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The New Jersey Workers’ Comp Blog is published by John H. Geaney, Esq. and focuses on covering all aspects of Workers’ Compensation law in the state of New Jersey.
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“ARE WE SAFE?” AI and Workers’ Compensation in New Jersey

People are asking these days whether AI is going to seriously impact their future employment.  Experts claim many jobs will be eliminated by AI, and some experts predict that some new jobs will be created by artificial intelligence.  So what about AI’s impact on the role of workers’ compensation lawyers, adjusters, supervisors and Judges of Compensation?

Let’s consider this question with respect to the New Jersey workers’ compensation law.  We all understand that artificial intelligence is going to have some impact on how we process information efficiently, such as analysis of medical records, discovery and electronic investigation.  There will be AI tools that accomplish these tasks more efficiently.  These tools will help the workers’ compensation practice, and the cost of technology will certainly decline over time, as it always does.  In my view, AI is not going to replace the jobs of workers’ compensation practitioners, adjusters, supervisors or judges; nor will it dramatically change the way workers’ compensation claims are handled in New Jersey.

The analysis on the impact of AI must begin with the recognition that there are 50 very different workers’ compensation statutes.  As the Honorable Richard Rubenstein, Judge of Workers Compensation, once said at a presentation I attended:  “When you know one state workers’ compensation law, you know — one state workers’ compensation law.”  His point was that there are significant variations among the 50 state workers’ compensation laws.  There are no two state laws that are exactly the same.  You can know New Jersey workers’ compensation law very well, but that does not mean you will then understand Pennsylvania workers’ compensation law, because these two states are polar opposites.

Three main issues are involved in all 50 states:  temporary disability benefits, medical benefits and permanent disability benefits.  Many claims are denied, leading to protracted legal disputes;  there are often fact issues that require testimony, and adjusters, lawyers and judges work hard in every state to resolve issues through trial or negotiations or both.  These are not skills that lend themselves to artificial intelligence.

Could artificial intelligence be used to streamline some aspects of workers’ compensation and perhaps replace practitioners to some degree?  In theory yes, but I do not think it is likely in most states.  I would concede that AI may someday play a role in establishing the level of impairment in the 14 “impairment states” in the United States.  The good news is that New Jersey is not one of the 14 impairment states.  In an impairment state, permanency is evaluated by determining the diagnosis of the injured body member and then applying the AMA Guides to the Evaluation of Permanent Impairment to establish the percentage of impairment.  Here is what is missing in an impairment state: there is no need for proof of loss of function in work life or non-work life activities.  There are medical examinations of the injured body member performed in these 14 states, but these exams do not focus on loss of function at work or non-work life.  So it is conceivable that AI will be used to establish impairment in one of the 14 impairment states but that is still not likely because many cases are going to have legal or factual disputes.

What about the other 36 states which are not solely impairment based?  Will artificial intelligence have an impact in those states?  No, it is not likely at all because there is so much more to the evaluation of permanency in these states.  Most of these 36 states focus heavily on whether there is a lessening to a material degree of working ability or an impact on earnings.  Those are fact issues that a Judge of Compensation will need to resolve, not artificial intelligence.  Of these 36 states that focus in part on loss of function at work, only one state in the United States permits an employee to obtain an award of permanent partial disability by proving only loss of function in non-work activities.  And that state is, you guessed it, the State of New Jersey.

There are four other states that have some similarities to New Jersey but none of these four states will allow a permanency award to be based exclusively on proof that the accident substantially interferes with non-work activities.  New Jersey has this distinction, and this is a major reason why New Jersey is the most expensive workers’ compensation state, along with the fact that New Jersey has no medical fee schedule.

When it comes to permanency, in New Jersey it does not matter what the medical diagnosis is or what surgery took place.  The focus moves to one of two questions: does the impairment materially affect working capacity or, if not, does it substantially interfere with non-work activities?  This analysis comes from the 1984 New Jersey Supreme Court case of Perez v. Pantasote.  That is why in New Jersey, unlike an impairment state, a Judge of Compensation cannot say, “This man had a two-level fusion, and two-level fusions generally run 40% or $153,000.”  That sort of analysis would be reversible error.  The focus in New Jersey is not on the medical diagnosis but only on proof of loss of function, if any, at the time of settlement.  Some people recover well from surgery, some do not, but you need the Judge of Compensation to consider the proofs on loss of work or non-work function. 

In most New Jersey workers’ compensation cases, even an employee who receives a very significant permanent partial disability award may have returned fully to work doing the very same job. In most states that fact would negate any permanent partial disability award.  But not in New Jersey.  If there is no proof of loss of function in working ability, then we move to the impact on non-work life activities.  The petitioner may testify to the following: “I cannot golf any longer, or I cannot mow the lawn any longer, or I cannot do weight lifting, etc.”  These cases are very fact specific, and the Judge of Compensation, not some form of artificial intelligence, must ultimately decide whether the proofs are credible and whether the proofs meet the test of substantial interference with non-work life activities.  Lawyers on both sides advocate for their clients, and adjusters provide valuable information that the defense needs.  This is why New Jersey will always be the most AI-resistant state.

No one can predict the future: one can only assess the odds.  Any state can change its state law, although substantial overhauls are rare.  New Jersey went from being an impairment state to a disability state in 1979.  Impairment is not enough to receive a permanency award in New Jersey.  Proof of functional loss to meet the test of disability suddenly became the legal standard in 1979.  The odds that the New Jersey legislature would ever return New Jersey to an impairment-based state are extremely remote.  The odds that workers’ compensation systems in every state could become federalized (like many European countries) are also extremely remote.  In my opinion, artificial intelligence will not replace our jobs.  AI tools will help all of us get our jobs done, and yes, we will still be performing our jobs in the coming years.

Appellate Division Affirms Judge of Compensation’s Ruling of Conflict of Interest

There are few unpublished or published Appellate Division cases dealing with disqualification of defense counsel in workers compensation.  The unreported case of Arboleda v. Paychex, 2026 N.J. Super. Unpub. LEXIS 333, No. A-0085-25 (App. Div. February 25, 2026) is therefore worth reviewing by practitioners, employers and insurance professionals.

The case began with a claim petition filed by petitioner Arboleda naming Prop N Spoon as the employer.  Because Prop N Spoon had previously entered into a professional employer organization (PEO) agreement with Paychex for purposes of obtaining HR services and workers’ compensation coverage, Prop N Spoon tendered the claim petition to Paychex as well as American Zurich Insurance Company.

The law firm of Goldberg Segalla (hereinafter “the defense firm”) file an answer on October 31, 2024.  The answer listed the firm as defense counsel for Prop N Spoon and disputed claims regarding the nature, extent and causation of permanent partial disability.  Four days later, the defense firm filed an amended answer clarifying that the firm did not represent Prop N Spoon and denied coverage for this claim.  The coverage issue arose because the insurance carrier contended that Prop N Spoon “concealed Arboleda’s employment from Paychex.”  Defense counsel made clear in the amended answer that it was only answering on behalf of Paychex as insured by Zurich.

Prop N Spoon then retained new counsel to represent its interests and moved to disqualify the defense firm based on the initial answer which listed defense counsel as representing Prop N Spoon.

