Thought Leadership

Key Points:

• A workers’ compensation judge has the discretion to require live testimony from a petitioner as a condition for approval of a Section 20 settlement. 
• The New Jersey Appellate Division defers to a judge’s findings of issues involving jurisdiction, liability, causal relationship, or dependency.

New Jersey’s workers’ compensation judges have the discretion to approve or reject a Section 20 settlement based solely on affidavits due to COVID-19. Specifically, if a judge feels a case requires live testimony or finds the affidavit is insufficient, they can order a petitioner to testify before approving a Section 20 settlement. 

In Gonzalez v. N.J. Transit Corp., 2023 WL 5344867 (N.J. Super. App. Div. August 21, 2023), New Jersey Transit (NJT) appealed a workers’ compensation judge’s order denying a proposed N.J.S.A 34:15-20 (Section 20) settlement with the petitioner. The Appellate Division affirmed the interlocutory workers’ compensation order denying a proposed Section 20 settlement. 

To provide the factual background, in January 2016, the petitioner, a bus driver working for NJT, slipped and fell while walking from a store to his bus. He filed a claim petition for alleged injuries to his head, neck, shoulders, back, right wrist, and legs. His employer accepted compensability but denied the nature and extent of permanent disability and reserved N.J.S.A. 34:15-40 (Section 40) lien rights.

A proposed Section 20 settlement was submitted to the workers’ compensation judge for approval by NJT in November 2021. Under this settlement, NJT would pay $200,000. Additionally, it noted the basis for the settlement was the petitioner’s failure to disclose his prior low back and neck injuries and his prior workers’ compensation awards until after settlement discussions began, causing NJT to be unable to address causation initially. Further, the Section 20 settlement would put money in the petitioner’s pocket versus an Order Approving Settlement due to the $250,000 Section 40 lien from the settlement against the store. 

The petitioner’s affidavit was submitted, indicating he had prior neck and back injuries, but had not experienced any issues for the past six years, and that his attorney had explained the settlement, his rights, and the consequences of a Section 20 proposal.

Rather than accepting the affidavit, the judge requested the petitioner to testify prior to approving settlement due to the petitioner not having prior neck issues and the defense expert providing ratings on both the neck and back. Although the judge asked for a defense addendum, NJT advised that their expert had retired. Instead, NJT noted no objection to the petitioner testifying and requested the judge to approve the settlement.

At the August 9th pre-trial conference, the judge reiterated she would not approve a Section 20 settlement and scheduled trial for November 1. NJT filed a motion for leave to appeal. The Appellate Division granted leave to appeal and remanded by directing the judge to issue an order to either approve or reject the proposed settlement and provide the reasons why.

The judge then issued a timely order and written decision rejecting the Section 20 settlement, noting she found no basis. Specifically, she noted the petitioner’s pre-existing injuries and the Section 20 lien were not valid reasons for a Section 20 resolution. Rather, she noted an Order Approving Settlement under N.J.S.A. 34:15-22 would address these issues without dismissing the case with prejudice. She also found no issues with causation or liability. As such, the judge noted no issue of “jurisdiction, dependency, liability, or causal relationship” that would make a Section 20 settlement appropriate. She did note that she would reconsider if the petitioner or the experts testified live, so she could make credibility determinations and confirm the petitioner’s knowledge of his rights.

NJT sought leave to appeal, and the Appellate Division granted, along with amicus participation by the New Jersey Department of Labor and Workforce, Division of Workers’ Compensation. NJT argued that the judge abused her discretion by refusing to approve a Section 20 settlement, citing to Univ. of Mass. Mem’l Med. Ctr., Inc. v. Christodoulou, 851 A.2d 636 (N.J. 2004), Kibble v. Weeks Dredging & Constr. Co., 735 A.2d 1142 (N.J. 1999), and Sperling v. Bd. of Rev., 693 A.2d 901 (N.J. App. Div. 1997). Specifically, NJT argued that, during the COVID-19 pandemic, judges regularly approved Section 20 settlements based on affidavits. Also, NJT pointed to Univ. of Mass. Mem’l Med. Ctr., Inc. in noting that the judge’s decision to reject the Section 20 proposal without live testimony was contrary to Section 20’s purpose of “avoid[ing] a hearing on contested issues.” 851 A.2d at 643-644.

In addition, NJT argued that the judge’s bases for rejecting the Section 20 settlement were incorrect. NJT noted her determinations that the nature and extent of pre-existing injuries and a Section 40 lien were not bases for Section 20 were incorrect. NJT also argued that the judge’s finding, that there were no issues when the parties advised there were, raised due process concerns and that her inability to make a credibility determination without hearing live testimony went against the parties’ intent. NJT asked the Appellate Division to order the judge to approve the settlement after reviewing the petitioner’s affidavit for competency and understanding.

The Appellate Division found no merit in these arguments, noting its review of the judge’s findings is limited and that the judge properly exercised her discretion. The Appellate Division found that the judge had discretion to approve the Section 20 settlement solely based on an affidavit or to request testimony.

As respondents, we have to ensure the language in affidavits meets the judge’s standards in a Section 20 settlement. Further, there needs to be clear issues of jurisdiction, liability, causal relationship, or dependency, so judges will have no hesitation in finding a basis for the Section 20 settlement.

*Kiara is an associate in our Mount Laurel, New Jersey, office. She can be reached at 856.414.6404 or KKHartwell@mdwcg.com.
 

_{Defense Digest, Vol. 29, No. 4, December 2023, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2023 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}