To:
From:
Re:
Date:
Commission
Keith P. Ronan
Attorney Fees in Workers’ Compensation Claims
October 11, 2011
MEMORANDUM
Commission Staff monitors case law in the State to identify decisions in which the court
calls for Legislative review or action. This memorandum results from one such case and seeks
Commission authorization for a project modifying N.J.S. 34:15–28.1 to address the issue of
attorney fees. Quereshi v. Cintas Corp., 413 N.J. Super. 492 (App. Div. 2010), examined
whether a judge of compensation must award reasonable attorney fees when a self-insured or
uninsured employer or employer's insurance carrier unreasonably delays payment of temporary
disability compensation upon having actual knowledge of the occurrence of the injury or notice
that compensation is due. The court held that attorney fees are mandatory and not limited by
N.J.S. 34:15–64a, which governs “fee awards following an award of benefits.” Id. at 467. Staff’s
research to this time has not revealed a trend of a mandatory attorney fees, but the Quereshi
decision may be the first in that direction.1
In Quereshi, the plaintiff suffered a work-related injury, and on October 22, 2003, the
court ordered the respondent employer to pay plaintiff’s temporary disability benefits. Id. at 468.
Subsequently, “[t]he employer failed to timely pay the temporary benefits as required by [the
order,]” and the plaintiff sought a penalty under N.J.S. 34:15–28.1. Ibid. The judge found that
the employer “had paid the benefits more than thirty days after entry of his order . . . and
assessed a penalty of 25% of the temporary benefits owed.” However, the judge refused to
award attorney fees because he awarded attorney fees on his original 2003 order, and deemed the
current 25% penalty sufficient. Ibid.
The statutory framework is as follows. N.J.S. 34:15–28.1 states that benefits must be
promptly paid and if a respondent negligently or unreasonably delays payment, a penalty is
assessed, “and reasonable attorneys’ fees shall be paid.” Ibid. (emphasis added). Additionally,
“[a] delay of thirty days or more gives rise to a rebuttable presumption of unreasonable and
negligent conduct by the respondent.” Ibid. The referenced section addresses delay or refusal in
payment of temporary disability compensations and penalties in the following circumstances:
If a self-insured or uninsured employer or employer's insurance carrier, having
actual knowledge of the occurrence of the injury, or having received notice
thereof such that temporary disability compensation is due pursuant to R.S. 34:1517, unreasonably or negligently delays or refuses to pay temporary disability
1
Quereshi was applied in Chase Bank USA, N.A. v. Staffenberg, 419 N.J. Super. 386, 396 (App. Div. 2011), where
the Appellate Division held that inclusion of “[attorney] fees as taxed costs of suit is mandatory under N.J.S. 22A:2–
42.” The court applied the statutory framework of Quereshi that “‘[t]he use of the word ‘shall’ ordinarily denotes
action that is mandatory, unless the context suggests otherwise.’” Ibid. (quoting Quereshi v. Cintas Corp., 413
N.J.Super. 492, 498 (App. Div. 2010)). Therefore, because N.J.S. 22A:2–42 provides that “[t]here shall be taxed by
the clerk of the Superior Court, Law Division, Special Civil Part in the costs against the judgment debtor, a fee to
the attorney of the prevailing party,” there are mandatory attorney fees in Special Civil Part actions. See ibid.
(emphasis added).
Workers’ Comp. – mandatory attorney fees – Memorandum – 10/11/11 – Page 1
compensation, or unreasonably or negligently delays denial of a claim, it shall be
liable to the petitioner for an additional amount of 25% of the amounts then due
plus any reasonable legal fees incurred by the petitioner as a result of and in
relation to such delays or refusals. A delay of 30 days or more shall give rise to a
rebuttable presumption of unreasonable and negligent conduct on the part of a
self-insured or uninsured employer or an employer's insurance carrier.
[N.J.S. 34:15–28.1.]
To determine whether attorney fees are mandatory under N.J.S. 34:15–28.1, the Quereshi
court looked at the plain language of the statute and its legislative history. Quereshi, supra, 412
N.J. Super. at 469. The court noted that the purpose of the statute was to ensure prompt payment
to “ameliorate the economic disruption occasioned by a workplace injury and the loss of a
regular paycheck.” Ibid. (citing Amorosa v. Jersey City Welding & Machine Works, 214 N.J.
Super. 130, 137). The specific language in question was the use of “shall” and “plus” in the
phrase, “it shall be liable to the petitioner for an additional amount of 25% of the amounts then
due plus any reasonable legal fees.” N.J.S. 34:15–28.1. (emphasis added). The court found that
the word “shall” ordinarily denotes mandatory action and the preposition “plus” commonly
means “increased by.” Quereshi, supra, 412 N.J. Super. at 469. Thus, the court found that “the
judge must award both the statutory penalty and a reasonable legal fee.” Ibid.
