ASSEMBLY, No. 1755

STATE OF NEW JERSEY

INTRODUCED MARCH 25, 1996

By Assemblyman DALTON

An Act concerning workers' compensation special adjustment and supplemental benefit payments and amending R.S.34:15-94 and P.L.1980, c.83.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. R.S.34:15-94 is amended to read as follows:

    34:15-94. a. Each mutual association or stock company writing compensation or employer's liability insurance in this State, and each self-insurer, shall pay to the Commissioner of Labor a sum equal to that proportion of 150% of the total amount of moneys paid under R.S.34:15-95 during the preceding calendar year, less the amount of net assets exceeding $5,000,000.00 remaining in such fund as of December 31 of said preceding calendar year, which the total compensation payments of such mutual association, stock company or self-insurer bear to the total compensation payments made by all such mutual associations, stock companies, and self-insurers during such preceding calendar year. Such sum shall be paid by the Commissioner of Labor to the State Treasurer.

    On or before August 1, 1986 the Commissioner of Labor shall recalculate payments due for calendar year 1986 in accordance with the formula provided above, and levy supplemental assessments to adjust for any difference due to be paid in satisfaction of obligations for calendar year 1986, giving full credit for payments previously due and paid on or before August 15, 1986. Such supplemental assessments, if necessary to be levied, shall be paid on or before September 15, 1986. Commencing January 1, 1987, and each calendar year thereafter, annual payments shall be calculated by the commissioner and sums due shall be paid in equal quarterly installments on or before March 15, on or before June 15, on or before September 15 and on or before December 15 of each year.

    The assessment established in this subsection shall be terminated effective December 31, 1988.

    b. Commencing January 1, 1989 and on the first day of each year thereafter, the Commissioner of Labor shall levy an annual surcharge upon all policyholders and self-insured employers for the purpose of providing moneys to the Second Injury Fund. Each policyholder and self-insured employer shall be liable for payment of the annual surcharge in accordance with the provisions of this section and all regulations promulgated pursuant hereto. The annual surcharge levied under this section shall be applied to all workers' compensation and employer's liability insurance policies providing coverage on or after January 1, 1989 and, in the case of self-insured employers, to coverage provided on or after January 1, 1989. Notwithstanding any law to the contrary, the surcharge levied pursuant to this section shall not apply: to any reinsurance or retrocessional transaction; to the State or any political subdivision thereof which acts as a self-insured employer; or to any workers' compensation endorsement required pursuant to section 1 of P.L.1979, c.380 (C.17:36-5.29).

    c. On or before July 31 of 1988 and of each year thereafter:

    (1) Each insurer and self-insured employer shall submit to the Commissioner of Labor, in a form and manner prescribed by the Commissioner of Labor, a report of the total compensation payments made by the insurer or self-insured employer during the 12-month period ending on the immediately preceding June 30th;

    (2) Each insurer shall submit to the Commissioner of Insurance, in a form and manner prescribed by the Commissioner of Insurance, a report of the total earned premiums collected by the insurer on all workers' compensation or employer's liability policies written on risks located in this State pursuant to the provisions of R.S.17:17-1 et seq., during the 12-month period ending on the immediately preceding June 30th;

    (3) The Commissioner of Labor shall estimate the amount of special adjustment and supplemental benefits payable by each insurer writing workers' compensation or employer's liability insurance in the State and by each self-insured employer pursuant to R.S.34:15-95 during the then current fiscal year;

    (4) The Commissioner of Labor shall establish the aggregate annual surcharge to be levied upon policyholders and self-insured employers during the next following calendar year, which shall be an amount equal to 150% of the moneys estimated by the Commissioner of Labor to be payable from the Second Injury Fund during the next following calendar year, less the estimated amount of net assets exceeding $5,000,000.00 which will remain in the Second Injury Fund on December 31st of the then current calendar year and less the estimated amount of moneys to be collected from non-insured governmental entities pursuant to paragraph (3) of subsection e. of this section;

