HOW JERSEY FAILS INJURED WORKERS
(Review of Bernstein's Client, Mr. John Madura)
June 12, 2008, 6:00AMSystem is slow to provide relief to thousands
John DeJulio, a retired veteran, fell into New Jersey's workers' compensation system when he slipped on a puddle and broke his leg at the Home Depot in Freehold. More than three years passed before surgery was approved to replace his injured knee.
Andrew Mathis lost his balance behind the meat counter at the Wegmans market in Princeton and injured himself so badly he missed six months of work. Mathis lost his home waiting for relief from the workers' comp system.
More than three years after suffering neck and back injuries in a work-related crash, Joseph DelDuca ran out of money for his pain medication. When a hearing on his claim was postponed for the eighth time in two years, DelDuca plowed his pickup truck through the glass entrance of a workers' compensation courthouse in Morris County.
"It was kind of stupid," the Madison man told police before being carted off to jail, "but I did what I had to do."
Each year, New Jersey's workers' compensation system directly touches more than 100,000 people. Laborers who rupture spinal discs lifting boxes or slash tendons operating heavy machinery. Couriers injured in car crashes on their way to deliveries. Store employees who dip, slip or trip their way to injuries that change when, how or if they can work.
For most, the accident provides the first introduction to a century-old compact among companies, their employees and the state: Don't sue, it promises workers, and you'll get quick and efficient relief.
Many find that relief. But for thousands, it is a hollow promise. Instead, they become trapped in bureaucratic quicksand, bullied by insurers, beholden to attorneys and surrendering their fates to judges with limited experience and clout.
The Star-Ledger spent eight months reviewing scores of cases and hundreds of state records. It interviewed workers, attorneys, legislators, current and former administrators, as well as legal and labor experts.
The newspaper's examination found an often confusing bureaucracy where injured workers might wait years -- or even die -- before getting benefits the law promises.
The flaws in the $1.8 billion system include:
¤ Frequent delays for claimants who can least afford them: totally disabled workers with mounting medical needs, no income or insurance. The Star-Ledger reviewed thousands of court dockets for open workers' comp cases and found hearings were rescheduled on average more than a dozen times.
¤ Inexperienced judges who, once on the bench, lack any substantial power to enforce their orders. The main qualification for some is friends in high places.
¤ A legislature where some of the same lawmakers who approve comp judges and decide which workers' benefits bills get considered belong to law firms that earn big money in compensation cases.
¤ A workers' compensation administration that does a woeful job of tracking its own performance. New Jersey officials acknowledged they could not identify the outcome in more than 10,000 of the most complex cases in the past seven years.
¤ More than almost any state, New Jersey lets insurers dictate where, when and for how long injured workers get treated. There are no alternative forms of resolution, no incentives to quickly resolve a claim and weak sanctions against companies slow to act.
"They've taken the worker out of workers' compensation," said Jon Gelman, a New Jersey attorney writing a legal treatise on compensation programs nationwide.
Defenders of the system insist its flaws are isolated and don't reflect its overall strengths. They point out a majority of claims are resolved quickly and without complaints.
And they say the system's structure -- including the control given to insurers -- has enabled New Jersey to avoid the financial upheaval that has roiled workers' compensation in many states during the past 15 years, when spikes in cases, treatment costs and fraud sent premiums skyrocketing.
"This is a system that works very well for workers and for employers alike and that deals with most cases expeditiously," said David Socolow, commissioner of the Department of Labor and Workforce Development, which oversees the Division of Workers' Compensation.
Others point to conditions they say will further strain an already overburdened system: Rising health costs. Longer life expectancy. Challenges over Medicare's share of the burden. A newer generation of attorneys willing to aggressively fight every claim.
"This system we're dealing with right now is beginning to break down, and I don't think I'm overstating it," Julius Feinson, a past chairman of the state bar association's workers' compensation committee, told a gathering of attorneys last fall.
Unlike other states, New Jersey's compensation system is impossible to navigate without a lawyer. Even with one, the baffling maze of laws and delays can be exasperating for workers.
DeJulio, a 79-year-old retired contractor, said Home Depot's insurance consultant, Sedgwick Claims Management Services, ordered him to see five specialists and attend nine court hearings in two years.
"They've dragged their feet on everything," he said.
In January, after The Star-Ledger inquired about the delays in his case, Sedgwick approved his knee-replacement operation. On Feb. 29, he underwent successful surgery. (A Sedgwick spokesman declined to discuss the case.)
Mathis, 34, waited more than two years to resolve his claim over the head and neck injuries he suffered at Wegmans.
And though the law says employers must pay replacement salary benefits to their injured workers, Mathis says he went six months without a paycheck -- enough to cause him to lose his house and move his family in with his mother.
