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Understanding the Workers' Compensation System

Understanding the Workers' Compensation System in New Jersey

By John D. Kovac, Esq.

Contents

  • Work-Related Accidents and Occupational Disease
  • Notice
  • Differences Between Workers' Compensation and Personal Injury Law
  • Medical Care and Temporary Disability Benefits
  • Determining Permanent Disability for Pretrial or Trial
  • Delays
  • Settlement and the Fees of Attorneys and Examining Doctors
  • Previous Injuries
  • Reopening Cases and Cash Settlements
  • Death Benefits

Work-Related Accidents and Occupational Disease

Workers compensation cases arise from work-related accidents or occupational disease. Generally occupational disease develops over time due to either repetitive movement, as with carpal tunnel syndrome, or exposure to harmful conditions such as a work place containing asbestos or a stressful environment that can lead to a heart attack or psychological illness. Clients typically realize they need legal representation when a work-related accident or occupational disease causes any or a combination of the following circumstances:

  • a need for immediate medical care
  • an inability to work for a period of time
  • concern about the likelihood of diminished work capacity in the future

When a client visits a workers' compensation lawyer, the lawyer will check if the accident or occupational disease is "work related," which means arising out of or in the course of employment. A warehouse worker may have job duties that involve heavy lifting, but if he injures his back lifting a package at home, the injury is not work-related, and he is not entitled to workers' compensation benefits. With only limited exceptions, the worker must be at the job and on the job. A carpenter who has an auto accident while driving from home to work is not covered; but if he were injured while driving from one job site to another, he would be covered.

Notice

Notice of work-related accidents or occupational disease must be given to the employer within specified time limits or else the worker will lose rights to certain benefits. If an employer, unaware of a work-related injury, is not notified of the injury within 14 days, no benefits are due until notice is given. If the employee fails to give notice within 30 days, and the employer can show he was harmed thereby, no benefits will be due to the extent the employer can demonstrate such harm. Take for example a clerk who cuts her arm while working for an employer who requires all injured workers to seek immediate medical treatment at its medical clinic. The clerk says nothing about it, believing her injury is not serious enough to warrant medical treatment. But twenty days later her arm becomes severely infected, and she is admitted to a hospital for emergency treatment. If the employer can prove that the clerk would have required only minor treatment had notification been given within 14 days, the employer will not have to pay for the worker's hospital bills, time missed from work, and permanent impairment caused by the severe infection. However, if the clerk can prove that a coworker notified the boss immediately, and the boss ignored the situation, or that the boss actually saw the injury or should have known about it, the employer may be ordered to provide all required benefits.

If the employer becomes aware of a work-related accident after 30 days but before 90 days, the employee must show that his failure to notify was due to a reasonable excuse such as fraud, mistake, ignorance of the law, or some other justifiable circumstance. An illiterate employee would find it easier to justify such a mistake than would a lawyer or paralegal employed by a large law firm specializing in workers' compensation defense.

In cases of occupational disease, the employee must notify the employer within five months after she ceased being exposed to the occupational disease, or within 90 days after she knew or should have known the nature of her disability and its relation to her employment, whichever is later. Failure to give notice within this these time frames will bar all compensation. Notice provisions differ from statutes of limitations, which prohibit the filing of lawsuits after specified times. The statute of limitations in cases of workers' compensation is two years after the accident or, in cases of occupational disease, two years after the claimant first knew the nature of her disability and its relation to her employment. An employee who notifies her employer of an injury or occupational disease at the earliest possible time will nevertheless be precluded from bringing a claim if she waits more than two years to file a lawsuit.

Differences Between Workers' Compensation and Personal Injury Law

The workers' compensation system compensates for temporary and permanent disability. It is an administrative system that differs from the civil tort system. In the civil tort system, when a plaintiff sues in Superior Court for a fall or auto accident, he may recover damages for pain, suffering, and loss of quality of life. In the workers' compensation system, however, pain and suffering is not in itself a criterion on which to base an award. Pain and suffering matters mainly to the extent that it prevents the worker from doing his job as he otherwise would, and loss of quality of life is rarely considered outside of the context of the worker's ability to perform his job. The focus of recovery in workers' compensation and personal injury cases may overlap somewhat but also differs. Thus the workers' compensation attorney should ascertain if someone other than the employer is responsible for the accident. If so, both a workers' compensation suit and a civil personal injury suit may be necessary to fully protect the worker's rights. Clients seeking representation for work-related injuries should hire counsel capable of handling both workers' compensation and personal injury matters (1).

