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Court Upholds Oral Settlement of Personal Injury Claim Immediately Following Auto Accident

Plaintiff Ravon Hinton was involved in an automobile accident with Defendant Keyla Rivas Acosta on September 17, 2023. Immediately following the accident, Hinton offered to Defendant to settle the claim if Defendant would pay him $500 in cash. Acosta agreed to settle and, after negotiation as to the amount, paid Plaintiff $400. The issue in Hinton v. Acosta, 2026 N.J. Super. Unpub. LEXIS 806 (App. Div. Apr. 22, 2026) was whether this oral settlement agreement was enforceable so as to bar the lawsuit subsequently filed by Hinton against Acosta.

The accident happened when Hinton was walking across an intersection in Paterson and was struck by Acosta’s car. It was a dark and rainy night and Hinton was wearing dark clothing. Immediately following the accident and before police arrived Hinton told Acosta that there was no need to call the police or file an insurance claim or pursue any legal action against her in exchange for $500 in cash.

Despite that offer, Acosta contacted the Paterson police department and Officer Cesar Nunez arrived to respond to the call. Thereafter, the interaction between Hinton and Acosta was captured on Nunez’s body worn camera. In the footage on the camera, it shows Hinton repeatedly expressing his desire to accept $500 cash from Acosta. Caught on camera are the negotiations between Hinton and Acosta concerning a cash settlement for this accident in which Hinton eventually agreed to accept $400 to settle.

However, Acosta did not have that much cash and told the officer she would need to stop at an ATM to secure the funds to pay plaintiff. Hinton, Acosta, and the officer thereafter located an open ATM and, while on the officer’s camera, she withdrew the agreed upon cash and handed it to Hinton.

Despite this agreement, Hinton retained counsel who filed a civil complaint against Acosta on May 13, 2024. The lawsuit claimed that Hinton suffered serious injuries to his brain, neck, back, and knee due to the accident. Acosta’s attorney filed an answer, denied liability and included the affirmative defense of accord and satisfaction and release based upon the oral agreement between the parties as a complete defense to the lawsuit.

Defendant Acosta thereafter filed a motion for summary judgment, asking the court to enforce the oral settlement made at the scene of the accident. She used certifications from the officer and witnesses, deposition testimony from the officer, as well as his body camera video footage to support her motion.

The trial court judge granted the motion, dismissing the lawsuit. He found that the body worn camera footage and the officer’s testimony supported that the plaintiff was lucid, aware of the implications of his conduct, controlled the negotiations, and that there was clear evidence of an offer and acceptance.

This appeal ensued. Plaintiff argued that there was no meeting of the minds, that a hearing should have been held concerning its viability as a contract and plaintiff’s waiver of his personal injury claims were unenforceable because the settlement agreement occurred within 30 days of the accident in violation of N.J.S.A. 17:29B-15.

The Appellate Division noted that settlement agreements “are encouraged as a matter of public policy because they promote the amicable resolutions of disputes and lighten the increasing load of litigation faced by … courts.” These types of agreements are governed by principles of contract law. They are freely enforceable unless there is fraud or other compelling circumstances that should bar their enforcement.

To be valid, a settlement requires an offer and acceptance. And, the terms of the agreement “must be sufficiently definite [so] that the performance to be rendered by each party can be ascertained by each party with reasonable certainty.” The Court further noted that once the parties agree on essential terms and show an intent to be bound by those terms, then they have created an enforceable contract.

Here, plaintiff argued that he never accepted defendant’s offer to settle and that he did not have the requisite capacity to enter into an agreement. He also argued that the body worn camera footage was ambiguous.

The Appellate Division disagreed with plaintiff’s position. The Court found that the officer’s body worn camera footage showed that the parties voluntarily entered into a settlement agreement. That footage showed that a valid agreement was reached. Further, the footage showed that the plaintiff was not pressured into this settlement. To the contrary, it showed that Hinton repeatedly stated that “he just wanted his money” and “wanted to go home.”

The Court also rejected the argument that N.J.S.A. 17:29B-15 applied to these circumstances. Under this statute, no insurance release or waiver of rights by a claimant to compensation for personal injury or wrongful death, arising from an accident, executed within 30 days is enforceable without a written disclosure informing the claimant that he may seek legal representation.

The Appellate Division found that this statute only applied to a waiver or release with an insurance company and that it did not apply to private party settlements – which is what happened in this case. Hence, the Court found this statute to be inapplicable.

Thus, the Appellate Division upheld the trial court’s decision to dismiss this lawsuit based on the oral agreement reached between Hinton and Acosta at the scene of the accident.

Court Finds Defendants Unable To Pay Medicare Lien Directly Because Not Part of Settlement Reached

Plaintiff Walter Cabezas, as administrator of the Estate of Aldemar Cabezas, filed a wrongful death lawsuit following the death of Aldemar Cabezas who was struck by a vehicle owned by defendant Penske Truck Leasing Co. on September 7, 2021.  Medicare issued a conditional payment letter to plaintiff, stating that Medicare had identified $62,100.82 in conditional payments related to the claim.  The issue in Cabezas v. Penske Truck Leasing Co., L.P., 2025 N.J. Super. Unpub. LEXIS 2034 (App. Div. Oct. 28, 2025) was whether defendants (Penske Truck Leasing and Nehal Selim) were entitled to pay the lien directly or whether they were required to pay the entire settlement amount to plaintiff, who had agreed to satisfy any outstanding medical bills and liens, as well as indemnify and hold defendants harmless as to such liens.

The case settled for the amount of $500,000 and, in the settlement agreement, it indicated that plaintiff would release all claims and be solely responsible for satisfying any and all outstanding medical bills and liens.  However, despite the language in the agreement, defendants paid the Medicare lien directly and then remitted the remainder of the settlement amount to plaintiff.

After the case settled, plaintiff sent the defendants an executed release.  Thereafter, CMS issued a final demand letter setting the finalized Medicare lien at $39,365.09.  That final demand letter was supplied to defendants and plaintiff’s counsel again asserted plaintiff’s sole responsibility for the lien and pressed for immediate payment of the $500,000 settlement.

However, defendants notified plaintiff that it had issued a check for $460,634.91 and paid the Medicare lien directly.  Plaintiff objected and immediately demanded the full $500,000.

Plaintiff filed a motion to enforce the settlement agreement.  Defendants argued that plaintiff suffered no damages and would be provided a “windfall” if they now had to pay the full amount. 

At the oral argument, plaintiff made the argument that by the defendants paying the Medicare lien directly, it removed from them the ability to resolve the Medicare lien and potentially compromise the lien.  Hence, plaintiff argued that there was potential harm by defendants paying the lien directly. 

The trial court granted the motion and enforced the settlement agreement as written. The court awarded plaintiff counsel fees and costs incurred with bringing the motion and entered an order to enforce the settlement agreement, which required the defendants to pay plaintiff the full $500,000 settlement, despite having already satisfied the Medicare lien.