The defense counsel argued that Courts Online does not allow counsel to change the identity of the respondent.  “One technological issue is that when we file the answer on the court’s on-line system, there is no option to change or delete respondent, i.e. Prop N Spoon, in this claim.”   Defense counsel added that the “preliminary answer was to provide notice to the court and the parties of our firm’s involvement while Paychex/Zurich/ESIS completes their investigation.  This filing neither established nor intended to establish an attorney-client relationship with Prop N Spoon.”  Defense counsel further argued that it promptly filed an amended answer after communicating with Paychex and Zurich about relevant facts regarding employment and coverage.  Counsel stressed that it had never provided Prop N Spoon with legal advice.

The Judge of Compensation ruled on the motion finding that the defense firm was disqualified from the case based on a conflict of interest.  The Judge directed Zurich and Paychex to retain separate counsel.  Defense counsel objected to the disqualification order and objected that the Judge of Compensation made the ruling on the papers without oral argument.  Thereafter oral argument took place. The Judge of Compensation specifically cited to N.J.A.C. 12:235-3.5(c) for the proposition that judges have authority to decide such motions on the papers.  The Judge of Compensation also took issue with the limitations of Courts Online, stating that manual answers may be filed in the Division of Workers’ Compensation.

An appeal followed, and the Appellate Division held as follows:

  1. Certain motions such as motions to dismiss for lack of prosecution (N.J.S.A. 34:15-54) and motions to suppress defenses must be listed for hearings with oral argument permitted.  All other motions can be disposed of by the Judge of Compensation on the papers. 
  2. The Appellate Division relied on RPC 1.9(a) which provides:  “A lawyer who has represented a client in a matter shall not thereafter represent another client in the same . . . matter in which that client’s interest are materially adverse to the interests of the former client unless the former client gives informed consent confirmed in writing.”

The Appellate Division rejected the argument that limitations with Courts Online sometimes result in the need for amended answers such as the one in this case. The Court said,  “Moreover, the record lacks evidence that it is normal for workers’ compensation matters to be initiated in the name of one party only to be later corrected by representing an entirely separate and adverse party.  Even if it were so, we would not condone it given the clear and plain wording of RPC 1.9(a).”

What Kinds of Questions Should New Jersey Permanency Evaluators Ask Petitioners?

An attorney in New Jersey recently asked me a question I have not been asked before, namely whether some permanency evaluators ask too many questions of examinees.  This attorney commented that some of the experts seem to be engaging in discovery with all their questions.  This got me thinking about what permanency evaluators are supposed to be focusing on during examinations.  What kinds of questions are crucial to ask under New Jersey law during a permanency exam?  

In my opinion, a lawyer cannot practice workers’ compensation law very well, and a doctor cannot perform permanency evaluations well, without reading and comprehending the case of Perez v. Pantasote, 95 N.J. 105 (1984).  The Supreme Court in its 1984 opinion explained what the legislature intended after the massive overhaul of the New Jersey Workers’ Compensation Act in 1979.  The law dramatically changed proofs on disability.  This is what the Supreme Court wrote: “First, there has to be demonstrable objective medical evidence of a restriction of a function of the body or an organ. Second, there had to be a reduction to a material degree of an employee’s working ability.”  Then the Court added that even if there is no reduction in working ability, an award for permanency still can be made if “…the injury substantially interferes with other, non work-related aspects of petitioner’s life.”   

What this means is that permanency awards are not about whether someone has a herniated disc after the accident or underwent surgery or had injections.  That type of negotiation ignores what the Supreme Court said.  The law passed in 1979, as interpreted the Supreme Court, focused entirely on these criteria: 1) objective medical evidence; 2) substantial impact on work, or 3) “substantial interference” with non-work activities at the time of settlement.  You can have a herniated disc from an accident and have no problems at work or at home.  If that is the case, there would be no award of permanency.

In an impairment state, (which New Jersey is not), the job of a permanency evaluator is much simpler. The focus is just on the injury and diagnosis (herniated disc, medial meniscal tear, etc.) and on an evaluation of the injured body part. There is no need in an impairment state to ask about impact on work or non-work activities. That doesn’t matter.  Rather, the permanency evaluator generally refers to the AMA Guidelines for Impairment to establish a percentage for a permanency award. New Jersey does not use AMA Guidelines because it is a disability state.  Here is how to think about the difference between impairment and disability states.  Impairment is to disability as high school is to college.  It’s harder to get to the next level.  

Permanency evaluators need to ask questions of the examinee that address the requirements discussed in the Perez decision.  Here are some possible questions:  Have you been able to return to work in your former job or in a new job? Are you able to work a full day or do overtime now? Were you active in sports before the accident?  Are you active now in sports or in going to the gym? Have you had to eliminate or curtail certain activities since the accident? What has been the impact of this accident on your non-work life? In addition, the permanency evaluator in every state must ask questions about past medical history of injuries or accidents to the same body part, including prior or subsequent car accidents, slip and falls, prior or subsequent workers’ compensation injuries, etc.

More questions are better than fewer questions. How does a permanency evaluator do this? There are some very strong medical groups on the respondent side that get this information by asking the examinees to fill out forms in the waiting room.  There is one medical group located in central Jersey working for petitioners’ counsel that gets the information in a different way.  They have a form that has two columns at the top, one for “difficulty” and the other for “no difficulty.”  Scores of major life functions are listed on the left side, and the examinee checks off difficulty or no difficulty in performing life functions, like sitting, lifting, cleaning, etc.  That information is then included in the permanency report.  The important issue is not how many questions are on the intake form but whether the evaluation is addressing the legal test of disability in New Jersey.

Judges are impressed when they read a permanency report that complies with the Supreme Court decision in Perez, especially since some permanency evaluators just regurgitate the medical records sent to them, conduct a physical examination and then provide an estimate without even asking about the impact of the accident on work life or non-work activities.  This is evaluating paper,  not people.  Some permanency evaluators prepare reports without asking or knowing if the employee has a job at the time of the evaluation!

Workers’ compensation has changed immensely since 1979 when the statute was overhauled.  The most significant fact today is that workers’ compensation in New Jersey has become extremely expensive. In the first two decades after the 1979 amendments, rates remained relatively inexpensive. Then rates skyrocketed in the past 10 years.  In 2026 a person with high wages who is out a year will receive over $62,000 in tax free temporary disability benefits.  An award of 50% permanent partial disability will cost a private or public employer nearly a quarter of a million dollars.  Most of those employees are back to work at the time they receive the award.  Medical costs are higher in New Jersey than in any other state.  These trends underscore why it is so important that permanency evaluators pay close attention to how the Supreme Court defined disability in New Jersey over 40 years ago.

Recent Legislation Impacting New Jersey Workers’ Compensation

Two bills have already been signed this year by Governor Phil Murphy, which will have some impact on workers’ compensation. The first, S-3772, deals with board and lodging provided by employers.  Under N.J.S.A. 34:15-37, the law provided until 2026 that board and lodging “when furnished by the employer as part of the wages shall be included and valued at $25.00 per week.”   This legislation was passed in 1945, but the $25 amount has not been amended in 80 years.

Under the new amendment to N.J.S.A. 34:15-37 signed by Governor Murphy, board and lodging when provided by employers as part of wages shall be at market value at the time of injury.  One exception is noted in the amendment. “If, however, the claimant continues to receive board or lodging during a period of total temporary disability, (sic), the value of the board or lodging shall not be included in the calculation of the workers’ compensation rate for purposes of temporary total disability.”