The policy behind the workers' compensation system is to compensate regardless of fault. Whereas a plaintiff in a personal injury case must prove the negligence of the defendant, a worker injured on the job may receive benefits without having to prove his employer failed to exercise due care. The New Jersey Legislature, in passing the workers compensation laws, decided it would be unfair and counterproductive to deny benefits to a negligent worker performing his job in good faith (2). Take, for instance, a salesman in the office who, mistakenly thinking his chair is behind him, attempts to sit but falls to the ground and suffers a herniated disc. It makes no difference that this may be his own fault. Under the workers' compensation system, where fault is not in issue, he is entitled to medical treatment, temporary disability benefits, and permanent disability benefits. The Legislature believed that a system that litigates fault would be overburdened with proceedings to determine who is negligent and who is not.

As an administrative system, the workers' compensation system also differs from the civil tort system in the way cases are tried. Personal injury cases are tried in Superior Court, where formal rules of evidence govern the proceeding. Hence at a workers' compensation trial the hearsay rules (3) do not apply and documents can be authenticated and introduced with less formality. Workers' compensation cases are tried by judges, instead of by juries as is the case with most personal injury claims that reach trial. The relative informality of workers' compensation trials, however, should not lull potential claimants into thinking they will escape unpleasant matters such as attacks on credibility which are often made by aggressive defense attorneys. The best response to such an assault is a well-prepared witness with claims thoroughly supported by medical and other evidence.

Medical Care and Temporary Disability Benefits

An injured worker is entitled to immediate medical care, but the employer has nearly complete control over this care. This means that the employer will send the worker to doctor or doctors of its choice, not, in most cases, to a personal physician the worker may know and trust. In many cases, the care provided by the employer's doctors is adequate—but not always. If the employer refuses to provide necessary care, or if the care provided is ineffective or too limited, the worker's attorney must file a Motion for Medical treatment, which the court should hear within 30 days.

Injured workers are also entitled to temporary disability benefits (4), which provide 70% of the employee's average weekly wage up to a limit (5), and permanent disability benefits, which compensate for diminished ability to work or complete disability with respect to job performance. Employers who refuse to provide temporary disability benefits can be forced to do so by a Motion for Temporary Disability. Like Motions for Medical Care, these Motions must be heard within 30 days of filing. Employers who deny medical treatment and/or temporary disability benefits will often do so on, among other reasons, the following grounds:

  • the injury requires no treatment
  • the injury is insufficient to cause the worker to be absent from work
  • the injury is not work related but due to a preexisting condition for which the employer is not responsible

A competent and aggressive workers' compensation attorney will, where appropriate, challenge these employer contentions (6), which are typically supported by the employer's treating doctors. To challenge the employer, the worker's attorney will send him to an independent doctor who can indicate that he needs treatment, explain why, and state that he is temporarily unable to work pending treatment.

It can take years to resolve a workers' compensation claim where the injury is serious. Injured workers need medical treatment; and the more serious the injury, the more involved and prolonged the treatment will be. A worker continues to be entitled to medical treatment as long as it is curative (likely to improve his condition) or relieves the worker of the effects of the injury. But once the worker returns to work, even if he has not reached maximum recovery, temporary disability benefits cease. For the worker with a serious back injury, treatment might include physical therapy lasting for months. If such therapy fails to help, epidural injections may be the next course of treatment. And if this too fails, surgery might be necessary. The period of recuperation following surgery typically includes additional physical therapy, which again can last for months. While the employee remains unable to work during curative treatment, he may collect temporary disability benefits at 70% of his weekly earnings.

The Workers' Compensation Statute provides for the payment of temporary disability benefits for up to 400 weeks (7.7 years) (7). Though it is rare that payments or treatment last this long, treatment can and often does take a substantial time. Sometimes the insurance company may be reluctant to provide additional treatment if an initial course of treatment fails. If this should occur, a Motion for Medical Treatment and (if also necessary) Temporary Benefits will have to be filed. This will further delay a final resolution of the case, but for a good cause: to provide needed assistance to the worker.

Determining Permanent Disability for Pretrial or Trial

A case is not over until a determination is made, either via negotiation or trial, as to how disabled the worker is. The outcome of this determination reflects the worker's permanent disability: an impairment that restricts a body function, and which is verifiable by objective medical evidence. Any lessening in the worker's ability to perform his job must be considered as a significant factor in determining permanent disability. To position itself for trial, or pretrial (a proceeding in court where the parties negotiate settlements), the worker's attorney will send him to examining doctors who prepare evaluation reports. Before setting up examinations, however, the attorney must make sure that no further treatment is necessary, and that all records of the workers' medical treatment are sent to the examining physician for review. Otherwise, the examining physician may reach a conclusion without considering relevant evidence. A faulty conclusion may underestimate a worker's permanent disability or render less credible a favorable estimate.