Earlier this year, Mathis settled his claim for $19,200. He said he couldn't risk a lengthy court case. "It took two years just to get here," he said.
Jo Natale, spokeswoman for Wegmans, said she could not discuss any particular case, but said the supermarket chain attempts to help every injured worker make a full recovery.
"Wegmans does go out of its way to help the employee fully recover," she said. "That's the goal."
Luckily for DelDuca, the Madison trucker, his flawed attempt to get attention didn't result in any injuries.
And oddly, it sparked some results.
One week after he smashed through the courthouse doors in Mount Arlington in 2005, the judge in the case ordered his attorney and a representative for the insurer, American International Group, back to court, weeks before they were due to return.
They settled the matter in a few hours.
DelDuca, meanwhile, was jailed for nearly six months. He died in November at age 59.
On its face, the comp process sounds simple: After suffering a debilitating injury, workers get replacement salary and treatment until a doctor declares them ready to return to the job. If a full recovery is impossible, the parties negotiate a settlement to cover treatment and a percentage of future salary loss.
Not everyone plays by the rules. State law requires all employers to insure their workers, but many don't. And some employees cheat the system by faking injuries, filing fraudulent claims or taking side jobs when they claim to be disabled.
For legitimate claims, the no-fault system was designed to avoid prolonged battles over who caused the accident and how. In workers' compensation matters, pain and suffering are irrelevant.
Roughly two-thirds of all New Jersey claims are processed without a judge. Most are minor injuries like cuts, scrapes or sprains treated by a company nurse or a quick visit to the emergency room. The rest, about 40,000 a year, end up in compensation court, where employees and insurers for employers spar over money, time and treatment.
Hundreds of cases churn through the courts each day before 45 judges who preside in courtrooms from Atlantic City to Paterson. Often, the workers and employers become secondary figures in their own cases, shuffled to a waiting room while attorneys and the judge negotiate settlements behind closed doors.
Rarely does a case settle in one hearing.
Comp court, as it is known, runs on a docketing calendar that allows each case to come before a judge on no more than one day every three weeks. With thousands of cases waiting to be heard, the cycle was designed to ensure that every claim gets at least considered within a reasonable amount of time. But it also means the longest, most complicated cases get dragged out even longer, with testimony starting and stopping, sometime for months at a time.
Holidays, conflicts and other quirks add to the delays.
"By and large, most routine cases used to be able to go, pillar to post, fairly quickly," said attorney Paul Schwartz, who has practiced in the field for two decades. "The problem is, there aren't any routine cases anymore. For whatever reason, they are not being handled routinely."
The Star-Ledger reviewed court dockets for more than 62,000 workers' compensation claims that were filed before 2006 and still open last summer. On average, each had been scheduled for a hearing 15 times.
State officials say they don't track how long it takes to resolve the average workers' compensation case. But the state's largest workers' compensation insurance carrier, New Jersey Manufacturers, does.
According to the company, it received 31,762 compensation claims in 2003 and resolved 80 percent within a year. Another 1,343 took at least three years to settle. At the start of this year, 927 cases remained unresolved.
Pat Breslin, a spokesman for the insurance company, said there was no single reason why some cases took so much longer than others, but the company believes the system generally works well.
"Extended litigation does not serve our company's interests or the interests of our policyholders, the employers," Breslin said. "Nothing is perfect."
Once a worker files a claim over benefits, there is only one way to resolve it in New Jersey: Hire an attorney and go to court.
"The big issue here that I see is the amount of litigation," said Craig Farina, a vice president at Chubb Insurance, who monitors workers' compensation claims in eight states. "That in itself just delays the settlement of the claim. The court systems get backed up."
John Burton, a Rutgers University professor and nationally recognized expert on the topic, described the state's comp system as one of the most "passive" in the country, an agency that does not look to prevent injuries or disputes, but rather reacts after they have occurred.
"It's kind of a sleepy system that's gone along without a major crisis," he said. "The bad news is, it's not particularly worker-friendly."
John Madura realized that a dozen years ago, when he fell backward down a staircase in Bergen County. He discovered how much power insurers have in New Jersey's workers' compensation system -- and how little judges possess.
ONE MAN'S BATTLE
Madura, then 44, was a service manager at Heritage Lincoln Mercury in Hackensack when he tumbled down the stairs at work on Sept. 12, 1995. He woke up in a hospital bed with herniated discs along his spine. Surgery proved too risky. Instead, doctors prescribed physical therapy and "pain management" therapy -- steps to teach him how to live with the pain.
His employer's insurer, Universal Underwriters, never contested the accident. It agreed to pay Madura replacement benefits and to cover his treatment.
Within a year, problems emerged. The doctors weren't being paid and sent the Parlin resident letters threatening to cut off his treatment. Then Madura stopped getting the $938 benefit checks Universal Underwriters had pledged to pay him every two weeks.