    (5) The Commissioner of Labor shall apportion the aggregate annual surcharge calculated pursuant to paragraph (4) of this subsection among policyholders as a group and self-insured employers as a separate group. Policyholders shall be liable to pay that portion of the aggregate annual surcharge that is equal to the proportion that the compensation payments made by all policyholders during the 12-month period ending on the immediately preceding June 30th bear to the total compensation payments made by all policyholders and self-insured employers during the 12-month period ending on the immediately preceding June 30th. Self-insured employers shall be liable to pay that portion of the aggregate annual surcharge that is equal to the proportion that the compensation payments made by all self-insured employers during the 12-month period ending on the immediately preceding June 30th bear to the total compensation payments made by all policyholders and self-insured employers during the 12-month period ending on the immediately preceding June 30th; and

    (6) The Commissioner of Labor shall notify the Commissioner of Insurance of the aggregate annual surcharge amount applicable to policyholders during the next following calendar year.

    d. On or before September 15 of 1988 and of each year thereafter:

    (1) In consultation with the Commissioner of Labor, the Commissioner of Insurance shall determine the annual policyholder surcharge rate to be applied to each workers' compensation and employer's liability policy during the next following calendar year, and shall notify insurers of the annual policyholder surcharge rate to be applied to policy premiums during the next following calendar year. The annual policyholder surcharge rate shall be established as a percentage, which shall be equal to the percentage relationship that the annual surcharge amount which is applicable to all policyholders bears to the total earned premiums for workers' compensation and employer's liability coverage written on risks located in this State for the 12-month period ending on the immediately preceding June 30th.

    (2) The Commissioner of Labor shall notify each self-insured employer of the amount of the annual surcharge applicable to that self-insured employer during the next following calendar year. The net annual surcharge for each self-insured employer shall be established as a pro rata portion of the annual surcharge applicable to all self-insured employers, which shall be chargeable to the self-insured employer in the proportion that the self-insured employer's compensation payments during the 12-month period ending on the immediately preceding June 30th bear to the total compensation payments made by all self-insured employers during the 12-month period ending on the immediately preceding June 30th, less the estimated amount of special adjustment and supplemental benefits payable by that self-insured employer pursuant to R.S.34:15-95 during the then current fiscal year. This reduction of the annual surcharge for payments of special adjustment

and supplemental benefits shall be applicable only through the fiscal year 1997.

    e. (1) Every insurer providing workers' compensation and employer's liability insurance shall collect from each of its policyholders, on behalf of the Commissioner of Labor and in accordance with subsections b., c. and d. of this section, an amount equal to the annual policyholder surcharge rate established by the Commissioner of Insurance pursuant to subsection d. of this section, multiplied by the amount of the policyholder's premium. The surcharge to be collected from the policyholder shall be stated separately on the policy or billing statement and be collected at the same time and in the same manner that the premium or other charges for the coverage are collected. On or before the 30th day after the end of the calendar quarter commencing January 1, 1989, and on or before the 30th day following the end of each calendar quarter thereafter, each insurer shall report to the Commissioner of Labor, on forms as the commissioner may require, the total amount of its workers' compensation and employer's liability insurance earned premiums for the preceding quarterly accounting period, and remit the surcharge collected from policyholders on those premiums, less special adjustment and supplemental benefits paid during the preceding calendar quarter by the insurer pursuant to the workers' compensation law, R.S.34:15-1 et seq. No insurer or its agent shall be entitled to any portion of any surcharge imposed pursuant to this section as a fee or commission for its collection nor shall that surcharge be subject to any taxes, licenses or fees.

    (2) On or before the 30th day after the end of each calendar quarter commencing January 1, 1989, and on or before the 30th day following the end of each calendar quarter thereafter, each self-insured employer shall remit to the Commissioner of Labor an amount equal to one-fourth of the effective net annual surcharge as established for that self-insured employer during the then current calendar year pursuant to subsection d. of this section, less special adjustment and supplemental benefits paid during the preceding calendar quarter by the self-insured employer pursuant to the workers' compensation law, R.S.34:15-1 et seq. This reduction of the annual surcharge for payments of special adjustment and supplemental benefits shall be applicable only through the fiscal year 1997.

