHRS complied with Harleysville's
guidelines for billing which included
allowance for travel expenses incurred by
rehabilitation consultants because
Harleysville places importance on human
contact. Their guidelines also allow billing
for report writing by the rehab consultants.
Baker also explained that rehabilitation
specialists do not provide "hands on" medical
care. She explained that rehabilitation
nurses use their training to assess
situations and communicate "to implement,
readjust, to see if they are meeting the
needs, to re-evaluate, to enhance, to
coordinate." She further testified that she
does not keep records of her time and none of
her time is figured into any Workers'
Compensation lien. Further, rehabilitation
consultants do not discuss costs with the
claimant especially in a case like this where
there is no knowledge that there is even
going to be a third party claim. That has
nothing to do with what the rehab nurse is
going to do. The Court found Joyce Baker to
be credible.
John McCabe is a claims supervisor for
Harleysville Insurance Company, and he
testified that rehabilitation nurses are only
used in cases of a very serious nature. The
severity of the injury is the only criteria.
He testified that the charges for
rehabilitation services must be reported to
the Compensation Rating and Inspection Bureau
as a loss incurred. He further testified
that cost containment is a concern on all
files and does not impact on the assignment
of a rehabilitation consultant. There is an
adjuster assigned to the case whose job it
would be to determine if temporary benefits
should be continuing or if the patient is
able to return to work. Whether there is a
possibility of a third party recovery is
never a criterion for assigning a
rehabilitation consultant. The Court found
John McCabe to be credible.
Plaintiff challenged Harleysville and contested the necessity for
and purpose of Giordano's services. We again refer to the
finding of the WCJ:
[Petitioner] called Mrs. Lori Machlus as
their expert rehabilitation specialist.
Without going into details, she basically
testified the services of the rehab nurse
were not medically necessary. Although
somewhat beneficial to Petitioner, the
services were primarily beneficial to the
insurance company. The Court found her
overall testimony to be incredible,
especially her opinion that rehabilitation
nursing was not a medical benefit inuring to
the Petitioner but only to the insurance
carrier, for cost containment.
The Court found the reasoning for her
opinion to be illogical. For instance, she
felt the services of the rehab nurse in
arranging for around-the-clock nursing care
not to be medically necessary, since a social
worker could have done it; the services of
the rehabilitation nurse in checking with
doctors and arranging examinations could have
been done by an adjuster; scheduling
medications and therapy could have been done
by his wife; arranging transportation could
have been done by a family member; securing
family counselling could have been done by a
doctor; avoiding duplication of treatment
and unnecessary treatment was just for the
benefit of the insurance company.
Harleysville countered with testimony from one of the treating
physicians:
Dr. A. Howard Levin was deposed. He
treated James Raso for his injuries following
the accident. Dr. Levin is a neurologist.
His testimony was that the rehabilitation
nurse was very helpful in supplying
information, completing the history of
treatments, doctors and various injuries.
She was very active in arranging tests and
examinations that he wanted for the patient.
When he suggested a treatment plan for
physical therapy and psychiatric attention,
the rehabilitation nurse followed up with his
recommendations. He opined that the
rehabilitation nurse was extremely helpful in
this case because the patient not only had
physical problems, he also had emotional
problems and cognitive dysfunction, so that
he was unable to provide many details
regarding his history, and she was able to
fill in those details. The Court found Dr.
Levin to be credible.
Finally, the WCJ concluded:
Petitioner benefits economically as well
as medically by efforts of the rehabilitation
nurse, especially in a case where there is a
lien as here. By coordinating treatments,
office visits, prescriptions and other
treatments, she prevents duplication of
effort [and provided] a chronological
treatment agenda rather than a haphazard
agenda; a focal point for information
concerning [the] patient and his treatment,
his rehabilitation or lack thereof, and need
for further or different treatment, all of
which [are] of primary benefit to the
patient.
The cost of a rehabilitation nurse is in
fact medical expenses, and the carriers are
permitted to include such costs in their lien
under N.J.S.A. [34:15-40].
The WCJ thereafter entered an order memorializing his
determination.