Cases are rare where an employer provides board and lodging as part of wages or a contract of hire. When this does occur, the use of market value rather than $25 per week will amount to a significant increase in the average weekly wage of the employee.  This is the intention behind the legislation.

Another bill relevant to workers’ compensation practitioners was signed by Governor Murphy on January 14, 2026, namely S-2373.  This legislation provides employment protections for paid first responders who have been diagnosed with post-traumatic stress disorder (PTSD).  This bill is not workers’ compensation legislation because Judges of Compensation do not have the power to order reinstatement of employees to work.  Where workers’ compensation law comes into play, however, is the requirement that the diagnosis of PTSD be based on work exposure or work injury.  The law provides:

An employer shall not discharge, harass, or otherwise discriminate or retaliate or threaten to discharge, harass, or otherwise discriminate or retaliate against an employee with respect to the compensation, terms, conditions, duties or privileges of employment on the basis that the employee took or requested any leave related to a qualifying diagnosis of post-traumatic stress disorder.

The law further provides that following a period of leave for PTSD, “an employer shall reinstate an employee whose fitness to return to work has been documented by a mental health professional to the position and duties held by the employee prior to the leave.”

How does the employee satisfy the requirement that the PTSD condition arose from work?  The law permits two methods.  First, the diagnosis may be “memorialized in an order of a judge of the Division of Workers’ Compensation concerning the employer and employee and the traumatic injury or exposure which makes up the basis for the claim, upon motion or after a plenary trial or by stipulation of the employer or employee.”

The second way, and probably more common way, will occur after “an examination of the employee by a mental health professional who reports the diagnosis of post-traumatic stress disorder…”  The mental health practitioner must give an opinion that this diagnosis arose from the employee witnessing or experiencing a traumatic event arising from work.  Alternatively, the mental health practitioner may determine that the diagnosis is “due to vicarious trauma experienced by the employee as a result of the performance of regular or assigned duties of the employee.”  The term “vicarious trauma” is not defined in the legislation but is commonly used to mean a situation where the psychological impact stems from learning or hearing about traumatic experiences of others.

This new law does not abrogate the right of a public employer to discharge any employee who it determines to be unfit for duty. However, when a mental health practitioner opines that a first responder can return to work following a leave related to PTSD, this law provides the first responder with job protection.

Appellate Division Rules That Police Officer in Extra Duty Job Was Not a Special Employee

Some cases have more twists and turns than a roller coaster.  The case of Dutcher v. Stathis & Leonardis, LLC, No. A-3135-23 (App. Div. October 23, 2025) is one such case, dating back to an injury on November 3, 2014 and including two Appellate Division decisions eight years apart centered on whether there was special or dual employment.

The plaintiff, John Dutcher, was a full-time police officer for the Woodbridge Police Department in 2014.  Black Rock Enterprises had a contract with Middlesex County for milling services on county roads, including certain roads in Woodbridge Township.  Black Rock contacted the Township of Woodbridge Police Department for permission to hire police officers for traffic control while its workers performed a road milling project in town.   The Township assigned two police officers to this extra duty job on November 3, 2014.   The Township got paid by Black Rock for the work done by the extra-duty police officers, including Officer Dutcher. The officers got paid by the Township.

On the date of the accident, Officer Dutcher and a colleague were directing traffic at a specific intersection of Woodbridge Center Drive and Plaza Drive.  Dutcher was working traffic duty when a Black Rock employee operating a construction vehicle struck him from behind, causing serious injuries that eventually led Officer Dutcher to retire from employment.  Dutcher received workers’ compensation benefits.  Officer Dutcher also attempted to sue Black Rock for negligence.   

Black Rock filed a motion for summary judgment to dismiss the officer’s civil lawsuit.  Black Rock argued that Dutcher was a special employee of the company and therefore could not sue.  The trial judge ruled on the motion for summary judgement in favor of Black Rock and barred the civil lawsuit. Dutcher appealed.  The Appellate Division affirmed the decision of the trial judge in Dutcher v. Pedro Pedeiro and Black Rock Enterprises, LLC, No. A-1088-16T3 (App. Div. Nov. 22, 2017).

The next twist in the case occurred in 2020 when Officer Dutcher sued the law firm that represented him in the civil action.  He argued that the law firm was negligent in representing him by failing to oppose Black Rock’s summary judgment motion.  He further argued that he was not a special employee of Black Rock and that the motion to dismiss should have been vigorously opposed.

Testimony of various witnesses occurred in the legal malpractice action against the law firm.  There was testimony from Officer Dutcher and another colleague that the officers directed all the traffic at the scene of the injury independent of Black Rock.  They testified that Black Rock had nothing to do with the traffic control and their job on the scene.  The defendant law firm filed a motion for summary judgment, and the trial judge ruled in favor of the law firm.  The judge held that Dutcher was a “dual employee” of Black Rock and the Township.  Therefore, there was no legal malpractice committed by his law firm.  The trial judge referenced a similar extra duty case in Domanoski v. Borough of Fanwood, 237 N.J. Super. 452, 456 (App. Div. 1989) where dual employment had been found.

Dutcher again appealed to the Appellate Division.  An initial argument on appeal was whether the Appellate Division was bound by the decision of the prior Appellate Division decision in 2017. The Court said that it was not bound because there was substantial testimony of witnesses in the legal malpractice case after the 2017 decision which had not been available at the time of the 2017 decision on Black Rock’s motion for summary judgment.  The Court stated that the prior Appellate panel’s decision in 2017 had been limited to “the undisputed facts on the motion record, deemed admitted by virtue of [the party’s] non-response.”  The Appellate Division in the October 23, 2025 decision focused more heavily on the clear separation of duties between Officer Dutcher and his fellow officer and the work duties of the Black Rock employees.  The Court said that Officer Dutcher’s duties at Black Rock on the day of the assignment were traffic control.  Black Rock’s duties were limited to milling the roadway.  “The nature of Black Rock’s work is heavy highway road construction – not police functions.” 

The Court added that Black Rock did not control the work plaintiff was doing at the time of his injury. “Plaintiff was trained in traffic control and direction and was utilizing his training to control traffic for the public’s safety while Black Rock did its work. Black Rock could not hire or fire plaintiff directly. Black Rock paid the Township, not plaintiff, and Woodbridge Police Department paid the extra duty officers even if Black Rock failed to pay its invoice.  Thus, under the totality of the circumstances presented here, plaintiff was not a special employee of Black Rock.”  The result of this decision was to reinstate plaintiff’s legal malpractice case, meaning Officer Dutcher is not barred from suing the law firm that represented him.

Can one reconcile the analysis of employment in the 2017 decision with the analysis of employment in the 2025 decision?  To some degree, yes.  As noted above, the October 23, 2025 appellate decision referenced a great deal of testimony that was not available to the appellate panel in 2017.  But if one looks carefully at the two Appellate Division decisions in this case, separated by eight years, there is a notable difference.  Each panel focused on a different legal test. The 2017 appellate panel focused more on the “whose interests are served” test.  That test considers which entity or entities benefit from the work being done.  Did both Black Rock employees and the public benefit from the work Officer Dutcher and his colleague performed?  The 2017 panel said yes, while the 2025 appellate panel did not address that test at all. It focused more on the complete separation of control and duties.  Officer Dutcher and his colleague operated independently with respect to traffic safety, and Black Rock employees operated independently with respect to road work. The two panels came at the legal problem from a different angle.

