On appeal from Judgment of the Division of Workers' Compensation Court, Passaic County, Workers' Compensation No. 94-046750.
Before Judges Wefing, Payne and C.S. Fisher.
The opinion of the court was delivered by: Fisher, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 22, 2004
"Commutation," as used in workers' compensation and other civil matters, connotes"the conversion of the right to receive a variable or periodical payment into the right to receive a fixed or gross payment." Black's Law Dictionary 281 (6th ed., 1990). In this case, appellant seeks our reversal of the workers' compensation court's refusal to grant commutation of dependency benefits that appellant has continued to receive as a result of her husband's work-related death in 1992.
Appellant applied for commutation on June 27, 2003, asserting that the building she resides in was"in default to the City of New York," thus permitting the purchase of her Manhattan residence for $370,000. Appellant claimed that she could obtain a mortgage for approximately half that amount and sought commutation in order to raise the balance of the purchase price. Respondent, the former employer of appellant's late husband, opposed the application.
The compensation judge denied the application without conducting a plenary hearing or even permitting oral argument. The only explanation for the ruling is contained in the judge's handwritten portion of the September 17, 2003 order:"Denied based on N.J.A.C. 12:235-6.3(d) -- No award for total disability or dependency benefits shall be commuted." Because we conclude that the compensation judge misconceived the extent of her authority to grant commutation, we reverse and remand for further proceedings.
The Commissioner of Labor has been authorized to"make and publish rules and regulations not inconsistent with law as he shall deem necessary to enforce" the workers' compensation laws. N.J.S.A. 34:1-20; see also N.J.S.A. 34:1A-3(e) ("[C]commissioner... shall... [a]dopt, issue and promulgate... such rules and regulations as may be authorized by law."). The regulations regarding commutation, N.J.A.C. 12:235-6.1 to -6.3, were adopted in 1991. Among these regulations is N.J.A.C. 12:235-6.3(d) which simply states, without explanation or limitation, that"[n]o award for total disability or dependency benefits shall be commuted." Based solely upon that absolute rule, the judge denied appellant's application.
Since, however, the Commissioner was only authorized to make rules that are"not inconsistent with law," N.J.S.A. 34:1-20, or make rules that"may be authorized by law," N.J.S.A. 34:1A-3(e), the absolute bar created by N.J.A.C. 12:235-6.3(d) is binding only to the extent it comports with the workers' compensation laws enacted by our Legislature. While we have applied a presumption of conformity in considering potential conflicts between statutes and regulations in similar circumstances, we have also recognized the inapplicability of a regulation that is"plainly and palpably inconsistent with the statute." Esso Standard Oil Co. v. Holderman, 75 N.J. Super. 455, 473 (App. Div. 1962), aff'd o.b., 39 N.J. 355, app. dis., 375 U.S. 43, 84 S.Ct. 148, 11 L.Ed. 2d 107 (1963); Grenewicz v. Ligham, 34 N.J. Super. 1, 9 (App. Div. 1955). The careful application of this standard takes on added importance, and requires increased vigor, when the questioned administrative regulation"directly affect[s] substantive property rights," such as here, and not merely the procedures utilized by the administrative body in considering substantive rights. Esso Standard, supra, 75 N.J. Super. at 473.
While N.J.A.C. 12:235-6.3(d) represents an absolute bar against commutation of"total disability or dependency benefits," the Legislature had previously imbued the courts with the discretion to grant commutation of compensation payments in appropriate circumstances:
Compensation may be commuted... at its present value, when discounted at five per centum (5%) simple interest, upon application of either party, with due notice to the other, if it appears that such commutation will be for the best interest of the employees or the dependents of the deceased employee, or that it will avoid undue expense or undue hardship to either party....
Unless so approved, no compensation payments shall be commuted..... [N.J.S.A. 34:15-25 (emphasis added).]
A plain reading of this statute, spurred by the absence of any limit on the types of compensation benefits that may be commuted, suggests that the discretion to permit commutation was intended to encompass all types of benefits, including the total disability and dependency benefits specifically referenced in N.J.A.C. 12:235-6.3(d). Since the Legislature did not set forth any exceptions to the broad language of N.J.S.A. 34:15-25, we see no reason to interpret the statute narrowly as to the types of compensation awards that were included. The statute's repeated references to the impact of commutation on"the dependents of the deceased employee" compel the conclusion that the Legislature intended to encompass the benefits currently received by the appellant within those types of benefits that may, in the exercise of sound discretion, be commuted. From this common sense reading, we conclude that the Legislature intended to create a right of commutation, subject to a weighing of the benefits and hardships of commutation as expressly described in the statute, and we reject the compensation judge's holding, based solely upon N.J.A.C. 12:235-6.3(d), that a recipient of dependency benefits, such as appellant, is absolutely barred from obtaining commutation.
Because of the summary manner in which the application was denied, there is little information in the record as to what was in appellant's best interests and whether commutation will cause or prevent undue hardship or undue expense. From the application, we know only that appellant is 73 years of age, resides in New York City, has an opportunity to purchase her residence for $370,000, and can obtain a mortgage for approximately half that amount, leaving a significant shortfall. Since the compensation judge did not permit argument on the motion or otherwise conduct a hearing to ascertain the accuracy of these allegations, or to examine any other relevant factors, we ...