Defendants moved for reconsideration, arguing that the trial court’s decision provided plaintiff with a “double recovery” or a windfall.  The court denied reconsideration and found that the parties had a contract that they had agreed to $500,000 as a settlement.  The trial court found that the Medicare payment made by the defendants fell outside of the agreement and did not excuse the obligation to plaintiff. 

This decision was appealed.  Unfortunately for the defendants, it was upheld by the Appellate Division. 

The Appellate Division found that the parties had entered into a valid settlement agreement that defendants breached.  The language in the agreement was explicit in assigning the responsibility for satisfying any Medicare lien to plaintiff.  The Court found the language of the agreement to be clear and unambiguous.  Defendants were to pay plaintiff $500,000 in exchange for plaintiff releasing all claims and plaintiff was solely responsible for the Medicare lien.  Thus, the Court found that the trial court correctly enforced the settlement agreement as written when it ordered defendants to pay the entire $500,000.

The takeaway from this case is, if a defendant desires to pay the Medicare lien directly to avoid any future liability if the plaintiff’s counsel fails to satisfy this lien, this requirement must be part of the settlement agreement.  It cannot be done unilaterally or brought up after the settlement is reached.  Otherwise, a defendant may be forced to face the potential consequence of Penske Truck Leasing in this case in which, after paying the lien, it still was required to pay the full amount of the settlement to plaintiff.

Appellate Division Upholds Trial Court’s Decision That Execution Of A Release Was Essential Term Of The Parties’ Settlement

Plaintiff Ronald Goldstein appealed from a trial court decision order denying his motion to enforce the terms of a settlement that was placed on the record.  He also appealed from the trial court’s order granting defendants’ cross-motion to enforce the settlement in accordance with their written settlement agreement.  The issue in Goldstein v. Prolong Pharmaceuticals, LLC, 2025 N.J. Super. Unpub. LEXIS 794 (App. Div. May 16, 2025) was whether the execution of a release was an essential term of the parties’ settlement.

This lawsuit involved a claim by the plaintiff, an intellectual property attorney, who sued the defendants for unpaid invoices for legal services rendered to Prolong pursuant to a consulting contract.  After negotiations mediated by the trial court, the parties agree to resolve the case and placed the terms on the record.  According to the terms placed on the record, in exchange for a release of all claims in favor of the defendants, the defendants agreed to pay $240,000 in full and final settlement of the fee claims.  The payment was to be made within 30 days of the execution of the release.  Further, defense counsel confirmed that all four defendants would be jointly and severally responsible for the settlement agreement.

Following the in-court settlement, the parties exchanged various drafts of proposed releases which did contain some different terms that the defendants provided to the plaintiff.  Defendants’ drafts required plaintiff to forever release all claims in favor of defendants and “past, present, and future” parties associated with the defendants, “including but not limited to claims” arising out of the services agreement between plaintiff and Prolong.  Further, defendants added a confidentiality and non-disparagement clause.

In response, plaintiffs submitted a revised draft of defendants’ release.  Plaintiff objected to the defendants’ version, claiming that it was overreaching, one-sided, and well beyond the scope of the litigation.  It also included a reciprocal release, requiring defendants to release all claims in favor of plaintiff.  Finally, it removed the confidentiality and non-disparagement clause.

Thereafter, defendants accepted a few of the changes but retained the original language in the release and the confidentiality and non-disparagement clause.  It also changed the draft to indicate that plaintiff would receive payment within 30 days of the execution of the settlement agreement.  Plaintiff in turn advised defendants that the proposal made the document “fatally defective” because, pursuant to the terms, the case was to be dismissed and the $240,000 would be paid within 30 days of the settlement placed on the record.  Plaintiff claimed that defendants improperly attempted to change the payment date and made the payment an uncertain event contingent on the execution of the agreement.

The exchange of drafts of the release was followed by a case management conference.  After the case management conference, the parties continued to propose various drafts of the settlement agreement but never agreed on the finalized terms.  A further conference between the parties did not resolve the remaining issues pertaining to the settlement.

Ultimately, plaintiff moved to enforce the settlement terms placed on the record.  The defendants cross-moved to enforce their draft of the settlement agreement and sought attorney’s fees, costs, and sanctions.

The respective settlement terms differed with respect to the scope of the release, the definition of a disparaging statement, and the effective date.  The court held oral argument on both motions.  The trial court denied the plaintiff’s motion but granted the cross-motion.  The trial court found that the defendants’ proposed release and confidentiality and non-disparagement clause contained “standard language.”  It concluded that the settlement agreement proffered by the defendants contained the essential settlement terms placed on the record and contained “standard release language.”  Also, the trial court noted that the plaintiff understood that it was only upon execution of the release that he would be due payment.  However, the court denied the defendants’ motion for attorney’s fees.

Plaintiff appealed the court’s ruling, which compelled him to sign a settlement agreement which he considered to be unnecessary, unfair, and to include terms he had not agreed upon.  He argued that defendants should have been required to make the $240,000 settlement payment because he had provided defendants with his own unilaterally signed release, claiming that it satisfied the terms of the settlement put on the record.  Further, he argued that a release is a mere formality and, as a matter of law, a written release or settlement agreement “is not an essential element of settlement.”

The Appellate Division agreed with the defendants that the execution of a release in favor of defendants was an essential term of the settlement placed on the record.  Further, the defendants’ payment of $240,000 was not due until 30 days after the execution of the release.  Hence, the execution of a written release was not a mere formality but rather was a central component of the settlement.

As for the terms of the settlement, the Appellate Division agreed that plaintiff was not entitled to a reciprocal release according to the agreed-upon terms placed on the record.  One of the essential terms of the settlement agreement was the execution of a written release in favor of defendants but there was no reference to a reciprocal release.  Hence, defendants had no obligation to sign a reciprocal release. 

As for the non-disparagement clause, plaintiff argued that this term was not a necessary term of the settlement, and the parties disagreed on its language.  As for this provision, the Appellate Division disagreed with the trial court in enforcing the non-disparagement clause because the parties never expressed an intent on the record to include that term as part of the settlement.  To the contrary, it was an additional, non-negotiated term.

Next, the Appellate Division addressed the plaintiff’s argument that the defendants’ proposed language in the release exceeded the scope of the parties’ agreement regarding the nature of the claims released and the time period for the release.  The defendants’ proposed release was overly broad to the extent it included a release not only from the claims advanced in this case but also from other unknown and unidentified claims.  The Court found that the release should be limited to plaintiff’s claims and should be further confined to the relevant time period when the dispute arose and the case was litigated.