The Domanoski case cited above focused mostly on the “whose interests are served” test in finding dual employment.  The officer in that case was injured performing security work in a supermarket on extra duty approved by the Borough.  The court ruled that the officer was a dual employee of the supermarket and the township when he was injured because the injured worker was furthering the interests of both the public generally and the store itself. The trial judge in the legal malpractice case in Dutcher also referenced the “whose interests are served” test in granting summary judgment to the law firm. 

On appeal, the 2025 appellate panel in Dutcher did not mention the “whose interests are served” test outlined in Domanoski. It addressed the legal test outlined in an older case,  Blessing v. T. Shriver & Co., 94 N.J. Super. 426 (App. Div. 1967), which employed a five factor special employee matrix:

  1. The employee has made a contract of hire, express or implied, with the special employer;
  2. The work being done by the employee is essentially that of the special employer;
  3. The special employer has the right to control the details of the work;
  4. The special employer pays the employee’s wages; and
  5. The special employer has the power to hire, discharge or recall the employee.

Sometimes a court can use both of these tests and arrive at the same result.  Consider the unreported Appellate Division case of Peterson v. Borough of Alpine and Bell Atlantic, No. A-5205-99T1, (App. Div. June 20, 2001). In that case the petitioner, a police officer, was injured directing traffic at the request of Bell Atlantic.  The Bell Atlantic linemen were stringing lines along a sinuous Bergen County road.  A witness for Bell Atlantic admitted that the company had the option of using a flagman for the job, but he stated that a flagman would not command as much respect as a uniformed police officer in directing traffic safely.  So, Bell Atlantic requested that the township provide a police officer, who was struck by a vehicle while directing traffic.  The Court found in favor of dual employment, holding that the seriously injured police officer was both an employee of the Borough and Bell Atlantic.  The Appellate Division in Peterson referred to both legal tests in Blessing and Domanoski in finding dual employment and assessed the workers’ compensation costs equally on Bell Atlantic and the Borough.

In this practitioner’s opinion, using the “whose interests are being served” test will likely lead to more joint employment findings than the older, five-part special employment test set forth in Blessing. Each of these two legal tests has its own proponents and critics. In venturing into the legal quagmire of special, dual and joint employment, practitioners and employers must understand that New Jersey courts are currently using different legal analyses to resolve employment issues. One is an older, more traditional approach, seen more in civil actions (Blessing), and the other is a more modern, pragmatic test seen more in workers’ compensation cases (whose interests are being served).  The Supreme Court will eventually provide much needed guidance.  

Public Sector Disability Pensions and Their Relationship to New Jersey Workers’ Comp

Many injured public employees in New Jersey retire on disability pensions (ordinary or accidental).  An accidental disability pension must be for a work injury.  An ordinary disability pension can be for non-work health issues, or work injuries or both.  This blog will focus on some of the key provisions which employers, third party administrators and practitioners need to know about ordinary and accidental disability pensions in the context of workers’ compensation cases.

Ordinary Disability Pensions for PFRS

To obtain an ordinary disability pension (hereinafter ODP) for a member of the Police and Firefighter Retirement System (hereinafter PFRS), one must be a member in service at the time the application is filed with the New Jersey Division of Pensions and Benefits (hereinafter NJDPB).  The applicant must have four or more years of service in the pension system and must prove he or she is totally and permanently disabled. That means he or she cannot perform the normal assigned job duties or any other position that the employer may assign.

The benefit is equal to 40% of the Final Compensation or 1.5% of the Final Compensation for each year of service credit (whichever is higher).  Final Compensation will depend on which Tier the employee occupies.  Tier 1 is for those enrolled on or before May 21, 2010; Tier 2 is for those enrolled after May 21, 2010 and before January 28, 2011; and Tier 3 members are enrolled after January 28, 2011.

Ordinary disability retirement benefits are subject to federal tax but not NJ State income tax until age 65.

Ordinary Disability Pensions for PERS and TPAF

For members of the Public Employees Retirement System (hereinafter PERS) and Teachers’ Pension and Annuity Fund (hereinafter TPAF), ordinary disability pensions are only available for those employees enrolled on or before May 21, 2010.

Unlike the PFRS, 10 years or more of New Jersey service credit are required for members of PERS and TPAF.  The annual benefit is equal to 43.6 percent of Final Average Salary or 1.64% of Final Average Salary for each year of service credit, whichever provides the higher benefit.

Workers’ Compensation Offsets

It is very important to understand that under workers’ compensation law in New Jersey, employers may receive an offset against ordinary disability pensions.  I will discuss the change in the law eliminating offsets for accidental disability pensions later in this article.

New Jersey employers may be entitled to an offset in a workers’ compensation case for an ODP if part of the reason for the employee’s ODP is a workers’ compensation injury.  Many ODP awards are filed by employees who have non-work-related conditions together with work-related conditions.  The offset, however, only applies to the work-related condition.  So, if the Division of Pensions and Benefits awards someone an ordinary disability for a work-related back surgery along with non-work-related respiratory and heart problems, only the back surgery will be considered for purposes of an offset.

Another important point to emphasize is that there is never an offset for monies that the employee puts into his or her retirement pension.  Those monies are called the annuity portion.  Any available offset is limited to the pension portion of the ordinary disability, which is usually most of the benefit.

Let’s consider two simple examples of offsets, and in both examples we will assume that the ODP was granted entirely for the workers’ compensation claim. The first example is from the very important Rosales case.

The permanency rate was $329.15 per week
The ODP was $673.95 per month
The annuity portion was $79.38 per month
The pension portion was $594.57 per month.

First, the $79.38 amount must be deducted as it represents the annuity portion, which cannot be offset. All that you need to do is convert the monthly pension figure of $594.57 to a weekly figure (multiply by 12 and then divide by 52 or 52.14 which is used by the Second Injury Fund).  That leads to a pension offset figure of $137.20 per week if you divide by 52. 

Comp rate                              $329.19 per week
Offset amount                        $137.20 per week
Amount due petitioner            $191.99 per week

So in the Rosales case, the workers’ compensation award was reduced by $137.20 per week as an offset against the ODP, and the public employer paid the award at a reduced rate of $191.99 per week.

Now let’s consider another case where we have a high-wage employee who receives a workers’ compensation award of 60% permanent partial disability or 360 weeks at $927 per week or $333,730. 

In this case, assume the ODP is $43,000 per year. The annuity portion is $5,000 per year, so that must be subtracted, leaving a potential offset of $38,000 per year.

To compute the offset, you convert the $38,000 per year figure into a weekly rate which comes to $730.76 per week. 

Comp rate                              $927.00 per week
Offset amount                        $730.76 per week
Amount due petitioner            $197.00 per week

You can see in this second example that offsets can make a huge difference in exposure for the public sector employer.  The public employer in the second example is saving about 80% of the award on account of the ODP.  Failing to consider the offset for the ordinary disability pension would cost the public employer over $265,000!

