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Can A Dependent Settle A Dependency Claim By Section 20 And Then Sue The Uninsured Employer?

By on August 23, 2019 in Claims with 0 Comments

The case of Kaur v. Garden State Fuels, Inc., A-2135-17T1 (App. Div. April 12, 2019) presents some interesting legal issues.  The facts begin with the tragic death of Surinder Singh, who was shot and killed during the course of his employment at Woodbury Gulf LLC. 

In 2014 Singh’s widow, Kirandeep Kaur, filed a dependency claim petition in workers’ compensation. The gas station was uninsured for workers’ compensation at the time of her husband’s death. Mr. Goyal and Mr. Saini were the sole members of the Woodbury Gulf LLC. 

In 2015 Kaur sued Woodbury Gulf civilly alleging that the station’s negligence led to the death of her husband.  She amended that suit in 2017 to add a claim against Mr. Goyal. 

On March 28, 2016, petitioner settled her workers’ compensation dependency claim petition for $150,000.  She said that she understood that the Section 20 settlement was final and that she could not return for further workers’ compensation benefits.  Petitioner received mostly deferred payments from the two members of the LLC:  $30,000 up front followed by $5,000 each month for 24 months.  The Order recited that the settlement was not a complete and absolute surrender and release of any and all rights of petitioner’s dependents under Section 13.  This was important because the petitioner and decedent had two young children.

The Judge of Compensation did not sign the 2016 order but waited until 2018 when all payments had been made.  Counsel reappeared on April 13, 2018, and the Judge again commented that this Section 20 settlement did not contemplate a release of decedent’s dependents’ rights. 

Meanwhile in her civil law suit, Kaur made some interesting arguments:

  1. She argued that she could sue Woodbury civilly because the gas station’s insurance had lapsed.  She contended that this was akin to an intentional wrong, thereby exempting her from the fundamental rule that neither an employee nor an employee’s dependents can sue the employer.
  2. She also argued that payments under a Section 20 are not recognized as workers’ compensation payments for any purpose other than for insurance rating purposes, so a civil suit should be permitted.

The motion judge ruled for Woodbury LLC and its members, holding that the civil law suit was barred.  Kaur appealed.  The Appellate Division devoted a good deal of analysis to Section 20 settlements.  It said, “A Section 20 settlement bars a subsequent lawsuit against the paying employer as it would be unfair to hold the employer liable for both common law damages and workers’ compensation liability,” citing Hawksby v. DePietro, 165 N.J. 58 (2000). 

The Court also seemed to suggest that a Section 20 settlement amounts to an implied acknowledgement that a claimant’s disability is work related, citing the Sperling case for this concept. For these reasons the Appellate Division affirmed the ruling that petitioner and her children could not sue her husband’s employer or the members of the LLC. 

As for the failure of Woodbury to maintain insurance for its own employees, the Court pointed out that this was potentially either a disorderly person offense or a fourth-degree crime, depending on whether the actions were willful.  Nonetheless, the Court ruled, “Their failure to maintain insurance did not alter the effect of the Workers’ Compensation bar, especially since plaintiff took advantage of the Act’s statutory scheme to obtain benefits under the Section 20 settlement.”

Importantly, the Court confirmed that consent of the workers’ dependents must be obtained for a Section 20 settlement that purports to waive dependency benefits.  In sum, the Court held that the two minor children were entitled to bring a dependency claim of their own against Woodbury Gulf and the members of the LLC.  The Court cited the Kibble case for the proposition that “a Section 20 settlement between the employer and a claimant ‘cannot extinguish the rights of those who do not participate, or do not have the opportunity to participate in a settlement.’”

The case is helpful in understanding that it does not really matter whether the workers’ compensation claim is resolved under an order approving settlement with reopener rights or a Section 20:  in either case, the claimant and his or her dependent cannot bring a civil action against the employer since the exclusive remedy is workers’ compensation.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, an executive committee member and shareholder with Capehart Scatchard, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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