                                NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
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                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-3310-17T3

SHIRLEY RAMELLA,

          Petitioner-Respondent,

v.

BOROUGH OF SEASIDE HEIGHTS,

     Respondent-Appellant.
________________________________

                    Submitted January 10, 2019 – Decided April 8, 2019

                    Before Judges Whipple and DeAlmeida.

                    On appeal from the New Jersey Department of Labor
                    and Workforce Development, Division of Workers'
                    Compensation, Claim Petition Nos. 2007-31369 and
                    2009-2736.

                    Gilmore & Monahan, PA, attorneys for appellant
                    (Denis P. Kelly, on the brief).

                    Bagolie-Friedman, LLC, attorneys for respondent
                    (Alan T. Friedman and Eric S. Ruiz, on the brief).

PER CURIAM
      Respondent, Borough of Seaside Heights, appeals from the February 20,

2018 order of the Division of Workers' Compensation (Division) imposing a

penalty, attorney's fees, and costs for the late payment of benefits after

settlement of a claim. We reverse.

                                        I.

      The following facts were derived from the record. On November 20,

2007, John Ramella, a Borough employee, filed a workers' compensation claim

alleging he suffered injuries to his lungs as the result of exposure to deleterious

substances while at work. On November 8, 2008, before his claim was resolved,

John1 died of respiratory failure. After his death, John's wife, petitioner Shirley

Ramella, filed an amended dependency claim petition alleging John died from

chronic obstructive lung disease as the result of exposure to asbestos at work.

The Borough disputed a causal relationship between John's illness and death ,

and the conditions he encountered during this employment.

      During John's approximately fifteen-year employment, the Borough had

four workers' compensation insurance carriers. In addition, there is a period of

John's employment for which the Borough's insurance coverage is in dispute.



1
  We use first names because the Ramellas share a last name. No disrespect is
intended.
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                                        2
      On August 15, 2017, the parties reached a lump-sum settlement in the

amount of $50,000.     Each insurance carrier assumed responsibility for the

portion of the settlement attributable to the period for which they provided

coverage to the Borough. The Borough agreed to pay $7500 of the settlement

attributable to the period for which its insurance coverage is in dispute. The

Borough's payment obligation was memorialized in an August 15, 2017 order of

a judge of compensation. The order does not establish a timeframe for payment

of the settlement amount to Shirley.

      As a public entity, the Borough is subject to the Local Fiscal Affairs Law,

N.J.S.A. 40A:5-1 to -50. Pursuant to that statute, before a public entity may

disburse public funds, it must secure a voucher detailing the claim signed by the

intended payee. N.J.S.A. 40A:5-16. On August 22, 2017, one week after the

August 15, 2017 order, the Borough sent Shirley a purchase order, intended to

function as a payment voucher, for her signature as intended payee of $7500.

Shirley did not sign the voucher or return it to the Borough.

      Neither Shirley nor her counsel contacted the Borough or its counsel

seeking payment of the $7500. It was the Borough's counsel, after being notified

by Borough officials that Shirley had not returned the voucher, who reached out

to Shirley's counsel seeking assistance in having her sign the voucher. In


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                                       3
January 2018, Shirley executed the voucher and returned it to the Borough. It

is undisputed that the Borough paid Shirley $7500 promptly after receipt of the

signed voucher.

      On January 8, 2018, after Shirley signed the voucher, but prior to the

Borough's issuance of payment, her counsel moved to enforce the August 15,

2017 order. Before the return date of the motion, the Borough had paid Shirley.

      On February 20, 2018, counsel appeared before the judge of compensation

on Shirley's motion. The judge took no testimony and issued an oral opinion

imposing a penalty on the Borough pursuant to N.J.S.A. 34:15-28.2 and N.J.A.C.

12:235-3.16. The judge found that the Borough had unreasonably delayed

payment to Shirley because it should have prepared the voucher and obtained

her signature during the eight years that her claim was pending. In addition, the

judge found that the Borough's counsel should have brought the voucher with

him on August 15, 2017, when the settlement was brought before the judge for

approval. The judge did not make findings of fact with respect to Shirley's

failure to sign the voucher, her counsel's failure to make any inquiry with respect

to whether Shirley had received the payment, or the speed with which the

Borough paid Shirley once her signature was obtained. In reaching her decision,

the judge cited the holding in Amorosa v. Jersey City Welding & Machine


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                                        4
Works, 214 N.J. Super. 130 (App. Div. 1986), for the proposition that a thirty-

day delay in complying with an order of the Division "creates a rebuttable

presumption of negligence. That it is negligent, and that a penalty should be

imposed."

