.

Defense Digest

A Workers’ Compensation Judge’s Approval of a Section 20 Settlement Can Be Contingent on a Petitioner’s Live Testimony

Defense Digest, Vol. 29, No. 4, December 2023

December 1, 2023

by Kiara K. Hartwell

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.

Firm Highlights

Event

29th Annual FDLA Florida Liability Claims Conference

Jim and Erica will team up to present, "Supporting the Next Generation: Connecting with Associates." This panel-style presentation will explore communication best practices from the perspective of a senior shareholder and newer associate. The discussion will focus on the communication styles of different generations and effective strategies to avoid communication breakdowns. Topics to be discussed include the hiring process, perceptions of defense work among newer lawyers, work-life balance issues after hiring, and mentoring.

Thought Leadership

PA Middle District Dismisses Claims Against School District and its Superintendent, Principal, Special Education Director, and Classroom Teacher

A five-year-old special education student was enrolled in the Wyoming Valley West School District and attended the State Street Elementary School during the 2024-2025 school year. The student refused to clean up classroom toys at dismissal. When his teacher allegedly grabbed him by the wrist to walk him back to his seat, the student dropped to the floor and began crying. The teacher then allegedly grabbed the student by the ankle and dragged him across the floor. Following an investigation, criminal charges were not advanced by the county DA, and the school permitted the teacher to return to the classroom. The student’s parents sued, lodging thirteen legal counts under both state and federal law, which sought monetary damages from the teacher, the school district, the superintendent, the principal, and the director of special education. The plaintiff’s 42 USC 1983 claims were dismissed as to the school district for failure to allege a policy or custom violation, and the failure to alleged deliberate indifference in the failure-to-train context. As to the superintendent, building principal, and special education director, the Section 1983 claims were also dismissed for failure to allege personal involvement on the part of the individuals. Regarding an equal protection claim asserted against all defendants, the motion to dismiss was also granted for a failure to advance a plausible equal protection claim, holding that “plaintiffs' single-act allegations do not include a factual basis to even infer that the act was motivated by discriminatory animus rather than some other non-discriminatory impulse.” The court further dismissed the plaintiff’s negligence-based claims including negligence against the teacher and district administrators, NIED, and vicarious liability under the Political Subdivision Tort Claims Act (PSTCA). The federal claims under the IDEA, Section 504, and the ADA were also dismissed in various respects. The IDEA claim was dismissed against all defendants with prejudice for failure to exhaust administrative remedies. The Section 504 claims against the individual defendants were also dismissed with prejudice, as districts, not individuals, are the recipients of federal funds under Section 504. However, the Section 504 and ADA claims were dismissed without prejudice as to defendant Wyoming Valley West, and the plaintiff was permitted leave to amend.

Thought Leadership

Marijuana Legalization and Workplace Risk: What New Jersey Employers Need to Know

While the legalization of recreational marijuana usage poses a risk of increased work-related accidents for younger workers, employers can work to curb this increase by investing in education, effective drug policies, and employee assistance programs.

Result

Summary Judgment Secured, Preserving $750,000 in Coverage for Insured in Major Trucking Liability Dispute

Ray Freudiger and Michael A. Roberts (both of Cincinnati) successfully obtained summary judgment on behalf of their client in a coverage dispute arising from a May 19, 2022, motor vehicle accident. A permissive driver operated a box truck for an interstate trucking company and caused severe injuries to two tort victims. Prior to the accident, the insured had procured a commercial auto policy for the trucking company with stated limits of $1,000,000. Following the accident, the insurer initiated a declaratory judgment action asserting that only reduced bodily injury limits of $25,000/$50,000 applied and later counterclaimed, alleging it would not have insured the driver had he been properly submitted for approval under the policy. After extensive discovery, briefing, and oral argument, the court rejected the insurer’s attempt to shift responsibility for the $750,000 in coverage it was legally required to provide for permissive drivers under Ohio law, granting summary judgment in favor of the insured and preserving $750,000 in liability exposure.

graphic with Maria Granaudo photo text announces she has joined the firm as a shareholder in the Health Care Dept.