Two doctors declared Madura totally disabled. A psychiatrist, Susan Blank, concluded that his battles with the insurer were adding to his stress.
"I think this is a highly motivated individual who wants to get better, and should not have to be routinely road blocked by his insurance company," Blank wrote in a May 1998 letter to Peter Calderone, the chief judge and director of the workers' compensation program.
The next month, the judge ordered Universal Underwriters to immediately pay Madura for five months of benefits. Calderone denied Madura's request to penalize the insurer.
The respite proved temporary. By 2000, collection agencies began sending Madura notices for almost $12,000 in unpaid treatment bills. Every few months, his benefits checks simply stopped arriving, without explanation. He used savings and his personal health insurance to cover shortfalls.
In October 2001, Calderone signed a motion ordering Universal Underwriters to pay Madura's bills and benefits. It didn't. The next month he issued the same order. Again, he decided not to punish the insurer.
Unlike their counterparts in Superior Court, comp judges lack the authority to fine or jail people who ignore them. Typically, they can do little more than make them pay interest on outstanding payments.
"Employers have no incentive to provide timely medical treatment because they will be in no worse a position after denying medical treatment than they would if they had acted properly from the beginning," one attorney, Richard Marcolus, argued in a legal brief last year.
Nine times since Calderone's order in 2001, Madura's biweekly disability checks were halted -- including one stretch in 2003 that lasted more than four months, according to Madura's account and court file. Other times, it was slow to pay his treatment bills.
"Unfortunately, this case is like a cancer that keeps spreading and cannot be contained," one of Madura's attorneys, Susan Gruen, wrote in 2005 to Judge Virginia Dietrich, who had taken over the case.
Steven McKay, a spokesman for Universal Underwriters, which has since changed its name to Zurich, said the company had no comment on the case.
New Jersey officials can't say if Madura's experience is typical. They say they don't track the interest that judges impose or any other attempts to sanction companies.
By contrast, the Arkansas Labor Department publishes "report cards" every three months that assess the performance of hundreds of companies that manage workers' comp claims. Wisconsin levies an average of $350,000 a year in fines against workers' comp insurers for violations of state performance standards.
Last year, Texas fined Liberty Mutual, the second biggest comp insurer in New Jersey, $486,000 for improperly denying more than half the treatment requests it received in 2004 and 2005 and for missing deadlines on others.
During interviews last year, Madura walked gingerly, standing and swaying most of time. He said he takes a cabinet full of pain killers every day. His bones are now so brittle, he said, that one doctor told him he is as frail as a 90-year-old woman. Madura is 56.
Madura has complained about the system to state senators, governors and others but typically gets a form-letter response directing him elsewhere. His bills, collection notices, court filings and correspondence fill a brown shopping bag. He'd like to move to another state, but said he fears he'd have to return too often to fight over his benefits.
"All I want is what the law prescribes," Madura said. "Not a single thing more."
CONFLICTS AND POLITICS
In a part-time Legislature dominated by lawyers, at least 10 of the 120 legislators also practice in workers' comp court or are partners in law firms that handle cases there. They include some of the state's most prominent politicians, such as recently retired Senate Majority Leader Bernard F. Kenny Jr. (D-Hudson) and Sen. Raymond Lesniak (D-Union), whose law firm earned hundreds of thousands of dollars representing school boards and public agencies in workers' comp cases.
Kenny and Lesniak served on the Senate Budget and Appropriations Committee, where five bills that would have boosted comp benefits to workers died awaiting consideration last year.
And this year Lesniak was appointed to the Senate Judiciary Committee, where he will vote on prospective comp judges, while Sen. Sean Kean (R-Monmouth), an attorney for injured workers, was assigned a seat on the Senate Labor Committee, the panel that considers workers' comp legislation.
In fact, a Star-Ledger review of more than 117,000 workers' comp cases pending in 2007 found 301 handled by the Lesniak firm and 237 by Kenny's firm.
Assemblyman Brian Rumpf (R-Ocean) sponsored two workers' compensation bills during the last legislative session, including one to cut benefits to illegal immigrants. Rumpf is an attorney for Scibal Associates, a firm that manages comp claims for local governments.
To him, there's no conflict. "I think I have an appreciation for where things stand from a fairness and equity situation in workers' compensation," Rumpf said.
Legislators also can influence the selection of comp judges.
Late last year Sen. Gerald Cardinale (R-Bergen) asked Gov. Jon Corzine to elevate a municipal judge to the Superior Court in Bergen County. The governor alone nominates members of the bench, but usually with input and approval from senators in the affected district.
Cardinale said Corzine's office rejected his nominee, Steven Zaben, telling him that his pick lacked sufficient litigation experience. "But," the 73-year-old senator explained, "they agreed to put him on the comp court -- as a way of getting me off their back."
