Is psychiatric disability resulting from notice of termination of employment a compensable injury under the New Jersey workers' compensation statute?

On March 6, 2003, the petitioner slipped and fell on the premises of her employer, suffering a tear of the posterior horn of the medial meniscus of her right knee. The petitioner underwent a course of medical treatment and was cleared to return to work in or about mid-July of 2003. Despite her medical clearance, the petitioner refused to report for work, claiming that her injuries had not resolved and that she was incapable of performing her job duties. Her employment with the respondent was soon thereafter terminated. The petitioner filed a claim against the respondent with the Division of Workers' Compensation alleging orthopedic disability arising out of the partial loss of function of her right knee, as well as depression and chronic adjustment disorder caused by her resulting inability to work. At trial, the petitioner was awarded permanent disability of the right leg. However, the judge of compensation determined that the petitioner's claimed psychiatric disability was not a result of an accidental injury arising out of and in the course of her employment – i.e., her right-knee injury – but, rather, was caused by the termination of her employment. As such, the judge of compensation found that the petitioner's psychiatric allegations were not compensable and dismissed same for failure to sustain the burden of proof. On appeal, the petitioner argued that even if her termination was the cause of her psychiatric disability, it provided sufficient grounds to give rise to a finding that her psychiatric disability arose out of and in the course of her employment. In affirming the judge of compensation's findings, the Appellate Division relied on Goyden v. State Judiciary, 256 N.J. Super. 438 (App. Div. 1991) and Cairns v. City of E. Orange, 267 N.J. Super. 395 (App. Div. 1993). In Goyden, the Appellate Division held that for psychological injuries to be compensable, there must be evidence of objectively stressful working conditions which are characteristic of or peculiar to the particular workplace. The Appellate Division amplified the peculiarity aspect of this test in Cairns, a case involving allegations of psychiatric injury arising out of the receipt of a layoff notice. The Cairns' Court held that: "[B]y "characteristic of" or "peculiar to" is meant conditions that one engaged in a particular employment would view as creating a likely risk of injury that distinguishes it from the usual run of occupations. Those conditions must cause the disease as a natural incident of either the occupation in general or the place of employment. Based on the Goyden and Cairns holdings, the Appellate Division reasoned that in the instant case the appropriate focus in assessing the petitioner's termination of employment was whether the precipitating events were peculiar to her workplace or held some essential relation to her work or its nature. The Appellate Division found that neither requirement had been met. "The risk of employment termination is so universal," the Appellate Division concluded, "and an emotional response to notice of termination so predictable, that this particular cause and effect relationship could not have been envisioned to be compensable." Accordingly, the Appellate Division held that: "[I]n the absence of evidence of a clear legislative intent to require payment of workers' compensation benefits for disability caused by varying personalized responses of employees to bona fide personnel decisions that alter an employee's work status, we are constrained to conclude that the burden of providing compensation to such employees may not be imposed upon an employer."

Case Law Alert - 3rd Qtr 2010