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Can an Employer Fire an Injured Employee on Light Duty and Then Stop Paying Temporary Disability Benefits?

By on January 27, 2016 in Compensability with 2 Comments

In an extension of the principle established in Cunningham v. Atlantic States Cast Iron Pipe Co., 386 N.J. Super. 423 (App. Div. 2006), the Appellate Division ruled on January 22, 2016 that an employee who was fired while on light duty was not entitled to temporary disability benefits because the firing was not related to his injury.

The case, entitled Katzenstein v. Dollar General, A-1141-13T3 (App. Div. January 22, 2016) arose from a compensable accident on August 22, 2012 when Mr. Katzenstein, a store manager, injured his knee, requiring authorized treatment.  On September 19, 2012, Dollar General returned Katzenstein to light duty work.  On September 28, 2012, Dollar General terminated Katzenstein for leaving several employees in the store without supervision while he went to the bank to deposit the previous day’s earnings.

Following his termination, petitioner Katzenstein filed for unemployment benefits; however, he was denied benefits because he was terminated for misconduct.  On October 17, 2012, Dr. Basch, the authorized treating doctor, opined that petitioner could not work due to his knee injury.  Katzenstein continued to treat with Dr. Basch, who maintained the light duty restriction with no lifting over 25 pounds.

Katzenstein filed a motion for medical and temporary disability benefits in the Division of Workers’ Compensation. He relied on Dr. Basch’s opinion that he could not work at all because he needed knee surgery.

On February 28, 2013, a consent order was entered providing that the parties agreed without prejudice that petitioner would receive temporary disability benefits from November 14, 2012 to February 14, 2013.  When the three months ended, Katzenstein filed a motion to enforce the order and to obtain ongoing temporary disability benefits.

In his motion, Katzenstein misstated the reason he did not get unemployment.  He asserted that he lost his unemployment claim because “was unable to engage in employment due to the injury to my right knee.” He did not mention that he had been denied benefits because he had been fired for misconduct.  The Judge of Compensation focused on this misrepresentation and the fact that Katzenstein’s injury was not the reason he left his job. Rather, he was fired for misconduct.  The Judge noted petitioner was lacking in candor and also noted that there was no evidence that petitioner had any prospect of new employment.  Petitioner then filed an appeal.

One week before the Judge of Compensation issued his decision, the Board of Review overturned the denial of unemployment benefits on the basis that petitioner’s conduct was reasonable and not an act of misconduct.

The Appellate Division applied the rule in Cunningham and said that the two cases were similar because the petitioner in Cunningham was injured on the job, returned to work, but was subsequently terminated and found not entitled to continuing temporary disability benefits while recovering from surgery.   In this case petitioner was injured on the job, placed on light duty, and then fired for a violation of company policy.  The court said that the burden was on petitioner to prove that he would have worked.  The Court said, “In determining that Katzenstein was not credible, the judge found he was neither offered employment after he was terminated nor declined employment due to his work-related disability.”  The Court wrote:

Here, the judge of compensation properly applied Cunningham.  The judge assessed whether Katzenstein, after being terminated, had a promise or prospect of employment that he had to forego due to his disability.  In determining that Katzenstein was not credible, the judge found he was neither offered employment after he was terminated nor declined employment due to his work-related disability.

This case is an important one.  It is the first Appellate Division case dealing with the right of the employer to terminate temporary disability benefits following job termination after an employee has been placed on light duty. The case does not discuss the rule in Harbatuk, which is that an employer can terminate temporary disability benefits to someone who turns down light duty.  This employee accepted light duty and presumably thought his temporary disability benefits would continue until he could either return to work full duty or until maximal medical improvement.  The Katzenstein case now applies the Cunningham rule to situations where someone is fired while on light duty for reasons unrelated to the work injury.  Petitioner was not able to show that he was fired because of his injury or that he had prospects of employment which he was unable to perform because of his injury.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, an executive committee member and shareholder with Capehart Scatchard, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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