As for the due date of the payment, the Appellate Division noted that the parties agreed on the record that defendants would make payment within 30 days of the execution of the release.  This term suggested only that plaintiff’s signature was required in order for him to be paid by defendants and did not necessitate defendants’ signatures prior to payment.  Thus, the payment should be made within 30 days of plaintiff executing the release, not from the date on which the last defendant signed the agreement.  To the extent the trial court held otherwise, the Appellate Division found that it made a mistake in enforcing the effective date for payment as defined in defendants’ draft settlement agreement.

Hence, the Appellate Division remanded the matter back to the trial court.  It ruled that the parties shall promptly exchange a release consistent with the essential and limited terms set forth on the record.  The release should not include a reciprocal release for plaintiff or any non-disparagement clause or any other provision not specifically agreed to.  The parties may include a confidentiality agreement consistent with the representations made during oral argument.  Further, the Court found that defendants must pay plaintiff $240,000 within 30 days of plaintiff’s execution of the release. 

Finally, the Appellate Division found that the trial court correctly ruled that plaintiff was not entitled to an award of statutory interests.  Because he had not yet executed a release to satisfy his obligation, he had no right to payment.  Therefore, he also had no right to interest from when he claimed the payment was due. 

Appellate Division Rules That Claimants in Certain Circumstances Do Not Have to Reimburse an Employer’s Lien From a Third Party Recovery Until the End of the Workers’ Compensation Case

The unreported case of New Jersey Transit Corp. v. Joseph, No. A-1194-22 (App. Div. March 19, 2024) has thrown a wrench into the common understanding of when to resolve third party liens in New Jersey. The facts that are supplied in the case are not detailed.  Darshelle Joseph was injured on October 23, 2019, during the course of his employment with New Jersey Transit.  The opinion notes that NJ Transit’s carrier notified Joseph on November 11, 2019, of its lien rights as to any third party recovery.  The letter also advised Mr. Joseph to contact the carrier if he should retain an attorney in a third-party case.  The Appellate Division observed that there was no indication in the record whether Mr. Joseph notified either NJ Transit or its carrier of the third-party action, nor does the opinion discuss what, if anything, the third party attorney knew about NJ Transit’s lien when the third party case settled.

NJ Transit paid $7,112.90 in workers’ compensation medical and temporary disability benefits to petitioner, Darshelle Joseph.  The workers’ compensation case had not yet been resolved. Mr. Joseph sued the tortfeasor and recovered $14,000 in settlement with his uninsured motorist insurance policy in December 2021.  His attorney disbursed the full $14,000 settlement amount less counsel fees and costs of $15.10 to Mr. Joseph.  No repayment was made to the New Jersey Transit for its medical and temporary disability benefits lien as of the date of the third party settlement. 

NJ Transit filed a verified complaint in civil court seeking reimbursement of its statutory lien.  It is noted in the decision that the trial court did not hear oral arguments but ruled on the briefs submitted, denying NJ Transit’s application for lien reimbursement as being “premature.”

The trial court and Appellate Division disagreed with NJ Transit’s argument that the employer’s statutory lien must be satisfied immediately upon resolution of the third-party settlement.  The Appellate Division said, “Thus, the statute makes no mention of when the employer’s lien must be satisfied, but it makes clear the specific amount of the lien cannot be determined until the employer’s liability is finalized.”   The Court was referring to N.J.S.A. 34:15-40(b) which states:

b) If the sum recovered by the employee … from the third person … is equivalent to or greater than the liability of the employer … under this statute, the employer … shall be released from such liability and shall be entitled to be reimbursed … for the medical expenses incurred and compensation payments theretofore paid to the injured employee … less employee’s expenses of suit and attorney’s fee as hereinafter defined.

The Court read the above paragraph as being directly applicable to this case because the $14,000 civil recovery was higher than the $7,112.90 paid in medical and temporary disability benefits but the court also noted that the workers’ compensation case had not yet concluded.  The Court said, “Thus, there is no requirement the employer’s lien must be paid following recovery from a third-party tortfeasor.  Indeed, it cannot be fully satisfied until any associated workers’ compensation action is finalized and the employer’s liability under the Act is determined. Thus, an employer’s unperfected statutory lien is not required to be satisfied immediately upon the injured employee’s recovery from a third-party tortfeasor.”

The comment that the Court made about an “unperfected lien” is important to understand for all workers’ compensation practitioners.  The Court was referring to N.J.S.A. 34:15-40(d), which provides that the employer or its carrier may serve notice on the third-party defendant or its insurance carrier of its lien rights as to any third-party recovery arising from the work injury.  When that notice is provided, the third-party defendant or its insurance carrier may not make settlement payments to the injured employee in the civil action until the workers’ compensation lien is satisfied.  This notice provision is what the Court meant by “perfection” of lien rights. The Court said that in this case, there was no proof of any perfection of lien rights.

Current practice in New Jersey is contrary to this decision.  When a third-party settlement occurs – even if the workers’ compensation case is ongoing – the lien is resolved as to the amount of the third-party recovery.  In a case like this, the third-party attorney would repay two thirds of $7,112.90 minus statutory costs, and then the employee would continue to pay one third of future benefits until the amount of the workers’ compensation benefits would reach $14,000 (which was the amount of the UM settlement). Thereafter the employer would pay dollar for dollar on any future benefits. The employer is not actually paying workers’ compensation benefits up to the amount of the $14,000 settlement.  Rather the employer is making its contribution to plaintiff’s counsel fee in the third party case. 

The Court acknowledged that the underlying principle behind N.J.S.A. 34:15-40 was to prevent double recoveries. In this case the plaintiff made a double recovery because he received his $7,112.90 and kept two thirds of the $14,000 UM settlement.  The Court seemed to be suggesting that this problem of double recovery could be addressed at the end of the workers’ compensation case depending on how much more money NJ Transit has to pay to resolve the workers’ compensation claim.  The flaw in that argument is that if NJ Transit should close the file with only a few thousand more dollars in payments, a double recovery will occur and NJ Transit will not receive repayment of its lien. 

The Appellate Division was concerned about the fact that NJ Transit’s lien was not protected in this case because the entire $14,000 settlement was disbursed without holding funds in escrow to satisfy the lien.   It said, “As long as the funds to pay the lien are protected – either deposited into court or deposited in an attorney trust account – there is no prejudice to NJ Transit.”  The Court remanded the case to the trial court to take steps to protect NJ Transit’s lien.  None of this would have been necessary had the lien been taken care of at the time of the third party settlement.

This case is focused on an important issue: namely, the timing of lien repayments when a third-party settlement occurs during an unresolved and ongoing workers’ compensation case. The general principles discussed in this case are far more important to focus on than the outcome in this Appellate Division case because the record here is so sparse.  The opinion does not mention what contact there was, if any, between plaintiff and his lawyer and NJ Transit before the third-party settlement funds were disbursed.

