No Right to Bring Damage Suit for Insurer’s Refusal to Obey Compensation Judge’s Order

Stancil v. ACE USA, 418 N.J. Super. 79 (App. Div. 2011).  A series of articles in The Star-Ledger in April 2008 exposed a pervasive problem of insurance companies flouting the orders of Workers’ Compensation judges that required the insurers to pay for treatments.  In October 2008, the Legislature amended the Workers’ Compensation Act, N.J.S.A. 34:15-1 to -128, to address the problem.  The revised legislation conferred greater authority, including contempt powers, on compensation judges.  New administrative regulations were also promulgated.  The question in this case was whether, under those amended provisions, an injured worker could sue for damages in Superior Court for an insurer’s willful non-compliance with a compensation judge’s order.  The Appellate Division said that such a suit was not permitted.

Speaking through Judge Lisa, the appellate panel traced the history of the statute, both before and after the 2008 amendments.  At one point in the legislative process, there was a proposal to allow compensation judges to “[r]efer matters to other administrative, civil or criminal proceedings including referrals to the Superior Court for contempt proceedings.”  That provision, however, was later replaced with one that allowed a judge of compensation to hold a separate hearing on contempt, and upon a finding of contempt, permitted the successful party to file a motion with the Superior Court for enforcement of the contempt proceedings.  An Assembly Committee statement expressly noted that the contempt provision “replace[d] broader language regarding the judge’s authority to refer matters to other tribunals.”

The Appellate Division held that “the Legislature consciously chose to limit Superior Court proceedings to enforcement.”  Thus, the plaintiff’s Superior Court damage suit was barred.  The court noted, however, that the plaintiff could still return to the compensation court to seek the remedies afforded by the revised statute.  In the bigger picture, of course, the Legislature can authorize damage actions in court if the contempt remedy is not sufficient to induce insurers to obey the orders of compensation judges.