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The End of Bona Fide Offers

New Jersey
March 13, 2019
December 13, 2018
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Since 1927, the Statute permitted employers to make bona fide offers within 26 weeks of maximum medical improvement, or return to work, which is later, without the offer being feeable.  Because the offer was not feeable, it provided incentive for the employer to issue a voluntary offer while at the same time providing financial relief for the petitioner while the workers’ compensation case was being litigated.  

On August 24, 2018, Governor Murphy signed a bill that ends this right.  An employer can still make an advanced offer of permanency and take a credit at the time of resolution.  However, the amendment takes away the right to make such offer free of counsel fees.  

While the amendment takes away the incentive for the employer to issue such offers, there still may be situations in which voluntary offers can be beneficial.  For example, we often see issues arising when the employer and employee disagree whether temporary disability benefits are owed for a past period of time.  Voluntary offers can be used to temporarily resolve such an issue in an effort to avoid delaying litigation.  If an employer is successful on the issue, then the voluntary offer gets converted into permanent disability benefits and if the employee is successful, the voluntary offer gets converted in temporary disability benefits.  

Another example in which voluntary offers may be beneficial is when the employer makes an inadvertent overpayment of temporary disability benefits.  Pursuant to long standing case law, a voluntary overpayment of temporary disability benefits is not reimbursable to the employer.  However, if the employer can prove unjust enrichment, then the overpayment of temporary disability benefits can be converted into a voluntary offer and be credited towards permanency at the resolution of a case effectively reimbursing the employer.  

Voluntary offers may be far and few as a result of the amendment.  However, it is important to note that there is nothing prohibiting the parties from agreeing to forego counsel fees on voluntary offers.  But, it is recommended that if the parties do agree to forego counsel fees in exchange for a voluntary offer, that the agreement be expressed in writing between both parties.