We all know that third-party settlements occur all the time during ongoing workers’ compensation cases.  The Court correctly observed that “perfected” liens must be repaid to the employer at the time of the third-party settlement if notice has been given to the third-party defendant or its carrier of the employer’s lien rights.  In that situation, there can be no attempt to delay repayment until the end of the workers’ compensation case.  Now let’s consider so-called unperfected liens where the third-party defendant and its carrier are not notified of lien rights before they disburse payments.  If both plaintiff’s attorney and the plaintiff have actual notice of the employer’s lien rights at the time of settlement of the third-party case, why would the result be different? Why would there be an opportunity to delay repayment until the workers’ compensation case should end – which might be several more years?  It is the actual notice that should matter. It would be inconsistent to read the statute to mean that a lawyer and plaintiff with actual notice of the current lien amount should be held to a different legal standard than a third-party defendant or its carrier with respect to the timing of reimbursement.

The post Appellate Division Rules That Claimants in Certain Circumstances Do Not Have to Reimburse an Employer’s Lien From a Third Party Recovery Until the End of the Workers’ Compensation Case appeared first on NJ Workers' Comp Blog.

Plaintiff’s Settlement of Property-Based Claim Against Landlord Found Not to Bar Subsequent Personal Injury Claim

Plaintiff Lourdes Gonzalez had filed a lawsuit against her landlord, defendant 908-910 Washington Street, LLC, alleging various theories of liability, based upon the condition of her apartment.  That lawsuit was settled on certain terms which included a general release of any and all claims against the landlord.  The issue in Gonzalez v. 908-910 Washington Street, LLC, 2023 N.J. Super. Unpub. LEXIS 1528 (App. Div. Sept. 13, 2023) was whether the plaintiff’s subsequent lawsuit for a personal injury based upon alleged lead poisoning in her apartment’s water supply was barred by the release she signed in the property dispute.

Plaintiff, along with two other tenants, had filed suit against the defendant landlord claiming that “ongoing course of discriminatory and unconscionable conduct for the purposes of evicting tenants are causing them to vacate the leased premises.”  Plaintiff sued the landlord based upon various theories of liability and requested an order enjoining the defendant landlord from pursuing eviction and she also sought damages.  Subsequently, that lawsuit was settled pursuant to a six-page settlement agreement which included a general release.  These settlement terms included the execution of a two-year lease with the parties’ simultaneous execution of a consent judgment for possession at the end of the two-year period and the defendant landlord’s payment to the plaintiff of $55,000.

The settlement agreement included a general release which contained language releasing the landlord from any and all actions and causes of action, whether known or unknown, or whether asserted or which could have been asserted against the landlord.

Following the execution of the agreement, the plaintiff retained the services of a building inspector to document her apartment’s condition at the beginning of her new lease.  The inspector tested her water.  She learned from the inspector’s report that the lead level in her apartment’s hot water supply was 60 times greater than the level permitted under federal regulations.  She had her blood levels tested and she learned that she had an elevated lead level.

Thereafter, plaintiff vacated the premises pursuant to the settlement agreement.  Following her departure from the apartment, she sued the defendant landlord a second time, claiming that the landlord negligently installed plumbing in her apartment and sought damages for personal injury.  She claimed that the hot water pipe to her apartment tested for lead and that the test results showed a lead level 60 times the permissible lead levels established by the United States Environmental Protection Agency.  She further claimed that she suffered chronic lead poisoning caused by the prolonged contact with the lead contaminated water supply in her apartment and that the lead poisoning resulted in a serious permanent bodily injury.  She sued on various theories of liability which boiled down to the defendant landlord’s “alleged failure to maintain plaintiff’s apartment’s potable water supply in a safe condition, resulting in harm to her through lead contamination.”

The defendant landlord filed a motion to enforce the settlement agreement and dismiss the complaint with prejudice.  The trial court found that all parties had the capacity to understand and enter into this agreement and granted the motion as to defendant, finding that the agreement unambiguously and expressly provided that any and all claims arising out of or relating to the prior lawsuit were waived, which included claims and damages, known or unknown.   The trial court relied upon prior case law for the proposition that a plaintiff who has signed a general release is barred from bringing a subsequent personal injury claim. 

Plaintiff appealed that order, finding that the trial court failed to apply the Supreme Court’s holding in Bilotti v. Accurate Forming Corp.   Pursuant to Bilotti, the Court held that the scope of a release must be determined by the intention of the parties “as expressed in the terms of the particular instrument, considered in the light of all the facts and circumstances.”  A general release would ordinarily cover all claims and demands due at the time of its execution and within the contemplation of the parties.  However, questions of such intent cannot ordinarily be “fairly disposed of on affidavits in a summary judgment application.”

In opposing the defendant’s motion to enforce the settlement, plaintiff submitted a certification that she did not intend to give up any future claims for personal injury damages due to lead poisoning.  Her first complaint was a property-based relief as she sought to compel her landlord to make repairs to her apartment.  Her claims at that time were that the building plumbing system did not supply adequate hot water to her apartment.  It was only after she settled her first lawsuit that she learned that the hot water system was contaminated with lead at unsafe levels.

After considering all of the facts in this case, the Appellate Division did find that the Bilotti case applied and emphasized that a general release, while it would ordinarily cover all claims and demands at the time of its execution, it would only cover those claims within the contemplation of the parties.  The Court found that the trial court made a mistake when it failed to find that there were genuine factual issues on the question of the party’s intent when they settled the first lawsuit.  Hence, the court’s order of dismissal was vacated and the case was remanded back to the trial court for further proceedings. 

Settlement Reached at Mediation Deemed Unenforceable Due to Parties Failure to Sign Written Agreement

This matter arose from a dispute over the sale of two nail salons.  Defendants PD Nail Corp., CD Nail Corp., Hee Jung Kim, and Sook Hee Kim made a $550,000 down payment and acquired possession of the nail salons, but the sales were not finalized due to the deterioration of the negotiations.  Plaintiffs Gold Tree Spa Inc. and Gold Garden of Wall Township, Inc., and Ok Sim Baik filed suit primarily for breach of contract and breach of an agreement to purchase the nail salons.  The parties voluntarily agreed to mediate their dispute but the defendant Baik refused to sign the settlement agreement following the mediation.  The issue in Gold Tree Spa, Inc. v. PD Nail Corp., 2023 N.J. Super. LEXIS 31 (App. Div. Mar. 28, 2023) was whether the parties reached an enforceable settlement agreement due to the failure of the parties to sign a written agreement at the conclusion of the mediation.

At the mediation session, the mediator did prepare a draft settlement agreement which provided that plaintiffs would retain the $550,000 down payment and defendants would retain possession of Sharon Nails but return possession of Ceci Nails, contingent upon Ceci Nails’ landlord consenting to assignment to its lease to plaintiffs by February 1, 2022.  Additionally, defendants agreed to give the third-party defendants (Soon Wea Son, the manager of Ceci Nails and her new nail salon Graceful Nails of Brielle, LLC) $4,000 to resolve any claims between the parties.  Within a few hours after the mediation ended, plaintiff Baik informed her attorney that she did not want to settle and did not sign the agreement.  This refusal to settle was communicated to the other parties and the trial court.

