On behalf of our member companies that provide more than 1 million jobs in the state and make the New Jersey Business & Industry Association (NJBIA) the largest statewide business association in the country, I would like to express our concerns about the impact of Senate Bill 2145 sponsored by Senators Scutari and Senate President Sweeney. The effect of the bill would be to restrict advanced payments to injured workers called ‘bona fide’ tender or offers.
New Jersey employers have a strong interest in having workers’ compensation claims handled effectively and efficiently. Businesses have no reason to delay matters within the court system or to deny medical treatment when the injury arises from an incident attributable to the workplace. This simply ends up costing businesses in the long run.
Current Law
Current law provides that where a self-insured employer or insurance company provides a bona fide tender (monies to the injured worker for expected permanent disability generally within 26 weeks after the worker has received their last medical treatment or returned to work) neither the injured worker nor the employer or insurance company pays a counsel fee on the advanced payment.
There are statutory and case law restrictions on the definition of bona fide tender which requires a medical basis and a limited time to provide the advanced payment. These offers can be made for a number of reasons, but many times the worker is seeking an advancement to pay mortgages, avoid foreclosure or for other personal reasons which the employer or carrier provides.
A ‘bona fide’ offer will save the petitioner, and in most cases, also the employer, some petitioner attorney fee costs. A worker can still file a workers’ compensation claim and if represented by an attorney, the attorney is entitled to a reasonable counsel fee up to a statutory 20 percent of the benefits received by the petitioner above the bona fide tender. For example, if the employer or carrier paid a ‘bona fide’ offer, but the final settlement or court judgment is higher, the attorney would be entitled to a fee on the dollar amount of the award that is greater than the ‘bona fide’ offer.
Concerns about impact
This measure raises several concerns about the unintended impacts on the workers’ compensation system in New Jersey.
- This measure has the potential to reduce the amount of benefits injured workers receive. By making the entire award subject to attorney fees, an injured worker will pay greater counsel fees and receive a reduced amount of compensation.
- Payments to injured workers could be delayed. The measure has the potential to delay compensation since current law prohibits an award until 26 weeks after the injured worker returns to work or the last medical treatment. The law only permits voluntary payments by an employer or carrier during this period.
- Judges have the authority to ensure fairness in offers and fees. Statute and case law establish strong rules to ensure that offers are bona fide, and ensure they are not made at the eleventh hour to avoid attorney fees. Judges have discretion to shift the allocation between employee and employer fees based upon the facts of the case.
The use of ‘bona fide’ offers should not be discouraged. It is most important to be mindful that the bona fide offer is the only incentive in the system, for an employer or carrier to provide an injured worker with some up front permanent disability payments, rather than waiting until the end case resolution. To require counsel fees on a bona fide tender may reduce the use of such early payments to the injured worker.
New Jersey has long recognized that a system that encourages the prompt payment and treatment of workplace injuries, benefits both workers and employers. The New Jersey business community funds the entire workers’ compensation system. Businesses fund benefits by paying a premium to carriers, to administer claims on their behalf or simply self-fund their own benefits.
For these reasons, we respectfully ask that you vote NO on S-2145.
Thank you
