Five Hot Tips In Workers’ Compensation Law

Workers’ compensation is a specialized area of practice, chosen by relatively few practitioners. For attorneys representing injured workers, the fees are relatively low, and one needs a volume of cases in order to make practicing in this area profitable.

However, even if an attorney decides not to practice in this area, she still may want to understand the laws’ basic principles, so she can recognize a good case when it walks through the door. Even more importantly, attorneys who advise business owners need to provide their clients with the basics for dealing with injured workers. What follows are five hot tips that non-workers’ compensation lawyers need to know about workers’ compensation.
HOT TIP #1: Understand the Legislative Bargain.

Workers’ compensation law is a creature of statute, and no statute comes about by accident. In order for an idea to successfully become a law, it must wind its way through two houses of the legislature, often run by separate political parties and signed by the governor, who may or may not be from the same party as the majority of the legislators.

The workers’ compensation law in New Jersey was first passed in 1911 and received a substantial overhaul in 1979. Essentially, the purpose of the law is two-fold; first, to provide compensation for workers injured on the job, and second, to provide employers with protection from personal injury lawsuits by their employees.

The very first line of the Workers’ Compensation Statute provides that employees may not sue their employer in torts for personal injuries. This is the employers’ side of legislative bargain. On the employees’ side there are three benefits workers receive in exchange for giving up the right to sue. However, for each benefit the workers receive, there is a counter-benefit to the employer. The three benefits in legislative bargain are as follows.
Medical Benefits

The law provides that an employer must provide medical treatment to an employee injured on the job, regardless of fault. There is no co-pay or deductible from the employee. All necessary medical treatment is paid by the employer 100 percent. What the employer receives in return is the right to direct treatment. That means, the employer or, rather, their insurance company, gets to pick the doctors who will treat the Petitioner. This is a right jealously guarded by workers’ compensation insurance companies, since they know the doctors who will provide the most conservative treatment.
Temporary Disablity

If an employee is unable to work due to his injuries, he is entitled to receive 70 percent of his lost wages until the doctor selected by his employer or his employer’s workers’ compensation carrier determines that he is either able to go back to work, or that no further medical treatment is necessary. However, the law caps temporary disability payments at $691 per week for 2006. This number is adjusted every year with the average weekly wage for a worker in New Jersey.
Permanent Disability

If the employee is left with some permanent disability after treatment is concluded, the employee is entitled to money for that permanent injury. The amount the employee receives is based on a chart and is relatively low. Furthermore, the employee must demonstrate that he has a “functional loss” and does not receive any money for his pain and suffering. This, in a nutshell, is the legislative bargain that is the workers’ compensation law.
HOT TIP #2: Know When The Workers’ Compensation Law Doesn’t Apply

Understanding the mechanics of the workers’ compensation law is important. However, perhaps even more important is understanding when the law does not apply. The following are the two most common exceptions to the no-fault workers’ compensation scheme.

First, workers’ compensation will not apply when an employer has committed an intentional wrong against the employee. The classic example of this is a punch in the nose. However, there are more subtle cases where the courts have found an intentional wrong that takes the matter out of the workers’ compensation scheme.

The court in Laidlow v. Hariton Machinery Company, 170 N.J. 602 (2002) held that an employee who lost much of her left hand in an accident with a machine could sue her employer for intentionally dismantling a safety guard on the machine and making it substantially certain that an employee in her position would be hurt. This “substantially certain” standard takes the case out of the workers’ compensation scheme and places it in the area of tort law, which is far more beneficial to the plaintiff and her attorney.

Another exception to the workers’ compensation law is an employee who is injured on the job as a result of being intoxicated or through horseplay. N.J.S.A. 34:15-7.1 The reason for such an exception is clear; an employer should not be responsible for injuries a worker causes to himself because he has acted in a reckless manner. However, as stated above, the workers’ compensation scheme is primarily a no-fault scheme, and comparative or contributory negligence do not play a part in that scheme.
HOT TIP #3: Understand How Other Benefits Fit Into the Workers’ Compensation Scheme

Employees who are injured on the job frequently do not want to bring a workers’ compensation case because they feel that it will jeopardize their good relationship with their employer. Often, they use their health insurance to pay for work-related medical bills and seek disability from the Department of Labor’s Division of Disability Insurance to compensate them for lost wages. This can be a big mistake for an employee.

If the State of New Jersey or the employee’s insurance carrier finds out later, perhaps through medical records, that his injury is work related, they may seek to recover from him the money paid out in benefits. It is, therefore, important to advise workers to seek benefits through the proper workers’ compensation channels when they are injured on the job.
HOT TIP #4: Know the True Value of a Section 40 Lien

A Section 40 lien under workers’ compensation arises when workers’ compensation has paid benefits to the employee, yet there is a third-party responsible for the employee’s injuries in tort. The classic example of this scenario is when an employee is injured on the job in a motor vehicle accident. If the accident is the fault of another driver, that other driver can be sued in tort. However, workers’ compensation may pay for the injured employee’s medical benefits and lost wages. Under Section 40 of the Workers’ Compensation Statute, the workers’ compensation carrier has the right to recover monies it has expended on behalf of the injured employee.

Frequently, judges and defense attorneys will tell plaintiff’s attorneys that they are only entitled to collect two-thirds of that lien, or even worse, that they are not entitled to recover that lien at all because of the New Jersey Collateral Source Rule. Both of these contentions are false.
An attorney is entitled to recover from a culpable defendant the entire amount of the workers’ compensation lien. The reason it is reduced by a third is because the lawyer is entitled to take a fee on the money he recovers for the workers’ compensation carrier. By reducing the lien by one-third, the defense is essentially cutting out the plaintiff’s attorney’s fee.
Moreover, the Collateral Source Rule does not apply to the Workers’ Compensation Statute. Therefore, at trial the plaintiff is entitled to submit proof of the amount of this lien to the jury.
HOT TIP #5: Know How to Advise Business Owners Regarding Injured Workers

N.J.S.A. 34:15-39.1 makes it illegal for an employer to terminate or otherwise discriminate against an employee for seeking workers’ compensation benefits or for agreeing to testify in a workers’ compensation case. If an employer discriminates against an employee for this reason, he is opening himself up to a much larger claim than the initial workers’ compensation claim.
Business owners should be advised strongly against discriminating against employees who file workers’ compensation claims.