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Geaney: Appellate Division Vacates Penalties, Fees Against Employer Pending New Hearing

  • State: New Jersey

In Saiti v. Garden Homes, the petitioner received an award for $66,074 on Sept. 3, 2020. The terms of the settlement were memorialized in an order signed by the judge of compensation and both parties.

John H. Geaney

John H. Geaney

Petitioner’s attorney made numerous phone calls in the ensuing 60 days regarding non-payment of the order. After 60 days, petitioner moved to enforce the order, since payments still had not been made. 

More than 90 days after the order was entered, a telephone conference occurred on Dec. 7, 2020, regarding the late payment. There was no record of the conversation and no record of any oral argument by the parties, although there is mention that the parties appeared.

On Dec. 7, 2020, the judge of compensation issued a verbal decision on petitioner’s motion, noting that the payments were now due over 90 days. The judge ordered:

  • Costs and interest on the settlement payments.
  • An additional assessment of 25% of the money due for the unreasonable payment delay to the petitioner, with $16,287 payable to Saiti.
  • $4,000 in attorneys’ fees payable to counsel for Saiti.
  • $5,000 in penalties payable to the Second Injury Fund.
  • Additional legal fees of $2,188 to counsel for Saiti in relation to enforcement efforts.

Respondent appealed the order and argued that the judge abused his discretion in awarding penalties and sanctions without affording counsel the opportunity to be heard. 

The Appellate Division observed, “The Workers’ Compensation Act does not establish a specific time frame for payment of workers’ compensation settlement proceeds.” 

That statement is puzzling because NJSA 34:15-28 states as follows: 

Whenever lawful compensation shall have been withheld from an injured employee or dependents for a term of 60 or more days following entry of a judgment or order, simple interest on each weekly payment for the period of delay of each payment may, at the discretion of the division, be added to the amount due at the time of settlement.

While this statute gives the judge some discretion, it also clearly refers to a 60-day time period.

The Appellate Division held, “Having reviewed the parties’ arguments in light of the record and the applicable legal principles, we are unable to determine whether the imposition of penalties and assessments under the Dec. 7, 2020, order was reasonable.”

The court held, “We are satisfied that it was a mistaken abuse of discretion to enter an order awarding sanctions without permitting counsel to be heard and without findings as to why the payment delay was unreasonable.”

The court directed that the judge “shall conduct a hearing and consider the steps taken by Saiti’s counsel to secure payment within 60 days of the entry of the Sept. 7, 2020, order.”

The order was vacated pending a new hearing. The case seems to turn on procedural due process, namely the need for the judge of compensation to hear oral arguments on the reasonableness of the delay — specifically, whether it had some justification.

This decision provides no comfort for respondents. It is true that the Dec. 7, 2020, order was vacated, but a new hearing will be held in which the judge will hear oral arguments from defense counsel explaining the reason, if any, for delays in paying the order of Sept. 3, 2020.

The best advice to employers remains this: All orders need to be paid within 60 days.  That is the clear import of the relevant statute.

John H. Geaney is an attorney, executive committee member and shareholder with Capehart Scatchard, a defense law firm in New Jersey. This post appears with permission from Geaney's New Jersey Workers' Comp Blog.

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