D'Annunzio v. Prudential Insurance Co. of America

927 A.2d 113, 192 N.J. 110, 26 I.E.R. Cas. (BNA) 686, 2007 N.J. LEXIS 910
CourtSupreme Court of New Jersey
DecidedJuly 25, 2007
StatusPublished
Cited by92 cases

This text of 927 A.2d 113 (D'Annunzio v. Prudential Insurance Co. of America) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
D'Annunzio v. Prudential Insurance Co. of America, 927 A.2d 113, 192 N.J. 110, 26 I.E.R. Cas. (BNA) 686, 2007 N.J. LEXIS 910 (N.J. 2007).

Opinions

Justice LaVECCHIA

delivered the opinion of the Court.

New Jersey’s Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8, protects workers who blow the whistle on their employers’ illegal, fraudulent, or otherwise improper activities that implicate the health, safety, and welfare of the public. The statute extends to “any individual who performs services for and under the control and direction of an employer for wages or other remuneration.” N.J.S.A. 34:19-2(b) (defining “[ejmployee[s]” entitled to CEPA protection). The question here is who is included in that definition. We have recognized previously that that definition is not limited to a narrow band of traditional employees. In this appeal, we reaffirm the appropriateness of the Pukowsky1 test for assessing the status of an alleged “independent contractor” claiming protection as an “employee” under CEPA.

[115]*115I.

The appeal comes to us on a summary judgment record that focused solely on the “independent contractor” versus “employee” issue. Because the defendants claimed an entitlement to judgment based on that record, we view the facts in the light most favorable to the party opposing that motion and, therefore, accord to plaintiff all favorable inferences that support his claim to CEPA’s protection. See R. 4:46-2(e); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540, 666 A.2d 146 (1995).

In February 2000, defendant Prudential Property and Casualty Insurance Company (Prudential) hired plaintiff George D’Annunzio as a chiropractic medical director in its Personal Injury Protection (PIP) Department. Prudential’s PIP Department reviews and pre-approves treatment plans submitted by the doctors who treat Prudential’s insureds and other covered claimants injured in automobile accidents. It is the responsibility of the medical directors and nurse case managers to determine whether the proposed treatments are medically necessary, consistent with the PIP reforms authorized by the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A 39:6A-1.1 to -35. Insurers engage licensed medical professionals to provide independent medical judgments as to the medical necessity of treatment plans submitted for approval. See N.J.S.A 39:6A-3.1(a); N.J.AC. 11:3— 4.7(c)(4).2 Prudential opted to meet that requirement by having a [116]*116cadre of licensed professionals in-house to perform the review function, but it designated those professionals as “independent contractors.” Indeed, Prudential required every licensed medical director to maintain an active private professional practice and to agree that their hours billed to Prudential would not exceed fifty percent of their total professional practice.

Prudential sent D’Annunzio a one-year “Medical Director Consultant Agreement” that was described as “standard” for the position. For tax purposes, D’Annunzio executed the agreement in the name of his professional association (George D’Annunzio D.C.P.A.) rather than as a licensed individual, although the parties apparently agree that only a licensed individual could perform the tasks for which D’Annunzio was retained. Pursuant to the agreement, D’Annunzio was paid $125 per hour for twenty hours of work per week. D’Annunzio agreed to perform his services at a designated Prudential PIP claims office, Monday through Friday, from 8:00 a.m. until noon.

In respect of the relationship between the parties, the agreement stated that

[t]he relationship between Prudential and the Medical Director is that of independent contractor. The Medical Director will maintain his own private practice and provide Medical Director services on a part time basis____None of the provisions of this agreement are intended to create or be construed as creating any agency, partnership, joint venture or employer-employee relationship.
As an independent contractor, [t]he Medical Director will have the sole responsibility for the payment of all self employment and applicable federal state and local taxes.

Both parties had the right to terminate the relationship without cause on sixty-days notice. Prudential also had the option of terminating the agreement immediately if D’Annunzio committed a material breach.

According to D’Annunzio, when he signed the agreement he expected to be permitted to perform his review function in an [117]*117independent manner, as one might expect from a contractor of professional services. Instead, from his first day in Prudential’s PIP Department, D’Annunzio found that Prudential sought to exert extensive control over him. D’Annunzio received a list of duties, workflow instructions, and a time sheet. The list of duties required that D’Annunzio (1) provide leadership and education to the staff; (2) review claims for medical appropriateness; (3) discuss treatment alternatives with doctors; (4) help to develop Prudential’s care guidelines; (5) participate in peer reviews of colleagues; (6) participate in data analysis; and (7) provide in-house coverage through his physical presence or by being telephonically accessible during required hours. The workflow instructions included step-by-step directions for D’Annunzio to use in his review of PIP claims. In addition to requiring D’Annunzio to record his billable hours on Prudential’s time sheet forms, other accouterments of the job appeared to D’Annunzio to be designed to make him essentially a cog in the machinery of Prudential’s PIP Department.3

As it turned out, D’Annunzio’s tenure with Prudential was short-lived. During the summer of 2000 he informed supervisors of his objection to insurance violations that he perceived were being perpetrated by Prudential and its employees. D’Annunzio allegedly expressed concern about Prudential’s failure to pay MRI bills, its hiring of non-medical vendors to perform independent medical evaluations, and the improper use of nurse case managers in the approval of medical care. In August and early September, [118]*118D’Annunzio’s supervisors Kathy Savvas, Linda Fraistat, Frank Hruska, and Anthony LoCastro informed him that his performance was not meeting expectations. D’Annunzio was advised to speed up his review of treatment files, to limit his reviews to claims involving chiropractic evaluations, and to reduce the number of treatment plans that he was denying. On September 11, 2000, Prudential gave D’Annunzio written notice that it was terminating its agreement with him based on the sixty-day notice provision.

D’Annunzio4 filed this action against Prudential, its parent company, as well as several officers and employees of Prudential. He alleged that he was fired because he had complained about Prudential’s “lack of regulatory and contractual compliance” and that therefore his termination was in violation of CEPA. In addition, D’Annunzio asserted common law claims for breach of contract and wrongful discharge.5

Limited discovery was conducted, focusing on whether D’Annunzio qualified as an “employee” for CEPA purposes. On the parties’ cross-motions for summary judgment, the trial court held in favor of the Prudential defendants. Applying the “Pukowsky test,” the court concluded that D’Annunzio was an independent contractor not entitled to advance a claim under CEPA. D’Annunzio’s other claims were dismissed also.

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Cite This Page — Counsel Stack

Bluebook (online)
927 A.2d 113, 192 N.J. 110, 26 I.E.R. Cas. (BNA) 686, 2007 N.J. LEXIS 910, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dannunzio-v-prudential-insurance-co-of-america-nj-2007.