Thereafter, defendants moved to enforce the settlement.  Plaintiffs filed opposition, stating that they were prepared to honor the settlement agreement if the contingencies could be met regarding the assignment of Ceci Nail’s lease.  The parties did acquire the landlord’s consent, contingent upon defendants guaranteeing two years of plaintiff’s rent.  Defendants contacted the mediator and plaintiffs to finalize the draft settlement agreement and sent a bill of sale, contract for sale of business, assignment of lease, and mutual release and indemnification agreement.  Plaintiff’s counsel responded by requesting an extension of time to review the documents while also seeking clarification in disputing certain terms of the agreement, specifically the defendants’ guaranty.  The parties did not finalize the agreement by February 1, 2022 as required by the draft settlement.

The trial court denied the defendants’ motion to enforce the settlement, stating that the motion to enforce the settlement was moot because the parties failed to reach a valid agreement under Willingboro Mall, Ltd. v. 240-242 Franklin Avenue, LLC., 215 N.J. 242 (2013).  In her decision, the trial court judge explained that Willingboro’s requirement that “[the] terms of settlement must be reduced to writing and signed by the parties before the mediation comes to a close” was not satisfied because the parties did not sign the agreement.  Defendants had argued that Willingboro did not apply because, in that case, the mediation was court-ordered and, in the within case, the party’s mediation was voluntary.  Further, the judge stated that plaintiffs’ actions and communications following their rejection of the settlement were irrelevant because there was no meeting of the minds.

In this published Appellate Division decision, the Court applied Willingboro’s holding.  In Willingboro, the Supreme Court found that “[t]o be clear, going forward, a settlement that is reached at mediation but not reduced to a signed written agreement will not be enforceable.”  The Appellate Division noted that in the within case, the parties failed to sign the draft settlement agreement and, hence, it was unenforceable under Willingboro’s broad, bright-line rule. 

The Court found that it made no difference that in Willingboro the mediation was court-ordered or that it was a voluntary mediation in this case.  It cited to Justice Albin’s statement in Willingboro that “mediation will not always be successful, but it should not spawn more litigation . . . Instead of litigating the dispute that was sent to mediation, the mediation became the dispute.”  The Appellate Division noted that this case was exactly the situation Willingboro was addressing, i.e., settlement through the mediation process only occurs when the parties agree in writing.

Further, the Court noted that there was no meeting of the minds that a settlement was reached.  The e-mails provided by defendants indicated that Baik refused to sign the draft settlement agreement.  Defendants admitted that they were still engaged in negotiations for the settlement and that the settlement became null and void because they did not finalize it by February 1.

Hence, the Appellate Division upheld the trial court’s decision denying the motion to enforce the settlement and remanded the matter back to the trial court.

This published decision reinforces the necessity of a signed written settlement agreement at the conclusion of a mediation to make any agreement reach at a mediation enforceable.  As the Appellate Division pointed out, the agreement needs to be in writing and signed by the parties, regardless of whether it was a court-ordered mediation or a voluntary mediation.  A term sheet with all materials terms should be sufficient to ensure the enforceability of a settlement reached at the mediation.

Section 20 Settlements Versus Orders Approving Settlement

Practical Advice in New Jersey Workers’ Compensation

Our clients often ask great questions regarding settlements in New Jersey workers’ compensation, particularly regarding the two types of settlements (Orders Approving Settlement, and Section 20/full and final), and the differences between them.  This post provides examples of scenarios where an argument can be made for a Section 20 settlement.

There are two ways to settle a workers’ compensation claim in New Jersey. Most cases in New Jersey settle under N.J.S.A. 34:15-22 (known as an Order Approving Settlement) with a specific percentage of disability. In this case, the employee retains right to reopen for future benefits and receives a percentage award which is paid over a certain number of weeks corresponding with the level of disability.  The higher the disability percentage, the more weeks that are paid.

Section 20 settlements are quite different.  First, the Award is paid in a lump sum settlement. This is a full and final settlement of the case and it can never be reopened. A case settling pursuant to a Section 20 settlement must present a disputed issue of, liability, causation, jurisdiction, or dependency.  Without one of these issues, there is no legal basis for a Section 20.

Issue of Liability: An issue of “liability” generally refers to a disputed employment issue (such as an off-premises injury) or a dispute regarding the existence of permanency.  N.J.S.A. 34:15-36 states that in order to demonstrate permanent disability, a petitioner must prove, via objective medical evidence of an impairment (diagnostic studies) which restricts the function of the body.  If the respondent can make a serious argument that there really is no permanent disability, then many judges will permit a Section 20 settlement.

In addition to proving an impairment, the petitioner must show also that the impairment is disabling.  Disability is broader than impairment.  It requires that the petitioner must also prove that he or she has a lessening to a material degree of working ability or a substantial impact on non-work activities.

Other bases for a Section 20 on the issue of liability are lack of timely notice under N.J.S.A. 34:15-17 or failure to comply with the Statute of Limitations under N.J.S.A 34:15-51.

Issue of Causation: An issue of “causation” generally refers to a disputed medical issue.

Case study/Example 1: Petitioner injures her left knee at work on January 1, 2020. Her post-accident MRI of February 15, 2020 is normal. She then has a subsequent non-work accident on March 1, 2020. An MRI of April 1, 2020 reveals an anterior cruciate ligament tear and a meniscal tear. We would argue that due to the March 1, 2020 subsequent accident which obviously caused new diagnostic findings, this case is appropriate for a Section 20 settlement. This example is similar to the case of Costanzo v. Meridian Rehab, A-5547-18 (App. Div. June 17, 2021), handled by our partner Carla Aldarelli. This case was discussed in our blog article entitled Respondent Prevails Where First MRI Post-Accident Showed No Abnormalities In Knee.

Case Study/Example 2: Petitioner injures her left knee at work on January 1, 2020. Her post-accident MRI of February 15, 2020 reveals an anterior cruciate ligament tear and a meniscal tear. During Respondent’s investigation, it is revealed that petitioner had a prior left knee injury of June 15, 2019 and on August 15, 2019, petitioner underwent a left knee MRI which also revealed an anterior cruciate ligament tear and a meniscal tear. We would argue that since the January 1, 2020 accident did not cause any new diagnostic findings, any disability is related to the prior June 15, 2019 accident, making this case proper for a Section 20 settlement.

Case Study/Example 3: Petitioner injures her left knee on January 1, 2020. On January 1, 2021, she receives an Order Approving Settlement for 15% of the leg from this January 1, 2020 accident. She re-opens her case on June 1, 2021. On May 1, 2021, she had a new left knee injury with a new employer for which she underwent treatment including a series of injections. She had no new treatment for the January 1, 2020 claim after filing her Re-opener. On the Re-opener, we would argue that the May 1, 2021 incident cuts off causation from the initial January 1, 2020 work accident, and the Re-opener should now be settled pursuant to Section 20.

