A Capehart Scatchard Blog

Questions Remain On Which Cases Are Affected By The New Hand And Foot Bill

By on February 13, 2020 in Legislation with 0 Comments

The recently passed legislation L. 2019, C. 387 increasing the value of hand and foot injuries in New Jersey has generated considerable debate about which cases the law affects. Does it affect only cases filed after the date the law was passed?  Or does it affect all cases presently pending in the Division of Workers’ Compensation but not yet subject to a court order?

One point all practitioners agree on is that the law does not affect prior court orders.  There is no indication that the law was meant to be primarily retroactive, requiring old orders to be reconsidered.  But there remains the question of whether the law is supposed to be secondarily retroactive, meaning affecting all present claims, even those filed before the effective date of the law, but not yet subject to a court order.

The law states that “This act shall take effect immediately.” There is no language specifically stating that the law should have “prospective relief only,” nor any clear language stating that the law should be in any way retroactive.  So the focus is on the meaning of the words “shall take effect immediately.”

Practitioners have two reported workers’ compensation cases to consider on this issue.  Unfortunately, these two cases seem to be in conflict. Both involve the dependency statute.  The first is Harris v. Branin Transport, 312 N.J. Super. 38 (App. Div.), certif. denied, 156 N.J. 408 (1998). In that case, Anne Harris became a statutory dependent back in 1979 when her spouse died in a work-related accident.  Under the old law, any income after 450 weeks had to be offset against dependency benefits.  Harris was earning $128 per week after 450 weeks, so that amount was deducted from her dependency award. 

In 1995 the law was changed removing the earnings credit.  Harris applied to end the removal of the earnings credit.  The question was whether or not the new law removing the earnings credit would apply to only new dependents after 1995 or to all current and existing dependents. The Appellate Division held that the new law was intended to apply to Harris and others like her who were already receiving dependency benefits, calling this “secondarily retroactive.”  The Supreme Court declined to accept the case, so that the Appellate Division stood.  If Harris is followed, the hand and foot bill would affect all existing claims in the Division not yet decided.

Nine years later another change in the dependency law occurred.  In Cruz v. Central Jersey Landscaping, Inc., 195 N.J. 33 (2008), the Supreme Court considered an amendment that removed the graduated dependency scale.  Prior to 2004, one dependent received 50% of wages, two received 55%, three received 60%, four received 65% and five or more received 70% of wages.  The new law established that one dependent alone would receive 70% of wages, eliminating the graduated scale.

Four separate cases were tried and eventually were consolidated before the Supreme Court.  All four claimants were existing dependents who had filed claims before the law was passed in 2004, and they argued that they should get the benefit of the new law.  The Division split on whether the new law was prospective only; the Appellate Division ruled the new law was secondarily retroactive as in Harris above, but the Supreme Court reversed.  The very same language appeared in that Act, namely that the law was supposed to have immediate effect.   The Supreme Court held that the new law should only apply to those who filed after the effective date of the Act.  The Supreme Court said:

Indeed there is nothing in the amendments or in the sponsors’ statements that suggests that the Legislature intended to give the new benefit level retroactive effect of any kind.  We certainly see no basis in the legislative history, and in an interpretive framework that includes our prior holding that vesting occurs on the date of death, to conclude that the Legislature intended to effect a reopener of settled awards.  Nor is there anything in the directive that the act ‘shall take effect immediately’ to suggest retroactivity.  On the contrary, these words bespeak an intent contrary to, and not supportive of, retroactive application.

The Supreme Court interpreted the words “shall take effect immediately” to imply only to those cases filed in the future, i.e., filed after the effective date of the amendment to the Act.   The Court was concerned about how far back one goes, stating that retroactive application would mean reaching even beyond pending and non-finalized claims, implying that it could be applied to closed orders in the past.  But no one is arguing that the hand and foot bill should affect orders entered in the past. The argument on the hand and foot bill is between secondary retroactivity (existing claims) versus prospective effect.  If Cruz is followed, the hand and foot bill will only apply to claim petitions filed after the effective date in late January 2020. 

It is very difficult to reconcile the decision in Harris with the decision in Cruz.  In Harris the Supreme Court did not take the case and therefore let the Appellate Division stand; In Cruz the Supreme Court took the case and reversed.  The decisions were only nine years apart but the reasoning diverged markedly.  

This practitioner has spoken with many attorneys and clients about this issue.  Defense attorney Joe Soriano took the time to review the legislative history and the sponsor’s statement and notes that there is no clear intention that the bill should be retroactive in any way.   He points out the word “retroactive” does not appear anywhere in the legislative history, sponsor’s statement or the legislation itself.

This practitioner has also spoken with several petitioners’ counsel.  They make the point that the words “shall take effect immediately” do not mean the same thing as “shall have prospective effect.”  The argument from the petitioner side is that if that was the intention, why wouldn’t the Legislature have simply said:  “This law shall only apply to claim petitions filed after the effective date.”  The meaning of the language “shall take effect immediately “ is open to interpretation.

In the meantime, what should employers and carriers do?  Suppose they settle a case without paying the new higher rates on hand and foot injuries, only to receive a decision a year from now from the Appellate Division ruling that they should have paid the increased weeks?  In that instance, the award would have to be reopened and corrected.  For this reason, it may be wise to reserve for this potential outcome until there is a decision.

What about petitioners’ counsel?  Suppose the Judge of Compensation rules that the petitioner is entitled to the benefit of the new law, only for the Appellate Division to rule a year from now that the law is not retroactive.  Does the petitioner owe the money back to the carrier?  Should an amount be set aside for that eventuality? 

The sooner we hear from the courts on this issue the better for all workers’ compensation practitioners. We thank the many counsel who have provided their input on this important issue.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, a shareholder and co-chair of Capehart Scatchard's Workers' Compensation department, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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