A Capehart Scatchard Blog

Legislative Changes to New Jersey Workers’ Compensation

On August 24, 2018, Governor Murphy signed a bill that for all practical purposes ends the right of employers to make bona fide offers of permanent partial disability free of counsel fees.  The statute that enabled employers to make bona fide offers within 26 weeks of maximal medical improvement, or return to work, whichever is later, without the offer being feeable, was passed on April 3, 1928.  For almost a century, employers made such voluntary offers to tide injured employees over while their workers’ compensation cases were pending.  The inducement to employers was the savings on counsel fees.  Neither petitioner nor respondent paid a counsel fee on the amount of a timely voluntary offer.

Under the new law signed by the Governor, counsel for petitioners are entitled to a fee on all benefits paid to the petitioner if those payments occur after the date of a signed agreement between counsel and the injured worker.  An employer can still make an offer of permanency if the employer so desires and get a dollar credit, of course, but for practical purposes there will be no way to know whether the voluntary offer will be feeable.  There is no obligation on the part of the injured worker to disclose to the employer or carrier whether he or she has a signed agreement with counsel.  In many cases the adjuster may be well aware that the injured worker has an attorney and can therefore infer that there is an attorney-client relationship.

One question practitioners have is whether an attorney for the injured worker can still agree with the employer or carrier not to take a fee on a voluntary offer of permanency as an inducement for such an offer to be made.  Voluntary offers of permanency are popular with injured workers because they help with the employee’s finances while the case is pending.  This sort of agreement by petitioner’s counsel to waive a fee on an amount offered would almost certainly be honored by a Judge of Compensation, even if there is a written agreement predating the offer of permanency.

One other important legislative development in New Jersey is the potential loss of the “reverse offset.”  New Jersey is one of 15 states that has an agreement with the Social Security Administration giving the offset for total disability payments to the employer.  In most states the offset goes to the Social Security Administration.   In a reverse offset state like New Jersey, workers’ compensation benefits in total disability award cases are reduced by the amount of SSDI benefits in certain circumstances.

The proposed 2019 federal budget eliminates the reverse offsets in the 15 states that currently are permitted to offset against SSDI benefits.  There is a formula that limits the employee to 80 percent of the employee’s average current earnings between workers’ compensation and SSDI benefits.  In New Jersey, the benefit from workers’ compensation is reduced rather than SSDI in achieving the 80% limit.  This has saved employers and carriers countless millions of dollars over the years.  The current budget proposal would eliminate this practice in all 15 states that have a reverse offset.  The reason for the budget proposal is that it will allegedly save the federal government $164 million over 10 years.

Thanks to Craig Livingston, Esq. for bringing this budget proposal to our attention.  Employer groups need to speak to their federal legislators about opposition to this budget proposal.  This would be a very costly change for New Jersey employers, and such a change will generate much more litigation in total disability claims.

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About the Author

About the Author:

John H. Geaney, Esq. is a Shareholder and Co-Chair of Capehart Scatchard's Workers' Compensation Group. Mr. Geaney began an email newsletter entitled “Currents in Workers’ Compensation, ADA and FMLA” in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The Manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA Manual also distributed by NJICLE. If you are interested in purchasing “Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers,” please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association. He is one of two firm representatives to the National Workers’ Compensation Defense Network.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School.

Mr. Geaney was selected to the “New Jersey Super Lawyer” list (2005-2017, 2021 in the area of Workers’ Compensation). Only 5% of attorneys are selected to “Super Lawyers” through a peer nominated process based on independent research and peer evaluation. The Super Lawyers list is issued by Thomson Reuters. For a description of the “Super Lawyers” selection methodology, please visit https://www.superlawyers.com/about/selection_process.html

For the years 2022-2024 Mr. Geaney was selected for inclusion in The Best Lawyers in America® list in the practice area of Workers’ Compensation Law - Employers. The attorneys on this list are selected based upon the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. A complete description of The Best Lawyers in America® methodology can be viewed via their website at https://www.bestlawyers.com/methodology.

*No aspect of this advertisement has been submitted to or approved by the Supreme Court of New Jersey.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Hamilton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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