Attorney's Fees Likely to Increase on Dependency Claims

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In a recent unpublished decision the Appellate Division addressed an attorney’s fee issue on a dependency case that has the potential to increase the exposure for such fees in cases going forward. Collas v. Raritan River Garage, Inc., involved review of an award of an attorney’s fee to counsel for a dependent spouse based, not upon the 450 weeks as has been common in the Division of Workers’ Compensation, but instead using the dependent’s life expectancy. The life expectancy used in assessing the fee in Collas was based on the life expectancy table available as an appendix to the New Jersey Rules of Court. Fees in dependency cases have commonly been based on 450 weeks of the benefits due to the surviving spouse, and typically at or around 20 percent of that figure. The Collas case is notable as most often the life expectancy of a person entitled to receive dependency benefits will exceed the 450 weeks that has frequently been used in assessing attorney’s fees on such cases, thus increasing the overall cost of the fees to the employer or insurance carrier.

By way of background, under Section 13, assuming compensability, a surviving spouse is entitled to dependency benefits during the entire period of survivorship or until the spouse remarries. N.J.S.A. 34:15-13. Essentially this means that the surviving spouse is entitled to benefits for the remainder of his/her lifetime unless he/she remarries. In terms of assessing attorney’s fees, a Judge of Compensation may allow a reasonable attorney’s fee not to exceed 20 percent of the judgment pursuant to Section 64. N.J.S.A. 34:15-64.

In Collas, the Appellate Division indicated that it did not find that Section 64 requires a Judge of Compensation to use the 450 weeks when approving attorney’s fees but rather, that the limitation on fees imposed by Section 64 is that the fee must be reasonable. Further, the court noted that the Judge of Compensation can adjust the fee, subject to the 20 percent cap, depending on the judge’s assessment of reasonableness. The court pointed out that both the 450 week period and the table method are not exact since an award of dependency benefits is not for a certain time as the benefits cease when the surviving spouse either dies or remarries. Additionally, the court stated that the method of using the table for life expectancy was not unreasonable and that the table is already used actuarially to determine the amount of potential dependency benefits that will be paid. The alternate method of using the 450 week period, the court noted, does not take into account the age of the surviving spouse, however the court specifically indicated that it did not hold that use of the 450 week method was improper. The court also did not find that the table method must be used but rather that in the case at hand it was a reasonable method for the judge to use in awarding attorney’s fees and the fee was upheld. Therefore, either method could be reasonable depending on the circumstances of the individual case.

The takeaway of the Collas decision is that as long as the Judge of Compensation’s use of the table of life expectancy in awarding attorney’s fees on a dependency claim is considered reasonable, it will likely be upheld by the Appellate Division. This is likely going to have a significant impact on dependency cases going forward as claimant’s counsel will, no doubt, seek in almost all cases than if it were based solely on 450 weeks of benefits due.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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