New Jersey’s workers’ compensation law embodies a strong public policy preference to litigate workers’ compensation coverage disputes in this jurisdiction.
The Appellate Division affirms the denial of a motion to change the venue of a workers’ compensation coverage dispute to New York as New Jersey’s workers’ compensation law embodies a strong public policy preference to litigate workers’ compensation coverage disputes in this jurisdiction.
The Travelers v. HES Trans, Inc., 2019 N.J. Super. Unpub. LEXIS 2621 (App. Div., decided Dec. 23, 2019)
In this dispute over workers’ compensation coverage, the Appellate Division affirmed the denial of a motion to effectively change the venue to New York State. The Appellate Division found that New Jersey’s workers’ compensation law embodies a strong public policy preference to litigate disputes over workers’ compensation coverage in this jurisdiction.
The underlying dispute was the employment status of truck drivers. The plaintiff, Travelers Property Casualty Company of America, provided workers’ compensation coverage for HES Trans, Inc., a trucking company. Travelers asserted that HES’s drivers were employees of HES and that, under New Jersey’s mandatory workers’ compensation coverage laws, Travelers was required to issue coverage for the drivers. Meanwhile, HES contended that the drivers were independent contractors, not employees; therefore, it was not required to pay for their workers’ compensation insurance. Accordingly, HES failed to name most of its drivers as employees in its policy application to Travelers. As such, Travelers claimed that HES substantially underpaid its workers’ compensation premiums and filed the present case in the Law Division seeking payment of the unpaid premiums from HES.
HES, in turn, named as third-party defendants the companies from whom it contractually procured its drivers. According to HES, these third-party defendants were supposed to ensure the drivers had all required insurance, including workers’ compensation coverage. The third-party defendants moved to dismiss HES’s third-party complaint for lack of jurisdiction, arguing the forum selection clause in their contracts with HES required that their dispute be resolved in New York, not in New Jersey.
The lower court denied the dismissal motion of the third-party defendants, ruling that strong public policies underlying New Jersey’s workers’ compensation scheme weighed against allowing parallel litigation in New York. This appeal ensued.
In affirming the Superior Court’s ruling, the Appellate Division found that the key issue before it was whether the forum selection clause required the case to be litigated in New York, or whether such action would be contrary to New Jersey public policy. As the Appellate Division concluded:
The New Jersey workers’ compensation statute, N.J.S.A. 34:15-1 et seq., requires an employer to insure all of its workers’ compensation liabilities and invalidates any insurance policies that fail to do so. A failure to provide workers’ compensation protections under the statutory scheme, or a deliberate misrepresentation of employees as independent contractors to avoid providing coverage, can subject an employer to criminal liability. N.J.S.A. 34:15-79(a). The trial court properly concluded these facets of our State’s workers’ compensation laws embody a strong public policy preference to litigate disputes over workers’ compensation coverage and premiums in this jurisdiction.
This decision highlights the statutory scheme for mandatory and comprehensive workers’ compensation insurance for New Jersey employers whereby, and with limited exception, every employer must make sufficient provision for the complete payment of any obligation it may incur to an injured employee. Although the Appellate Division was not asked to address the distinction between employees and independent contractors, which was the subject of Travelers’ underlying complaint, New Jersey’s statutory workers’ compensation scheme does exclude independent contractors from this mandatory coverage requirement.
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