Having found attorneys fees mandatory, the court examined whether attorney fees
granted under N.J.S. 34:15–28.1 are limited by N.J.S. 34:15–64a. Id. at 470. Subsection 64a
provides that “[t]he official conducting any hearing under this chapter may allow to the party in
whose favor judgment is entered, costs of witness fees and a reasonable attorney fee, not
exceeding 20% of the judgment.” The employer argued that because Subsection 64a and
Subsection 28.1 require “reasonable” attorney fees, a judge of compensation awarding attorney
fees under Subsection 28.1 is bound by the 20% limit in Subsection 64a. Quereshi, supra, 412
N.J. Super. at 471. The Appellate Division disagreed. Ibid. The court found the lack of a cap
referenced in Subsection 28.1 dispositive. Ibid. The court reasoned that the reasonableness
standard in Subsection 28.1 “should reflect the actual cost to obtain the previously ordered
benefits.” Ibid. Furthermore, the court analogized Subsection 28.1 to Subsection 28.2, which is
referenced in the former subsection. Ibid. Subsection 28.2 “provides the judge of compensation
with further remedy to address non-compliance with orders,” and also lacks a limitation on
attorney fees. Ibid. More importantly, the court recognized that during debate in the Assembly,
Subsection 28.2 was amended “to delete language that would have limited the fee to 20% of the
sum awarded to enforce the order.” Ibid. The court found that the congruence of language
between the statutes indicated that they “are designed to provide similar remedies, [and t]he
deletion of the cap in the subsequently adopted remedial section is further evidence that section
28.1 legal fees are not capped at 20% of the penalty assessed.” Ibid.
In summary, the court held that attorney fees are mandatory under Subsection 28.1, and
attorney fees are not subject to the 20% restriction found in Subsection 64a. In light of the
appellate court’s decision, Staff seeks the Commission’s guidance on whether to pursue
modifying N.J.S. 34:15–28.1, and/or N.J.S. 34:15–64 to reflect the court’s interpretation. Staff
has prepared two draft changes to the statutes.
Workers’ Comp. – mandatory attorney fees – Memorandum – 10/11/11 – Page 2
DRAFT
N.J.S. 34:15-28.1. Delay or refusal in payment of temporary disability compensation;
penalty
If a self-insured or uninsured employer or employer's insurance carrier, having
actual knowledge of the occurrence of the injury, or having received notice
thereof such that temporary disability compensation is due pursuant to R.S. 34:1517, unreasonably or negligently delays or refuses to pay temporary disability
compensation, or unreasonably or negligently delays denial of a claim, it shall be
liable to the petitioner for an additional amount of 25% of the amounts then due
plus and it shall be liable to the petitioner for any reasonable legal fees reflecting
the actual cost to obtain the previously ordered benefits incurred by the petitioner
as a result of and in relation to such delays or refusals. Any legal fees granted
under this subsection shall not be subject to the 20% statutory limit under N.J.S.
34:15-64a. A delay of 30 days or more shall give rise to a rebuttable presumption
of unreasonable and negligent conduct on the part of a self-insured or uninsured
employer or an employer's insurance carrier.
COMMENT
The revision in N.J.S. 34:15-28.1 reflects the extent to which an employer who unreasonably or negligently
delays or refuses to pay temporary disability payments is liable to pay reasonable attorney fees to the petitioner. The
revision codifies the reading of the statute found in Quereshi v. Cintas Corp., 413 N.J. Super. 492 (App. Div. 2010).
In Quereshi, the court found that “the judge must award both the statutory penalty and a reasonable legal
fee,” because the use of the word “shall” in Subsection 28.1 denotes mandatory action and the preposition “plus”
subsequent to “shall” means “increased by.” Id. at 469. To clarify the court’s statutory interpretation, this revision
removes the word “plus” and instead reuses the word “shall” to denote mandatory action.
Additionally, in Quereshi, the court stated that reasonable attorney fees “should reflect the actual cost to
obtain the previously ordered benefits.” Id. at 471. This revision inserts the language used by the Quereshi court to
elucidate the understanding of reasonable attorneys’ fees under Subsection 28.1.
Furthermore, this revision reflects the court’s finding that reasonable attorney fees granted under N.J.S.
34:15-28.1 are not limited by the 20% cap under N.J.S. 34:15-64a. Ibid.
N.J.S. 34:15-64. Rules and regulations; witness fees; attorney fees; costs
a. The commissioner, director and the judges of compensation may make such
rules and regulations for the conduct of the hearing not inconsistent with the
provisions of this chapter as may, in the commissioner's judgment, be necessary.
The official conducting any hearing under this chapter may allow to the party in
whose favor judgment is entered, costs of witness fees and a reasonable attorney
fee, not exceeding 20% of the judgment unless respondent is liable under N.J.S.