      The judge imposed a penalty of $5000 payable to the Second Injury Fund,

the maximum amount permitted by N.J.S.A. 34:15-28.2(b) and N.J.A.C. 12:235-

3.16(h)(2). The penalty represents approximately sixty-seven percent of the

amount the Borough owed Shirley. In addition, the judge awarded Shirley's

counsel $500 in attorney's fees. The record does not contain an affidavit of

services and no reference was made by the judge to such an affidavit. The judge

made no findings with respect to the reasonableness of the attorney's hourly rate

or the number of hours expended on the motion. Finally, the judge assessed

against the Borough a $90 stenographic fee.

      The judge entered a February 20, 2018 order memorializing her decision.

On April 24, 2018, the judge denied the Borough's motion for reconsideration

and a stay.

      This appeal followed. The Borough argues the penalty is not supported

by the record because: (1) it was Shirley's failure to execute the voucher, and

not any action of the Borough, that delayed payment; (2) no demand was made


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                                       5
by Shirley or her counsel for payment from the Borough after the voucher was

sent to Shirley; (3) it was the Borough's proactive efforts to secure Shirley's

signature that resulted in issuance of the payment to her; and (4) the penalty is

excessive in light of the circumstances.

                                       II.

      "Our analysis begins by noting that the scope of appellate review of

factual findings by a judge of compensation is limited." Renner v. AT&T, 218

N.J. 435, 448 (2014). "An appellate court reviews a final agency decision with

deference, and will not reverse the ultimate determination of an agency unless

the court concludes that it was 'arbitrary, capricious or unreasonable, or that it

lacked fair support in the evidence[.]'" In re Freshwater Wetlands Gen. Permit

No. 16, 379 N.J. Super. 331, 341 (App. Div. 2005) (quoting Campbell v. Dep't

of Civil Serv., 39 N.J. 556, 562 (1963)). "Courts extend substantial deference

to an agency's interpretation of its own regulations." Ibid.

      "[T]he workers' compensation system has been carefully constructed by

our Legislature in a manner that serves to protect the rights of injured employees

to receive prompt treatment and compensation." Stancil v. Ace USA, 211 N.J.

276, 277 (2012). We have recognized "that prompt payment is required to

ameliorate the economic disruption occasioned by a workplace injury and the


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                                        6
loss of a regular paycheck." Quereshi v. Cintas Corp., 413 N.J. Super. 492, 499

(App. Div. 2010).

      There is no statute establishing a specific timeframe for payment of

workers' compensation settlement proceeds.2       The Division may, however,

impose penalties for failure to comply with an order of a judge of compensation.

According to N.J.S.A. 34:15-28.2:

            If any employer . . . fails to comply with any order of a
            judge of compensation . . . a judge of compensation
            may, in addition to other remedies provided by law:

                    ....

            (b) Impose additional fines and other penalties on
            parties or counsel in an amount not exceeding $5,000
            for unreasonable delay, with the proceeds of the
            penalties paid into the Second Injury Fund;

                    ....

            (f)   Take other actions deemed appropriate by the
            judge of compensation with respect to the claim.

            [N.J.S.A. 34:15-28.2.]

      The Division promulgated a regulation effectuating this statutory

provision. According to N.J.A.C. 12:235-3.16:


2
   N.J.S.A. 34:15-28 gives the Division discretion to assess interest on any
"lawful compensation . . . withheld from an injured employee or dependents for
a term of [sixty] or more days following entry of a judgment or order[.]"
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                                       7
            (a) A party may, by written motion . . . move against
            an employer . . . for enforcement of any court order[.]

                  ....

            (e) Any time after the [fourteen]-day period to
            respond . . . has elapsed and on notice to the parties, the
            judge shall hold a hearing on the motion.

                  ....

            (h) Upon a finding by a judge of noncompliance with
            a court order . . . the judge, in addition to any other
            remedy provided by law, may[:]

                  ....

            (2) Levy fines or other penalties on parties . . . in an
            amount not to exceed $5,000 for unreasonable delay or
            continued noncompliance.

                  ....

                  (iii) The proceeds under this paragraph shall be
            paid into the Second Injury Fund;

                  ....

            (6) Allow a reasonable counsel fee to a prevailing
            party, where supported by an affidavit of services.

      The statute and regulation are designed "to address circumstances in

which insurance carriers flout compensation judges' orders[.]" Stancil v. ACE

USA, 418 N.J. Super. 79, 88 (App. Div. 2011), aff'd, 211 N.J. 276 (2012); Flick

v. PMA Ins. Co., 394 N.J. Super. 605, 613 (App. Div. 2007). Imposition of a

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                                        8
sanction is permitted after a workers' compensation judge follows "[s]pecific

and clearly defined procedures[.]" Stancil, 418 N.J. Super. at 91.

      Having carefully reviewed the Borough's arguments in light of the record

and applicable legal principles, we conclude that the imposition of a $5000

penalty is not supported by substantial credible evidence and was based on

erroneous legal conclusions.