If the worker's skills are limited, and his job imposes significant physical demands, the worker's attorney should advise the examining physician to evaluate the worker in light of these circumstances. A computer programmer with a severe leg injury will be less disabled than a floor tile installer with the same injury who possesses a limited education. The floor tile installer has to use his legs more to perform his job than a programmer who sits in a chair for most of the day. And if the tile installer's injury prevents him from performing manual labor in the future, he will find it much more difficult to get an office job than the computer programmer or some other college-educated worker. Of course, if the programmer injures a hand or wrist, or is afflicted by carpal tunnel syndrome, her ability to earn a living may be affected in a way comparable to a floor tile installer with an identical injury. Unless instructed otherwise, Petitioners' examining doctors often fail to note factors such as the nature of the Petitioner's job, and the Petitioner's level of skill, which is relevant to ability to earn a living in other fields if a Petitioner is totally disabled in a given occupation. In addition, where the worker has limited skill and job options, his attorney must stress these factors to the insurance company and the judge as well.

The Respondent will also send the worker to an examining doctor or doctors. These doctors conduct examinations and set forth numbers representing estimates of the worker's disability. Doctors used by the employer will always give an estimate lower than the estimate provided by the worker's doctors. For instance, in the case of an unoperated herniated disc with minor nerve impingement, the worker's orthopedic expert may fix the worker's disability at 45% of partial/total disability (8). The employer's orthopedic specialist may find a partial/total disability of 5%. Ultimately the case will, in all probability, be resolved at a figure in between these two estimates.

The numbers used by examining doctors refer to charts published yearly by the New Jersey Division of Workers' Compensation. These charts assign dollar values to percentages of disability ranging from 1% to 100%. In the example just used, if the accident occurred in the year 2000 (9) 5% of partial/total disability translates in dollars to $4,530.00, and 45% of partial/total disability translates to $92,000 (10). Different rates apply to different categories of injuries. A back injury is classified as "partial/total." This classification mandates a greater figure in dollars for any given percentage of disability than, for example, an injury to an arm or a leg. Whereas an award of 20% of partial/total is worth $19,536.00, an award of 20% partial disability for a leg is worth $9,513.00; 20% for a hand is worth $7,399.00; and for an ear, $1,812.00.

Medical examinations to determine permanent disability may not be undertaken until 6 months (26 weeks) after the employee's authorized medical treatment ends, or 6 months from the date the employee returns to work, whichever is earlier. This delay is built into the system to insure that the employee's condition remains permanent and stationary before any final determinations as to permanent disability are made. After all examinations are finished, the parties meet in court for a pretrial—a discussion and negotiation session between the attorneys, held in the judge's chambers. The worker's attorney should know if the defense is ready to discuss settlement, in which case the worker will be asked to appear in court to approve or reject settlement offers. If an agreement is reached, the worker will take the witness stand to indicate he understands and approves of the settlement. If the parties cannot settle the case, it will be set for trial.

Delays

Some delays are built into the system to ensure that workers are medically "permanent and stationary" before being evaluated for permanent disability. Other delays may be caused by the large caseloads of defense attorneys, insurance adjusters, and defense doctors; and still others result from stalling tactics. Workers' attorneys should do everything possible to prevent unnecessary delays. At minimum, they should promptly set up examinations after treatment is finished (11), demand that the defense do the same, and inform the defense that the Petitioner is prepared to negotiate settlement or go to trial. Furthermore, if the defense appears to be acting in bad faith, the worker's attorney should ask the court to intervene. One unfortunate effect of delays is that some workers get worn down by the process and, especially those suffering from financial hardship, may become willing to settle for less than their case might be worth. A good workers' compensation attorney will not only prevent delays whenever possible but also help clients understand the nature of the process from the start so that delays will be less baffling and, perhaps, more tolerable. Finally, a good workers' compensation attorney will avoid taking on too many cases so that sufficient time can be devoted to existing clients.

Previous Injuries

It often happens that a worker comes to an attorney with a current injury to a body part that has previously been impaired. The clerk whose supervisor caused him to have a nervous breakdown may have had previous unrelated psychiatric hospitalizations. The electrician who sustains an electric shock may have been shocked before. The roofer with a dislocated knee may have hurt the same knee while playing football in college. If the previous injury was work-related, there will usually be a workers' compensation settlement on record. If there is no record of the previous injury, it must nevertheless be revealed to both the worker's attorney and to the defense. Failure to disclose a previous injury can destroy a Petitioner's credibility and thereby seriously damage a claim.

