If you have suffered a work injury in New Jersey, you have no doubt heard of Section 20 settlements in workers’ compensation claims. While we often recommend that our clients do not accept Section 20 offers of settlement in their New Jersey workers’ compensation cases, there are indeed times when it would be advisable to accept this offer of settlement. Our New Jersey workers’ compensation attorneys have years of experience negotiating the best possible settlement in Section 20 cases and would be happy to discuss whether such a settlement would be advisable for you.
The Basics: What is a Section 20 Settlement in NJ?
A Section 20 settlement NJ is a type of full and final settlement of a workers’ compensation claim. Section 20 settlements of workers’ compensation claims in NJ get their name from Section 20 of the New Jersey Workers’ Compensation Act (N.J.S.A. 34:15-20). These types of settlements contain a full and final resolution of a disputed workers’ compensation claim. A Section 20 settlement can be used to resolve not only the extent of an employee’s work-related injury, but also whether an employee was even injured at work in the first place.
A Section 20 settlement is a full and final payment of a workers’ compensation claim. In exchange for a lump sum payment, the injured worker receives a full and complete release of all claims against the employer and/or insurer. The release is permanent and contains a full bar of any future medical expenses as well as any further wage loss under the workers’ compensation laws. The injured worker gives up all rights to any additional workers’ compensation benefits in exchange for the Section 20 settlement.
A Section 20 settlement is also known as a “disputed claim settlement” because in such a case the employer/insurer is contesting some aspect of the worker’s claim. In a Section 20 settlement the employer/insurer is not admitting that the worker was injured at work or that the worker is suffering from any work related condition.
Who Typically Uses a Section 20 Settlement?
A workers’ compensation lump sum settlement NJ under Section 20 is typically used in cases where there is a genuine dispute about:
- Whether the injury is work-related
- Whether the worker’s medical condition stems from occupational exposure
- Whether the injury arose out of and in the course of employment.
- Whether the worker is actually an employee covered under NJ workers’ compensation law
To give you an idea of how this works, let’s assume that an employer’s insurance company is disputing a back injury claim because they don’t believe that the worker was injured as a result of their work. In cases like this, both parties can agree to a Section 20 settlement to put an end to the dispute and avoid a hearing before a workers’ compensation judge. The amount of the settlement would reflect a compromise between the two parties’ assessment of their chances of prevailing at a hearing, including the risks of an unfavorable decision.
Why Section 20 Settlements Are Common in New Jersey Workers’ Compensation Cases
Workers’ compensation in New Jersey is not always easy. Many employers and insurance carriers are willing to fight workers’ compensation claims that do not clearly fall within the definition of a work-related accident or occupational disease. In many instances, injured workers are not aware that a dispute is occurring and are surprised when their workers’ compensation benefits are delayed or denied. Below are four examples of common claims that are frequently disputed in workers’ compensation cases in New Jersey.
- Disputed Occupational Disease Claims:
- Unlike a single incident of injury that causes immediate harm, such as a broken leg, occupational diseases develop slowly over time due to repetitive exposure to workplace hazards such as toxic substances, chemicals, and other conditions that can cause workers to contract disease.
- Many workers in New Jersey have successfully received workers’ compensation benefits for asbestosis, mesothelioma, chronic bronchitis caused by inhaling dust and fumes, and occupational hearing loss, among other diseases.
- These types of claims are typically disputed by insurers as the symptoms of an occupational disease generally develop slowly over a long period of time.
- This can often mean that there is a considerable amount of time between the date of initial exposure to a substance or circumstances and the date on which an individual develops symptoms of an occupational disease.
- Repetitive Trauma Claims:
- Another group of workers’ compensation claims in New Jersey that are often disputed are those caused by repetitive trauma. Most workers’ compensation claims are caused by a single incident, such as a fall or a work accident, but there are many injuries that are caused by repetitive actions over long periods of time.
- Workers who repeatedly perform similar tasks or activities over long periods of time are at risk for developing repetitive stress type injuries. Some examples of repetitive stress type injuries include carpal tunnel syndrome caused by repetitive use of computers or repetitive tasks that involve bending, lifting, standing, walking, repetitive overhead activities, etc. When these injuries are caused by repetitive actions, they are referred to as repetitive trauma or cumulative trauma injuries.
- These types of claims are very disputed, as there is no single date of occurrence of the injury and no single incident report of the injury at work. Carriers argue that the injuries and conditions that a worker suffers from are age related and were caused by activities outside of work.
- Some carriers argue that while a worker may have been exposed to certain things at work, that exposure was not sufficient to cause the worker’s injuries or conditions. Others argue that even if a worker was exposed to things at work that could cause injuries or conditions, that the worker’s work did not play a role in the development of the worker’s injuries or conditions.
- Pre-Existing Condition Disputes:
- By far the most common method used by insurance companies to deny or reduce the amount of workers’ compensation benefits owed to a worker is to contend that the worker had a pre-existing condition before he or she was injured on the job.
- This pre-existing condition could be a prior back surgery, a history of arthritis, an old knee injury, or any other medical condition that the worker had prior to the date of his or her work injury.