      We begin our analysis with the observation that our review of the February

20, 2018 order was hampered by an absence of findings of fact with respect to:

(1) when Shirley received the voucher; (2) when the Borough's counsel reached

out to Shirley's counsel for assistance in securing her signature; (3) what, if any,

steps Shirley's counsel took to ensure that his client had received payment from

the Borough; (4) why Shirley's counsel moved to enforce the August 15, 2017

order only after he was notified by the Borough that Shirley had not signed the

voucher; and (5) whether Shirley was present when the settlement was placed

on the record.

      As noted above, N.J.A.C. 12:235-3.16(e) requires a judge of

compensation to hold a hearing prior to assessing a penalty for failure to comply

with an order. The evident purpose of the hearing requirement is to permit the

judge to review testimony and other evidence to make findings of fact necessary


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                                         9
to determine whether a penalty is warranted. Here, no witnesses gave testimony

and no documents or other evidence were admitted into the record before the

penalty was assessed.

      In addition, the judge's reliance on the holding in Amorosa was misplaced.

That opinion interprets N.J.S.A. 34:15-28.1, which provides:

            If a self-insured or uninsured employer . . .
            unreasonably or negligently delays or refuses to pay
            temporary disability compensation . . . it shall be liable
            to the petitioner for an additional amount of [twenty-
            five percent] of the amounts then due plus any
            reasonable legal fees incurred by the petitioner as a
            result of and in relation to such delays[.] A delay of
            [thirty] days or more shall give rise to a rebuttable
            presumption of unreasonable and negligent conduct on
            the part of a self-insured or uninsured employer[.]

            [(Emphasis added).]

The statute applies only to temporary disability benefits. See Stancil, 418 N.J.

Super. at 84.   Thus, the negligence standard and the thirty-day rebuttable

presumption of negligent conduct established in N.J.S.A. 34:15-28.1 and

recognized in Amorosa are not applicable here.

      Moreover, the Legislature enacted N.J.S.A. 34:15-28.2 to address

circumstances not covered by N.J.S.A. 34:15-28.1. Id. at 81-82. Although

aware of N.J.S.A. 34:15-28.1, the Legislature did not include either a negligence

standard or a specified period of delay creating a rebuttable presumption that a

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                                       10
penalty is warranted. Instead, N.J.S.A. 34:15-28.2(b) authorizes a penalty only

where payment is unreasonably delayed. In order to impose a penalty under the

statute it is necessary for the judge of compensation to make a reasonableness

determination not tied to the thirty-day period established in N.J.S.A. 34:15-

28.1 or concepts of negligence.

      Here, it was entirely reasonable for the Borough to send Shirley a voucher

for her signature. The Borough, bound by N.J.S.A. 40A:5-16, see Maltese v.

Twp. of N. Brunswick, 353 N.J. Super. 226, 238 (App. Div. 2002), sent the

voucher just one week after entry of the August 15, 2017 order. We do not agree

with the judge's observation that the Borough could have prepared the voucher

and secured Shirley's signature during the eight years that her amended claim

petition was pending. During that time, the Borough was contesting Shirley's

right to recovery and its insurance coverage was in dispute. It was not certain

until the settlement was reached whether, and in what amount, the Borough

would be directly responsible to Shirley.

      We are also not persuaded by the judge's conclusion that the Borough

should have brought the voucher to the hearing at which the settlement was

presented for approval. No findings of fact were made with respect to whether

Shirley attended the hearing. It is not clear, therefore, that her signature on a


                                                                         A-3310-17T3
                                      11
voucher could have been obtained that day. Moreover, pursuant to N.J.S.A.

34:15-20, a judge of compensation, after hearing testimony and/or reviewing

stipulations of the parties, must determine that a settlement is "fair and just under

all the circumstances" before entering an order requiring the payment of

settlement proceeds by an employer. The Borough, therefore, did not have an

order authorizing the expenditure of its funds until after the hearing at which the

settlement was approved.

      Finally, the judge did not consider the inaction of Shirley and her counsel

after her receipt of the voucher, the affirmative acts of the Borough's counsel in

seeking Shirley's signature, or his client's prompt payment once it obtained the

signed voucher, when deciding whether a penalty was warranted. This is not a

situation in which the employer acted with "no explanation for the delay in

making payment," after repeated inquiries by the employee's counsel seeking

payment. See Amorosa, 214 N.J. Super. at 133. At best, both parties could have

been more vigilant in obtaining Shirley's signature on the voucher.

      Having determined that the $5000 penalty is not supported by the record,

we also vacate the award of attorney's fees and costs against the Borough. We

need not determine whether the penalty was excessive.

      Reversed.


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