Petitioner’s attorneys have been busy proposing legislation that adds costs on all New Jersey employers. On July 20, 2023 Governor Murphy approved an amendment to N.J.S.A. 34:15-64 raising the maximum amount that claimants’ physicians may be paid for opinions regarding need for treatment or permanent disability. The maximum fee had been previously set at $600. Under the new amendment, the maximum fee is now $1,000.
Why should employers care? Here is why: the Division of Workers’ Compensation in New Jersey has a custom of assessing half of the cost of the medical examination for the claimant on the employer in a percentage of disability settlement. That means that employers not only pay for the cost of their own experts, but they pay half of the cost of the injured worker’s experts. Before this new Bill passed, employers were paying $300 for each expert retained by the petitioner’s attorney and the employee was paying $300.
Under the new law, passed on July 20, 2023, the Judge of Compensation can award $1,000 to the claimant’s physician with $500 assessed against the employer and $500 assessed against the employee. That amounts to about a 65% increase in additional costs on both the employer and employee to their medical expert. This affects every percentage of disability award in New Jersey, and most cases settle with a percentage of disability.
Many employers have asked why they must pay for their own expert and for the expert for the claimant. That is a very good question. The answer will surprise almost everyone: there is no law or regulation that says employers have to pay half of the expert fee of the injured worker. Nonetheless, this practice has been going on in the New Jersey Division of Workers’ Compensation for many decades.
An even more costly bill has been proposed by petitioners’ attorneys to increase their counsel fee from 20% of the award to 25% of the award. This bill is S3818. The proposed legislation is likely to be taken up by the Legislature in the Fall. If it passes, employers will again be socked because employers pay 60% of the legal fee of the claimant’s lawyer. The employee only pays 40% of his or her legal fee. Another way of saying this is that an employee only pays 8% of the total award to his or her lawyer. The employer pays 12% of the gross award to the claimant’s lawyer! Once again, there is also no law or regulation that requires employers to pay anything to the petitioner’s attorney, but this practice has also been going on for many decades.
Example: if a case settles for a percentage of disability amounting to $100,000, the new counsel fee will be $25,000 for the claimant’s lawyer (25% of the award) up from $20,000 (20% fee prevails now). Employers will pay 60% of that fee or $15,000, which goes to the injured worker’s lawyer. The employee will pay $10,000 or a mere 10%. This increase represents a 25% hike against employers.
Who is sponsoring these two bills? You guessed it: lawyers for injured workers successfully wrote the bill and lobbied for the increase in medical fees that Governor Murphy signed last month. Now they want a raise for themselves and have written another bill. Both bills are bad for public sector employers because there is no way for municipalities to generate additional revenues to pay for these higher costs other than to raise taxes. As is the case with medical fees, the practice of making employers pay for the claimant’s lawyer is merely a custom. It is a relic of pre-1980 days when workers’ compensation awards were minimal and permanency rates were only $40 per week. Now permanency rates can go as high as nearly $1,100 per week for total and permanent disability benefits. An award in 1979 for 50% permanent partial disability amounted to only $11,000; now the same award in 2023 amounts to $219,900. That is 20 times more than 1979 - far outpacing inflation for that period of time.
Employers should make their position clear in opposing S3818, which will result in employers paying 25% more to claimant’s lawyers. The simple truth is that Injured workers should be paying for their own lawyers. Employers should not be subsidizing injured worker counsel fees. In a New Jersey personal injury case, the employee pays for his or her own lawyer at one third, not a mere 8%! The party who benefits from an award is the injured worker: their legal fees should not be passed along to the employer. It is simply inequitable that employers are required to pay for the lawyer who represents the employer’s interests and also pay the lawyer who works against the employer’s interests.