The Workers' Compensation COLA bill, S929, was pulled from the Assembly Board list on March 26, and no vote was taken in the New Jersey Legislature. This legislation will probably not be voted on until after the budget break, however, the bill does have support. The cost of the legislation may be the primary reason for the Assembly appropriations committee to vote no and/or the Governor to veto the bill if it reaches his desk.
The bill provides (from July 1, 2015 forward) an annual cost of living adjustment (COLA) in the weekly workers' compensation benefits rate for workers rendered totally and permanently disabled from a work place injury, and for the surviving dependents of any worker who dies from a work place injury (dependency benefit). The COLA would be an amount such that when added to the workers' compensation weekly benefit rate initially awarded, the sum would bear the same percentage relationship to the maximum benefit rate at the time of the adjustment at the initial rate, or to the maximum rate at the time of the initial award except:
- The amount of the adjustment is reduced as necessary to ensure that the sum of the adjustment and the amount initially awarded does not exceed the amount which would cause any reduction of Social Security Disability Benefits;
- The Bill reduces supplemental workers' compensation benefits for employees injured after 1979 by the amount of any Social Security Disability Benefits, black lung benefits or employer share of disability pension payments received from or on account of an employer;
- The Bill requires that the COLA benefits will not be paid to any individual who elects not to receive benefits under the Federal Old Age & Survivor Disability Act.
The current law requires adjustments in the rate of workers' compensation benefits for death and total disability for of injuries, or death, occurring before January 1, 1980. This special adjustment was created due to the significant changes made to the workers' compensation statute that took effect in 1980 that substantially increased the value of significant permanent disabilities. The current law already automatically adjusts the rate of compensation on an annual basis based upon the state average weekly wage.
In regard to the new COLA proposal, the New Jersey State Bar Association set forth its opposition to the legislative proposal with the following position statement:
The New Jersey State Bar Association opposes this legislation in order to preserve the "Reverse Offset" provision in New Jersey, visa vie Social Security, which provides for a reduction of the workers’ compensation benefit of a worker also receiving disability insurance. Enacting this legislation has the potential of harming the economic integrity of New Jersey's current cost effective system by allowing for a double recovery of disability benefits and workers' compensation benefits, which will in turn increase the cost of doing business in New Jersey. A potential alternative that would limit these adverse consequences would be to limit the application of the bill to survivor/death benefits.
Others opposing the legislation include the New Jersey Chamber of Commerce, the New Jersey Food Counsel and the New Jersey Business Industry Association.
If fully implemented, the bill is anticipated to cost $58 million dollars annually in fiscal year 2018, according to the Office of Legislative Services. All costs are to be offset by additional surcharges levied on certain workers' compensation policy holders and self-insured employers that are deposited into the Second Injury Fund.
This bill extends those adjustments paid from the Second Injury Fund to claims originating after December 31, 1979, although the adjustments would apply only to benefits paid on those claims after July 1, 2015.
It is proposed that the special adjustment be phased in, in increments over a three year period to "avoid an abrupt fiscal impact on the workers' compensation system." One- third of the special or supplemental benefit rate would be paid during the first year, two-thirds of the rate during the second year and the full amount during the third and subsequent years.
The bill contains strict time limits for workers' compensation insurance carriers and self-insured employers to notify the Second Injury Fund when a supplemental workers' compensation benefit is required under the bill. An insurer or self-insured employer is required to provide notice not more than 60 days after the supplement is awarded over a voluntary payment has begun and failure to notify the Second Injury Fund results in the insurer or employer being required to make the payment until such required notice is provided.
By: Mark Setaro and Richard Tavani