On appeal of the Division's decision, plaintiff raises a
number of issues including a challenge to the factual findings
and sufficiency of the record. We reject plaintiff's initial
argument regarding the facts and sufficiency of the record as we
recognize that the scope of our review of an error in factfinding
is limited. On review, the Appellate Division will only decide
whether the findings made could reasonably have been reached on
"sufficient" or "substantial" credible evidence present in the
record. We must consider the proofs as a whole and give due
regard both to the ability of the factfinder to judge the
credibility of witnesses and to the agency's expertise where such
expertise is pertinent. Close v. Kordulak Bros.,
44 N.J. 589,
599 (1965); see Dennery v. Board of Educ.,
131 N.J. 626, 641
(1993) (holding that appellate courts "will not reverse an agency
decision unless it is "arbitrary, capricious or unreasonable or
it is not supported by substantial credible evidence in the
record as a whole"); Nachtigall v. New Jersey Turnpike Auth.,
302 N.J. Super. 123, 139 (App. Div.) (noting that the Appellate
Division is "not at liberty to disregard administrative fact-finding amply supported by the record"), certif. denied,
151 N.J. 77 (1997); De Angelo v. Alsan Masons, Inc.,
122 N.J. Super. 88,
89-90 (App. Div.) (Appellate review is limited "to a
determination of whether the findings of the judge of
compensation could reasonably have been reached on sufficient
credible evidence present in the whole record, after giving due
weight to his expertise in the field and his opportunity of
hearing and seeing the witnesses.), aff'd o.b.,
62 N.J. 581
(1973); see also State v. Locurto, N.J. , (1999) (Slip
op. at 9-12). Thus, if substantial credible evidence supports an
agency's conclusion, a court may not substitute its own judgment
for the agency's even though the court might have reached a
different result. Clowes v. Terminix Int'l, Inc.,
109 N.J. 575,
588 (App. Div. 1988) The burden of showing that the agency's
action was arbitrary, unreasonable or capricious rests upon the
appellant. Barone v. Department of Human Servs.,
210 N.J. Super. 276, 285 (App. Div. 1986), aff'd,
107 N.J. 355 (1987). Our
careful review of the extensive record convinces us that the
WCJ's findings were well-supported by the record.
We recognize, however, that the issue is not resolved by the
factual determinations since it is the application of these facts
to Section 40, when read in pari materia to Section 15, that
ultimately determines whether the costs of the rehabilitation
nurse should be allowed. That issue then becomes a legal
determination and our reviewing role is different. While we
accord respect to the agency's expertise, Mayflower Sec. Co. v.
Bureau of Sec.,
64 N.J. 85, 93 (1973), ultimately the
interpretation of statutes is a judicial, not administrative,
function, and the court is not bound by the agency's
interpretation. Ibid. See also R & R Marketing, L.L.C. v. Brown-Forman Corp.,
307 N.J. Super. 474, 482 (App. Div.), certif.
granted,
156 N.J. 384 (1998).
Section 40(b) imposes a lien in favor of the workers
compensation carrier against the proceeds of a third-party
recovery obtained by an injured worker. The lien secures
reimbursement of "the medical expenses incurred and compensation
payments theretofore paid to the employee," less the lienor's
share of attorneys' fees not in excess of 33 1/3%, plus "expenses
of suit" not in excess of $200. N.J.S.A. 34:15-40(e). The
statute does not define the term "medical expenses." Section 15,
however, provides some guidance in determining what constitutes
reimbursable medical expenses. It defines the type of treatment
an employer, or its insurance carrier, must provide to an injured
worker. Under Section 15, carriers are required to provide
"medical, surgical and other treatment . . . as shall be
necessary to cure and relieve the worker of the effects of the
injury." N.J.S.A. 34:15-15 (emphasis added). Limited case law
is available interpreting Section 15.
In Squeo v. Comfort Control Corp.,
99 N.J. 588 (1985), the
Supreme Court addressed the question of "whether the construction
of a self-contained apartment attached to the home of an injured
worker's parents may constitute `medical, surgical or other
treatment . . . necessary to cure and relieve' under N.J.S.A.
34:15-15 of the Workers' Compensation Act." Id. at 590. We had
affirmed the order of the Division and found that the apartment
for the injured worker, who was a quadriplegic, constituted
"treatment" within the purview of the act because independent
living would relieve the petitioner's mental depression. Id. at
595.
The Court granted certification and noted:
Although this Court has liberally
construed the Act to promote its beneficent
purposes, we have always imposed the
limitation that no expense incurred may be
recovered that is not shown to be reasonable
and necessary by sufficient competent medical
evidence.
The services must be shown by competent
medical testimony to be such as are
reasonable and necessary for the
particular patient, taking into
consideration his individual condition
and need.
[Id. at 599 (quoting Howard v. Harwood's
Restaurant Co.,
25 N.J. 72, 93 (1957)).]
.
Additionally, the Court commented with approval that other
jurisdictions
have been generous in allowing as "treatment"
not only the cost of medical and hospital
services, but also of necessary incidentals
such as transportation, apparatus, and even
nursing care furnished by a member of
claimaint's own family.
[Ibid. (citing 2A. Larson, Workmen's
Compensation Law § 61.00 (1983).]
The Court noted that the relief provided by other
jurisdictions governed by similar workers compensation statutes
"has not been limited to physical amelioration but has
encompassed psychological relief as well." Id. at 603.
Ultimately, the Court found "that competent medical testimony
exists on this record to hold that the construction of the
apartment addition was reasonable and necessary to relieve Squeo
of his severe mental depression." Id. at 605. Therefore, in
satisfaction of Section 15, the Court found "sufficient credible
evidence on the record to establish that construction of the
apartment [was] necessary to cure and relieve the mental
depression caused by Squeo's work-related injury." Id. at 606.
Most significantly, the Court stressed that "in determining what
is reasonable and necessary, the touchstone is not the injured
worker's desires or what he thinks to be most beneficial.
