On appeal from the New Jersey Department of Labor, Division of Workers' Compensation, 2005-32975.
The opinion of the court was delivered by: S.L. Reisner, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 24, 2007
Before Judges Weissbard, S.L. Reisner and Gilroy.
This case concerns the proper construction of N.J.S.A. 34:15-64c, a provision of the Workers' Compensation Act*fn1 that allows an employer to pay a reduced amount of counsel fees to the employee if the employer makes a good faith offer of compensation prior to the hearing. The issue is whether such an offer, which is made before the employer has the employee examined by its doctor but which also turns out to be higher than the percentage of permanent disability that the employer's doctor eventually determines, is nonetheless "tendered in good faith" so as to reduce the employer's liability to pay the employee's counsel fees. We hold that such an offer does entitle the employer to the benefit of the statutory reduction in counsel fees.
Where an employee obtains a judgment awarding workers' compensation, the Act requires the employer to pay the employee's counsel "a reasonable attorney fee, not exceeding 20% of the judgment." N.J.S.A. 34:15-64a. However, the Act also provides the employer an incentive to offer compensation in advance of any hearing on a claim petition, by providing that if the employer makes the offer and actually tenders the offered compensation, any counsel fee will be calculated only on the difference between the employer's offer and the eventual award.
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. . . . 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 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. [N.J.S.A. 34:15-64c (emphasis added).]
Against this statutory backdrop, we briefly review the facts and procedural history giving rise to this appeal. Petitioner Philip Menichetti injured his knee at work on October 7, 2005. He filed a claim petition on November 7, 2005. However, he did not undergo a partial medial meniscectomy of the knee until two days later on November 9, 2005. He received follow-up care from his doctor in December 2005. Less than two months later, on February 22, 2006, before having Menichetti examined by its own doctor, the employer offered Menichetti an amount representing fifteen percent of partial disability of petitioner's leg. The employer paid Menichetti in accordance with its offer.
The employer's doctor examined petitioner in April 2006, but was unable to opine with certainty as to permanency because petitioner did not bring his treatment records to the examination. In June 2006, after receiving the records, the employer's doctor opined that there was a seven and one-half percent permanent disability. Petitioner's doctor, who examined him in August 2006, found a forty-five percent disability. By November 2006, the parties had agreed upon a settlement of twenty-two and one-half percent disability with credit for the fifteen percent the employer had already paid. However, they disagreed on whether the original tender was a bona fide offer under N.J.S.A. 34:15-64c, for purposes of calculating petitioner's counsel fee.*fn2
Relying on Coponi v. Federal Industries, 31 N.J. 1 (1959), the workers' compensation judge determined that the employer's initial tender was not made in good faith, because the employer had no medical basis on which to make the offer.
[T]he Court has to look at whether or not there is a basis for the respondent making the tender, and I've felt in this case that that amount was more than should have been made, so to speak, in good faith, as being a good faith tender, there was no real basis to make that amount of tender . . . and the more proper amount of tender should have been . . . 71/2 percent, based upon the respondent's medical examination, which was what disclosed the disability.
Hence, the judge reasoned that the employer's credit should be limited to the seven and one-half percent disability ...