Workers' Compensation: Workers' Comp Settlements: Public or Private?

Federal Court Rules on Transparency of Settlement Orders in Fantini v. WestRock

In a significant decision affecting workplace injury cases, a New Jersey federal court recently addressed whether settlement orders from workers' compensation proceedings should remain under seal or be made public. The September 2024 ruling in Fantini v. WestRock provides important guidance on the intersection of settlement confidentiality and public access to judicial records.

The Background

Nicholas Fantini, proceeding pro se in a federal employment lawsuit, filed two letters with the court, including copies of an "Order Approving Settlement" from his separate workers' compensation case. The defendants moved to seal these exhibits, arguing that, because they contained settlement terms, they should remain confidential, as with a previous document the court had sealed containing settlement negotiations between the parties.

The court initially denied the sealing motion without prejudice, noting that defendants failed to address whether the workers' compensation order was a "judicial record" subject to a presumptive right of public access. When defendants renewed their motion, the court conducted a thorough analysis of New Jersey's workers' compensation statutory framework and relevant case law.

The Statutory Framework

The court's analysis centered on several key New Jersey statutes governing workers' compensation records:

N.J.S.A. § 34:15-20 allows employees and employers to enter into lump-sum settlements that must be approved by a workers' compensation judge after a hearing to determine whether the "settlement is fair and just under all the circumstances."

N.J.S.A. § 34:15-58 provides that an Order Approving Settlement "shall have the same effect and may be collected and docketed in the same manner as judgments rendered in causes tried in the Superior Court." This statutory language proved crucial to the court's analysis.

N.J.S.A. § 34:15-59 explicitly states that workers' compensation records "shall be open to the inspection of the public."

N.J.S.A. § 34:15-62 requires that "[a]ll hearings conducted under this chapter shall be open to the public."

The Legal Precedents

The court relied heavily on the Accident Index Bureau cases from the 1960s, which established that workers' compensation records are "public records" in the same category as court judgments. In Accident Index Bureau v. Hughes(1964), the New Jersey Superior Court stated unequivocally: "there can be no doubt that, by express legislative pronouncement, [workers' compensation records] are essentially 'public records,' in the same general category as judgment records of courts of law." (Affirmed on Appeal)

The court distinguished defendants' reliance on N.J.S.A. § 34:15-128, which limits access to workers' compensation records for commercial agencies that sell information to employers about prospective employees. As the court in Accident Index Bureau v. Male (1967) explained, this statute was "aimed at curbing only the activities of commercial agencies" and does not render all workers' compensation records non-public.

The court also rejected the defendants' citation to Seymoure v. A.O. Smith Water Products Co. (2016), which addressed privacy protections for medical records in workers' compensation cases. The Fantini court noted that an Order Approving Settlement "does not contain details of Plaintiff's medical condition, and thus the privacy concerns in Seymoure are not implicated."

The Court's Reasoning

Judge Donio's decision emphasized several key points:

Judicial Nature of the Document: Unlike the previously sealed letter containing settlement negotiations, an Order Approving Settlement is a judicial order entered after a public hearing, in which a judge determines that the settlement is fair and just.
Statutory Equivalence to Judgments: The statute explicitly requires these orders to be "docketed in the same manner as judgments rendered in causes tried in the Superior Court," making them presumptively public judicial records.
Public Hearing Requirement: Settlement approval hearings are generally public proceedings where the judge must consider live testimony unless circumstances preclude the petitioner's appearance.
Already in the Public Domain: The court noted the fundamental principle that "information that has already entered the public domain cannot in any meaningful way be later removed from the public domain."
Limited Scope of Confidentiality Statutes: N.J.S.A. § 34:15-128 restricts only commercial agencies from accessing records for profit, not general public access to judicially-approved settlements.
Burden Not Met: Defendants failed to demonstrate that the Order Approving Settlement was not publicly accessible or that sealing was necessary under Local Civil Rule 5.3.

Practical Implications

This decision has several important implications for practitioners and parties in workers' compensation and related litigation:

For Settlement Negotiations: While the terms of ongoing settlement negotiations can remain confidential (as the court recognized in sealing the earlier letter), once a settlement is approved by a workers' compensation judge and entered as an order, it becomes a public judicial record.

For Employers and Insurers: Settlement amounts approved by workers' compensation judges will generally be accessible to the public, similar to court judgments. Confidentiality provisions in settlement agreements cannot override the statutory requirement that these orders be public records.

For Injured Workers: The public nature of approved settlements provides transparency but may raise privacy concerns. However, the court's decision recognizes that the legislature has already balanced these interests by making hearings and orders public while protecting against commercial exploitation of the records.

For Subsequent Litigation: As illustrated in Fantini, parties cannot prevent disclosure of workers' compensation settlement orders in related federal litigation simply by asserting confidentiality or invoking Federal Rule of Evidence 408.

The Distinction That Matters

The Fantini decision draws a critical distinction between:

Settlement negotiations and discussions (which can be kept confidential under Rule 408 and general confidentiality principles)
Judicially-approved settlement orders (which are public judicial records under New Jersey law)

This distinction makes practical sense. While parties should be free to negotiate settlements candidly and confidentially, once they seek judicial approval of a settlement—particularly in the workers' compensation system where the judge must independently determine the settlement is "fair and just"—the resulting order becomes part of the public judicial record.

Unanswered Questions

While Judge Donio granted defendants one final opportunity to demonstrate why the Order Approving Settlement should be sealed, the decision strongly suggests such a showing will be difficult to make. The court emphasized that defendants must prove the document is not publicly accessible—a high bar given the statutory framework and case law.

The decision leaves open certain questions:

Could settlement orders be sealed in exceptional circumstances involving trade secrets or other compelling interests?
How does this ruling apply to settlement orders that include specific terms beyond just monetary amounts?
What happens when parties include confidentiality provisions in settlements that are later approved by workers' compensation judges?

Conclusion

The Fantini decision reinforces the principle that judicial proceedings and orders are presumptively public, even in the specialized context of workers' compensation. While settlement negotiations can remain confidential, once parties seek judicial approval of a settlement, they invoke the public judicial system and must accept the transparency that accompanies it.

For practitioners, this case serves as an important reminder to counsel clients that while they can negotiate settlements confidentially, the final approved order—including the settlement amount—will generally become a public record. Parties seeking to keep settlement terms private should consider alternative dispute resolution mechanisms that don't require judicial approval, though this may not be possible in the workers' compensation context, where judicial approval is statutorily required for certain settlements.

The decision reflects a broader commitment to transparency in judicial proceedings, recognizing that public access to court records serves important democratic values even when it conflicts with parties' preferences for confidentiality.

Court Listner Docket: FANTINI v. WESTROCK COMPANY (1:22-cv-04351) USDC-NJ