Case Study/Example 4: Petitioner injures her left knee on January 1, 2020. On January 1, 2021, she receives an Order Approving Settlement for 15% of the leg from this January 1, 2020 accident. She re-opens her case on June 1, 2021. On May 1, 2021, she had a new and minor left knee injury with a new employer. The first employer for the January 1, 2020 accident agrees to provide all treatment following the reopener date, and the second employer pays no medical and temporary disability benefits because its incident was very minor.  A petition is filed against the second employer. The employer for the May 1, 2021 incident will likely argue for a Section 20 dismissal.  Most likely, the employer for the original January 1, 2020 re-opened claim will have to resolve the case on an Order Approving Settlement.

Issue of Jurisdiction: As a general matter, there are three principal ways in which jurisdiction in New Jersey may be found:

1.         When the contract of hire is in New Jersey;

2.         When the accident occurs in New Jersey;

3.         When a substantial amount of employment for the respondent occurs in New Jersey.

There are instances where jurisdiction may be found in more than one state. This is allowed, so long as there is not a duplication of benefits between the two states (medical, TTD, permanency). So an employee may receive temporary disability benefits and medical benefits in another state like New York but apply for partial permanent disability benefits in New Jersey if the injury, hire, or work occurred in New Jersey.

Marconi v. United Airlines, 460 N.J. Super. 330 (App. Div. 2019) holds that localization of the employer in New Jersey and residency of the petitioner in New Jersey was not sufficient to warrant New Jersey jurisdiction where the petitioner worked almost exclusively in Pennsylvania and was injured in Pennsylvania.  Petitioner argued that since United Airlines had a hub in Newark Airport (although petitioner worked in Pennsylvania) and petitioner also lived in New Jersey, those facts should be enough for jurisdiction. The Appellate Division disagreed.  Our partner, Prudence Higbee, prevailed in this matter for United Airlines. More details about this case may be found in our blog article entitled United Airlines Wins Important Appellate Decision Involving Jurisdiction.

Issue of Dependency:

If it is determined that the work accident was not the cause of death, ultimately, we would argue that nothing except funeral costs are owed. However, in certain situations, a small Section 20 settlement/Award may be offered, in order to close the case.

If it is determined that an alleged dependent is not a valid dependent under Section 13, we would argue that nothing is owed. However, in certain situations, a small Section 20 settlement/Award may be offered, in order to close the case.

Miscellaneous Issues

Finally, there are also some “miscellaneous” considerations when determining if a Section 20 settlement is feasible. First, all Section 20 settlements are subject to petitioner’s, petitioner’s attorney’s, and the Judge’s approval.

Second, practitioners should keep in mind that legal fees are quite different between a Section 20 and an Order Approving Settlement. In Orders Approving Settlement, petitioner’s attorney’s fee (which is 20% of the overall Award) is paid 60% by Respondent and 40% by petitioner. For petitioner’s permanency exam, Respondent pays 50%; petitioner pays 50% (generally $300 each) In a Section 20 Order, petitioner pays 100% of his or her attorney’s fee.

Case Study/Example 1: Petitioner receives an Award for 15% partial total at 2021 rates, or 90 weeks at a rate of $258.00 per week, totaling $23,220.00. Petitioner’s attorney’s fee is $4,644. Of this, Respondent pays $2,786.40 and petitioner pays $1,857.60 (this may be rounded to the nearest dollar and rounded up for Respondent and rounded down for petitioner). Respondent and petitioner each pay $300 for petitioner’s expert. Ultimately, petitioner nets $21,062.40 and retains re-opener rights.

Case Study/Example 2: Petitioner receives a Section 20 Award of $27,500. Petitioner is solely responsible for his attorney’s fee of $5,500 out of his Award; he also pays the full $600 for his report. Ultimately, petitioner nets $21,400 and does not retain re-opener rights.

One disadvantage of a Section 20 is that payments are not lienable when there is a third party recovery unless both parties specifically agree on the record to make such payments lienable. This is quite different from an Order Approving Settlement where the entire permanency payment may be lienable if the third party amount is higher than the amount of the permanency award.

More than two thirds of settlements in New Jersey resolve on an Order Approving Settlement.  The reason is that in many accidents there simply is no legal basis for a Section 20 settlement.  The advantages of a Section 20 settlement are that the case is closed in a lump sum payment (unlike payments over many weeks for an Order Approving Settlement), there is no admission of liability and there is no potential for a reopener.  But there must be a disputed issue of, liability, causation, jurisdiction, or dependency to argue for a Section 20 settlement.

The post Section 20 Settlements Versus Orders Approving Settlement appeared first on NJ Workers' Comp Blog.

Court Enforces Settlement Agreement Without Insurer Included on Release

Plaintiff Glentina Kupolati sued the Village of Timber Creek Condominium when she slipped and fell on a sidewalk near her home.  On the day of trial, the parties’ counsel met to settle the matter with counsel orally agreeing that plaintiff would receive $180,000 and, in return, Kupolati would sign a general release, waiving any claims against the defendant Association. In Kupolati v. Village of Timber Creek Association, 2021 N.J. Super. Unpub. LEXIS 7 (App. Div. Jan. 5, 2021), the issue was whether plaintiff must sign a general release which would also cover the defendant Association’s insurer, as well as provide a physician’s certification that her slip and fall injuries would not require any additional treatment or monitoring.

When the case settled, counsel did not put the settlement terms on the record in open court.  Subsequently, defense counsel prepared settlement documents.  The general release that was prepared included the defendant Association’s insurer, in addition to the Association, releasing them from most claims, including Medicare liens.  As part of the settlement process, defense counsel also insisted that plaintiff’s physician certify that the plaintiff’s slip and fall injuries would not require any additional treatment or monitoring.

The plaintiff’s counsel amended this proposed release, striking the provision that generally released the insurer.  However, plaintiff did agree to accept a paragraph which held the insurer harmless against “any and all liens, known or unknown, or claims that may be asserted against the settlement proceeds.”  The plaintiff signed the defense prepared settlement agreement, accepting the $180,000 settlement payment would cover the insurer’s portion of amounts payable to Medicare, then and in the future and that the responsibility to reimburse Medicare for payments was solely the responsibility of the plaintiff.  Further, plaintiff’s counsel stated in a letter that his office would satisfy any Medicare liens before distributing the settlement funds.

However, a dispute remained over the terms of the general release and the requested physician’s certification.

Plaintiff moved to enforce this settlement without the disputed items.  The defendant cross-moved to enforce a settlement with them.

The trial court found that defendant failed to establish that either a general release of a non-party insurer or a physician’s certification regarding future treatment was standard practice.  The court did note that holding an insurer harmless for Medicare claims was standard practice but it pointed out that the plaintiff had already done so.  The court then ordered defendant to pay interest at the post-judgment interest rate of 3½% on the $180,000 settlement amount, which would commence thirty (30) days after plaintiff signed the amended release.

