There are only a few appellate level cases dealing with counsel fees in the New Jersey Division of Workers’ Compensation. In Garzon v. Morris County Golf Club, A-1100-21 (App. Div. December 23, 2022), the Appellate Division embraced an approach that petitioner’s attorney’s counsel fee should be based on considerations of reasonableness and not automatically set at 20%.
The case dates back six years. Petitioner suffered injuries on December 15, 2016 to her neck, back and left hand tripping over a box in the kitchen where she prepared and served food. Temporary disability benefits commenced but stopped on December 29, 2016 when petitioner traveled to Colombia for a two-week vacation.
Petitioner filed a claim petition and a motion to compel payment of temporary disability benefits from December 29, 2016 to January 24, 2017. Petitioner also opposed respondent’s termination of the care provided by treating physician, Dr. Joseph Fodero. Petitioner relied on a letter written by the adjuster to Dr. Fodero, asking the doctor why he extended petitioner’s disability when petitioner had left the country on vacation. The adjuster asked the doctor to reconsider his opinion.
Dr. Fodero responded that the petitioner already had swelling before she left for vacation and the vacation “had no bearing on her care.” Dr. Fodero added that the adjuster was “more concerned with the fact that you would need to pay for the lost time than with her treatment and well being.” On February 15, 2017 the adjuster advised petitioner that Dr. Fodero was no longer authorized to treat, appointing a new treating facility.
During the trial on the first motion, petitioner testified that Dr. Fodero did not recommend physical therapy before she traveled to Colombia. She said that the doctor approved her travel plans and did not require treatment while she was away. She further stated that the Golf Club was closed from December 24, 2016 to March 4, 2017, so she could not have worked.
Following petitioner’s testimony, the Judge of Compensation registered his concerns that the adjuster was “playing doctor” and considered her actions “completely inappropriate.” The parties then resolved the issues surrounding the motion. The Golf Club agreed to pay temporary disability benefits from December 29, 2016 to January 24, 2017 in the amount of $1,880.84. Counsel fees on the motion were deferred until the conclusion of the case. An Order was entered confirming these terms on April 17, 2017.
A new issue developed in late August 2018. The treating physician imposed permanent work restrictions on August 23, 2018. The Golf Club then stopped temporary disability benefits. There is no comment in the decision whether the doctor found petitioner to be at maximal medical improvement. Another conference ensued, and respondent agreed to restore the temporary disability benefits. However, payments were not immediately restored, leading to a second motion. This motion was filed to enforce the April 17, 2017 Order. Temporary disability benefits were restored as of March 1, 2019. A June 3, 2019 Order was entered confirming that the Golf Club was then providing temporary disability benefits and reserving the issue of fees and penalties until the end of the case.
Counsel for petitioner submitted an affidavit in support of his counsel fee application, stating that he had expended 25 hours on this matter and that if the time was converted to an hourly rate, he would be entitled to $500 per hour. The Appellate Division commented that there was no invoice detailing work performed by counsel. Respondent’s counsel opposed the fee application.
On October 19, 2021, the Judge of Compensation entered an order approving the settlement for a percentage amounting to $164,577. Arguments were placed on the record in regard to petitioner’s fee application and the request for penalties.
The Judge of Compensation approved a counsel fee of $32,915, or 20% of the award and assessed this entirely against respondent. The Judge explained that “it has been a struggle for petitioner the entire time right up until the commencement of the trial to get the protection that she’s entitled to under the law under the Workers’ Compensation statute.”
With regard to the initial motion which petitioner filed for benefits while she was in Colombia, the Judge disagreed with the decision of the carrier to stop benefits and held that a penalty was warranted equal to 25% of the amount of the withheld benefits under N.J.S.A. 34:15-28.2. The Judge of Compensation also awarded a counsel fee on the motion for Medical and Temporary Disability Benefits of $78,000 based on $61,008 paid in temporary disability benefits and $329,172 in medical benefits paid in the case (approximately $390,000 paid before permanency benefits).
With regard to the 2019 motion to enforce, the Judge found that the respondent erred in stopping temporary disability benefits unilaterally without the Court’s permission in August 2018. A penalty was assessed in the amount of 25% of $5,564.17 or $1,391.04.
In regard to petitioner’s prior affidavit regarding the second termination of benefits in August 2018, the Judge noted that counsel expended 25 hours and awarded $12,500 in counsel fees.
