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What is a Section 20 Settlement in New Jersey?

Practitioners often refer to “Section 20” to describe settlement pursuant to the statutory authority provided by N.J.S.A. 34:15-20. Such a settlement allows a respondent to dispose of a claim for compensation as a “lump-sum” dismissal. The petitioner who accepts a Section 20 settlement is barred from re-opening a claim petition in the future. Even if a claimant’s condition worsens, she will be prohibited from re-opening her claim.

In addition, the respondent will no longer be responsible for providing medical treatment to the claimant.

Approximately 30% of all cases disposed of are done by way of Section 20 resolution. Section 20 dismissals, in which the petitioner receives a one-time lump-sum payment, is usually preferable to any other type of dismissal because the petitioner has no right of re-opener.

Section 20 provides:

In case of a dispute over or failure to agree upon a claim for compensation between employer and employee, or the dependents of the employee, either party may submit the claim, both as to the questions of fact, the nature and effect of the injuries, and the amount of compensation therefor according to the schedule herein provided, to the Division of Workers’ Compensation, as prescribed in article 4 of this chapter (section 34:15-49 et seq.).

After a petition for compensation or dependency claims has been filed, seeking compensation by reason of accident, injury or occupational disease of any employee, and when the petitioner is represented by an attorney of the State of New Jersey, and when it shall appear that the issue or issues involve the question of jurisdiction, liability, causal relationship or dependency of the petitioner under this chapter, and the petitioner and the respondent are desirous of entering into a lump-sum settlement of the controversy, a judge of compensation may with the consent of the parties, after considering the testimony of the petitioner and other witnesses, together with any stipulation of the parties, and after such judge of compensation has determined that such settlement is fair and just under all the circumstances, enter “an order approving settlement.” Such settlement, when so approved, notwithstanding any other provisions of this chapter, shall have the force and effect of a dismissal of the claim petition and shall be final and conclusive upon the employee and the employee’s dependents, and shall be a complete surrender of any right to compensation or other benefits arising out of such claim under the statute. Any payments made under this section shall be recognized as payments of workers’ compensation benefits for insurance rating purposes only.

Any payments to the petitioner made pursuant to Section 20 are not technically compensation. Therefore, the respondent cannot assert a lien for amounts paid to the petitioner under Section 20 against a third-party settlement or judgment.

Not all cases can be resolved by way of Section 20. There must be an issue as to employment, causal relationship, a jurisdictional issue, or a dispute as to the extent and nature of permanent disability. Any settlement pursuant to Section 20 must be approved by the Judge of Compensation.

Medical Care provider actions survive Section 20 dismissal.

The New Jersey Supreme Court recently held that settlements made pursuant to N.J.S.A. 34:15-20 only resolve issues between those who were parties to that agreement. See University of Massachusetts Memorial Medical Center v. Christodoulo, 180 N.J. 334 (2004). Hence, where a medical provider was not a party to the Section 20 settlement, it is not bound by that agreement and may pursue an action in the Law Division to enforce its contractual rights to payment for the medical services it provided to the petitioner.

Dependency claims can survive a Section 20 dismissal.

The Supreme Court has also ruled that that acceptance of a Section 20 (N.J.S.A. 35:15-20) settlement by the petitioner alone does not bar dependents from filing a claim after the death of the petitioner. Kibble v. Weeks Dredging & Construction Co., 161 N.J. 178 (1999). The Court determined that a dependent must knowingly, intelligently, and voluntarily waive his or her right to future dependency claims at the time the Section 20 settlement is entered for such a waiver to be effective.

Counsel can craft a Section 20 dismissal with language that destroys the rights of the dependents of a claimant to file a claim after the petitioner dies. This is frequently sought when an occupational pulmonary or cardiovascular claim is resolved by way of Section 20.

The chief advantage to a Section 20 resolution is that the exposure is reduced to a lump-sum.

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For more than 20 years we have represented insurance carriers, self-insured employers, third party claim administrators, and employers before New Jersey’s Division of Workers’ Compensation. Our founding partner, Gregory Lois, is co-author of the LexisNexis “Practice Guide to Workers’ Compensation in New Jersey” (2017, ISBN:9781632838735) and served as Law Clerk to Hon. Joan Mott, Administrative Supervisor of Workers Compensation.

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