Josephine Lucciola appealed from an order denying her request to vacate a February 23, 2012 order establishing her social security offset. She contended that the order contained the wrong offset calculation and that she was being shorted tens of thousands of dollars by her employer, Home Depot. There was no dispute that Lucciola had been found totally and permanently disabled as a result of her eye injuries sustained in an accident in 2000. She received an award in 2006 of total and permanent disability at $308.55 per week based on an average weekly wage of $440.79 per week.
When the total award was entered, the parties considered the fact that Lucciola also received social security disability benefits. The order said that Lucciola would have to reimburse Home Depot for any workers’ compensation benefits she received “in excess of the statutory offset rate during the period of time Petitioner has received Social Security Disability benefits.” For reasons unknown, the Social Security offset rate was not calculated for several years. Home Depot withheld a portion of payments pending receipt of Social Security information and calculation of the offset.
Lucciola filed a motion in 2012 to enforce the terms of the order since her employer had been withholding part of her award. The Judge of Compensation then entered an order setting petitioner’s offset rate at $125.43. That meant that she would not receive $308.55 per week but would receive $125.43 per week. The order also referred to petitioner’s average current monthly earnings (ACE) at $855.20. It noted that her initial social security entitlement was $310. Petitioner sought a penalty for Home Depot’s delay in making payments.
Sometime thereafter petitioner challenged the offset calculations. She contended that there should be no offset at all, saying that the offset only applies to Second Injury Fund cases. On that point she was incorrect. She also argued that her prior lawyer had agreed to entry of the February 2012 order without her consent.
Following argument, the Judge of Compensation found that the $125.43 offset rate was correctly determined. Petitioner appealed pro se and argued among other things that the offset calculation was incorrect. The Appellate Division agreed with petitioner that the order setting the offset rate at $125.43 was incorrect. First it noted that 42 U.S.C.A. 424a(a) states: “If the total monthly benefits (i.e. the sum of the Social Security and workers’ compensation benefit) exceed eighty percent of the individual’s average current monthly earnings (ACE), then her Social Security benefit is to be reduced to the point where the combined monthly benefit does not exceed eighty percent of her average monthly earnings.” The court also cited to Wood v. Jackson TP., 383 N.J. Super. 250, 254 (App. Div. 2006).
Importantly, the Act exempts certain states like New Jersey that adopted laws that require a reduction in workers’ compensation benefits to account for the Social Security benefits. 42 U.S.C.A. 424a(d). New Jersey is such a state where employers can reduce in certain situations the workers’ compensation benefit rate under N.J.S.A. 34:15-95.5. Instead of the Social Security Administration taking the offset, New Jersey employers get the offset in certain circumstances pertaining to total and permanent disability. The Second Injury Fund need not be involved. The New Jersey statute says:
Such compensation benefits shall be reduced by an amount equal to the [Social Security disability benefit}, not to exceed the amount of the reduction established pursuant to 42 U.S.C. 424a. However, such reduction shall not apply when the combined [workers’ compensation benefit and Social Security disability benefit] is less than the total benefits to which the Federal reduction would apply, pursuant to 42 U.S.C. 424a.
The Court explained the main mistake that was made in this case. “As noted above, the weekly Social Security benefit may be subtracted from the weekly 80%-ACE only if the weekly 80%-ACE is greater than the initial workers’ compensation award. In this case, the weekly 80%-ACE, which is $157.88 (not $196.82, as respondent asserts), is less than the $308.55 initial workers’ compensation award. Therefore, the effective workers’ compensation award should be calculated by subtracting the weekly Social Security benefit ($71.58) from the initial award ($308.55). The result is a weekly benefit of $236.97.”
Another mistake that respondent’s counsel made in this case was arguing that the $855.20 figure was the 80% ACE. The actual 80% ACE was $684.16 (80% of $855.20 equals $684.16), which is why the Court said above that the 80% ACE was $157.88, not $196.82.
What this means is that Home Depot was underpaying petitioner $111.54 per week for approximately 10 years. The Appellate Division remanded the case to enter the correct offset rate and require respondent to pay petitioner the amount owed. The Court also remanded for the Judge of Compensation to determine whether petitioner is entitled to a 25% penalty.
This case shows how complex calculating offsets can be when a claimant gets total and permanent disability in workers’ compensation and Social Security Disability benefits. There is an offset worksheet available online. Employers may contact the undersigned for the form. The case may be found at Lucciola v. Home Depot, A-3055-14T2, (App. Div. July 22, 2016).