These examples are simple ones because we assumed that the ODP was entirely due to a workers’ compensation injury.  But often that is not the case.  Many public employees get an ODP for non-work-related conditions together with work-related conditions.  The parties must first attempt to gather medical records that may have been submitted to the Division of Pensions and Benefits. Respondent will need the petitioner’s application to the Division of Pensions and Benefits. Then the parties must attempt to negotiate what percentage of the ODP is related to just the work accident.  If only one third of the ODP is related to the work accident, then the public employer is only going to be able to consider one third of the ODP for purposes of potential offset.  When the parties cannot agree, the Judge of Compensation will make recommendations or may require testimony to decide what portion of the ODP is work related.

Accidental Disability Pensions for PFRS

An accidental disability pension (hereinafter ADP) is very different from an ODP.  First of all, there is no apportionment between non-work conditions and work conditions.  The accidental disability pension must be from a work injury, namely a traumatic event as defined by case law and regulations.  Benefits are higher than they are for an ODP.  There is no service requirement.  One could be injured seriously in the first month of employment and obtain an accidental disability pension if the proofs suffice.

As in an ODP, the public employee must prove that he or she is totally and permanent disabled from the work accident to obtain an ADP.  For PFRS, the benefit is equal to two thirds of the annual compensation on which pension contributions were being made at the time of retirement or at the date of the traumatic event, whichever provides the higher benefit.

Accidental disability pensions are not only more generous in payments but also treated better by the IRS.  Unlike an ODP, the member who receives an ADP is exempt from paying federal tax on the pension amount.  No state income tax is due until age 65.

Until 2022, public employers were settling workers’ compensation cases where the employee received an ADP with medical monitoring orders.  What that meant is the public employer was not paying any permanent partial disability benefits but only causally related medical benefits.  That practice, which continued for many years, ended more than three years ago. New Jersey Administrative Code 12:235-3.19 became effective March 7, 2022.  This regulation eliminated the practice of settling a workers’ compensation case involving an ADP by a medical monitoring order, with one exception discussed below. The regulation provides as follows:

  1. Both the workers’ compensation petitioner and the workers’ compensation respondent shall immediately notify the Division of Pensions and Benefits of the filing of the claim petition with the Division of Workers’ Compensation.

  2. Except at (a)3 below, the approval by a Judge of Compensation of a continuing medical monitoring settlement shall be prohibited and the worker’s compensation petition shall result in one of the following outcomes:

  1. The award by a Judge of Compensation of a monetary judgment after trial;

  2. The approval by a Judge of Compensation of a settlement agreement reached pursuant to N.J.S.A. 34:15-20 (Section 20 settlement)

  3. The approval by a Judge of Compensation of a settlement agreement reached pursuant to N.J.S.A. 34:15-22 (Section 22 settlement)

  4. The dismissal by a Judge of Compensation of petitioner’s claim after trial for failure of petitioner to meet their burden; or

  5. The dismissal by a Judge of Compensation of petitioner’s claim petition pursuant to N.J.S.A. 34:15-54 for lack of prosecution.

These changes were designed to require the public employer to pay whatever workers’ compensation awards are entered, thereby avoiding situations created by medical monitoring orders where the Division of Pensions and Benefits would keep paying the public employee without receiving an offset. 

The regulation permits one exception under (a)3.  “Where the workers’ compensation claim is for an occupational disease (for example, asbestosis), under appropriate circumstances based on the facts presented, and when not used in a way to avoid a pension offset, a Judge of Compensation may approve a continuing medical monitoring settlement…” In this practitioner’s experience, the NJDPB seldom awards accidental disability pensions in occupational cases. 

Despite the fact that these changes were enacted in 2022, the statute itself still provides that “No former employee who has been retired on pension by reason of injury or disability shall be entitled under this section to compensation for such injury or disability; provided, however, that such employee, despite retirement, shall, nevertheless, be entitled to the medical, surgical and other treatment and hospital services as set forth in RS. 34:15-15.”  This language, which remains unchanged, established the rationale for medical monitoring awards.

So where are we today?  The new regulation that became effective in March 2022 remains in conflict with N.J.S.A. 34:15-43 since the statute provides that public employers do not have an obligation to pay a permanency award when the public employee receives an accidental disability pension.  It is unclear why this conflict was not resolved in 2022.

It is also important to understand that the policy in New Jersey militates against double recovery to the public employee who receives workers’ compensation benefits and an accidental disability pension. After all, taxpayers fund public sector workers’ compensation claims and taxpayers also fund state pensions, so it makes sense that one cannot receive both.  Under procedures since 2022, when an award is entered in the Division of Workers’ Compensation for someone who has received an ADP, the workers’ compensation payment is not really going to the public employee.  Rather the payment serves to reimburse the Division of Pensions and Benefits.  How is this accomplished?  The NJDPB simply takes a dollar for dollar offset for every dollar that the employee receives in workers’ compensation. There is generally no financial benefit to the public employee in pursuing a workers’ compensation case when he or she receives an accidental disability pension. One exception, however, occurs when there is a gap period between the end of temporary disability benefits and the start date of the ADP for which permanent partial disability would be paid without offset.

Accidental Disability Pensions for TPAF and PERS

The accidental disability retirement benefit for TPAF and PERS is actually higher than the two thirds benefit under PFRS.  For TPAF and PERS, the amount is equal to 72.7% of the base salary at the time of the traumatic event. As with PFRS, the application must be filed within five years of the date of the traumatic event.  Most of the other provisions in accidental disability pensions for PFRS apply to PERS and TPAF.

If one applies for an ADP and is found by the Board of Trustees to be permanently and totally disabled, but not because of a traumatic event or the traumatic event was not the primary cause of disability, then an ODP will be granted but only for those who have 10 years of New Jersey service in the retirement system.

The definition of an accident that is a direct result of a traumatic event has been addressed by courts:

  • The event must be identifiable as to time and place;
  • The event must be undesigned and unexpected;
  • The event must be caused by a circumstance external to the member (not the result of pre-existing disease that is aggravated or accelerated by the work);
  • The event must occur during and as a result of the member’s regular or assigned duties;
  • The event cannot be the result of willful negligence of the public employee;
  • The event must result in the member’s permanent and total incapacitation from performing his or her usual or any other duty.

There are other kinds of disability pensions which this article does not focus on.  Readers can contact the undersigned for further information.  There are provisions in all three pension systems for Accidental Disability for World Trade Center Responders, Involuntary Disability Retirement (where the employer applies on behalf of the recipient), and Special Disability Retirement.  There are also rules for possible adjustments in benefits due to employment of the member after retirement.

Appellate Division Affirms Finding of Joint Employment of Police Officer

Joint employment for workers’ compensation purposes is quite common in New Jersey.  Examples are employees who work for staffing agencies and professional employer organizations.  Another fairly common example is a police officer who does an extra-duty job assignment for a private company as approved by his or her employer.  The recent case of Vola v. City of Northfield, No. A-1627-23 ( App. Div. May 14, 2025) provides insight into this type of joint employment.

Officer Vola was approved by his department to perform an extra traffic duty assignment in response to a request made to the police department by Asplundh Tree Experts.  Vola reported to the police station on March 31, 2021, checked out a police car, and then proceeded to drive to the intersection at Burton Avenue and Jack Sloane Court to meet the Asplundh trucks and other police detail cars.  When Vola was making a k-turn to follow the Asplundh trucks, his vehicle was struck by another car, causing serious injuries to Officer Vola.

