Appellate Division concludes judge relied on delays in litigation, prior to the entry of the order, to award maximum penalty.

The petitioner was injured in a workplace incident on February 11, 2013. He filed a workers’ compensation petition in June 2013, received benefits and was declared permanently disabled in 2016. On January 26, 2021, a judge entered an order for total disability, and it was undisputed that the employer was to pay a portion within 60 days of the order.

The petitioner filed a motion to enforce, seeking an additional fee and counsel fees, because the employer had not made the payment. It was noted that an answer to the motion was not in the record. It was undisputed the petitioner received his payment on April 12, 2021, 16 days after the due date, though the employer had not paid reimbursement of other expenses at that time.

Before the judge on May 11, 2021, the employer presented its argument that the third-party administrator did not submit the payment request in time, that this delay was due to the change in adjusters and COVID-19. The judge, in an oral decision, recognized some delays were inevitable due to the employer being a government entity and the involvement of an excess carrier. However, the judge noted the petitioner previously had to file motions to enforce to obtain his temporary total disability benefits. The judge also referenced the fact that the parties discussed voluntarily finding the petitioner totally disabled in August 2019 but that the settlement was not authorized until January 2021.

Although the judge found the employer’s explanation in the delayed payment of reimbursable expenses reasonable, a 25% penalty was imposed on the petitioner’s benefits due. The judge also indicated the prior delay in getting to settlement negatively impacted the petitioner. As such, she found the employer’s delay was unreasonable and imposed the maximum additional assessment.

The employer appealed, arguing the judge abused her discretion. The Appellate Division agreed, reversed and remanded. In the de novo review, the Appellate Division reviewed relevant case law, which notes a party’s obligations for timely payments, elimination of unreasonable delays and compliance with orders. Specifically, the Appellate Division noted that the Division of Workers’ Compensation adopted N.J.A.C. 12:235-3.16(h)(1)(i) for the additional assessment of up to 25% on any payment delay. However, the Appellate Division considered that the Legislature did not specifically define a presumptively unreasonable delay.

According to the Appellate Division, the judge erred in taking into account how long it took to settle the petitioner’s case after agreeing that he was totally disabled. As no payments were due until the order was entered, there was no delay for the first 60 days. Although the Appellate Division noted there was no standard of review of a penalty awarded due to a motion in workers’ compensation, after reviewing the standard for abuse of discretion, the Appellate Division found the judge mistakenly exercised her discretion. The Appellate Division concluded the judge relied on the delays in litigation prior to the entry of the order to award the maximum penalty, even though the delay was only 16 days and recognized there was a reasonable basis for the delay in payment.

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