Defendant appealed this ruling to the Appellate Division and presented two arguments in challenging the order to enforce.  First, the defendant argued that the trial court should have held an evidentiary hearing because there was a genuine factual issue regarding the settlement’s terms or, second, the trial court should have, without an evidentiary hearing, enforced defendant’s version of the settlement, which defendant claimed included terms allegedly consistent with standard industry practice.

The Appellate Division noted that, under New Jersey law, that a settlement agreement between parties to a lawsuit is a contract and governed by the general principles of contract law.  Further, because the court system highly values dispute-settlement agreements, the court will “strain to give effect to the terms of the settlement wherever possible.”  The Appellate Division noted that a court will generally enforce a settlement agreement which involves the payment of money by one party in consideration for the dismissal of a lawsuit if the agreement addresses the principal terms required to resolve the dispute. 

The Court noted that if the parties do not agree on one or more essential terms, the agreement would be unenforceable.  A court will enforce an oral agreement that includes essential terms, “even if the writing does not materialize because a party later reneges.” 

The Appellate Division pointed out that the plaintiff bore the initial burden to establish both the agreement to settle and defendant’s breach.  However, the Court stated that the plaintiff had satisfied her burden through her certification of counsel in certifying that he negotiated the settlement agreement and that the parties orally agreed that the defendant would pay $180,000 and the plaintiff would generally release defendant in return.  He also certified that the parties never agreed to generally release the insurer or to provide a physician’s certification.  In fact, the parties did not even discuss the certification in the conference.

At that point, the burden then shifted to the defendant to present evidence to demonstrate a genuine dispute of material fact.  However, defense counsel, in his responding certification did not deny the plaintiff’s version of what occurred at the settlement conference.  In particular, at the conference, the defendant’s counsel did not demand that plaintiff generally release the insurer and provide a physician’s certification.  Thus, the Appellate Division concluded that there was no genuine dispute that the parties agreed to essential and enforceable terms of a settlement agreement but that they did not expressly agree that plaintiff would provide either a general release of the insurer or a physician’s certification.

Further, the Appellate Division noted that it was not persuaded that “even if the parties did not expressly agree to the release and the certification, those elements were essential, including them is standard practice in settling personal injury suits, and they were implied.”  The Appellate Division held that under general contract law, terms may be implied in a contract “because they are necessarily involved in the contractual relationship so that the parties must have intended them and have only failed to specifically express them because of sheer inadvertence or because the term was too obvious to need expression.”  Further, under New Jersey law, a court may supplement an agreement with terms common to an industry.

Here, the defendant failed to present any competent evidence that generally releasing a tortfeasor’s insurance company was a common and customary practice in settling personal injury suits.  Further, the defendant failed to present any evidence that its demand for the physician’s certification was consistent with industry customs.  Without such evidence, there was no industry usage basis to supply such terms and the Appellate Division found that the trial court properly refused to add such terms to the release.

In summary, the Appellate Division found that the trial court did not err in granting plaintiff’s motion to enforce the settlement agreement, as plaintiff’s counsel described that agreement.

The Appellate Division also upheld the award of prejudgment interest.  The Court found that plaintiff was entitled to the payment of $180,000 based upon the settlement agreement reached but that the defendant retained the use of the money in breach of that agreement.  The Court noted that the trial court “reasonably exercised its discretion in utilizing the post-judgment interest rate and in deciding to start running interest thirty (30) days after the plaintiff signed the documents.”

Hence, the trial court’s decision was affirmed to enforce the settlement based upon the plaintiff’s version of the release.

This case points out the need to discuss all non-monetary terms, as well as the form of the release and parties to be released, at the time a case is settled.  If the defendant has a specific form of a release, which includes the insurer as a party to be released, it would be prudent for defense counsel to advise plaintiff’s counsel that the plaintiff would need to sign a specific form of release, before or no later than the time the case is settled. 

Additionally, although not an issue in this decision, if there are other non-monetary provisions that are material, such as a confidentiality provision or as to which party would satisfy any lien, again, those terms need to be negotiated before the settlement is concluded or, as happened in the Kupolati case, a court may decide that those terms were not implied in the standard settlement agreement (or release) and refuse to enforce them.

Appellate Court Allows Employee To Reopen Terms Of A Consent Settlement To Reconstruct Wages

A recent unpublished case poses an unusual question:  can a party to a consent settlement for a percentage of disability award reopen the case to dispute the rate that was agreed to in the settlement?  The case is Calero v. Target Corporation, A-2650-18T3 (App. Div. June 10, 2020).   

Ms. Calero and Target Corporation agreed to a settlement on August 23, 2016 for a certain percentage of partial permanent disability.  Wages were stipulated at that time of $276.17 week with a capped rate of $193.32.  That meant that petitioner’s weekly permanency payments were capped at $193.32.  The Judge of Compensation and all parties, including the petitioner, signed the final order.   Several months later petitioner hired a new lawyer, who filed a motion for reconsideration of the wage which had been stipulated to in the settlement order.  The new lawyer argued that the part-time wage should have been reconstructed based on a full time wage. Target opposed the motion for reconsideration.

A hearing took place on September 12, 2018, and petitioner was permitted to testify essentially that the consent award was wrong on her wage.  She agreed that she earned $11.50 per hour but she was not seeking a higher percentage of disability.  She testified that she was hired on a full-time basis but she “worked the hours that were posted” for her.  She maintained that she was always available for 40 hours.  After her accident she tried to return to work but was physically unable to do so, and she said her hours continued to be reduced until there was no more work for her.  She had not worked anywhere since leaving Target.

On cross examination, petitioner acknowledged that sometimes she barely worked 20 hours per week. But she maintained that most of the time she worked 40 hours per week.   Counsel for Target did not offer any documents on her actual hours worked, nor produce any testimony from store employees.  It does not appear in the decision whether petitioner was asked why she had in fact agreed to the rate of $193.32 at the time of the 2016 settlement.

On January 16, 2019, the Judge of Compensation issued his decision reconstructing petitioner’s wages to 40 hours per week.  The judge applied the law set forth in Katsoris v. S. J. Publ’g Co., 131 N.J. 535 (1993).  That case requires proof of a permanent diminution of earnings capacity to reconstruct wages. Given petitioner’s testimony that she mainly worked 40 hours per week and that she could no longer work, the judge held that petitioner had proven a permanent diminution of wage earning capacity.  In so finding, the Judge of Compensation relied on a Civil Rule 4:50-1, which allows for judicial relief “which involves mistake, inadvertent surprise or excusable neglect.” 

Pursuant to the reconstructed wage, petitioner’s new wage became $460 per week, which allowed for a permanency rate up to $322 per week, substantially higher than the rate in the 2016 order of $193.32 per week.

