The Honorable Joshua Friedman decided an issue this month that has been pending for several years regarding calculation of the Social Security Disability offsets in workers' compensation cases for petitioners under the age of 62. A petitioner's attorney had brought motions in five cases including one handled by our office, asserting that the SSD offset had been calculated incorrectly because the petitioner's rate should change and increase every three years in accordance with rate changes in Social Security – the triennial recalculation. While we do not normally write about cases decided in the Division of Workers' Compensation, this case is an exception because it is the only decision that we know of in the state dealing with the issue of triennial recalculation.
The total and permanent disability provision of the workers' compensation statute NJSA 34:15-95.5 indicates that offsets should be calculated in conjunction with the SSD statute 42 USC 424(a). In most states, if a petitioner gets both SSD and workers' compensation the SSD is reduced to insure that the petitioner does not earn more than his 80% average current earnings. In a handful of states, including NJ, there is a “reverse offset” – if the combination of SSD and workers' compensation is more than the 80% average current earnings (ACE), then the workers' compensation rate is reduced, not the SSD. This offset can make a total disability award very attractive monetarily for the respondent and the Fund. This offset is only applicable for total and permanent disability resolutions.
The petitioner's attorney had argued that since SSD re-determines the ACE every three years that workers' compensation was required to do the same. This would mean that every offset case would have the rate increased every three years by an amount determined by Social Security which takes in effect national wage factors, inflation, cost of living etc. The effect of the change that the petitioner was seeking would be to both increase the exposure for every total disability case for a worker under 62 and also insert uncertainty regarding the amount of the award. Another potential issue is that any change in the NJ workers' compensation statute regarding the offset could result in the loss of the “reverse offset” for the entire state, converting NJ to a state where Social Security, rather than workers' compensation gets the offset.
The motions were pending for a very long time with multiple briefs provided by each party and testimony offered regarding legislative intent regarding NJSA 34:15 – 95.5. and Social Security. In his decision, Judge Friedman stated that the triennial recalculation is essentially a cost of living adjustment, which was not contemplated by the Workers' Compensation Act. He also found important the fact that Social Security does not make triennial recalculations in reverse offset states. He believed that the calculations that the petitioner's attorney provided were merely hypothetical, not official calculations from Social Security. Judge Friedman also decided that the Supremacy Clause, which holds that Federal law pre-empts conflicting State law, was not applicable because there was no intent in the Federal law to “occupy the field” for payment of workers' compensation disability benefits.
This decision is a very favorable outcome for the respondents and the Fund. A contrary decision would have been extremely disruptive to both pending total and permanent disability cases and potentially cases already settled or tried. At this time we do not know if the case will be appealed. Claire Ringel of our office handled this case for respondent Burlington County. Please direct any questions regarding this issue to her.
John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers' Compensation Group. Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers' compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e?mail at email@example.com.
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