Vola brought a workers’ compensation claim against both the City and Asplundh. For its part, Asplundh denied the claim petition and moved to dismiss it.  The Judge of Compensation ruled against Asplundh.  First, the Judge of Compensation pointed to the municipal code for traffic control services to support a finding of joint employment. The code required payment by Asplundh to the police department for traffic control services. The code also specified that the private company requesting extra traffic control services must provide indemnification to the City, as well as a hold harmless provision. 

Asplundh also argued that the officer’s injury was barred by the premises rule because he was reporting to work and had technically not begun the traffic duty.  The Judge of Compensation disagreed.  He said, “This is not the usual coming or going scenario for which pre-employment travel might be deemed beyond the scope of a respondent’s liability. Rather, under the terms and design of this extra-duty assignment, one or both [Northfield and Asplundh] was obligated for injuries incurred by [Vola] from the moment he pulled out of the police headquarters with his marked patrol vehicle en route to the first or any of the tree-trimming assignments that day.”

The Judge of Compensation ruled that Asplundh was a joint employer at the time of Officer Vola’s injury, and both the City and Asplundh were jointly responsible for workers’ compensation benefits.  Asplundh appealed.  The Appellate Division first tackled the premises rule issue.  It said that the special mission exception to the premises rule applies when an employee is “required to be away from the conventional place of employment, if actually engaged in the direct performance of employment duties.”  The Court also relied on the case of Keim v. Above All Termite & Pest Control to support its reasoning, as petitioner was using an authorized vehicle at the time of his injury.  The Keim decision focused on the rule that an injury that occurs while using an authorized vehicle for business purposes constitutes an additional exception to the premises rule.

Next the Court addressed the principal issue of joint employment.  The Court found that the facts in this case were controlled by the 1989 decision in Domanoski v. Borough of Fanwood.  That case addressed the “whose interests are served” principle to establish joint employment for a police officer injured while performing an extra-duty assignment at an A&P store. The Appellate Division said, “Similar to Domanoski, Vola served the public interest of Northfield to ensure the safe and expeditious movement of traffic and the private interest of protecting Asplundh employees.”  Accordingly, the Appellate Division affirmed the decision of the Judge of Compensation. 

This case underscores that the determination of joint employment focuses on whether an injured employee in performing work is serving the interest of two or more employers.  Direct payment to the injured worker is not dispositive; nor is direct hiring.  Here Officer Vola was not getting paid directly by Asplundh and was not hired directly by Asplundh.  What mattered for purposes of a finding of joint employment was that he was engaged to provide for the safety of Asplundh employees while also discharging his duties to the police department and the residents of the City. 

The post Appellate Division Affirms Finding of Joint Employment of Police Officer appeared first on NJ Workers' Comp Blog.

Appellate Division Affirms Dismissal of Case After Bifurcated Trial

The small details matter.  A petitioner will always have problems at trial when there is very little congruence between the allegations contained on the claim petition and the statements which petitioner gave to the employer and treating doctors at the time of the accident. That is the message in the case of Makins v. Palace Rehab & Care Center and Premier Cadbury, LLC, A-2263-23, A-2276-23 (App. Div. April 24, 2025).

Petitioner was a certified nursing assistant (CNA) who provided essential care to patients. She injured her back in 2013 while working for Palace Rehab with pain and numbness into her right leg. She received an award in that case and reopened that award on June 12, 2018.

On June 19, 2018, petitioner, who was then working for Premier Cadbury, filed two additional claim petitions.  The first claim petition alleged an injury on February 11, 2018, which aggravated her low back with pain into her legs while “picking up a resident.”  In the second claim petition, she alleged that she injured her back, left knee and left hip picking up a patient on June 8, 2018. Cadbury denied both claims, and the case proceeded to trial. The parties agreed to a bifurcated trial.  That meant that the case would be tried on the issue of the occurrence of an accident and causal relationship without medical experts necessarily testifying. 

During the first date of trial, petitioner said she did not remember whom she reported the first incident to but later she said she told her supervisor, whose name she did not recall.  She said she was lifting a patient when something happened to her low back.  She admitted to finishing work the day of the alleged injury on February 11, 2018.  She worked the next two days.  She then went to a hospital on February 14, 2018, and stayed home two days, returning to work on light duty before resuming full duty.

The petitioner’s version of the second alleged incident on June 8, 2018 was similar.  She said she was lifting a patient, putting her on a toilet, when she felt sharp pain in her back.  She also said that she bent down to pick up a box of tissues that the patient dropped but then she fell to the floor, striking her back and left hips.  She said she told a nurse who entered the room what had occurred. She recalled signing an incident report but claimed she had not read the incident report because she was in too much pain.  She said Susan, who completed the incident report, told her to see her family doctor.  She was referred to an orthopedist, who gave her an injection.  She was then referred to Dr. Kepler, a surgeon.  She also had two visits with Concentra, which were arranged through her employer.

Cadbury’s counsel focused heavily during trial on numerous inconsistencies in this case:

1)  The incident report of February 16, 2018, which was signed by a supervisor but not by petitioner, contained a handwritten response to the question about how the incident happened: it read “overall strain on back – did not occur with just [one] resident.” Defense counsel asked petitioner to comment on this description.  The judge observed that during her response,  “petitioner’s head went down, she would not make eye contact with respondent attorney, she did not speak for a period that was uncomfortable, shrugging with [a] lack of expression.”  She then said she did not recall making that statement.

2)  Regarding the alleged incident on June 8, 2018, petitioner admitted that she signed the incident report but said that she had not read it. She denied ever saying the words contained in the report: “Employee was simply walking, passing out trays and performing routine duties when she felt sharp pain in her left hip like a dislocation – now has radiated to lower back.”  Petitioner testified, “This didn’t happen like this.”

3)  Petitioner was shown a document entitled “Workers’ Compensation – First Report of Injury or Illness.”  She said she did not agree with the description on that document, namely: “Employee was simply walking, passing out trays and performing routine care when she felt a sharp pain in her left hip/lower back.”

4)  Petitioner was also shown notes from a physician’s assistant in the orthopedic practice for her June 13, 2018 appointment. She did not agree with the description: “[The patient] states that she has been having low back pain for approximately a month. She states that a few [sic] last week at work when she was in a standing position, her leg gave out and she did not fall.  She states that her knee has been feeling painful as well.”

5)  Petitioner also disagreed with a statement contained in a June 14, 2018 appointment at Concentra: “Patient states that as she was walking her left leg gave out, she was able to prevent herself from falling, she states she sat down and rested and later in the day the same thing happened again. She reports since then she has been experiencing lower back pain, left knee and left hip pain.  She states that her left knee appears to slip out of place and she is unable to resume regular activity until it returns to a normal position.  She reports a history of arthritis to the back.  She denies slipping, tripping or other mechanics of injury.”

6)  Petitioner also disagreed with the note from a Concentra doctor in her June 18, 2018 appointment where the physician described her as having a “preexisting condition.”

