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The End of Voluntary Offers in New Jersey?

By on June 22, 2018 in Court Rulings with 1 Comment

On June 21, 2018 the New Jersey Assembly passed Senate 2145, which is a bill long lobbied for by counsel for injured workers.  The measure passed by a 2-1 margin and now goes to the Governor for signature, the Senate already having passed the bill.  The legislation makes a significant change in removing the incentive for employers to make voluntary offers of permanent partial disability without having to pay a counsel fee on the amount offered.  The original legislation was passed in the 1920s and has stood the test of time – until now.

The law for the past 90 years was simply this: any offer of permanent partial disability made within 26 weeks of the last active medical treatment or return to work date to injured workers was not feeable.  Neither the petitioner nor the employer paid a fee on the amount of a valid voluntary offer.  Counsel fees to attorneys for petitioners were based only on amounts paid to injured workers in excess of the amount of the voluntary offer.  Injured workers benefited by receiving payments while their case was pending in the Division.  Those funds might help tide the worker over while the ultimate settlement was negotiated. The incentive to employers in making these payments was clearly avoidance of paying a counsel fee on the amount offered.

Under the new law to be signed by the Governor, a petitioner’s attorney is entitled to a fee on all amounts received by the injured worker if the attorney can prove an established attorney – client relationship pursuant to a written agreement prior to the date of the voluntary offer.  In other words, the claimant’s attorney gets a fee on all payments of permanency made after the date of the written engagement letter.

Counsel for petitioners have long argued that the voluntary offer rule, also known as the bona fide offer rule, was inherently unfair because attorneys may have put in a great deal of time and effort on a case only to have their fee reduced by a substantial voluntary offer made within 26 weeks of maximal medical improvement or return to work, whichever is later.

It will be interesting to see how employers react to this legislative change.  Some practitioners predict the end of voluntary offers except in truly rare cases.  The incentive to employers for the past 90 years was to save on counsel fees by making early offers of permanency.  Petitioners’ counsel as well as judges often request that employers make voluntary offers, recognizing that employers benefit by not paying a counsel fee on such early offers and that employees benefit by getting funds when they really need them. That incentive is now for the most part gone.  Arguably, the new legislation hurts petitioners as much as employers. The winners are petitioners’ attorneys, who have fought for many years for this change in the law.

One practical problem for employers is this:  an employer who is considering making a voluntary offer after the Governor signs this legislation has no way of knowing whether the injured worker has a signed agreement with counsel.  There is no obligation to reveal this information on the part of the injured worker.  Whether one has retained an attorney or not is confidential.  Of course, if the employer or carrier has received a letter of representation prior to the offer being made, the employer will know that any voluntary offer would be feeable.  In that situation, voluntary offers will almost never be made. But injured workers may or may not have counsel in the background.  So there may be situations where an offer is made, and the employer will only find out at the end of the case whether the offer is feeable.   An employer may think it is making a non-feeable voluntary offer only to be proven wrong at settlement when a valid attorney agreement is produced.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, an executive committee member and shareholder with Capehart Scatchard, 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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  1. Robert Franchetti says:

    John, I’ve never gotten much support in my circles within the insurance industry but I’ve always felt that Voluntary offers made it worthwhile to for a carrier to acknowledge where PPD was owed and pay it. A clear advantage to injured worker’s who should not need an attorney to get benefits that are provided within the statute. The non-feeable aspect made the idea saleable to employers who had less than a genuine appreciation for the concept of PPD. Now that the non-feeable aspect may be thrown out I suspect that no one will get PPD without needing counsel. That’s a shame.

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