- Disability Pensions and New Jersey Workers' Compensation
- July 30, 2013 | Author: Scott J. Endlein
- Law Firm: Capehart & Scatchard, P.A. - Mount Laurel Office
Like N.J.S.A. 34:15-40, which prohibits the double recovery of workers' compensation awards and recoveries in related third-party claims, there exists a statutory framework and a long-standing public policy tprevent double recovery in the situation in which a claimant receives both a workers' compensation award and an accidental or ordinary disability pension. Specifically, N.J.S.A. 34:15-43 reads in pertinent part that "[n]former employee whhas been retired on pension by reason of injury or disability shall be entitled under this section tcompensation for such injury or disability." A series of offsets are in place tprevent such double recoveries, and the outcomes of those offsets depend on whether a claimant is receiving an accidental or an ordinary disability pension.
In the world of workers' compensation, there are three particular public employee pension systems of interest: the Public Employees' Retirement System (PERS), the Teachers' Pension and Annuity Fund (TPAF), and the Police and Firemen's Retirement System (PFRS). One significant way in which the three systems vary is in the amount of the yearly allowance of the pension. Under the PERS and TPAF, a qualified claimant is entitled t72.7% of annual salary at the time of the traumatic event for an accidental disability pension, and 43.6% of Final Average Salary (FAS) or 1.64% of FAS for each year of service credit, whichever is higher, for an ordinary disability pension. Under the PFRS, a qualified claimant is entitled t2/3, or 66.67% of annual salary at the time of the traumatic event for an accidental disability pension, and 40% of annual salary or 1.5% of the Final Compensation for each year of service credit, whichever is higher, for an ordinary disability pension. State of New Jersey Department of the Treasury - Division of Pensions and Benefits: Information for Active Employees, http://www.nj.gov/treasury/pensions/active-home.shtml.
Generally, there are three options workers' compensation claimants are left with that must be reviewed when examining the interplay between a workers' compensation claim and an application for a pension:
Litigate the workers' compensation case (if a monetary award is entered, the Division of Pensions and Benefits will receive the offset in the case of an accidental disability pension).
Voluntarily dismiss the workers' compensation case, and avoid the offset issue altogether.
Agree ta continuing medical monitoring order through an Order Approving Settlement, with npermanency awarded.
Memorandum from Peter J. Calderone, Director and Chief Judge on Public Employee Pension Issues Affecting Workers' Compensation Awards (November 16, 2006) at 2.
Accidental Disability Pensions
Generally, a public employee may receive an accidental disability pension in the event of being totally and permanently disabled as a result of a traumatic event. Please see N.J.S.A. 43:15A-43 (PERS); N.J.S.A. 18A:66-39 (TPAF); N.J.S.A. 43:16A-7 (PFRS), and Richardson v. Board of Trustees, Police and Firemen's Retirement System, 192 N.J. 189 (2007) for further clarification as twhat qualifies as a traumatic event for an accidental disability pension.
When a claimant receives both an accidental disability pension and a workers' compensation award, the petitioner cannot retain both; there will be a dollar-for-dollar offset. If a monetary award is entered in the Division of Workers' Compensation, the Division of Pensions and Benefits will pay out the pension at a reduced rate, while the public employer is left tpay the workers' compensation award at the full rate. See generally N.J.S.A. 43:15A-25.1(b); N.J.S.A. 34:15-43; and the holding of the Appellate Division in Wright v. Port Authority of New York and New Jersey, 263 N.J. Super. 6 (App. Div.), certif. den., 133 N.J. 442 (1993). N.J.S.A. 43:15A-25.1 provides in relevant part that:
[i]f a retirant receiving an accidental disability retirement allowance becomes a recipient of periodic benefits under the workers' compensation law after the date of retirement, the pension portion of the retirement allowance payable tthe retirant shall be reduced, during the period of the payment of the periodic benefits, dollar-for-dollar in the amount of the periodic benefits received after the date of retirement.
In deciding on the issue, the Appellate Division rested its holding on "the legislative intent manifested by these provisions: tprevent double recovery." Wright, 263 N.J. Super. at 21.
If a public employee is receiving an accidental disability pension and has filed a workers' compensation claim for the same accident, the most desirable option for the respondent public employer generally is tpursue the medical monitoring order. By settling such a claim through an Order for Continuing Medical Monitoring, the respondent public employer agrees tpay for causally-related treatment in the future waiving the statute of limitations. In exchange, the petitioner foregoes any award of permanent disability in connection with the workers' compensation claim. Because there is npermanency award paid out on the workers' compensation claim through an Order for Continuing Medical Monitoring, the Division of Pensions and Benefits is not entitled tany offset and pays the pension at the full amount, while the public employer only pays for causally-related medical treatment.
Ordinary Disability Pensions
In order treceive an ordinary disability pension, there is nrequirement of a traumatic event. Please see N.J.S.A. 43:15A-42 (PERS); N.J.S.A. 18A:66-39 (TPAF); and N.J.S.A. 43:16A-6 (PFRS) for the requirements for a public employee seeking an ordinary disability pension. When dealing with an ordinary disability pension, the respondent public employer may alsbe entitled tthe offset.