Where there is a previous injury to the same body part, a determination of permanent disability will include a deduction or "credit" for the prior injury. For instance, a Petitioner hurt her right shoulder 1994 and settled the case for 10% of partial/total in 1997—a settlement of $7,380.00 (12). Then, in 1998, she reinjured her shoulder. In 2000, the parties agree she is disabled 20% of partial/total. The monetary value of a 20% settlement for partial/total disability in 1998 is $17,796. From this figure, however, the defense will get a credit of 10% of partial/total in 1998 dollars: $8,280.00, not $7,380.00, the value of the settlement in 1994. Thus the value of the settlement, before deductions for attorney fees and Petitioner's examinations, will be $17,796.00 minus 8,280.00, or $9,516.00.

If a prior disability and a current disability combine to render the worker totally disabled, an application may be made to a state fund known as the Second Injury Fund, which pays that percentage of disability benefits not attributable to the most recent employer. In setting up this fund, the Legislature wished to promote the hiring of partially disabled workers. The Second Injury Fund furthers this policy by preventing the employer from having to pay full disability benefits if a partially disabled worker suffers a totally disabling injury.

Settlement and the Fees of Attorneys and Examining Doctors

A pretrial settlement must include not only an agreement on permanent disability but also a resolution of any outstanding disputes over medical treatment and temporary disability. For instance, sometimes certain medical bills have not been paid because the defense claims the treatment is unauthorized, or a Petitioner will rightly claim to be entitled to more temporary disability than he was given. If all issues are not resolved, the case will be set for trial. If they are resolved, the Petitioner will be asked to take the witness stand so that the settlement can be put on record. To ensure that the Petitioner understands the settlement and the deductions to be taken from it, and to create an accurate record, his attorney, the Respondent's attorney, and the Judge will ask him a series of questions about the accident, his medical treatment, and the present effects of his injuries. The Petitioner will also be asked to state that understands attorney fees will be deducted from his settlement.

The judge has discretion in awarding attorney fees. Typically a Petitioner's attorney is awarded a fee of 20% of the value of the settlement. However, the judge usually apportions the fee, and might, for instance, require the Respondent to pay 60% of the fee, leaving 40% for the Petitioner. In the example of the right shoulder injury discussed above, an attorney fee of 20% of $9,516.00 equals $1,903.20. From this figure, assuming the apportionment ratio is 60% to 40%, the Respondent would pay 1,141.92 and the remainder, $761.28, would be taken from the Petitioner's settlement.

Fees are also awarded to the Petitioner's examining physicians. Again the judge has discretion to award fees, which often in the case of doctors are apportioned equally between the parties. So if the court awards an orthopedic doctor $200.00 for an exam, the Respondent will pay $100.00 and $100.00 will be taken from the Petitioner's settlement. The Petitioner never has to pay for the Respondent's exams or for authorized or necessary medical treatment. A small fee may also be taken from the worker's settlement to compensate an interpreter, should one be needed. Continuing with our example, if we assume that an interpreter is not required to put the settlement on record, the Petitioner would ultimately receive $8,294.72 ($9516.00 minus $761.28 minus $100.00). Within 5 weeks after the settlement is put on record, the Respondent should send a check to the Petitioner's attorney, who will distribute the settlement money.

Reopening Cases and Cash Settlements

When a settlement is put on record, the worker will also be advised that he has a right to a trial but is waiving it in favor of a settlement. Furthermore, he will be instructed that he may, within two years after the last payment of benefits (13), reopen the case. If the Petitioner seeks no medical treatment for two years after the settlement check arrives, he will be barred forever from reopening the case should his condition worsen.

Some settlements are for cash only and leave the worker with no right to reopen a case should his condition worsen or should additional treatment become necessary. These settlements, known as Section 20 Settlements (14), cover situations where a genuine dispute exists over issues such as liability and causation. A liability issue, for instance, might arise if the employer has a basis to claim that the employee was not at work when the injury occurred. And a causation dispute could arise if the employer has grounds to assert that a previous injury is causing the employee's present symptoms. A worker's attorney should never agree to a Section 20 settlement where there is no genuine dispute over the worker's ability to prove his case. Otherwise the worker will be left without recourse to additional medical treatment and benefits if his condition worsens.

