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VOLUME 7 February 2005 | ||||||
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IS THE NEW JERSEY COMP DEFENSE LOSING A VALUABLE SETTLEMENT TOOL? By James P. Backenson, Esq. and Kimberly A. Jubanyik, Esq.
The New Jersey worker’s compensation statute was written with the primary goal of providing injured employees compensation for injuries sustained in the workplace. In doing so, the legislature has made it easier for employees to obtain benefits to pay for medical treatment and to obtain an award or determination of permanent disability based on work related injuries. For example, the legislature has made the issue of comparative liability on the part of the employee a non-issue indicating that the employee’s own negligence is not to be considered in work related claims. Employees merely have to sustain the burden of showing that injuries were sustained while performing duties within the course and scope of their employment. After a determination of permanent disability is rendered, the employee has two years to make a claim of a need for further treatment or an increase in disability. While at the outset it may appear to be an uphill battle for employers and their insurance carriers to deny claims, the legislature did provide defenses for employers. One such defense to the determination of a permanent disability award is the section 20 settlement.
N.J.S.A. 34:15-20 (section 20) provides in pertinent part that when there is a dispute as to the compensability of an injury, a lump sum settlement agreement can be entered wherein the employee agrees to waive his/her rights to a trial and further agrees that by entering into settlement that the claim will be dismissed with prejudice. This type of settlement bars that employee from ever coming back to the court or the employer for further medical benefits or permanent disability, and brings the matter to a close. By entering into such a settlement, the petitioner’s (employee) dependants can also be bound as to any future claims should the employee die as a result of the injuries alleged. In order to do this though, the dependants must also knowingly and voluntarily waive their rights since their claims are independent of the employee.
It is obvious why a section 20 settlement would be the goal of the employer in any disputed matter. If the matter does not settle, and goes to trial, a judgment in the employee’s favor would also provide the two years period for making claims for adjustment of the order for increases in disability. Unfortunately, the courts are starting to follow a trend of holding the employers to a higher standard in order to approve a settlement under section 20. In conversations with Judges and other attorneys, it would appear as though the general thought amongst members of the division of labor is that the section 20 settlement has been approved too liberally in the past. Due to that perception, these settlements are now subject to more scrutiny in order to make certain that their approval is in fact fair and just (the standard required by the courts for approval of all settlements).
We, as attorney’s for the employer, are now faced with the issue of whether we are losing a settlement tool used widely to close cases with minor injuries and/or suspect claims. While this tool is still available pursuant to the statute, the ease of obtaining approval for these settlements is clearly not what it used to be. Where cases involving scars used to routinely be approved based on the dispute as to whether there is any permanent disability the current trend is to settle these cases for relatively small settlements without dismissal and make the employee prove an increase in disability should they file a claim for adjustment of the order.
Should the trend of scrutiny involving section 20 settlements continue, it may cause the eventual loss of this tool. In doing so, I would think that we would then be forced to re-evaluate the percentages of disability that we would estimate for certain injuries because employers and their insurance carriers are going to be stuck with the risk of re-opener claims on cases that used to be dismissed with prejudice at the conclusion of the settlement hearing. We should therefore be mindful of this trend when negotiating settlements in the future. |
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