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To the editor: The Jan. 15 article, "Texas Comp Opt Outs Report Success," concerning Texas employers that "opt out" of the workers compensation system perpetuates a common misunderstanding that the New Jersey workers compensation law is elective.

The article cites a study that reported: "besides Texas, only New Jersey and South Carolina permit employers to opt out."

The New Jersey law permits employers to reject Article 2, which provides statutory benefits. Employers are presumed to have accepted Article 2 unless there is written rejection prior to any accident. Rejection of Article 2, however, automatically subjects the employer to Article 1, which provides for common law negligence without the traditional defenses.

Whether subject to Article 2 or Article 1, the law provides in Article 5 that insurance is compulsory, except for certain governmental entities. Thus, the ability to "opt out" of the New Jersey law is illusory because, in reality, it is a Hobson's choice between statutory coverage and unlimited liability, both of which are subject to the system and require insurance protection.

To the best of our knowledge, no employer has ever rejected Article 2 and no employer can be self-insured without prior authorization by the Department of Insurance.

David H. Hannum

Special Deputy Commissioner

Compensation Rating

& Inspection Bureau

State of New Jersey