Category Archives: Workers Compensation

Commutation of Benefits

What is a “commutation”? Simply stated, a ‘commutation’ is the legal term for a petitioner asking the Court to accelerate the payment of an award to answer some pressing need of the claimant.

Commutation reduces exposure in two ways:

1)Any commuted payment made is discounted 5%. Therefore, payments of compensation which are made under Order For Commutation saved the insured money.
2)The payment of commutation is deemed to shorten the period of overall benefits. A claimant, under the New Jersey Workers’ Compensation Act, has two years to re-open a claim from the time last payment was paid. By commuting payments, the period for re-opener is shortened.

Generally speaking, a respondent does not usually object to paying a commuted award.

A recent case, Piskorz v. Beno Stucco Systems Corp., discussed the availability of commutation in a specific case. The Petitioner filed a motion for commutation of his workers’ compensation award, stating he wanted to leave America and open a business in Poland. According to the petitioner, he needed his money NOW because he had obtained the promise of a financial subsidy from the European Regional Development Fund for $60,000.00 to open the business, however, as a condition of the approval, he had to provide his own matching personal funds of $60,000, otherwise he will not receive the subsidy.

The Judge of Compensation inquired as to whether the petitioner (1) had the matching funds, or (2) had any experience running a business. The petitioner could not verify that even with the grant of a commutation e would have the funds necessary to get a matching grant and had no experience running a business.

The Judge of Compensation denied the motion because the petitioner failed to prove: (1) he planned to actually remove from the U.S., and (2) his particular circumstances warranted a departure from the usual method paying a workers’ compensation award.

Case: Piskorz v. Beno Stucco Systems Corp., 06-6559 decided August 15, 2008 by the Honorable Philip A. Tornetta, J.W.C. (Note: this blog entry discusses an agency decision which is not binding law).

Statute discussed: N.J.S.A. 34:15-25

Contributed By: Greg Lois

Six major changes to the Workers Comp laws signed

Governor Corzine just signed six new laws yesterday which attempt to “reform” certain aspects of the New Jersey Workers’ Compensation system. The “reforms” were passed by the Legislature in response to the series of newspaper articles in the Star Ledger which focused on the long wait some New jersey claimant have had to obtain their benefits.

Three of the new laws (S-1914/A-2962, S-1915/A-3059 and S-1918/A-2970) create new reporting requirements, create a new prosecutorial power, and increase penalties on employers who fail to provide workers comp coverage for all their own employees (or see that it’s provided for their subcontractors’ workers). These laws can be said to address the situations where an employer has no coverage or issues of coverage are in doubt. These laws are in direct response to the Star Ledger series of articles which focused on cases where benefits were delayed because the claimant’s employment status and coverage issues were questioned.

(1) S-1915 requires that “every corporation, limited partnership, LLP, or other employer” must submit proof of workers’ compensation coverage with their annual reports filed with the state of new Jersey. According to the new law, a “valid proof” is one of the following: (a) documentation of a current order from the Commissioner of Banking and Insurance authorizing the employer to be a self-insured employer pursuant to N.J.S.A. 34:15-77; or (b) a letter from an insurance carrier which includes the name of the carrier, insurance policy number, and date of commencement under the policy. This new law takes effect January 1, 2009.

(2) S-1915 gives the Office of the Insurance Fraud Prosecutor the power to investigate cases where an employer failed to provide workers’ compensation coverage “after being given a reasonable opportunity to obtain that coverage.”

(3) S-1914 raises the criminal penalties for not carrying workers’ compensation insurance to a crime of the fourth degree and expands liability to “any officer who is actively engaged in the corporate business.” Most troubling, the new law creates a “rebuttable presumption” that an employer has established a successor firm (under certain conditions) and allows the Uninsured employers Fund a right to pursue subrogation against any successor firm, corporation, or partnership. This law also creates a power whereby the Division of Workers’ Compensation can request proof of coverage at the time of trial. If no coverage s found the Division may issue a penalty of $5,000 for every ten days of no coverage (a 500% increase in penalties over the prior law).

Three of the new laws deal with the speed at which benefits are provided. S-1913 will permit workers comp judges to penalize parties who drag their feet in processing cases. S-1916 holds benefit payments to a time line based on a medical diagnosis. And S-1917 adds representatives of labor and taxpayers to the insurance industry-dominated Compensation Ratings and Inspection Bureau, which sets insurance premiums for workers compensation.

