COVID-19 Resource Center

September 11, 2018

New Jersey Governor Signs Legislation Limiting Fee Reduction for Voluntary Tenders

As many New Jersey Workers' Compensation defense practitioners are aware, the bona fide voluntary tender (or "VT") has been an effective vehicle to permit employers to offset a portion of attorney fee exposure associated with a permanency award by issuing a voluntary payment of permanency to an injured worker, while at the same time incentivizing the employer to issue such payments to injured workers in financial need.

In this regard, the New Jersey Workers' Compensation Act contained a provision, N.J.S.A. 34:15-64, which allowed an employer/its insurance carrier/TPA to extend a VT to an injured worker.  The Statute provided that when a VT is offered in good faith and within a reasonable time, which is described as either within twenty-six (26) weeks from the date of notification to the employer of an accident (or occupational disease), or when the injured worker completes his or her active medical treatment from the accident, or within twenty-six (26) weeks after the injured employee returns to work.  If issued during that statutory time frame, the "tender" is considered "bona fide."  In the past, if issued in a timely fashion, these payments were not subject to an attorney's fee, thereby resulting in some level of monetary savings for the employer once the matter is ripe for formal resolution and/or trial.

On August 24, 2018, New Jersey Governor Phil Murphy signed a new bill into law, thereby amending N.J.S.A. 34:15-64.  Same effectively amends paragraph (c) of Section 64 and revokes the benefits afforded to employers and workers' compensation insurance carriers in providing bona fide voluntary tenders of permanent disability benefits to injured workers who are represented by counsel.  Under the enacted Section 64 amendments, the injured worker's attorney is now entitled to legal fees for all compensation benefits tendered after the establishment of an attorney-client relationship pursuant to a written agreement.

Under the new law, Petitioner's attorneys will be entitled to a fee on all benefits paid to a petitioner if those payments occur after the date of a signed agreement between counsel and the injured worker.  An employer can still make an offer of permanency if the employer so desires and get a dollar credit at the time of ultimate resolution; however, for practical purposes there will be no way to know whether the voluntary offer will be feeable as there is no obligation on the part of the injured worker to disclose to the employer or carrier whether he or she has a signed agreement with counsel.  In many cases, the adjuster may be well aware that the injured worker has an attorney, and can therefore infer that there is an attorney-client relationship, for all practical purposes.

The amendment raises several questions and dramatically impacts the landscape of New Jersey Workers' Compensation by not only eviscerating the employer/insurance carrier's benefit and incentive associated with VT issuance, but it may also create an undue and unnecessary financial hardship to the injured worker that the Act is designed to protect, as carriers will be far less likely to issue VT payments as they have in the past.