Death Benefits

If a worker dies in a work-related accident, his dependents are entitled to benefits. Dependents include a spouse and minor children until the age of 18 (or up till 23 years old if they remain in school), and parents dependent upon the worker for support. Death benefits start at 50% of the worker's wages for one dependent (15). Thus if a deceased worker earning $600.00 per week leaves a surviving spouse and no other dependents, the spouse will receive $300.00 per week in benefits until she remarries or dies. A surviving spouse, 40 years old the time of the worker's death, who never remarries and lives until the age of 75, will receive $546,000.00 over the course of 35 years. The spouse's employment status or other income will not affect these benefits. It makes no difference if she is a doctor earning $300,000.00 per year, living on a trust fund, or unemployed. If, however, the spouse remarries, weekly benefits end but, depending on the time of the remarriage, she may be entitled to additional money (16).

Each additional dependent increases the amount of benefits paid by 5%, up to a maximum of 70% of the worker's weekly wages. Thus, if the surviving spouse in the example above had two minor children with the deceased worker, the amount of total death benefits paid would be 60% of the worker's wages, or $360.00 per week, to be apportioned among three dependents. As with temporary disability benefits, though, death benefits are subject to a maximum weekly rate of 75% of the state average weekly wage. The state average weekly wage in the year 2000 is $757.08; and 75% of this totals $568.00. So if a deceased worker earned a weekly wage of $1500.00, his dependents, however many may exist, would be paid no more than a total of $568.00.

Notes:

1. Seriously injured workers, whether they have a third-party claim or not, should also consider applying for Social Security, and, if applicable, a Disability Retirement. They should be aware, however, that the employer's insurance carrier will be entitled to certain offsets or credits for recoveries or benefits obtained outside of the workers compensation system.

2. A few exceptions apply to the general rule of no-fault compensation: where work-related injury or death results from substance abuse or self-inflicted injury, compensation will be denied.

3. The hearsay rules comprise a complex set of regulations and exceptions that limit the admissibility of statements made out of court used to prove the truth of matters asserted in court.

4. Temporary disability benefits take effect only if the worker misses seven days or more of work due to an employment-related injury or occupational disease. Once seven days are missed, however, the benefits become retroactive.

5. The limit for the year 2000 is $568.00. This limit is set at 75% of the State Average Weekly Wage, which is $757.08. $568.00 is 70% of $811.42. A worker injured in the year 2000 who earns more than $811,42 per week will only be able to collect temporary disability benefits of $811.42 per week, even though this amounts to less than 70% of his earnings. Each year, the limit of temporary disability benefits tends to increase slightly along with the State Average Weekly Wage.

6. In the vast majority of cases, the employer's insurance company, not the employer, is the actual party that, along with its attorney, decides how to respond to the claims of an injured employee. The insurance company or employer who responds to the employee's claim is also known as the Respondent. The injured employee who files a Claim Petition is known as the Petitioner.

7. To the extent, however, that the worker uses accumulated sick leave (which pays full salary instead of 70% of salary), she is entitled to neither temporary disability nor reimbursement of sick leave, unless she is a school employee. Teachers and other school employees receive their full salaries and lose no sick leave during periods of disability.

8. "Partial/total" is a classification of disability applied to injuries or occupational diseases that do not fit into the other enumerated categories: hand, arm, thumb, fingers, leg, foot, toes, eyes, and ears. Injuries to the neck, back, and head, among many others, fall into the partial/total category.

9. Figures for previous years are lower.

10. These figures assume that the worker is earning a certain minimum weekly wage, which if not reached would lower the amount of recovery.

11. If treatment finishes less than 6 months after the date of accident (or date that an occupational disease became manifest), the permanency exam will have to wait.

12. This settlement is based on 1994 figures, the year of the injury, not 1997 figures, the year of settlement.

13. "Payment of benefits" includes both money and medical treatment.

14. Section 20 refers to NJSA 34:15-20.

15. In addition to paying benefits based on the worker's weekly wages, the employer must also pay for the last sickness of the deceased and funeral expenses up to $3500.00.

16. If the spouse remarries before the expiration of 450 weeks (8.6 years), she will receive 100 times the weekly compensation paid immediately preceding the marriage or the remainder of compensation due to her (up to 450 weeks) had she not remarried, whichever is lesser. Thus if she marries three years after the death she will receive $30,000.00 (100 x $300.00). But if she remarries 7.6 years after the death, she will receive $15,600.00 (52 x $300.00). A spouse who remarries more than 8.6 years after the death will receive no additional payments.

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