The New Jersey Senate passed S374 by a vote of 23-12 on Monday, June 30, 2014. The bill effectively ends the benefit that employers obtain from making voluntary offers of permanency under N.J.S.A. 34:15-64.
New Jersey has an unusual practice of requiring employers to pay 60% of the attorney’s fee of the claimant in an order approving settlement. For example, if a case should settle for 25% of partial total at 2013 rates, which would be $37,644, the petitioner’s attorney would receive a 20% counsel fee, which would be $7,528. Respondent would pay 60% of that fee or $4,517. But N.J.S.A. 34:15-64 has always given respondent the right to avoid paying a counsel fee on any amounts offered within 26 weeks of maximal medical improvement or return to work, whichever is later. This benefits injured workers by receiving some monetary compensation while the case is pending and also provides an incentive for employers to make such offers.
Using the example above, if respondent were to offer 7.5% or $9,900 within 26 weeks of the date of maximal medical improvement, (a voluntary offer), respondent would not pay a fee on that amount at the end of the case. The savings to respondent would amount to $1,188. Respondent would keep that amount instead of paying it to petitioner’s attorney at the time of settlement. Petitioner’s attorney would still get a counsel fee but only on the amounts paid in settlement in excess of the offer of $9,900.
S374 proposes to eliminate the respondent’s savings in counsel fees on voluntary offers. N.J.S.A. 34:15-64 would allow voluntary offers to be made as a benefit to employees in providing prompt funds after reaching maximal medical improvement, but there would be no longer any benefit to employers in making those offers. Counsel for petitioner would get a fee on all amounts received by the injured worker, including amounts paid as voluntary offers. Interestingly, the bill would cost injured workers more because they too would have to pay a fee to their attorney on the amount of a voluntary offer. Right now they do not pay a fee on a voluntary offer.
The Bill has not yet been voted on by the New Jersey Assembly. If it passes the Assembly, it will be presented to the Governor.