Rather, it is what is shown by sufficient competent evidence to
be reasonable and necessary to cure and relieve him." Ibid.
Recently, we addressed the criteria for determining whether
certain treatment is "necessary" under N.J.S.A. 34:15-15. In
Hanrahan v. Township of Sparta,
284 N.J. Super. 327 (App. Div.
1995), certif. denied,
143 N.J. 326 (1996), we noted that
"[c]ompetent medical evidence" establishing that the treatment
proposed will cure or relieve the effects of the injury, must be
presented to demonstrate that such treatment is reasonably
necessary. Id. at 334. This court held
that even in non-total disability cases
N.J.S.A. 34:15-15 provides for continued
treatment, whether or not labeled as
"palliative," as long as there is a showing
by competent medical testimony that the
treatment is reasonably necessary to cure or
relieve the effects of the injury."
[Id. at 336.]
Squeo and Hanrahan instruct us that a showing of "reasonableness"
or "necessity" standing alone is not enough to compel treatment.
In order to compel an employer or a workers compensation
insurance carrier to pay for the treatment of an injured worker,
it must be shown that such treatment is "reasonable" and
"necessary" to cure or relieve the injury of the worker. A mere
showing that the injured worker would benefit from the added
treatment is not enough. Clearly, the petitioner in Squeo would
have benefitted from the construction of the apartment, but the
Court ruled that the employer or carrier could not be made to pay
for the construction until petitioner had satisfied his burden of
showing that it was reasonable and necessary to cure and relieve
him.
Squeo further informs us that the standard of reasonableness
and necessity to cure or relieve need not be limited to actual
medical treatment. As the WCJ found, Giordano provided no hands-on medical care. In determining whether Giordano's services
conform to Section 15 standards, the Division must address
whether, among other things, the arranging and coordination of
such care for a patient suffering from catastrophic injuries
qualifies for Section 40 reimbursement.
The same showing that compels treatment under Section 15
reasonableness and necessity to cure or relieve - is required to
warrant reimbursement for payment for such services. We conclude
that the WCJ's findings did not address the standard required by
the statute. The judge did not err in concluding that plaintiff
benefitted from Giordano's services, but this finding is
insufficient to warrant reimbursement.
By clarifying the standard that must be applied, we
determine that a remand to the Division is appropriate to
determine whether the proofs meet this standard. We do not
suggest or infer that the result need be any different, but it
well may be. That determination will, in the first instance, be
addressed by the Division.
We comment on the concern expressed by plaintiff that to
allow the assignment of rehabilitation nurses would be an
invitation for "chicanery." First, we note that Giordano was not
retained until plaintiff's attorney had agreed to her retention.
Harleysville was not acting unilaterally. Securing plaintiff's
concurrence in the retention provides an effective check on any
suggestion of misdeed or inappropriate conduct by the insurer.
Second, while plaintiff claims that cost-cutting - apparently an
issue of concern to Giordano - only served Harleysville, such is
not the case. While cost reduction benefits the carrier, it
benefits the employee as well. Since there is a reimbursement
provision, any savings by the carrier inures to the employee's
benefit, as it will reduce the employee's reimbursement
obligation. Harleysville asserts that the rehabilitation nurse
is only used in a limited number of cases involving catastrophic
injury. Given plaintiff's prior approval, the reduction of cost
to the employee and carrier and the limited use of such services,
we find no basis for the suggestion of misuse of such services.
We add one additional comment. If, after consideration of
all the relevant facts, the Division concludes that not all of
Giordano's charges meet the standards that we have enumerated,
the Division may apportion the charges accordingly. In Squeo,
the Court remanded the matter to the Division "for a
determination as to the portion of the cost of the construction
of the apartment for which the employer will be liable." Squeo,
supra, 99 N.J. at 607 (emphasis added). The Division may also
apportion Giordano's expenses, if any, as it deems appropriate.
Plaintiff argues that Judge Gibson erred in dismissing the consumer fraud count of the complaint. We have considered the arguments and the record and find no merit in plaintiff's arguments. R. 2:11-3(e)(1)(E).
After the Division determined that the lien was properly reimbursable under Section 40, Judge Gibson did not review the merits of that decision but dismissed the remaining counts of the complaint. Since we remand the matter to the Division, counts III - VI may, at some future time, still be viable. Ultimately, the determination as to the propriety of reinstating those counts pending the decision of the Division should be addressed by Judge Gibson, but we perceive no reason why any action should be taken regarding those counts until the underlying substantive issue is resolved. If the issue is resolved in favor of Harleysville, the issue is moot; if in favor of plaintiff, an appropriate application should be made to the Chancery Division for relief. There is no reason for us to otherwise intervene.
In A-3239-96T2, we affirm without prejudice. In A-3049-96T2, we reverse and remand to the Division in accordance with this opinion. We do not retain jurisdiction.
Footnote: 1The actual amount paid for Giordano's services was $19,959.65; however, Harleysville sought reimbursement for two-thirds of the total. N.J.S.A. 34:15-40(b) and (e).