7)  Petitioner also was shown a note from her orthopedic physician at her July 2, 2018 appointment.  The doctor wrote that petitioner had “a history of chronic recurrent lower back pain for many years” and “severe osteoarthritis of her left knee.”  The doctor also wrote that petitioner denied any specific injury and admitted that her symptoms began “insidiously.”  Petitioner did admit that she had preexisting problems but did not recall this specific discussion.

8)  Petitioner also did not recall the history contained in an IME performed at Cadbury’s request which referenced a prior August 8, 2017 incident when petitioner felt pain while helping a 200-pound patient get off a toilet. Petitioner did not recall being examined by the doctor and did not recall that particular history.  In fact, she disagreed with that description of a 2017 injury.

On examination by the attorney for Palace, (the first employer), petitioner did agree with a statement by Dr. Kepler in his May 21, 2019 report that she suffered two injuries at Cadbury on February 11, 2018 and June 8, 2018, both of which aggravated her back and leg pain.

Cadbury produced two witnesses:  a Director of Nursing in 2018 and an Executive Assistant and Supervisor for the front desk. These witnesses testified to the procedures that Cadbury followed for reporting an injury at work.  The first witness testified that the information on the First Report of Injury Form came from the information on the Incident Report. The second witness testified that she created the incident report for the alleged February 11, 2018 accident based on what petitioner had reported to her.

The Judge of Compensation admitted into evidence over objection from petitioner’s attorney the incident reports and the Workers’ Compensation First Report under the Business Records exception to hearsay.  The Judge permitted the petitioner on the final day of trial to bring in a doctor to challenge impeachment evidence but petitioner declined to do so.  Certain documents were introduced into evidence by all parties, and the Judge of Compensation rendered a decision finding that … “petitioner failed to prove by a preponderance of the evidence that her injuries were causally related to the alleged accidents at Cadbury.”  The Judge dismissed both claim petitions with prejudice.  The Judge also noted that he did not give the First Report of Injury Form any weight in arriving at his decision.  He specifically stated that he found petitioner not to be credible.

Petitioner appealed and raised several issues.  The first issue pertained to petitioner’s competence to testify.  Petitioner was asked by the judge at the outset of testimony whether she was under the influence of anything that would interfere with her ability to testify.  She said no.  Then her own attorney asked her if she was under the influence of medications.  She said yes, that she was taking oxycodone and muscle relaxers which affected her memory.  She also said she was suffering from memory issues related to Long Covid.  The Appellate Division commented, “The problem with that argument is that petitioner and her counsel chose to have her testify, fully aware of what medication she had taken and her Long Covid condition and their potential effects on her memory.  Nothing in the record indicates petitioner or her counsel asked the judge for an adjournment…”  The Court also noted that petitioner initially told the Judge of Compensation that she was not under the influence of anything that would cloud her judgment. Furthermore, the Appellate Court noted that the Judge of Compensation focused more on “the differences in her demeanor when she testified about facts that were in her favor and when she testified about facts that were not in her favor.”

The next issue on appeal was the decision to bifurcate the trial.  Counsel for petitioner challenged the trial judge’s decision to bifurcate the trial because it contended that this may have prevented petitioner from producing testimony from her treating physicians.   The Appellate Court said there was no error in bifurcating the trial because neither party objected to this approach.  The Court also noted that the Judge of Compensation allowed petitioner to bring in medical testimony on the final date of trial but petitioner’s counsel declined. The Appellate Court commented that in this case the judge found that petitioner was not credible in her claims that work accidents happened.

The last argument on appeal was that the Cadbury incident and first reports should not have been admitted into evidence because they did not meet the test of a business record under N.J.R.E. 803 (c)(6).  Counsel also argued that petitioner was denied due process when Cadbury did not produce the author of the incident report. The Appellate Court noted that the Judge of Compensation gave no weight to the First Report of Injury Form.  The Court also noted, “… [A] Judge of Compensation is not bound strictly by the Rules of Evidence, see N.J.S.A. 34:15-56, and may admit documents into evidence without authentication testimony,” citing Lindquist v. City of Jersey City Fire Dept., 175 N.J. 244 (2003). The Court also observed that petitioner did admit that she signed the first page of the June 8, 2018 incident report, “which contained a description of the purported accident that did not match the description petitioner gave on her claim form or in her testimony.” Finally, the Court commented that all counsel in the case consented to the admission of certain documents into evidence; hence there was no due process violation.

The dilemma for petitioner in this case was the inability to overcome the inconsistency between the allegations in her claim petitions and the contrary statements in the incident reports and doctors’ notes close in time to the alleged accidents.

Work-Related Knee Injury Can Constitute a Disability Under ADA

Workers’ compensation injuries may lead to coverage under the ADA.  A recent federal case provides a good example of this.  In Sutherland v. Peterson’s Oil Services, Inc., 126 F.4th 728 (1st Cir. 2025), Mr. Sutherland, a service technician, was injured in a work accident on October 8, 2019, two months after he was hired. He tore the meniscus of his knee in two places and also damaged his patella.

He continued to work for several months while experiencing swelling and pain in his knee.  He said he was working more than 40 hours per week on a regular basis.  He said that he twice requested a reduction of hours to 40 hours per week because of the pain in his knee.  In December 2019, Sutherland gave his supervisor a note from his doctor recommending a 30-hour workweek.  The record contained no evidence that his supervisor reached out to Sutherland to reduce his hours to 30 per week.  Sutherland continued to work regular days, sometimes up to nine hours per day.

Sutherland underwent knee surgery on January 27, 2020, and he was given leave for the next 12 weeks. On April 8, 2020, Sutherland texted his supervisor to let the company know that he had been cleared to return to work on April 20, 2020.  He said no one responded to him.  He said he tried three times to get a response.  Eventually he found out that his employment had been terminated, but he never received a formal notice.  Through discovery in the case, a letter emerged that listed the date of termination as April 20, 2020, although the letter was dated May 26, 2020. That April 20 date was the same date that the plaintiff’s doctor cleared him to recommence work.

Mr. Sutherland sued and alleged violations of his rights under the Americans with Disabilities Act.  Specifically, he argued that he was discriminated against and retaliated against in violation of the ADA.  He also argued that the company failed to make reasonable accommodation. The federal district court dismissed his case, granting summary judgment to his employer.  Mr. Sutherland appealed to the Court of Appeals for the First Circuit.

The Court of Appeals began its analysis by noting an important fact in this case: when Mr. Sutherland was hired, he negotiated with his employer an arrangement in which he would not have to perform installation work or cover night shifts.  In exchange, he promised to work Saturdays during the busy winter season.

The first issue that the Court of Appeals reviewed was whether Mr. Sutherland could make an argument that his knee injury constituted a disability under the ADA.   The district court found that his knee injury was temporary in nature and not substantially limiting. The Court of Appeals did not concur with this finding. The Court of Appeals said that Congress passed the ADAAA (ADA Amendments Act) in part to broaden the interpretation of term “major life activities.” The Court  commented that under the ADAAA, major life activities are not required to be of central importance to daily life.  EEOC Regulations specifically state that a temporary injury can still qualify as a disability if it is sufficiently severe.

The employer contended that Mr. Sutherland failed to support his case with adequate medical evidence.  In response, the Court of Appeals cited another federal case for the proposition that medical evidence is not always needed where “’a lay jury would have no difficulty grasping the connection between a knee injury and problems in conducting major life activities such as standing, walking, and bending.’” (citations omitted).

