Workers' Compensation: Penalties for Delay in Payment Excessive

Waiting for timely payment of a workers’ compensation award can sometimes be a frustrating experience for an injured worker. The penalties assessed for the delay in paying a workers’ compensation award were an issue of first impression reviewed by the NJ Appellate Division.

Facts

The petitioner was injured and declared totally and permanently disabled due to a work-related event. Medical and temporary disability benefits were paid in a timely fashion. Outstanding with a payment of $173,483 at the time of the award.

The respondent, the County Hudson, made payment to the petitioner 76 days after the award or 16 days late, according to the statute (60-day). NJSA 34: 15–28. The trial court awarded simple interest as prescribed by the statute.

Penalties

In addition, the judge of compensation awarded a 25% penalty ($43,370) assessment under NJSA 34:15–28(a). Furthermore, the compensation judge assessed a fine payable to the Second Injury Fund of $5000 under NJSA 34:15–28 (B).

In response to the motion, the county of Hudson, the respondent, a public entity, cited two: excuses: the third-party administrator failed to submit the request for a payment timely to the February 2001 meeting of the county, and the respondent cited the Covid-19 health emergency as another reason for the disruption and inability to make payment on time.

Appellate Division Ruled

The New Jersey Appellate Division held that the compensation judge abused her discretion in imposing a manifestly excessive assessment under the circumstances. The reviewing court found that the $43,370 assessment was inappropriate. The Appellate Division reasoned that the Legislature had not specified what a presumptively unreasonable delay in payment of settlements proceeds was under the compensation court’s order.

Since this issue was a matter of first impression, the appellate court looked to California law, where discretion requires more than simply calculating the passage of time beyond the duty anticipated by the judge of compensation's order. Each case must be looked at and its facts. State Compensation Insurance Fund v. Workers’ Compensation Appeals Board, 959 P.2d 1204 (Cal. 1998) The Appellate Division held that litigation delays that pre-dated the payment order could not be considered an appropriate remedy. A decision to impose a penalty must be made rationally, based upon departure from established policies or have an impermissible basis.

The Appellate Division frowned that the compensation judge relied on personal ex parte correspondence from the petitioner setting out hardships resulting from the delay. The reviewing tribunal reflected that the compensation judge should not have awarded the maximum penalties for a mere 16-day delay in making payment in the absence of bad faith upon the respondent. See, Stancil v. ACE USA, 418 N.J. Super. 79, 12 A.3d 223 (App. Div. 2011), certification granted, (June 7, 2011) and certification granted in part, 23 A.3d 338 , 207 N.J. 66 (2011); new common-law remedy rejected 48 A.3d 991, 211 N.J. 276 (NJ 2012).

The matter was reversed and remanded back to the judge of compensation for proceedings consistent with the Appellate Division's decision.

LOUIS RIPP VS. COUNTY OF HUDSON, 472 N.J, Super. 600, 277 A. 3d 1071 (NJ App. Div. 2022)

Recommended Citation: Gelman, Jon L., Penalties for Delay in Payment, Workers' Compensation Blog, June 4, 2022), https://workers-compensation.blogspot.com/2022/06/penalties-for-delay-in-payment-excessive.html

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Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (Thomson-Reuters). For over five decades, the Law Offices of Jon L Gelman 1.973.696.7900 jon@gelmans.com have represented injured workers and their families who have suffered occupational accidents and illnesses.

Blog: Workers ' Compensation