Target appealed and argued that N.J.S.A. 34:15-27 respecting requests for modifications does not permit a party to reopen a case on stipulated facts like wage and rate.  Rather, the rule is designed for requests for modifications in the percentage of disability, or requests for further treatment or further temporary disability benefits.  The Appellate Division refused to hear this argument because Target failed to argue this point before the Judge of Compensation.  The policy of the appellate division is to only hear arguments on appeal that were raised below.  The Appellate Division also noted that Target had conceded that Civil Rule 4:50-1 permitted petitioner to make application to the Judge of Compensation for relief from a mistake. 

The Appellate Division commented that even if it had considered Target’s argument that stipulations on wages and rates cannot be the subject of a motion for reconsideration, “… we would find no error because regardless of the Act’s provisions, a judge of compensation has inherent authority to open judgments or orders in the interest of justice and that decision will not be disturbed absent an abuse of discretion.”

Target also argued that it was unfairly required to “incur additional and unforeseen litigation expenses to defend the settlement” which created “a tangible and significant harm.”  The Court rejected this argument because “Target did not argue before the judge of compensation or now before us, that had reconstruction been raised by Calero in the settlement discussions that led to the consent order, she would not have been entitled to the application of reconstruction to her wages.”  In other words, the Court said that Target never proved petitioner was not entitled to the reconstructed wage.  The Court said, “Target offered absolutely no evidence to refute Calero’s proofs or to establish that the alleged substantial prejudice Target suffered outweighed that which Calero experienced by not have her award properly determined.”

This case is unpublished, meaning that other courts are not bound by it, but it raises some very important questions for all cases where petitioners do not regularly work 40-hour per week jobs and may have capped permanency rates. If the petitioner agrees on the record to the wage and rate and testifies as such, is the petitioner still able to hire another lawyer later on to prove that wages should have been reconstructed?  How can the respondent protect itself from settlements being overturned on this issue?  Can respondent do the same thing and reopen awards if records show that the petitioner in fact had a lower wage than that which was agreed on? 

In this particular case, the evidence produced by petitioner for reconstruction of wages was strong and consistent with the Katsoris decision because petitioner argued she had a permanent diminution of earning capacity.   There was no evidence offered by Target to dispute the statements petitioner made in court.  Rather, Target focused on the unfairness to the company when a petitioner moves to reject the terms of consent order after the order has been entered and is being paid.   In fact, It does seem unfair to the employer to negotiate a settlement considering all factors, including the percentage of disability and rate, and then have one part of that settlement remain open for a subsequent attack.  What we do not know in this case was whether the overall percentage of disability was negotiated higher in exchange for a capped rate.  There is no mention of that in the decision.

Thanks to Rick Rubenstein, Esq. for bringing this case to our attention.

The post Appellate Court Allows Employee To Reopen Terms Of A Consent Settlement To Reconstruct Wages appeared first on NJ Workers' Comp Blog.

The Limitations of Settlements in New Jersey Comp

This practitioner is often asked two questions regarding
workers’ compensation settlements in New Jersey:  1) Can we settle out of court? and 2) Can we
get a termination agreement at the time of settlement?

There are a number of limitations on settlements in New
Jersey that are different from the practice of law in other states.  One has to do with the prohibition against
out of court settlements. The employer, third party administrator or carrier
may not reach an agreement with the injured worker to settle a workers’
compensation claim unless that claim is the subject of a claim petition
properly filed and heard before a Judge of Compensation.  An injured worker is not even eligible for an
award of permanent partial disability until he or she files a claim petition
through counsel.

Three sections of the New Jersey Workers’ Compensation Act make this clear:  N.J.S.A. 34:15-22, 34:15-39, and 34:15-50.  In all three sections, as a precondition to settling any claim of workers’ compensation, a claim petition must be filed in the Division of Workers’ Compensation, and only the Judge of Compensation can enter an order approving settlement or one of dismissal.

Another major distinction between New Jersey and other
states has to do with waiver of workers’ compensation rights in other
agreements.  The statutes cited above
make clear that the employer may not ask an injured worker to waive rights to
workers’ compensation as part of another agreement, such as a separation
agreement.  There are many laws that can
be waived in a valid separation agreement, such as rights under the ADA, FMLA,
etc., but workers’ compensation is not one of them.   These
kinds of waivers are against public policy.

Similarly, it is fairly common in many states that an employer
will get a signed letter of resignation at the time of the workers’
compensation settlement.  There are both
practical and legal reasons why this does not happen in New Jersey.  First, most injured workers are back to work
doing the very same job by the time the settlement occurs.  That is a big practical difference from other
states where workers remain out of work for years even for relatively modest
injuries.

New Jersey is not a wage loss state but rather a functional loss
state.  Most of the injured workers in
New Jersey who have formal claim petitions in the Division have already
returned to work long before the settlement, either to their former job or a
new job.  In wage loss states like
Pennsylvania, the injured worker may have been out of work for years by the
time the case is settled.  In states like
Pennsylvania, the worker who has been away from work for years may agree to
provide a letter of resignation for nominal consideration. 

In New Jersey, going back to work – even the same job – does
not detract from the ability of the injured worker to obtain a compensation
award for permanent partial disability. 
Injured workers in New Jersey may receive both temporary disability
benefits and an award of permanent partial disability as part of the same case.  There is no requirement that an injured
worker prove impairment of working capacity to obtain an award of permanent
partial disability.   All the injured
worker must do is prove objective medical evidence of impairment as well as
substantial impairment of major life activities.

Since the vast majority of injured workers are back to work in New Jersey at the time of settlement and doing the very same job as the one they did before their injury, seeking a resignation letter is fraught with legal peril.  First, the employee is often an active working unit performing essential job functions. In that situation, there is seldom any legal basis to terminate someone who is doing his or her job satisfactorily. Second, many judges would view an attempt to terminate an injured worker as part of a workers’ compensation settlement as retaliatory or a violation of the New Jersey Law Against Discrimination.  If the employee is able to perform the essential functions of the job, termination of employment as part of a settlement of a workers’ compensation claim would likely lead to immediate labor law litigation.

So can an employer ever get a resignation at the time of settlement?  It can be done but it must be done through labor counsel, following all the rules that prevail in such agreements in New Jersey.  Further, these employment releases are only done when the employee remains out of work for a very long time.  The agreement between the parties must be negotiated for separate consideration, and the injured worker will almost certainly need his own labor counsel.   There are many laws that such an agreement must cover to be effective, and any employment release must meet state and federal legal requirements. 

If the parties do reach an agreement on termination of employment through respective labor counsel, that agreement will not be placed on the record in the New Jersey Division of Workers’ Compensation.  Judges will not reference any separation agreement nor determine whether it is fair or just.  The employment agreement is executed outside workers’ compensation court with both sides having retained labor counsel to advise them.

The post The Limitations of Settlements in New Jersey Comp appeared first on NJ Workers' Comp Blog.

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