Firm News

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.

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