A cornerstone of the NJ Workers’ Compensation Act [WCA] is that the Division of Workers’ Compensation [DWC] is mandated to oversee the settlement of accident or injury claims.
LUMP-SUM PAYMENTS BEFORE SECTION 20
A common form of settlement of disputed claims is a lump sum payment and dismissal mechanism, commonly called a “Section 20,” NJSA 34:15-20. Historically, this process evolved as a vehicle to legitimatize the resolution of disputed fatal dependency claims where there had been no process to make a payment employing judicial oversight. The DWC is a quasi-judicial division of a department of the executive branch of the government, and its authority is strictly limited by the statute creating it. New Amsterdam Cas. Co. v. Popovich, 27 N.J.Super. 40, 98 A.2d 693 (A.D.1953).
ENACTMENT OF SECTION 20
After the enactment of NJSA 34:15-20 in 1979, the DWC promulgated regulations, NJAC 12:235-3.13 (e), that provides guidelines for a Judge of Workers’ Compensation [JWC] to review proposed settlements where there is a lump sum payment in exchange for a dismissal of a claim with prejudice. Section 20s statutorily are authorized where there is a question of jurisdiction, liability, causal relationship, or dependency of the petitioner.
The procedure outlined by statute authorizes a JWC, in its discretion, with the consent of the parties, “after considering the testimony of the petitioner and other witnesses, together with any stipulation of the parties, and after the judge of compensation has determined that the settlement is fair and just under all the circumstances, enter “an order approving settlement.”
FAIR AND JUST
A JWC must approve dispositions under Section 20. The JWC, is statutorily mandated to review the settlement and determine that it is fair and just under all the circumstances. An attorney-at-law must represent the settling petitioner. The settlement terms are enumerated on a prescribed form and signed by the employee, employer, and judge of compensation after the employee has been fully advised of all rights. A deceased employee's spouse or other adult dependent may waive any future claims. To be binding, the waiver of future dependency must be knowingly, intelligently, and voluntarily waived. Kibble v. Weeks Dredging & Const. Co., 161 N.J. 178, 735 A.2d 1142 (1999).
A lump-sum payment made under Section 20 is deemed to act as a dismissal of the claim petition. It acts as a full surrender of rights upon the employee and the employee’s dependents, who have waived their rights, and a complete surrender of benefits that might arise from the claim. University of Massachusetts Memorial Medical Center, Inc. v. Christodoulou, 180 N.J. 334, 851 A.2d 636 (2004).
Payments made under Section 20 may be considered payments of workers’ compensation for insurance rating purposes only. The insurance premium agency in NJ is the New Jersey Compensation Rating and Inspection Bureau [NJCRIB].
In a recent unreported decision, the NJ Appellate Division held that a JWC may deny approval of a Section 20 disposition where consent was offered through the petitioner’s affidavit. The JWC mandated that the live testimony of the petitioner was required to determine the circumstances surrounding the claim, including the factual basis of the claim. While the DWC had allowed for the use of affidavits in some circumstances, a JWC may, in its discretion, require the live testimony of the petitioner. The ruling is consistent with judicial precedent where the Appellate Division had determined that, “We agree with amicus that ‘Section 20 permits settlements in limited circumstances and only after [JWCs] have ... the opportunity to voir dire the petitioner and determine whether all of the attendant circumstances — not just petitioner's understanding — warrant approval.’ This is consistent with the enactment of Section 20 to ‘prevent parties from entering into `surreptitiously negotiated' settlements whereby the worker would agree to dismiss his or her claim voluntarily and with prejudice in exchange for a subsequent payment from the employer." Kibble, 161 N.J. at 187. Our Legislature has given the JWC oversight regarding approving settlements—including the hearing of in-person petitioner testimony—to ensure compliance with Section 20. See Brown v. Gen. Aniline & Film Corp., 127 N.J. Super. 93, 94-95 (App. Div. 1974)." Gonzalez v. New Jersey Transit Corp., NJ: Appellate Div. 2023 (Decided August 21, 2023).*
While the submission of an affidavit of the petitioner had been routinely permitted pre-COVID-19 and was universally permitted during the Public Health Emergency (PHE), and at other times, for the convenience of the parties, the oversight function, mandated by statute, cannot be diminished by the consent of the parties. The legislative intent of the NJ Workers’ Compensation Act requires that the settlement of workers’ claims is fair and just under all circumstances. While the compensation system is a summary administrative proceeding, the overriding goal of the industrial benefit program is to provide a fair and just resolution of claims.
Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (Thomson-Reuters). For over five decades, the Law Offices of Jon L Gelman 1.973.696.7900 firstname.lastname@example.org have represented injured workers and their families who have suffered occupational accidents and illnesses.
Blog: Workers ' Compensation
LinkedIn Group: Injured Workers Law & Advocacy Group
Author: "Workers' Compensation Law" West-Thomson-Reuters
*UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not “constitute precedent or be binding upon any court.” Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3. Superior Court of New Jersey, Appellate Division.