(1) A Judge of Compensation always had the power to enforce Orders under N.J.A.C. 12:235-3.14 (administrative code rules). The new law (S-1913) raises the amounts of penalties (from $1,000 to $5,000) for “unreasonable delays” by an insurer in issuing payments. In addition, a Judge of Compensation may now hold contempt proceedings, issues judgments for contempt, and then directly file a motion with the Superior court for enforcement of the contempt proceeding. Legal fees for such proceeding may be awarded by the Judge up to 20% of the award.

(2) S-1916 now requires that “emergent” requests for medical treatment be heard within 10 days of the request being filed with the court. What classifies as an ‘emergent’ motion for medical and temporary benefits? One where a doctor states that a worker is in need of emergent medical care and that “delay in treatment will result in irreparable harm and damage.” The respondent will have five days to file an answer to such a motion and the matter will be listed for hearing “within five calendar days of the filing of an answer.” A penalty of $2,500 will be assessed for each employer or insurance carrier who fails to designate a ‘contact person’ for such motions.

(3) S-1917 changes the makeup of the ‘Compensation Rating and Inspection Bureau’ (CRIB) to include union representatives (among others). This is an important change because CRIB has the power to institute proceedings against employers and to audit payrolls and set rates.

Employer not entitled to credit for workers' compensation payments when settling co-defendant is a public entity

In a case of first impression, the Appellate Division held that where a public entity settles with an injured plaintiff for an at-work injury, the plaintiff’s independent contractor-employer is not entitled to a credit for workers compensation payments in a subsequent indemnity suit by the public entity. In Serpa v. New Jersey Transit, a construction worker was severely injured while working on a train station owned by New Jersey Transit — a publicly owned concern. He received some $900,000 in workers’ compensation payments from his employer, the general contractor for the job. New Jersey Transit paid the plaintiff $1.5 million to settle a personal injury suit, wherein the employer was named as a third-party defendant on an indemnity claim. The employer’s attorney agreed on the record that the $1.5 million was a reasonable settlement. However, after being apportioned 85% of the fault at trial on the indemnity issue, the employer sought a credit for its workers compensation payments. The trial court declined the requested relief and the Appellate Division affirmed. The court held that N.J.S.A. 59:9-2(e) precludes reimbursement to an employer from a public entity tortfeasor. Rather, the public entity or public employee receives a credit for the workers compensation payments, if a judgment is entered. Thus, in a settlement, a public entity cannot reasonably be expected to pay full value for a claim, knowing that if the case goes to trial, it will receive a credit against the damage verdict for the workers’ compensation payments. This was not accounted for by the employer in consenting to the reasonableness of the settlement.

Ultimately, the lesson taught by Serpa for carriers with insureds who work with public entities is that the public entity’s right to a credit for workers compensation payments made to injured employees must be taken into account before conceding as to whether a settlement proposal is reasonable. In this case, counsel for the employer should have argued that a settlement of $600,000 was appropriate.

Appellate Decision – Greg Lois

The Appellate Division affirmed the trial court in ‘Ferrigno v. Tyco.’ Greg Lois co-wrote the Appellate Briefs (with Michael S. Miller, Esq., also of Tompkins McGuire). Decision is here (PDF).

Citation: Ferrigno v. Tyco International, Ltd., App. Div. A-3328-06T3 (Decided Aug. 15, 2008). Download decision (PDF).

Dependency benefits in New Jersey

On July 16, 2004 Alfonso Estrada Moron (A.K.A. Eduardo Zambrano) was shot and killed in a hold-up while working for Quik Chek as an assistant manager.

There was no dispute that the decedent died “in the course of employment” and that his weekly wages were sufficient to give rise to a dependency rate of $227.98 per week.

The dispute arose as to whether or not the claimant’s mother, who lived in Peru was “solely dependent” on the decedent as she claimed. If she could prove dependency, she would received $227.98 per week until she died. The claimant testified that the decedent sent her $600 per month for her support, plus $600 for her birthday and $1,000 at Christmas.

The claimant was unable to provide any evidence that she had ever received any money of any kind from the decedent. It turns out that all the monies were transferred to her in cash through a “middleman” and no records could be produced. Regardless of the lack of proof, the Judge of Compensation gave full credence to the claims of the mother, and awarded her full dependency benefits.

The employer appealed, arguing that the claimant failed to prove she was the claimant’s mother. The Appellate Court found that the Judge of Compensation was correct in awarding lifetime benefits and that counsel for the employer waived the issue of parentage by failing to raise it at trial.

Lesson for adjusters: choose counsel wisely!

Case: Estrada v. Quik Chek, A-1927-07T2 (App. Div. decided July 3 2008)(Judges Lisa & Lihotz, unpublished as of blog date).