    (3) On or before the 60th day following the end of each fiscal year, each non-insured governmental entity of the State of New Jersey shall remit to the Commissioner of Labor an amount equal to the benefits paid from the Second Injury Fund during the immediately preceding fiscal year to employees and dependents whose compensable injury or death occurred during or as a result of employment with that non-insured governmental entity.

    f. The Commissioner of Labor shall promulgate within 180 days of the effective date of this act and in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), any rules and regulations as may be necessary for the apportionment and collection of annual surcharges from policyholders and self-insured employers covered by this section.

    g. The Commissioner of Insurance shall promulgate within 180 days of the effective date of this act and in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), any rules and regulations as may be necessary for the collection, and provision to the Commissioner of Labor, of information with respect to earned premiums of insurers and the establishment of the annual surcharge rate for policyholders.

    h. For each 30-day period or part thereof during which a policyholder, self-insured employer, or insurer fails to make a payment or transfer of payment as required by this section or regulations promulgated pursuant hereto, a penalty of one-half of one percent (0.5%) of the amount of delinquent payment or transfer of payment shall be assessed against the delinquent policyholder, self-insured employer or insurer. In no case of single failure, however, shall penalties assessed under this section exceed five percent (5.0%) of the amount of surcharge unpaid or untransferred. Penalties assessed under this subsection shall be collected in a civil action by a summary proceeding brought by the Commissioner of Labor pursuant to "the penalty enforcement law," N.J.S.2A:58-1 et seq., and shall be deposited by the commissioner in the Second Injury Fund.

    i. For each 30-day period during which an insurer or self-insured employer fails to file a report as required by this section, the Commissioner of Labor shall assess a penalty of $100.00 against the insurer or self-insured employer and, upon collection thereof, shall deposit those monies in the "uninsured employer's fund." As a result of any single failure, however, no such penalty shall exceed a total of $500.00. During the period of any such failure to file this report, the estimate by the Department of Labor of the amounts of such compensation payments or earned premiums shall be used for the purposes cited in the workers' compensation law, R.S.34:15-1 et seq.

    j. The Commissioner of Labor may, with the authorization of and appropriation by the Legislature, transfer from the Second Injury Fund an amount necessary for the cost of administration of the Division of Workers' Compensation in the Department of Labor.

    k. As used in this section, "policyholder" means a holder of a policy of workers' compensation or employer's liability insurance issued by an insurer. "Insurer" means a domestic, foreign or alien mutual association or stock company writing workers' compensation or employer's liability insurance on risks located in this State and subject to premium taxes pursuant to P.L.1945, c.132 (C.54:18A-1 et seq.). "Self-insured employer" means an employer which self-insures for workers' compensation or employer's liability insurance pursuant to the provisions of R.S.34:15-77.

(cf: P.L.1990, c.46, s.1)

    2. Section 1 of P.L.1980, c.83 (C.34:15-95.4) is amended to read as follows:

    1. a. Any employee or dependent receiving weekly benefits as provided under R.S.34:15-95, R.S.34:15-12(b) or R.S.34:15-13 at a rate applicable prior to January 1, 1980, and whose payment is less than the maximum compensation rate in effect for the year 1980, shall be entitled to receive a special adjustment benefit payment from the Second Injury Fund and from those sources as provided for by [this 1980 amendatory and supplementary act] P.L.1980, c.83 (C.34:15-95.4 et al.).

    Any dependent, as defined in R.S.34:15-13, of a person totally disabled who dies while receiving compensation from the Second Injury Fund, shall become entitled to dependent benefits under this chapter which are comparable to payments made to other dependents under the workers' compensation law, R.S.34:15-1 et seq., on or after [the effective date of this 1980 amendatory and supplementary act] July 1, 1980.

    All compensation payments made under this chapter to a dependent, as defined under R.S.34:15-13, of an individual who dies while receiving such compensation, shall be payable only where the compensable occupational injury or disease of the decedent is a material contributing factor to his death.