News

Maria R. Granaudo Joins Marshall Dennehey’s Wilmington Office As a Shareholder in the Health Care Department

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict. 

blue facade of a hospital sign against blue sky

Result

Defense Verdict in Complex Medical Malpractice Trial

News

Christina Gonzales To Speak at the Women of Color Roundtable at DRI’s Diversity and Inclusion Seminar

Thought Leadership

U.S. Supreme Court Decides Key Issue Regarding Interstate Freight Broker Liability

Freight brokers are intermediaries.  They connect shippers of goods with trucking companies that transport those goods.  Freight brokers match a load of freight with a trucking company and oversee the logistics of the transportation. For a number of years there has been a division among the Federal Circuits regarding the potential liability of freight brokers when the trucking companies that they retain for interstate loads are involved in accidents.  At the center of this division was the Federal Aviation Administration Authorization Act of 1994 (FAAAA).  Some Federal Circuit Courts have held that state law negligent hiring claims against freight brokers were preempted by the FAAAA .  Other Federal Circuits Courts have held that even if preemption applied, the “safety exception” in the FAAAA saved state law negligent hiring claims from federal preemption.  On May 14, 2026, the U.S. Supreme Court addressed the conflict in Montgomery v. Caribe Transport II, LLC, et al, No24-1238. In that case freight broker C.H. Robinson selected Caribe Transport to haul an interstate load. The commercial truck driver employed by Caribe Transport allegedly caused an accident and the plaintiff, Montgomery, was seriously injured. Montgomery brought an action against the driver, Caribe Transport and C.H. Robinson. The allegation against C.H. Robinson was that it negligently retained Caribe Transport when it knew, or should have known, that it was an unsafe company. The Seventh Circuit Court of Appeals held that Montgomery’s claims against C.H. Robinson were preempted by the FAAAA. The plaintiff appealed to the U.S. Supreme Court.  The U.S. Supreme Court’s decision focused primarily on the safety exception in the FAAAA.  That provision provides that the FAAAA preemption “…shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” C.H. Robinson argued, as freight brokers historically have, that their function was not “with respect to motor vehicles” because they do not own trucks or employ drivers. They are merely intermediaries, connecting entities who need freight moved with entities who can do that job. Therefore, C.H. Robinson argued that preemption applied, not the safety exception. The U.S. Supreme Court did not accept that argument. The Court focused on the meaning of the phrase “with respect to” in the safety exception. The Court held that it means “referring to”, “concerning” or “regarding”. Therefore, writing for a unanimous Court, Justice Barrett concluded that “[r]equiring C.H. Robinson to exercise ordinary care in selecting a carrier therefore “concerns” motor vehicles—most obviously, the trucks that will transport the goods. So, Montgomery’s negligent-hiring claim falls within the FAAAA’s safety exception, which saves it from preemption.” Justice Kavanaugh, in his concurring opinion, noted the effect this ruling may have on freight brokers and their insurers throughout the country: Importantly, the Court's decision today should not be read to mean that brokers will routinely be subject to state tort liability in the wake of truck accidents. As even plaintiff's counsel stressed, brokers should be able to successfully defend against state tort suits if the brokers have acted reasonably and arranged transportation with reputable trucking companies. Tr. of Oral Arg. 27-29. In plaintiff's counsel's words, the brokers "just have to hire carriers that actually have a reasonable policy," and "the broker is not going to have a problem if it's asking the hard questions of the carrier." Id., at 42, 45. In addition, the proximate-cause requirement in typical state tort law should help protect brokers from excessive liability. Id., at 25. That said, the brokers rightly caution against naivete. In the real world, as the brokers forcefully respond, state tort law can be unpredictable, and the costs to brokers of litigation and insurance may be significant even when brokers prevail in lawsuits. Moreover, the costs of litigation and insurance, as well as the costs of brokers' conducting more substantial inquiries into trucking companies, will cascade through the economy and be paid in part by American consumers in the form of higher prices. The concerns expressed by the brokers are legitimate and weighty. The key point here is that freight brokers can no longer claim they are protected from negligent retention claims by the FAAAA (in cases involving interstate transportation). The challenge will be to determine what is considered ”reasonable efforts” used by brokers when retaining transportation companies. 

News

John J. Hare Featured in Pennsylvania & Delaware Super Lawyers Magazine