Wilhelm v. Ryder Logistics & Transp. & Second Injury Fund, No. A-3770-18; Bozarth, Sr. v Burlington Cnty. & SIF, No. A-3792-18; Schiazza v. Western Oilfield Supply & SIF, No. A-3797-18; Pierce, Jr. v. CBF Trucking & SIF, No. A-3798-18, (App. Div. 6/21/21)

In four back-to-back appeals, the Appellate Division finds the triennial redetermination of average current monthly earnings was not applicable in New Jersey as a reverse offset state.

In four back-to-back appeals, the Appellate Division again affirmed the workers’ compensation court’s decisions, noting the petitioners were not entitled to a redetermination of benefits. In these cases, the petitioners all collected permanent and total disability benefits and Social Security Disability benefits. Wilhelm’s Social Security Disability application was pending, whereas Pierce’s and Schiazza’s applications were on appeal at the time of the total disability orders. They were required to notify the respondents and the Second Injury Fund (Fund) if Social Security Disability was approved so that reimbursements could be made for workers’ compensation benefits paid in excess of the Social Security Disability offset rate. Once they were approved for Social Security Disability, the Fund moved for reimbursement. The petitioners opposed, seeking a recalculation of the benefit rates to include a triennial redetermination of the average current monthly earnings (ACE). Bozarth also re-opened his case for same reason.

The cases were consolidated and tried in 2016-2017. The Fund produced Larry Crider as its witness, who was the administrator of Special Compensation Funds for the New Jersey Department of Labor since 1990. In 1980, he became involved in processing calculations for the Fund with the Social Security offset. He worked with compensation judges Alan Napier and Michael Cunningham. He testified that they agreed an offset was required if the “total of the weekly workers’ compensation benefits and the weekly equivalent of social security benefit exceed[s] [eighty] percent of the ACE.” There were no cost-of-living increases mentioned in the statute. Crider indicated that legislative history did not reveal an intent for a triennial review for the offset calculations.

He recalled that in 2004 or 2005 an attorney inquired whether petitioners were entitled to a triennial redetermination of ACE. Crider did his own research and requested Glenn Sklar, the Associate Commissioner of Disability Programs at the Social Security Administration, to provide clarification. Sklar confirmed that Social Security was precluded from taking a reduction in Social Security Disability in a reverse offset state and that their manual noted a reverse offset existed for Fund benefits in New Jersey. Crider concluded that N.J.S.A. 34:15-95.5 did not support a triennial redetermination and that 42 U.S.C. § 424a(d) excluded a reverse offset state from performing same.

The petitioners presented Alan Polonsky, an attorney with 30 years of experience handling Social Security benefit claims, as a witness. He was a staff attorney with the Social Security Administration Office of Hearing and Appeals until 1987 when he entered private practice. He related the triennial redetermination to a cost-of-living adjustment, but conceded he had never seen the triennial redetermination applied to a petitioner under the age of 62 receiving total disability benefits. He also confirmed the redetermination would not be applicable as New Jersey is a reverse offset state.

The Judge of Compensation issued an oral decision, finding N.J.S.A. 34:15-95.5 did not compel a triennial redetermination of ACE nor was it mentioned. Also, the judge found the petitioners neglected 42 U.S.C. § 424a(d). The petitioners’ motions for a triennial redetermination was denied, and the respondents’ and the Fund’s motions for offset and reimbursement were granted.

The petitioners appealed, arguing they were entitled to the redetermination of ACE under N.J.S.A. 34:15-95.5 until they reach age 62 and that the statute did not comply with 42 U.S.C. § 424a(f). The Fund contended the petitioners were precluded from asserting this issue as it was not presented before the total disability awards, and the respondents asserted there was no support for a triennial determination.

The Appellate Division briefly addressed the procedural bar raised by the Fund, noting the petitioners did not raise the triennial redetermination issue prior to the entry of the awards nor that their disability increased or decreased. It was noted the petitioners failed to meet the statutory criteria to re-open their cases. Nonetheless, the Appellate Division did address the substantive issue, as it was an issue of first impression. The Appellate Division noted that New Jersey is a reverse offset state, in which the workers’ compensation award is reduced rather than Social Security Disability. Both Crider and Polonsky testified that a person below the age of 62 is subject to the reverse offset if receiving total disability benefits.

As 42 U.S.C. § 424a(f) provided for a redetermination of the Social Security offset every three years, the petitioners argued the New Jersey Legislature intended to adopt the federal triennial redetermination. However, the Appellate Division noted the plain language does not include same and there was no mention in the legislative history. It was also indicated that 42 U.S.C. § 424a(d) created an exception for reverse offset states. As such, the Appellate Division found the triennial redetermination of ACE was not applicable in New Jersey as a reverse offset state.

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