In Rosales v. Dept. of the Judiciary, 373 N.J. Super. 29 (App. Div. 2004), certif. den., 182 N.J. 630 (2005), the Appellate Division was presented with the issue of "whether Workers' Compensation benefits should be offset by an ordinary disability retirement based upon the same disability." Rosales, 373 N.J. Super. at 31. The petitioner filed several workers' compensation claims, an application for an ordinary disability pension, and a Second Injury Fund application on the basis of a diagnosis of bilateral carpal tunnel syndrome and associated pain in her arms, wrists, and hands. Id. at 31-35. A trial was held before the Honorable Lawrence Moncher, JWC, in 2002, in which the petitioner was found tbe totally and permanently disabled, and was most likely entitled tSecond Injury Benefits. Id. at 36. Judge Moncher ordered the respondent tbegin paying total permanent disability benefits tthe petitioner, pending a decision on Second Injury Fund liability. Id. The carrier for respondent, Risk Management, argued that the petitioner's total permanent disability benefits should be negated due tthe fact she was alsreceiving an ordinary disability pension. Id. at 37. Judge Moncher rejected this argument on the grounds that pension offsets were tapply only in the case of an accidental disability pension.
On appeal, the Appellate Division ruled in favor of Risk Management and the respondent, holding that "[t]he long standing public policy of N.J.S.A. 34:15-43 prohibits the dual recovery of both pension benefits and Workers' Compensation benefits for the same disability." Id. at 38. The Appellate Division specifically noted that if Judge Moncher's ruling stood, then the petitioner would be entitled tworkers' compensation benefits, pension payments, and Social Security benefits, which would entitle her tmore compensation as a retiree than if she was able tcontinue working, and thus ruled that an offset must be utilized tprevent a double recovery. Id. at 45.
Because the Division of Pensions and Benefits nlonger sought ttake an offset of ordinary disability pensions, the door was left open for the public employer tuse the offset. Id. at 40. The case was ultimately remanded tthe Division of Workers' Compensation tdetermine the outcome of the offset. Id. at 45. On remand, the Honorable Judge Richard E. Hickey, III, concluded:
[h]aving heard the argument of counsel and having received additional memorandum from the State of New Jersey it is the decision of this court that the State of New Jersey [the public employer] ... is entitled tan offset for benefits received under an ordinary disability pension for those conditions which represent both the award of pension and workers' compensation. (emphasis added)
Rosales v. State of New Jersey, CP No. 1999-7099, decision on remand, (April 13, 2005). This last portion is significant for the reason that in the case of an ordinary disability pension, the public employer is only entitled tan offset from the portion of the pension "for those conditions which represent both the award of pension and workers' compensation." Id. Additionally, there is noffset for the annuity portion of a claimant's pension, which represents the portion the employee pays intthe pension.
The Mechanics of the Offset
The calculation of the offset can be boiled down tan evaluation of a claimant's weekly payment rate under the pension and the weekly payment rate under the workers' compensation award. In the case of the ordinary disability pension, where the pension itself is based solely on the same condition which comprises the workers' compensation award, "the entire pension can be used toffset the workers' compensation award." Id. However, in the more common scenariwhere the pension is based on a number of conditions, some of which may not alsbe a part of the workers' compensation award, the offset tthe public employer will only be based on the portion of the pension comprising the same conditions as the workers' compensation claim. For example, if a claimant is found tbe 50% partially totally disabled in the workers' compensation claim, but there are additional conditions making up the ordinary disability pension, then the public employer's offset based on the pension is cut in half.
Consider the following illustration using a hypothetical public employee in the PERS system with a yearly salary of $150,000.00 whreceives an award of 50% partial total at 2012 rates, and an ordinary disability pension, for which 50% was related tthe workers' compensation accident and 50% was due tunrelated causes. Assume the following approximate figures:
Workers' Compensation award
300 weeks of payments at a rate of $540.00 per week
Total award of $162,000.00
The claimant is entitled t43.6% of his yearly salary for the ordinary disability pension, and is thus paid at a rate of approximately $1,250 per week
$1,000 hypothetically represents the pension portion
$250 hypothetically represents the annuity portion
Assuming that the claimant is 50% disabled as a result of the work-related accident and the remaining 50% of overall disability comprising the pension is unrelated, then the public employer is entitled ta $500 offset in the payment of the workers' compensation award. Therefore, the pension is paid at the full rate of $1,250, while the rate of compensation for the workers' compensation award will be reduced t$40 per week. It is important tremember, however, that there is noffset on the portion of the award that goes tthe claimant's attorneys fees and costs. In the above hypothetical scenario, then, the claimant would ultimately receive a reduced overall workers' compensation award, while the pension is paid at the full rate.
Given the benefit tthe public employer of seeking an Order for Continuing Medical Monitoring when dealing with an accidental disability pension and of the offset tthe public employer when dealing with an ordinary disability pension, it will be critical for public employers and their attorneys tensure that all issues of pensions have been determined prior tany resolution of a workers' compensation claim.