- In many cases, the worker’s pre-existing condition will not have caused the worker any problems prior to his or her work injury. However, after suffering an injury on the job, the worker’s pre-existing condition can worsen dramatically.
- The insurance company will then argue that the worker’s work injury did not cause the worker’s current disability and, therefore, the worker is not entitled to receive any workers’ compensation benefits for his or her injury.
- Causation Disputes:
- Causation issues generally are raised in most claims. Whether it is a claim for an occupational disease, a repetitive trauma injury, or a claim that a pre-existing condition has been aggravated by work, the fundamental issue that must be addressed is whether the work caused the injury or illness for which compensation is being claimed.
- Causation is generally established by medical evidence.
- In New Jersey workers’ compensation cases causation can be proven through differing medical opinions regarding the cause or causes of an injury or illness. It is typically the case that in a workers’ compensation case where the employer or insurance carrier is disputing causation that the case is established through opposing views of treating and non-treating physicians.
Section 20 vs Section 22: What is the Difference?
One of the most important distinctions in NJ workers’ compensation is Section 20 vs Section 22. While both result in the injured worker receiving compensation, they are fundamentally different in structure and consequence.
Section 20 Settlements:
- Resolve disputed claims
- The employer does not admit the injury is work-related
- Result in a lump sum payment
- Close the case entirely – no future medical benefits, no future claims
- Require approval from a workers’ compensation judge
Section 22 Settlements:
- Also called “orders approving settlement” or “formal awards”
- The employer accepts that the injury is work-related
- Typically result in a permanent partial disability award paid out over time
- The worker may retain the right to reopen the claim within two years for additional medical treatment or a change in disability status
The significance of this difference between Section 22 and Section 20 settlements can best be highlighted by outlining the difference between the two. A Section 22 settlement is a type of settlement that leaves the workers’ compensation case open in the event that the injured worker’s condition worsens at a later time in which case they would be able to seek further benefits.
On the other hand, a Section 20 settlement is a complete and final resolution of a workers’ compensation case in which a lump sum is approved by a judge and then paid by the workers’ compensation carrier and after which there is no going back.
Thus, deciding between Section 20 and Section 22 settlements is a very informed decision that requires much thought and quality legal representation. Even though a Section 20 settlement may pay more initially than a Section 22 settlement, the Section 20 settlement may not provide enough for future expenses of a serious or long-term injury.
How is a Section 20 Settlement Amount Determined?
There is no rigid formula for calculating a Section 20 settlement NJ amount. Because the entire premise is a compromise over a disputed claim, the negotiated value depends on factors such as:
- Case strength. If there is any doubt about liability, a lower settlement figure would be anticipated. However, a weak employer position could result in higher settlement negotiations.
- The nature and severity of the injury – Injuries with greater medical treatment are worth more money.
- Your current medical situation and prognosis – how long do you expect to require future treatment for and will you be left with any degree of permanent disability?
- The cost of litigation and the risk involved. In deciding whether to settle a case or to litigate it, both parties will look at the cost of a hearing and try to gauge the likely result.
- Your average weekly wage. This will be used to calculate your workers’ compensation benefits based on your average weekly wage prior to your injury, and will be a factor in establishing a base value for your claim.
An experienced NJ workers’ compensation attorney plays a critical role in this negotiation. Insurance carriers are focused on minimizing their exposure. Without skilled legal representation, many injured workers accept far less than their claim is actually worth.
The Role of the Workers’ Compensation Judge
A Section 20 settlement is reached by the parties through negotiation; however, a workers’ compensation judge has to review and approve the settlement agreement to make it final. Our attorneys try to ensure that the terms of a Section 20 settlement are fair and that the injured employee is advised of the ramifications of said agreement, specifically that by entering into a Section 20 settlement the injured employee is giving up all rights to claims related to the work-related injury for future medical treatment among other things.
During the approval hearing, the worker will be questioned by the judge to establish that the worker has a full understanding of the matters in Section 20. Specifically, the worker will be advised that by entering into a Section 20 settlement, the worker is giving up all claims, including future medical, for the specific injury in question. Ultimately, the settlement can be rejected by the judge if he or she believes that the proposed settlement is to be inequitable.
A judge’s approval of a Section 20 settlement is intended to be a protective mechanism for the injured worker to ensure that he/she is receiving fair compensation for his/her work-related injury. However, approval of a settlement by a workers’ compensation judge is not a guarantee or a complete safety net. An injured worker is best protected by having an attorney represent him/her prior to and at the approval hearing.
Pros and Cons of a Section 20 Settlement
Potential advantages:
- Provides immediate, guaranteed payment rather than an uncertain outcome at hearing
- Eliminates the time, stress, and cost of continued litigation
- Can be advantageous when liability is genuinely disputed and the outcome of a hearing is unpredictable
- Offers finality, allowing injured workers to move forward
Potential disadvantages:
- Permanently closes all future medical claims, even if your condition worsens significantly
- The employer never formally admits the injury occurred at work
- A lump sum may undervalue the long-term costs of a serious injury
- Not appropriate for workers who will need ongoing medical care
Should You Accept a Section 20 Settlement?