34:15-28.1; and a reasonable fee not exceeding $400 for any one witness, except
that the following fees may be allowed for a medical witness:
Workers’ Comp. – mandatory attorney fees – Memorandum – 10/11/11 – Page 3
(1) (a) A fee of not more than $400 paid to an evaluating physician for an opinion
regarding the need for medical treatment or for an estimation of permanent
disability, if the physician provides the opinion or estimation in a written report;
and
(b) An additional fee of not more than $400 paid to the evaluating physician who
makes a court appearance to give testimony; or
(2) (a) A fee of not more than $450 paid to a treating physician for the preparation
and submission of a report including the entire record of treatment, medical
history, opinions regarding diagnosis, prognosis, causal relationships between the
treated condition and the claim, the claimant's ability to return to work with or
without restrictions, what, if any, restrictions are appropriate, and the anticipated
date of return to work, and any recommendations for further treatment; and
(b) (i) An additional fee of not more than $300 per hour, with the total amount not
to exceed $2,500, paid to the treating physician who gives testimony concerning
causal relationship, ability to work or the need for treatment; or
(ii) An additional fee of not more than $300 per hour, with the total amount not to
exceed $1,500, paid to the treating physician who gives a deposition concerning
causal relationship, ability to work or the need for treatment.
b. (1) No fee for an evaluating physician pursuant to this section shall be
contingent on whether a judgment or award is or is not made in favor of the
petitioner.
(2) No evaluating or treating physician shall charge any fee for a report, testimony
or deposition in excess of the amount permitted pursuant to the provisions of this
section.
c. A fee shall be allowed at the discretion of the judge of compensation when, in
the official's judgment, the services of an attorney and medical witnesses are
necessary for the proper presentation of the case. In determining a reasonable fee
for medical witnesses, the official shall consider (1) the time, personnel, and other
cost factors required to conduct the examination; (2) the extent, adequacy and
completeness of the medical evaluation; (3) the objective measurement of bodily
function and the avoidance of the use of subjective complaints; and (4) the
necessity of a court appearance of the medical witness. When, however, at a
reasonable time, prior to any hearing compensation has been offered and the
amount then due has been tendered in good faith or paid within 26 weeks from the
date of the notification to the employer of an accident or an occupational disease
or the employee's final active medical treatment or within 26 weeks after the
employee's return to work whichever is later or within 26 weeks after employer's
notification of the employee's death, the reasonable allowance for attorney fee
shall be based upon only that part of the judgment or award in excess of the
Workers’ Comp. – mandatory attorney fees – Memorandum – 10/11/11 – Page 4
amount of compensation, theretofore offered, tendered in good faith or paid.
When the amount of the judgment, or when that part of the judgment or award in
excess of compensation, offered, tendered in good faith or paid as aforesaid, is
less than $200, an attorney fee may be allowed not in excess of $50.
d. All counsel fees of claimants' attorneys for services performed in matters
before the Division of Workers' Compensation, whether or not allowed as part of
a judgment, shall be first approved by the judge of compensation before payment.
Whenever a judgment or award is made in favor of a petitioner, the judges of
compensation or referees of formal hearings shall direct amounts to be deducted
for the petitioner's expenses and to be paid directly to the persons entitled to the
same, the remainder to be paid directly to the petitioner.
COMMENT
The revision in N.J.S. 34:15-64 reflects the extent to which a judge of compensation may award attorney
fees to a petitioner whose employer is found liable under N.J.S. 34:15-28.1. In Quereshi v. Cintas Corp., 413 N.J.
Super. 492, 471 (App. Div. 2010), the court found that reasonable attorney fees granted under N.J.S. 34:15-28.1 are
not limited by the 20% cap under N.J.S. 34:15-64a. This revision codifies the Quereshi court’s reading of the
statute.
Of concern, Staff’s research revealed a potential conflict with modifying N.J.S. 34:15-64 in regards to the
possible effect it will have on attorney fees awarded under N.J.S. 34:15-28.2. The Quereshi court found that an
attorney fees cap does not apply to N.J.S. 34:15-28.1 because of its analogous language found in N.J.S. 34:15-28.2,
and because the legislative history of N.J.S. 34:15-28.2 revealed that language requiring an attorney fees damage cap
was removed during drafting. See Quereshi, 413 N.J. Super. at 471. Although this dicta likely means that the cap in
N.J.S. 34:15-64 does not apply to N.J.S. 34:15-28.2, Staff’s concern is that adding language exempting N.J.S. 34:1528.1 from N.J.S. 34:15-64, will confuse the issue of whether N.J.S. 34:15-64 applies to N.J.S. 34:15-28.2. If the
Commission decides to modify N.J.S. 34:15-64, perhaps Staff should add language to assure that N.J.S. 34:15-64
does not apply to N.J.S. 34:15-28.2.
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