By Brian R. Lehrer, Esq.

A.      Third-Party Defendants and Affidavits of Merit

In a case involving the question of whether a third-party defendant, facing only claims for contribution and common-law indemnification from an original defendant that did not file an Affidavit of Merit against him must participate in the trial establishing an underlying liability, the New Jersey Supreme Court recently held that the answer is yes. Mejia v. Quest Diagnostics, Inc., et al. v. Fernandez, et al., - N.J. – (2020).

Mejia was a wrongful death medical malpractice action. Plaintiff filed a Complaint against Quest Diagnostics. Quest Diagnostics then filed a Third-Party Complaint against the decedent’s two physicians. Plaintiff then filed an affirmative claim against one of the physicians, but not against the third-party defendant, Dr. Fernandez.

No party ever served an Affidavit of Merit on Dr. Fernandez pursuant to N.J.S.A. 2A:53A-27. Dr. Fernandez sought to be dismissed from the case on these grounds, but the trial Court denied the motion. Ultimately, the Supreme Court affirmed.

Dr. Fernandez relied upon two prior decisions where third-party defendants were either dismissed from suit because of a failure to serve an Affidavit of Merit or by a failure to serve a Notice of Claim under the Tort Claims Act at N.J.S.A. 59:8-8. See generally, Burt v. West Jersey Health Systems, 339 N.J. Super. 296 (App. Div. 2001) and Jones v. Morey’s Pier, Inc., 230 N.J. 142 (2017). The Court distinguished both cases. The Court noted that in Jones, the relevant defendant was a public entity dismissed pursuant to a statutory time bar not applicable in the within case. The Court pointed to a prior Appellate holding which stated that Affidavits of Merit are not required against third-party defendants. See Diocese of Metuchen v. Prisco & Edwards, AIA, 374 N.J. Super. 409 (App. Div. 2005). The Court noted that Dr. Fernandez had not opposed the application earlier in the case for a declaration that the third-party defendant was not required to serve an Affidavit of Merit and, therefore, declined to decide that issue.

The Supreme Court noted that under the Comparative Negligence Act and Joint Tortfeasors Contribution Law, defendants can pursue claims for contribution by bringing third parties into a suit pursuant to Rule 4:8-1(a). The Court further noted that contribution does not depend upon whether a defendant is sued as a third-party defendant or as a direct defendant. See Holloway v. State, 125 N.J. 386 (1991).

The Court noted that an active third-party defendant must participate in the litigation and is subject to liability and contribution. A plaintiff cannot recover directly against the third party, and thus the third-party defendant is only potentially liable to the third-party plaintiff that filed the claim for contribution against him. The Court noted that pursuant to N.J.S.A. 2A:15-5.3(a), if the direct defendants were 60% or more at fault, then plaintiff could recover the full amount of damages from them; if third-party defendant Fernandez was found to be between 1% and 40% at fault, then he would be liable for his percentage of fault in contribution to the party that paid the full amount of damages to the plaintiff; and, finally, if Fernandez was determined to be 100% at fault, then plaintiff would recover nothing.

B.                 Tort Claims Act – Wrongful Imprisonment and the “Verbal Threshold”

In a case involving the Tort Claims Act (TCA), the New Jersey Supreme Court recently held that plaintiff’s legal malpractice claim for pain and suffering damages failed to satisfy the Act’s “verbal threshold”. Nieves v. Office of the Public Defender, - N.J. – (2020).

Plaintiff, Antonio Nieves, was convicted of sexual assault. He was imprisoned, but later released after DNA evidence confirmed that he was not the perpetrator. He recovered economic damages from the State under the Mistaken Imprisonment Act and then filed a claim for legal malpractice against the Office of the Public Defender.

Plaintiff’s claim for loss of liberty damages was limited to pain and suffering, because he had already obtained economic damages from the State. The Supreme Court held that plaintiff’s claim for pain and suffering was subject to the “verbal threshold” provision of the Tort Claims Act set forth in N.J.S.A. 59:9-2(d) and held that the defendant was entitled to a dismissal. 

The Court held that the State public defender was entitled to the protection of the TCA. The TCA contains a “verbal threshold” provision barring damages against a public entity for pain and suffering unless there is permanent loss of a bodily function, permanent disfigurement or dismemberment where the medical treatment expenses are in excess of $3,600.00. The Court held that plaintiff’s loss of liberty damages claim was subject to the TCA’s verbal threshold. The Court noted that claims for emotional distress are considered pain and suffering under the Act. The Court concluded that plaintiff’s claims failed to satisfy the Act’s threshold and, therefore, upheld the dismissal of plaintiff’s case. 

C.                 Affidavit of Merit – “Common Knowledge” Exception

In a case involving a medical malpractice claim, the Supreme Court recently held that the “common knowledge” exception to the Affidavit of Merit Statute did not apply to plaintiff’s claim that defendants failed to take action after a food – and medicine – administering to, properly inserted in accordance with a physician’s order, was dislodged. Cowley v. Virtua Health System, et al., - N.J. – (2020).