The Court of Appeals next considered whether Mr. Sutherland could show that he was a “qualified individual with a disability.”  He had to show that he could perform the essential functions of the job with or without accommodation.  Peterson’s argued that Mr. Sutherland could not be deemed a qualified individual because right from the start of his employment he was not doing installation work and night shift work. The Court of Appeals responded to this argument by noting Mr. Sutherland was hired with that specific understanding that he would not have to do installation and night shifts. In the opinion of the Court of Appeals, this initial arrangement between the parties could be interpreted by a jury to suggest that installation work and night shift work were not essential job functions at all.   Determining what is and what is not an essential function is not always as easy as one might think.

Concerning the anti-retaliation provision of the ADA, Sutherland argued that he was fired because he sought an accommodation of reduced hours.   The Court of Appeals suggested that this argument also needed to be addressed by a jury.  The Court noted that there is case law standing for the proposition that an employer can be found liable for retaliation even if the underlying claim of disability remains unproven. 

The final issue in this case had to do with the essence of the ADA, namely the obligation to make reasonable accommodations to a person with a disability.  The Court said that Congress recognized a part-time or modified work schedule as examples of possible reasonable accommodations.  Plaintiff argued that the company’s employee handbook defined “part-time” work as meaning less than 30 hours.  Plaintiff further contended that the company employed one part-time worker on its staff.  The Court summarized the various proofs that Sutherland had to demonstrate:  

  1. He must prove that he has a disability within the meaning of the ADA;
  2. He must  prove that he can perform the essential job functions with or without accommodation;
  3. He must prove that Peterson’s was aware of his disability and did not make reasonable accommodation. The employer disputed this element of the case.  Plaintiff countered that he sent text messages to his supervisor requesting accommodations for his knee condition.
  4. Further, he must show that the reasonable accommodation request would have enabled him to perform the essential job functions;
  5. Lastly, Sutherland must also prove that the accommodation would have been feasible for his employer to make.

For its part, Peterson’s could defend against the request for accommodation of reduced hours by showing that such an accommodation would pose an undue hardship to the company.  

Based on all the foregoing considerations, the Court of Appeals vacated the summary judgment entered by the district court and allowed Mr. Sutherland to move forward with his ADA lawsuit. 

For employers this case serves as a reminder that the FMLA 12-week period of job protected leave is not the only law to consider when terminating an employee who may have a qualified ADA disability. In some instances, the ADA or equivalent state discrimination law (the Law Against Discrimination in New Jersey) may impose additional obligations on the employer.  Interestingly, this case did not involve a request for additional leave as a possible reasonable accommodation but rather a request for a modified work schedule.

The post Work-Related Knee Injury Can Constitute a Disability Under ADA appeared first on NJ Workers' Comp Blog.

MSA: To Submit or Not To Submit

Recent updates from CMS introduce significant changes to the reporting and submission requirements for Medicare Set-Asides (MSAs), impacting all Responsible Reporting Entities (RRE). Understanding these changes is crucial to ensuring compliance and avoiding potential penalties. Two important dates to remember are April 4, 2025 and July 17, 2025.

Effective April 4, 2025, all RRE will be required to report any WCMSA amount within the Total Payment Obligation to the claimant, even a zero-dollar allocation. The only exception to this reporting requirement is if the settlement is $750 or less. This new reporting requirement gives CMS access to every single worker’s compensation claim if it involves a Medicare beneficiary. CMS will then instruct the claimant on how to properly exhaust the MSA. Annual reports must be submitted to CMS, showing proper use of the MSA funds. Once the funds are properly exhausted, Medicare will resume coverage for injury-related medical care. Of importance, if the MSA amount is reported as zero, CMS has the right to audit the submission if it is suspected that the parties are attempting to shift work-related medical costs to Medicare.

The goal of establishing an MSA is to set aside sufficient funds to cover the lifetime cost of medical expenses that would otherwise be payable by Medicare for work-injury related conditions. While the RRE will now have to report the amount of an MSA, the need to submit an MSA to CMS for approval remains optional.

Currently, CMS will only review WCMSA proposals that meet the following criteria:

  • The claimant is a Medicare beneficiary, and the total settlement amount is greater than $25,000.00; or
  • The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.

The recent update confirms “submitting a WCMSA proposed amount for review is never required.” See, Section 4.2.  It further explains that Medicare’s interests are already protected in the following instances:

  1. If the injured worker is only being compensated for past medical expenses; and
  2. There is no evidence that the individual is attempting to maximize the other aspects of the settlement such as lost wages or permanent disability to Medicare’s detriment.

The guidelines explain that the above conditions can be demonstrated through one of the following criteria:

  1. The claimant’s treating doctor documents in the medical records, to a reasonable degree of medical certainty, that the claimant will no longer require any treatment or medications related to the workers compensation injury; or
  2. The claim is denied, and no benefits have been paid and there is no allocation of medical benefits in the settlement; or
  3. The Court determines, by issuing a decision on the merits, that respondent does not owe any additional medical or indemnity benefits and there is no allocation of medical benefits in the settlement; or
  4. The claim as denied following an investigation regarding compensability where benefits extended were paid without prejudice and there is no allocation of medical benefits in the settlement.

The guidelines state that unless an MSA is submitted, reviewed, and approved by CMS prior to settlement, CMS cannot be certain that the Medicare’s interests are adequately protected. As such, “CMS may at its sole discretion deny payment for medical services related to WC injuries or illnesses, requiring attestation of appropriate exhaustion [of benefits] equal to the total settlement,” rather than a CMS-approved WCMSA amount.

However, Section 4.2 specifically states that as of July 17, 2025, CMS will no longer accept submissions for zero-dollar MSAs. While this will allow respondents to finalize settlements much faster, if CMS refuses to review zero-dollar allocations, the question becomes how to ensure that Medicare’s interest is adequately protected to avoid a denial of payment for medical services related to the WC injuries.

CMS highlights the importance of thorough documentation in cases where an MSA is not submitted to Medicare for approval, which includes all zero-dollar allocations. In these instances, it is crucial to obtain an opinion letter from an independent third party MSA vendor, outlining the legal justification and mitigating circumstances that make a zero-dollar allocation appropriate. Additionally, the letter should explain in detail the reliance on the criteria outlined above to support a zero-dollar allocation. A recent revision to Section 9.4.3 reinforces the need to have clear medical documentation to support the exclusion of certain medications or treatment protocols as part of an MSA.

While not submitting an MSA can speed up the settlement process, it will require strong documentation and compliance measures to prevent issues in the future. On the other hand, while submitting an MSA that meets the threshold requirement offers certainty that CMS will honor the allocation, this can lead to delays and stricter oversight. The good news is as of April 7, 2025, the one year waiting period to submit an amended review of an MSA is being eliminated. This benefits respondents in allowing faster resolutions and potential costs savings from overfunding an MSA based on medical expenses that are no longer needed. 

Given the new updates from CMS, employers, third-party administrators, and insurance carriers should review their MSA reporting procedures to ensure compliance before the April 4, 2025, deadline, and develop a policy regarding the handling of all MSAs whether it’s a zero-dollar allocation or not. Readers may contact me at phigbee@capehart.com for further information.

The post MSA: To Submit or Not To Submit appeared first on NJ Workers' Comp Blog.

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