    The payment of these adjustment benefits shall be paid to an employee or dependent as long as the employee or dependent is eligible to receive payments under R.S.34:15-95, R.S.34:15-12(b), R.S.34:15-13, or this section.

    The amount of the special adjustment benefit payment shall be such that when added to the workers' compensation rate awarded pursuant to R.S.34:15-95, R.S.34:15-12(b), R.S.34:15-13 or this section as a result of injury or death, the total shall bear the same percentage relationship to the 1980 maximum workers' compensation rate that the worker's own compensation rate awarded as a result of the injury or death bears to the then effective maximum workers' compensation rate. The amount of the special adjustment benefit shall be payable at a rate of 35% of the adjustment during the fiscal year 1981 commencing July 1, 1980; 75% of the adjustment during the fiscal year 1982; and 100% of the adjustment during the fiscal year 1983 and thereafter through fiscal year 1997. The special adjustment benefit payment provided herein shall be reduced by an amount equal to the individual's benefit payable under the Federal Old-Age, Survivors' and Disability Insurance Act (not including increases in such benefits due to any federal statutory increases after May 31, 1980), Black Lung benefits, or the employer's share of disability pension payments received from or on account of an employer. Where any person refuses to authorize the release of information concerning the amount of benefits payable under the aforementioned benefits, the division's estimate of that amount shall be deemed to be correct unless and until the actual amount is established and no adjustment shall be made for any period of time covered by any such refusal.

    Payments of the adjustment shall be made from the Second Injury Fund in the manner hereinafter provided. The Commissioner of Labor shall make payments from the Second Injury Fund directly to the persons who are now receiving benefits under R.S. 34:15-95 and to their dependents becoming eligible for dependents' benefits under [this 1980 amendatory and supplementary act] P.L.1980, c.83 (C.34:15-95.4 et al.) by increasing or, as the case may be, setting the biweekly compensation payments to include the biweekly special adjustment. In the case of persons who are entitled to compensation under R.S.34:15-12(b) or R.S.34:15-13, the insurance carrier or self-insured employer in the second and subsequent fiscal years after enactment shall increase the weekly compensation payments to include the weekly special adjustment. For such special adjustment payments and supplements to special adjustment payments paid during the period July 1, 1981 and December 31, 1988, insurance carriers and self-insured employers shall credit the payments against the assessments payable by the insurance carrier or self-insurer under R.S.34:15-94. The insurance carrier or self-insurer claiming such credit shall submit vouchers upon forms prescribed by the Commissioner of Labor, identifying each case and indicating the weekly benefit adjustment applicable thereto on or before June 30, 1989.

    Beginning in the fiscal year 1984 and in every fiscal year thereafter through fiscal year 1997, a supplement to the special adjustment benefit payment shall be paid to all employees or dependents entitled to the special adjustment benefit payment. The supplement to the special adjustment benefit payment shall be paid in an amount, in combination with income from all sources referred to in this section, which bears the same percentage relationship to the then current maximum workers' compensation rate that the worker's own compensation rate awarded as a result of the injury or death bears to the then effective maximum workers' compensation rate. Beginning in fiscal year 1986 and in every fiscal year thereafter, payment of supplements to the special adjustment benefits shall be made from the Second Injury Fund. Payment of supplements to the special adjustment benefits for fiscal years 1984 and 1985 shall be from interest earned and accrued upon moneys belonging to "the stock workers' compensation security fund" and "the mutual workers' compensation security fund" during fiscal years 1981 through 1985, and from special assessments upon self-insured employers in the same proportions as provided under R.S.34:15-94.

    b. Beginning with the fiscal year 1998, commencing July 1, 1997, and during each fiscal year thereafter, any employee or dependent who receives weekly benefits as provided under R.S.34:15-95, R.S.34:15-12(b), or R.S.34:15-13, and whose weekly benefit payment is less than the maximum compensation rate in effect on the date of the benefit payment, shall be entitled to supplemental benefits from the Second Injury Fund. The payment of these supplemental benefits shall be made to a beneficiary as long as the beneficiary is eligible to receive payments under R.S.34:15-95, R.S.34:15-12(b), R.S.34:15-13, or this section.