Corzine nominated Zaben earlier this year to the comp bench. A spokesman for the governor said he could neither confirm nor deny any conversation with Cardinale about the judge.
"I'm not going to get into the position where we would have to elaborate on private meetings," said the spokesman, Jim Gardner. "The process of selecting judicial nominees should be confidential."
The workers' compensation bench has become one of Trenton's remaining patronage grounds, used by political power brokers to reward friends and appease opponents with a position that pays $140,000 a year.
Socolow, who became labor commissioner two years ago, declined to discuss individual candidates or say if he would support a change to the process.
"The thing that I have to do and what Judge Calderone has to do is administer a system with the judges that we have, most of whom were here when we got here," he said.
Some attorneys working in the system say an unqualified judiciary adds to the delays. "This is a very difficult practice to learn from scratch," said Arthur Kravitz, incoming chairman of the state bar association's workers' compensation group. "Some inexperienced judges will be afraid to take a case, try it and make a decision."
Sometimes, even the experienced ones dawdle.
Two years ago, a New Jersey Appellate Court upbraided a workers' compensation judge in unusually stark terms for letting a case languish. The claimants, Nuri Delson and his son, Walter, then 14, were working at their family-run child care center in Wayne in November 1992 when they decided to go to the store for supplies. Delson drove his motorcycle, with his son on the back.
On the ride back to the child care center, a truck veered into their path and sent them careening off the road. Delson was severely injured; his son was paralyzed.
Almost 10 years and 14 hearings after the Delsons filed their claim, Judge Sandra Spizziri finally ruled that the accident was not work-related. There was no written opinion. She merely announced her decision from the bench -- on a day when neither the Delsons nor their attorneys were present.
In 2005, an appellate court overturned the order, noting that Spizziri bungled even the basic facts of the accident.
"We pause here to express our concern over the length of time it took for the workers' compensation judge to reach a final decision after filing of the complaints in 1993 -- almost 10 years," the appellate panel wrote. "That may explain, but certainly not excuse, the judge's three-page factually skimpy oral decision."
Spizziri, the ex-wife of John Spizziri, a prominent assemblyman in the 1970s, retired six months later. In an interview, she declined to discuss the case but said it played no part in her decision to leave the bench.
"I had always planned to retire," said Spizziri, now 69.
IN OTHER STATES
Workers' comp administrators vigorously defend the system as a model, but they track only the sparsest information about its performance and effectiveness.
Citing the state's Open Records Act, The Star-Ledger asked the division for data that would show how it resolved more than 15,000 of the most controversial and complex injury claims -- those involving uninsured workers -- filed between 2000 and 2007. After roughly two months, state officials said they could find complete data only for the years 2000 and 2004.
Calderone acknowledged the shortcomings.
"We work within the resources that we have," he said. "We don't have individuals to data process that information."
More than three dozen states produce annual reports that chart the efficiency of their systems or address its problems. Oklahoma's latest 183-page report included a biography of each judge and a breakdown of how their cases were resolved. Maryland's 50-page annual report includes data comparisons with neighboring states.
Florida and Montana have commissioned strategic plans to improve their systems. In several states, advisory councils prepare annual critiques.
In New Jersey, Calderone said he has never been asked to compile an annual report.
"There are many, many ways to measure efficiency in government," Calderone said. "We're in the field, talking to judges, checking on the issues."
He said he meets a few times a year with an advisory council composed of representatives from organized labor, the workers' comp bar, employers and insurance companies. The labor commissioner appoints each member. The meetings are closed to the public and not recorded.
Oregon, widely cited by experts as one of the most efficient and organized comp systems, tracks and publishes data in scores of categories. The state also has two ombudsman offices -- one for injured workers and one for small businesses -- to help them navigate the comp system.
About 15 years ago, the American Insurance Association suggested New Jersey join the ranks of states with workers' comp ombudsman offices, according to Bruce Wood, the association's assistant general counsel.
But attorneys rose up in protest, he said, apparently perceiving the idea as a threat to their livelihood. "It was met with an absolute back of the hand," Wood said.
To Wood, it demonstrated the overly litigious nature of New Jersey's comp system, an aspect that he says drives up costs for everyone.
"It doesn't make that a horrible system," he said. "It makes it a system that is in need of some correction."
Calderone said one reason he believes the state's system must be working well is because he rarely hears complaints.
"When I started five years ago, we had an average of over 100 constituent letters a week," Calderone said in an interview. "If we get one or two letters a week, that's all that's coming in the system."
Dunstan McNichol may be reached at (609) 989-0341 or firstname.lastname@example.org. John P. Martin may be reached at (609) 989-0379 or email@example.com