Lastly, an additional penalty was assessed in the amount of $5,000 to be paid into the Second Injury Fund pursuant to N.J.S.A. 34:15-28.2(b). The Judge commented that this penalty was appropriate because of the “reckless conduct in the way the Club treated this petitioner and unilaterally worked to deny the petitioner the benefits the petitioner was entitled to under the statute.”
Respondent appealed all of the counsel fee awards and argued that the fee awards were excessive and unfair. The Appellate Division noted that there was no appeal of the penalties assessed against respondent.
The Appellate Division reversed all the fee awards. The Court focused on the language in N.J.S.A. 34:15-64 (a) which provides that a Judge of Compensation may “allow to the party in whose favor judgment is entered . . . a reasonable attorney fee, not exceeding 20% of the judgment.” The Court quoted Quereshi v. Cintas Corp., 413 N.J. Super. 492, 500 (App. Div. 2010) for the proposition that “an attorney for a petitioner can anticipate up to 20%, but may receive less, if the judge of compensation finds an award less than 20% is reasonable.”
The thrust of the Court’s holding is that fee awards must be reasonable. The Court looked to non-workers’ compensation cases for the principle that the Judge of Compensation must consider “the number of hours reasonably expended multiplied by a reasonable hourly rate.” The Court cited Quereshi: “When a petitioner’s attorney requests a substantial fee, albeit not in excess of the allowed 20%, the fee request must be supported by an affidavit of services that demonstrates the extent of the attorney’s efforts, including the time expended and ‘the extent of his expertise and experience. . . ..’” (citations omitted). The Court noted that Collas v. Raritan River Garage, Inc., 460 N.J. Super. 279 (App. Div. 2019) “cautioned against a reflexive application of a twenty-percent award without full analysis.”
The Appellate Division found that the Judge of Compensation “did exactly what we have cautioned against: he engaged in a ‘reflexive application’ of the twenty-percent maximum set forth in N.J.S.A. 34:15-64(a) and failed to make a ‘full analysis’ of petitioner’s fee submission.” The Court vacated the award of $32,915 in counsel fees with respect to the permanency award. The Court also vacated the award in counsel fees of $78,000 on the Motion. In regard to fees on a successful motion, the Court said as follow:
In N.J.S.A. 34:15-28.1, which is the applicable statute for an award of fees in connection with a motion regarding a delay or refusal to pay temporary disability benefits, the Legislature said nothing about awarding fees equal to twenty percent of the benefits obtained through the motion. Instead, the Legislature clearly provided for an award of ‘any reasonable legal fees incurred by the petitioner as a result of an in relation to such delays or refusals.’
The Court stressed that “the Club paid benefits immediately after the accident, agreed to limit what ultimately had to be tried, and interrupted benefits payments based only on petitioner’s trip to Colombia and on information that her treating physician had imposed permanent restrictions. Those circumstances do not bespeak a maximum award.”
This case is not a reported decision. It is therefore not binding on Judges of Compensation or on other appellate panels. It should not be read as requiring that in every case counsel for petitioner must provide an affidavit or invoices detailing hours expended. In actual practice, workers’ compensation attorneys who represent injured workers are much like personal injury attorneys in not being permitted to bill by the hour. Both practice areas are based on contingent fees. If petitioner obtains no recovery, there is no fee paid to his or her counsel. Sometimes the awards are very small and the counsel fee, if converted to an hourly rate, could be well under $100 per hour. It would make no sense in smaller cases to require counsel to submit evidence of hours expended.
Where this case is on sounder footing concerns substantial fees awarded on successful motions for medical and temporary disability benefits, particularly where motions are resolved by consent order with little or no testimony required. No one can predict the total amount of benefits that will be incurred after an Order for Medical and Temporary Disability Benefits is entered. The variables are whether there is surgery, whether the surgery succeeds or fails and requires a second surgery, whether there are pain management issues, hospitalizations, injections, expensive medications, and other such complicating factors.
The costs incurred after the entry of an Order for benefits may turn out to be a few thousand dollars or a few hundred thousand dollars, but if the costs are a few hundred thousand dollars, a 20% fee could be higher than the fee on the ultimate permanency award. That is exactly what happened in the Garzon case. The counsel fee on the motion was more than twice as high as the counsel fee for the award of permanency at the end of the case. In such a situation, the Court argued that there needs to be some analysis of the hours expended on the motion and on the whole case before defaulting to the 20% fee.
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