New Jersey Federal Court finds Bad Faith Claim against Workers' Compensation carrier is not barred by exclusive remedy provision

Davis v. OneBeacon Insurance Group, 09-cv-4179, (D.N.J. June 28, 2010).
In this case the petitioner injured his left shoulder while working.  He filed a
claim petition in the Division of Workers’ Compensation.  The WC carrier, defendant in the civil law suit, authorized a treating physician. The authorized physician recommended surgery. The WC carrier refused to authorize the surgery. Petitioner repeatedly requested approval for the surgery, but the
carrier refused. Petitioner filed a Motion for Medical and Temporary Disability
Benefits on September 20, 2006. On April 18, 2007, the Honorable Robert
Butler, JWC, found that the WC carrier was obligated to approve the surgery and
that its refusal to approve the surgery violated Section 15 of the New Jersey
Workers’ Compensation Act. The judge assessed a 25% penalty under
N.J.S.A. 34:15-28.1 and awarded counsel fees and costs. The court described the conduct of the carrier as “unconscionable.”The judge went on to admonish the carrier:
The additional and prolonged pain and obvious mental anguish of
the Petitioner that has been caused by the appalling and
unconscionable conduct of OneBeacon are neither cognizable nor
compensable based upon the provisions of the Workers’
Compensation Act. Only the nature and extent of the Petitioner’s
permanent disability following his recuperation from surgery is
compensable in this court.
As regrettable as that may be, the Petitioner is not left without a
possible source of redress against OneBeacon for his pain and
suffering. The Court suggests that Petitioner’s counsel direct his
attention to the case of Rothfuss versus Bakers Mutual Insurance
Company of New York, 107 N.J. Super. 189, 257 A.2d 733 (1969).
Thereafter petitioner filed a complaint in the Superior Court of New Jersey on April
13, 2009, alleging that the carriers refusal to authorize necessary medical
treatment caused him injuries that are not recoverable in workers’
compensation, including pain and suffering, mental anguish and emotional
distress. The carrier moved to dismiss the law suit and argued, in part, that
the suit was barred by the exclusive remedy provision of the New Jersey
Workers’ Compensation Act and by the statute of limitations.
The Federal court went on to deny the the carriers motion to dismiss and the case has survived.