How can I know whether a Section 20 workers’ compensation settlement is good for me? The answer depends on the facts of your case, your medical condition, your financial situation and the strength of your claim. In some instances, the wise thing to do is to fight your employer’s contest of your workers’ compensation claim.
In other instances, the risk of fighting your employer’s defenses to your claim could far outweigh the potential benefit to you of pursuing the matter further. In still other instances, accepting a lump sum of past due workers’ compensation benefits and giving up your right to receive medical treatment for work related injuries on an ongoing basis could prove to be a very poor decision and could cause you significant harm in the long run.
The attorneys at Pellettieri Rabstein & Altman take a case by case look at each worker’s compensation case. We will go through the possible risks and rewards of litigation and then weigh them against the proposed settlement. We will not suggest a Section 20 settlement if we do not feel that it is in our client’s best interest.
Workers’ Compensation Attorney Spotlight: Gary E. Adams
Gary E. Adams is a Managing Partner at Pellettieri Rabstein & Altman and Chairman of the firm’s Workers’ Compensation department. Certified by the Supreme Court of New Jersey as a Workers’ Compensation Trial Attorney, Gary has dedicated his entire practice to the representation of injured workers and union members throughout New Jersey in their quest to receive entitled benefits in a timely fashion.
Gary has handled Workers’ Compensation appeals in all levels of the New Jersey court system. The types of cases he handles include occupational disease, cardiac and pulmonary claims, repetitive motion injuries, traumatic injury and death claims. He served as Chairman of the Workers’ Compensation Section of the New Jersey State Bar Association. He has received an AV Preeminent rating from Martindale-Hubbell, indicating his highest level of professional expertise and strong ethical practices as reviewed by his peers.
Frequently Asked Questions About Section 20 Settlements in New Jersey
Q: What is a Section 20 settlement?
A: A Section 20 settlement is another way that a workers’ compensation claim can be brought to a close. The terms of a Section 20 are set forth in N.J.S.A. 34:15-20. It is the only method by which a workers’ compensation claim can be settled on a full and final basis where both parties are agreeing to settle a claim for a work-related injury or disease as to whether or not such injury or disease was work-related.
Q: How does a Section 20 Settlement differ from a Section 22 Settlement?
A: A Section 20 settlement would enable a full and final settlement of a workers’ compensation claim whereas a Section 22 (formal award) settlement would allow for the accepted claim to be closed and a permanent disability rating would be determined however the worker’s right to receive future medical treatment and other benefits would remain open and said claim could be reopened in the future. In most cases, a Section 20 settlement would pay a greater lump sum to settle the claim as the worker would be giving up all future rights to medical treatment as well as other benefits.
Q: Can I reopen my claim?
A: A Section 20 settlement is considered a “final” resolution of the workers’ compensation claim. As such, it cannot be reopened for any reason. In entering into a Section 20 settlement, a worker waives all future rights to medical treatment and additional benefits in relation to the claim. A Section 20 settlement is one of the most important decisions an injured worker will make in relation to his or her workers’ compensation claim. As such, it is strongly recommended that an injured worker seek the advice of an experienced workers’ compensation attorney before entering into a Section 20 settlement.
Q: Does a judge have to approve it?
A: Yes. A Workers’ Compensation Judge approves a Section 20 settlement to make certain that a settlement is fair and that a worker has a clear understanding of the rights that he/she is surrendering in entering into a Section 20 settlement.
Q: Is it paid in a lump sum?
A: The agreement is generally paid in full as a single, lump sum payment. Unlike a Section 22 award that is typically paid out as weekly installments of a workers’ compensation benefit, a Section 20 agreement is structured to deliver a single payment. Many workers view a Section 20 settlement as a better way to manage the proceeds of a workers’ compensation claim than as weekly payments of a workers’ compensation benefit.
Q: When does a Section 20 settlement make sense?
A: A Section 20 settlement is generally used where there is a genuine issue of liability such as in cases of occupational disease or in cases where there is a dispute as to cause of injury. In these types of cases, the injured worker can receive a guaranteed payment of the value of his or her workers’ compensation claim by settling the case via Section 20. A Supreme Court certified workers’ compensation attorney should review any offer of a Section 20 settlement to ensure that the amount of the settlement payment represents the full value of the worker’s claim and that the terms and conditions of the settlement are in the best interest of the worker.
Contact Our New Jersey Workers’ Compensation Attorneys
Pellettieri Rabstein & Altman, since 1929, has been one of the premier law firms protecting the rights of injured workers throughout New Jersey. Our workers’ compensation attorneys are extremely familiar with the intricacies of Section 20 settlements as well as all of the other sections of the New Jersey Workers’ Compensation statute. We handle all phases of a worker’s claim including initial filing of claim through a hearing, an appeal and through settlement negotiations.
Contact us for a free workers’ compensation consultation. We take all workers’ compensation cases on a contingency fee basis – that means we get no payment unless we obtain money for you.
