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Young v. Western Electric Co.

Decided: May 30, 1984.


On certification to the Superior Court, Appellate Division, whose opinions are reported at For affirmance as modified -- Chief Justice Wilentz and Justices Clifford, Schreiber, Handler, Pollock, O'Hern and Garibaldi. Opposed -- None. The opinion of the Court was delivered by Schreiber, J.


This case presents the question of whether the Division of Workers' Compensation (Division) has jurisdiction to reduce a workers' compensation award by the amount of disability benefits payable to the employee under the employer's private plan, where the plan provides for such a setoff. If the Division has such jurisdiction, a subordinate issue is the extent to which that jurisdiction depends on the nature of the private benefits.

Petitioner, Roosevelt Young, was employed by the respondent, Western Electric Company, Inc., in various capacities from December, 1956 until June, 1976. In March, 1971 he suffered an injury to his back arising out of and in the course of his employment. That condition led to several hospitalizations and an operation. He also incurred a hearing loss due to noise exposure on the job. He stopped working on June 4, 1976 because of his physical condition.

After the petitioner had stopped working, respondent paid him the following benefits under its Plan for Employees' Pensions, Disability Benefits and Death Benefits (Plan):

June 6, 1976 to December 6, 1976 -- $278.40 per week (petitioner's full salary as sickness disability benefits)

December 6, 1976 to March 23, 1977 -- $139.20 per week (one half of petitioner's salary as sickness disability benefits)

March 23, 1977 to December, 1979 -- $299.50 per month (as disability pension payments)

December, 1979 to present -- $344.18 per month (as disability pension payments)

Petitioner filed a workers' compensation claim in November, 1977. Hearings were held on eight widely separated dates

commencing on May 25, 1978 and ending on April 2, 1981. Thereafter a judgment was entered on June 3, 1981 awarding the petitioner 100% total permanent disability because he was totally unemployable under the "odd-lot doctrine." See generally Germaine v. Cool-Rite Corp., 70 N.J. 1, 8-9 (1976) (describing the doctrine). The judgment called for payment of $128 per week for 450 weeks commencing June 6, 1976. At the expiration of the 450 weeks, petitioner was to receive benefits so long as he remained totally and permanently disabled in accordance with N.J.S.A. 34:15-12(b).

At the compensation hearing, the respondent sought an offset against the award of the payments for both sickness disability benefits and disability pension payments it had made under its Plan, which aggregated approximately $27,000 as of June 3, 1981. As of that date the respondent owed the petitioner in excess of $30,000 representing the amount that had accrued under the compensation award. The judge of compensation refused to make the offset, asserting that his function was to determine the extent of petitioner's disability and that "whether [the petitioner] is ultimately prohibited from receiving said benefits by his disability pension plan provided by his employer is not within my jurisdiction."

Upon respondent's appeal, the Appellate Division modified the workers' compensation judgment. The Appellate Division acknowledged "that until 1977 New Jersey had permitted offset of payments under pension and disability plans against workers' compensation payments where the plan so provided." 189 N.J. Super. 1, 6 (1982). The court held that a 1977 amendment to N.J.S.A. 34:15-29*fn1 modified the prior law by permitting only private temporary disability benefits and not retirement pension benefits to be offset against workers' compensation benefits.

Id. The court also held that the Division of Workers' Compensation had jurisdiction to modify its award accordingly. Id. at 8. However, the Appellate Division affirmed the ruling that the Division of Workers' Compensation had no jurisdiction to credit retirement pension benefits, including the Plan's disability pension payments made to the petitioner. Id. at 10. The Appellate Division remanded the cause to the Division of Workers' Compensation to determine the amount of the offset and enter an appropriate order.

Respondent moved for a rehearing, contending that its payments to petitioner after March 23, 1977 were "disability pension benefits," rather than "retirement pension benefits," within the meaning of the amendment. The Appellate Division rejected that contention and reaffirmed. Id. at 11. It concluded that respondent's payments were actually "retirement" and not "disability pension benefits" as those terms are used in the amendment to N.J.S.A. 34:15-29. Id. at 18. We granted respondent's petition for certification. 95 N.J. 175 (1983).


The Division of Workers' Compensation is an administrative agency. Mulhearn v. Federal Shipbuilding & Dry Dock Co., 2 N.J. 356, 365-66 (1949). As such, the Division has the right to exercise only those powers that are expressly and duly delegated to it, Nagy v. Ford Motor Co., 6 N.J. 341, 349 (1951), or that are impliedly incident to those expressly granted powers, Conway v. Mr. Softee, Inc., 51 N.J. 254, 258 (1968) (Division has authority expressly conferred by statute and "by fair implication incident to the authority expressly granted"); P. Bronstein & Co. ...

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