Settlements in New Jersey: What gets deducted?

What does the petitioner have to pay back when a settlement is reached in a New Jersey workers’ compensation case?

Has to be paid back: State Disability

Any petitioner’s award is offset by any amounts paid to the petitioner by State Disability as provided by N.J.S.A. 34:15-57.1. Temporary disability paid by the state for injuries later deemed compensable or settled via Section 20 must be reimbursed to the state. Before settling a case, counsel should be expected to investigate all outstanding liens. The New Jersey workers’ compensation law judge can provide the parties with the amount of the State temporary disability lien at the time of settlement.

Has to be paid back: Health Insurance

By the very terms of the Act, workers’ compensation insurance is primary to medical insurance. Therefore, any amounts paid on behalf of the petitioner for treatment deemed by a judge “reasonable and necessary” to cure the petitioner of the effects of the work-related accident, can be collected by the health insurer at the time of settlement, or later. Recent case law instructs that even matters disposed of pursuant to Section 20 may not extinguish a health insurer’s lien.

The New Jersey Supreme Court has held that settlements made pursuant to N.J.S.A. 34:15-20 only resolve issues between those who were parties to that agreement. 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. See Christodoulo v. University of Mass. Memorial Medical Center, Inc., 180 N.J. 334 (2004).

Gets an Offset: Pensions

Workers’ Compensation benefits should be offset by the petitioner’s ordinary disability retirement benefits, where the disability income is provided secondary to the same injury. Rosales v. State of New Jersey, 373 N.J. Super. 29 (App. Div. 2004), cert. denied, 182 N.J. 630 (2005).

Has to be paid back or set aside: Medicare.

As per the Medicare Secondary Payer Act, workers’ compensation is always primary to Medicare.

Has to be paid: Child Support

In reviewing the term “net proceeds” in N.J.S.A. 2A:17-56.23b concerning child support liens, the Appellate Division found that the first $2,000.00 of recovery by an individual, after allowances and litigation expenses, is not subject to the statutory automatic lien provisions of this statute. A child support lien does not apply to the first $2,000.00 of the net proceeds from a settlement. See Simpkins v. Adolfo Saiani, 356 N.J. Super. 26 (App. Div. 2002).

Has to be paid back: Motor Vehicle Medical Payments.

By the terms of the New Jersey Workers’ Compensation Act, workers’ compensation benefits are primary to New Jersey “PIP” (Personal Injury Protection) benefits.

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Greg Lois is the managing partner of LOIS LLC, a 21-attorney law firm dedicated to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 & 2017 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@lois-llc.com