    The amount of the supplemental benefits shall be determined during the fiscal year 1998 and recalculated during every fiscal year following that fiscal year. For the year that the amount of the supplemental benefits is determined or recalculated, the base amount of the supplemental benefits shall be such that when that base amount is added to the workers' compensation rate awarded pursuant to R.S.34:15-95, of R.S.34:15-12(b), R.S.34:15-13 or this section, as a result of the injury or death, the total of both the compensation rate and the base amount of the supplemental benefits shall bear the same percentage relationship to the then current maximum workers' compensation rate that the worker's own compensation rate awarded as the result of the injury or death bears to the maximum workers' compensation rate in effect at the time of the injury or death. The actual amount of the supplemental benefits to be paid to a beneficiary shall be the base amount of the supplemental benefits determined or recalculated pursuant to this subsection reduced by an amount equal to the benefits payable during the year of the determination or recalculation to the beneficiary under the federal Old-Age, Survivors and Disability Insurance Act, Black Lung benefits, or the employer's share of disability pension payments received from or on account of an employer. For beneficiaries to whom special adjustment benefit payments or supplemental benefit payments, or both, were paid pursuant to this section during fiscal year 1997 however, the supplemental benefit payment under this subsection shall not be less than the total of such special adjustment, supplemental benefits, or both, paid during that fiscal year, except to the extent that the supplemental benefit payment is reduced as a result of increases in Black Lung benefits or the employer's share of disability pension payments received from or on account of an employer. For persons under the age of 62 receiving benefits as provided under R.S.34:15-95 or R.S.34:15-12(b), and whose period of disability began after December 31, 1979, the amount of reduction to the supplemental benefit payments provided pursuant to this section for benefits payable from the federal Old-Age Survivors and Disability Insurance Act shall be equal to the amount of such benefits payable less any portion thereof used to reduce the compensation amount payable pursuant to section 9 of P.L.1980, c.83 (C.34:15-95.5)

(cf: P.L.1988, c.26, s.3)

    3. This act shall take effect immediately.

STATEMENT

    This bill amends the workers' compensation law, R.S.34:15-1 et seq., to provide that:

    1. Supplemental benefits which are currently provided only to workers permanently and totally disabled prior to 1980 and their dependents be extended to workers permanently and totally disabled after 1980 and their dependents. The amount of the supplemental benefit payment for a beneficiary is to equal an amount that, when added to the basic compensation rate awarded pursuant to R.S.34:15-95, R.S.34:15-12(b), or R.S.34:15-13, bears the same percentage relationship to the then current maximum workers' compensation rate that the beneficiary's own compensation rate awarded as the result of the injury or death bears to the maximum workers' compensation rate at the time of the injury or death.

    2. The full amount of Social Security benefits and other disability-related income received by a beneficiary be used to offset the supplemental benefits indicated in paragraph 1 above. The bill makes this offset apply not only to post-1979 beneficiaries, but also to pre-1980 beneficiaries. The current law, in the case of the pre-1980 beneficiaries, offsets against supplemental workers' compensation benefits only the portion of Social Security benefits which represents a beneficiary's benefit level in 1980 and exempts any increases in Social Security benefits after 1980 from being offset against supplemental workers' compensation benefits.

    3. The supplemental benefits for pre-1980 beneficiaries are not to be reduced in connection with the elimination of the exemption of certian Social Security benefits from the offset as provided in paragraph 2 above. This would prevent an absolute reduction in the amount of benefits provided to those beneficiaries which would otherwise occur as a result of the elimination of that exemption.

    4. The amount of Social Security benefit offset used for disabled workers under the age of 62, whose disability commenced after December 31, 1979, be limited to the amount of the Social Security income already used in order to prevent the use of the same Social Security income twice in the calculation of the basic award.

    5. Benefit levels be adjusted annually.

    6. Each non-insured public employer be charged for the Second Injury Fund benefits paid on claims arising from employment with that employer.

Extends supplemental workers' compensation benefits to injuries and deaths occurring after January 1, 1980.