NJCJI believes that workers who are injured on the job deserve to be fully compensated for their injuries. Furthermore, workers should not have to hire an attorney to get the benefits they are due. These basic principles are what underlie our opposition to S374/A3403, which would award more money to workers compensation attorneys at the expense of their injured clients.
New Jersey’s existing workers comp law encourages employers to make prompt, good faith settlement offers to injured employees. If an employee decides to hire an attorney to sue the employer for additional compensation, the law states that the employee’s attorney is to be awarded fees based only on the portion of the award in excess of what was originally offered by the employer.
A3403 would instead base attorney fees on the full amount of the employee’s workers comp award, regardless of how much, if any, additional money the attorney was able to get their client. Attorney fees are deducted from the injured worker’s award, so the extra money going to attorneys under this bill is coming directly out of their injured client’s pockets! This is unconscionable.
The existing formula fosters good public policy in several ways. Most obviously, it encourages prompt, good faith payments to injured employees. It also ensures that the incentives for litigating claims are aligned with the incremental benefit of the potential litigation. To the extent that the current formula dis-incentivizes unnecessary litigation, it ensures maximum compensation for employees at a minimum cost to employers.
The proposed bill, by contrast, would undo all of those beneficial incentives. Eliminating the potential savings for prompt settlements reduces the potential risk and costs of contesting claims, encouraging more delayed and contested settlements. Compensating plaintiff’s counsel for the entire award grants an unwarranted windfall to the attorney bringing the claim, at the expense of the injured employee. It also over-incentivizes litigation, eliminating the attorney’s incentive to consider the likelihood that he will recover any additional compensation for the employee over what the defendant has already paid.
On December 11, NJCJI testified against S374/A3403 in the Assembly Labor Committee. Despite hearing compelling testimony from NJCJI and other opponents of the legislation, the committee voted 5-2-1-1 to advance it to the full Assembly for a vote. The bill passed the Senate by a vote of 23-12-5 on June 30.
If you would like additional information about this legislation, or would like to help NJCJI oppose this legislation as it moves forward, please contact NJCJI’s Chief Counsel Alida Kass.