Defense Digest 12/08: Supreme Court Renders Decision Regarding Application Of Dependency Rate In Workers' Compensation Matters

By Angela Y. DeMary, Esq.*

New Jersey - Workers' Compensation

Since discussing the issue of whether there should be a retroactive application of the 2004 modification of the New Jersey workers' compensation Statute 34:15-13 in the January 7, 2008, issue of the Law Journal, the Supreme Court has rendered a decision. In its unanimous decision of June 9, 2008, the Supreme Court held that the 2004 amendment to Section 13 setting forth calculation of dependency rates should not be applied retroactively. Practically speaking, the amendment applies to claims filed by dependents of workers who died on or after the effective date of the amendment or January 14, 2004. Should the claimant be entitled to dependency benefits under this amendment, the weekly benefit rate will be 70 percent of the deceased's wages regardless of how many dependents.

Prior to the amendment in 2004, the workers' compensation Statute provided for a sliding scale computation of the weekly benefit rate for a dependent. Specifically, the Statute gradually increased from an entitlement of 50 percent of the deceased's wages if there was one dependent up to 70 percent of those wages if there were five or more dependents. For instance, if the deceased made $500 per week, one dependent would be entitled to weekly benefits of 50 percent of those wages or $250. In contrast, if there were five or more dependents, the weekly dependency benefits would be paid at 70 percent of those same wages or $350 per week. Under the 2004 amendment, there is no distinction between one or more dependents. Even one dependent would be entitled to 70 percent of the deceased's weekly wages.

The issue of application of the amendment to Section 13 arose as a result of four workers' compensation matters consolidated on appeal: Luz M. Cruz v. Central Jersey Landscaping, Inc.; Hohl v. Insulated Duct & Cable Company; Bush v. Kauffman & Minteer, Inc.; and Herzer v. Classic Cars Nissan, Inc. In the Cruz matter, the deceased expired over two years prior to the amendment. The claim petition was also filed in 2002 with benefits paid without the entry of a formal award. In the Hohl matter, the deceased expired over one year prior to the amendment. Benefits were paid at that time without the filing of a claim petition and entry of formal award. Likewise, the deceased in the Bush matter expired over two years prior to the amendment. The claim petition was also filed in 2002. However, unlike the above matters, this matter was not resolved until after the amendment of the Statute. In the final matter of Herzer, the deceased expired over one year prior to the amendment. A claim petition was filed thereafter. Like Bush, the matter was not resolved until after the amendment of the Statute. All of these claimants sought application of the amendment to their claims, which would have entitled them to receive the flat rate of 70 percent of the decedents' wages. The Supreme Court held that they are not entitled to the increased flat rate. The amendment applies to claims filed as a result of deaths that occurred on or after January 14, 2004, only.

In analyzing whether there would be retroactive application of the amended Statute, the Supreme Court looked at the legislative intent behind the amendment. The Court recognized that retroactivity applies in three circumstances: (1) when the intent is expressed in the language; (2) when the amendment is curative in nature; or (3) when the expectations of the parties so warrant. In the absence of these circumstances, the Court looked at the general rule of statutory construction. As a general rule, the Court found that "notions of fairness and due process" prefer prospective versus retroactive application of a new amendment.

As to the issue of dependency rate, the Court further acknowledges prior holdings by the Court that death benefits accrue and the right thereto vests on the date of death. The Court also took note of the lack of anything in the legislative history to indicate or suggest a retroactive application. The Court further emphasized the Legislature's use of language "shall take effect immediately" as an indicator of a prospective versus retroactive intent. Lastly, the Court looked at the fiscal note accompanying the Bill for the amendment, indicating that the same contained no analysis of the impact on existing or previously settled claims. The Court found such an expansive view of the amendment to be impractical.

This decision finalizes the issue of retroactive or prospective application of the dependency rate amendment. However, the decision also provides guidance in addressing future issues of retroactive versus prospective application of newly amended law.

For additional information on this and other issues, please visit the state of New Jersey Department of Labor and Workforce Development website at:

http://lwd.dol.state.nj.us/labor/wc/wc_index.html.

*Angela is an associate in our Cherry Hill, New Jersey, office. She can be reached at (856) 414-6409 or aydemary@mdwcg.com.