Plaintiff, Linda Cowley, was admitted to Virtua Voorhees Hospital. A physician entered an order directing nursing staff to insert a tube through her nose to deliver medicine liquids and liquid food. She removed her tube overnight and refused replacement. The nurses on staff did not reinsert the tube and plaintiff subsequently underwent a series of procedures which resulted in post-operative complications she alleged she suffered as a result of the defendants’ failure to reinsert the tube. 

The defendants were never served with an Affidavit of Merit pursuant to N.J.S.A. 2A:53A-26-29. The plaintiff argued that the “common knowledge” exception to the statute applied. The trial Court disagreed and dismissed plaintiff’s Complaint. The Supreme Court upheld the dismissal.

The Affidavit of Merit statute applies to any action involving professional malpractice. In exceptionally rare cases in which the common knowledge exception applies, an expert is not needed to demonstrate that a defendant breached some duty of care where the carelessness of the defendant is readily apparent to anyone of average intelligence. See Rosenberg v. Cahill, 99 N.J. 318 (1985).

The exception is construed narrowly to avoid non-compliance with the statute and the Court held that in this situation, where plaintiff alleged that the overnight duty nurses charged with monitoring her as the hospitalized patient were negligent in their care, an expert was required to assess a deviation in the standard of care because one must know the procedures, protocols and scope of duties of the licensed professional nurses in such circumstances.

D.                Torts – “Intrusion Upon Seclusion” Claim Dismissed

In a case involving the tort of “intrusion upon seclusion,” the New Jersey Supreme Court recently held that a group of plaintiffs who sued defendants after a janitor in an office building had been hiding video-recording devices in the women’s bathrooms and a locker room properly had their claims dismissed on summary judgment because plaintiffs had not offered proof from which one could reasonably infer that they had used a restroom while a camera was placed there. Friedman v. Martinez, et al., - N.J. – (2020).

Friedman involved numerous plaintiffs who claimed damages after a janitor at an office building had been hiding video recording devices in the women’s bathrooms and a locker room for a number of months. Roughly sixty (60) plaintiffs filed a Complaint and ultimately two groups of plaintiffs emerged: one group who could identify their images on the recovered video footage; and a second group who could not. Summary judgment was entered against the “arendt” plaintiffs – the women who did not identify themselves in the recovered footage. The plaintiffs appealed.

The Appellate Division reversed the granting of summary judgment. However, the Supreme Court upheld the trial Court and dismissed the claim. The Court agreed with the Appellate Division that a victim does not have to present evidence that she was secretly recorded to bring a cause of action for intrusion on seclusion. The Court noted that a victim may rely on circumstantial evidence to establish that an intrusion occurred. However, while it was not necessary for plaintiffs to offer video footage of themselves to survive summary judgment, the dismissed plaintiffs could not establish that they used bathrooms with cameras during the relevant time period. Quite simply, the dismissed plaintiffs could not offer proof from which one could reasonably infer that they used a restroom while a camera was placed there and their claim was properly dismissed by the trial Court.

E.         Subrogation – Policy Language Trumps Made-Whole Doctrine

In a case involving a dispute between a worker’s compensation carrier and its insured over subrogation proceeds, the New Jersey Supreme Court recently held that under equitable principles of New Jersey law, the Made-Whole Doctrine does not apply to first-dollar risk, such as a self-insured retention or deductible, that is allocated to an insured under an insurance policy. City of Asbury Park v. Star Ins. Co., - N.J. – (2020).

The City of Asbury Park had an insurance policy with Star Insurance Company that provided coverage for worker’s compensation claims against the city. The policy included a “self-insured limit retention for worker’s compensation” losses against the city in the amount of $400,000.00 per occurrence. Star provided coverage for worker’s compensation losses above that self-insured retention.

In January 2011, Asbury Park Firefighter John Fazio suffered serious injuries while fighting a fire. He filed a worker’s compensation claim. The city paid him $400,000.00 – the full amount of his self-insured retention – and Star paid roughly $2.6 million. Fazio filed a third-party action and settled for a total of $2.7 million, $935,968.25 of which was to be set aside to partially reimburse the city and Star.

The city took the position that it should be reimbursed the $400,000.00 it paid before Star could assert its subrogation rights against the tortfeasor. Star took the position that it was entitled to the entire set-aside. The Supreme Court found in favor of Star.

The Star Insurance policy contained a subrogation provision which provided that it was to be subrogated to all of the insured’s rights of recovery against any tortfeasor and the insured was to execute and deliver instruments and papers and do whatever else was necessary to secure such rights. The Made-Whole Doctrine holds that an insurer cannot assert its subrogation right until the insured has been fully compensated for his or her injuries. While the doctrine generally applies in New Jersey, Courts had never addressed the question of whether the doctrine applies to first-dollar risk, such as deductibles and self-insured retentions born by insureds.

In short, the Supreme Court held that the Made-Whole Doctrine does not apply to deductibles or self-insured retentions. However, the Court cautioned that insurance policies must be read carefully to determine whether the policy unambiguously provides an insurer with all of the insured’s rights to recovery against third-party tortfeasors, and noted that in those circumstances the Made-Whole Doctrine would not override the parties’ agreement. 

DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.