Section 20 vs. 22: Which Settlement is for You?
Employers dealing with workers’ compensation claims filed against them by their employees have many facets of each case to consider when deciding on a potential settlement. Each unique case, and the circumstances under which a particular claimant suffered a work injury will bring about the possibility of settlement either under Section 20 or Section 22 of New Jersey’s Workers’ Compensation Law.
But what are the differences between these two types of settlements, and which one works out best for the employer and employee? Which type an employer eventually petitions for depends on the injury or illness suffered by the filing employee, whether they’re at risk of re-injuring the same body part in the future, and whether there is a bona fide issue of causation or liability of the injury that needs to be resolved.
Pros and Cons of Settling Under Section 20
Before delving into the benefits this type of settlement can give an employer, let’s go over exactly what a Section 20 settlement is. A Section 20 settlement, named for the corresponding section of New Jersey Workers’ Comp Law, happens when both parties agree to a one-time lump sum payout to settle a workers’ comp case and the agreement is approved by a judge. Once settled, a Section 20 case cannot be reopened in the event of the claimant re-injuring the same body part at some point in the future.
Employers and insurance carriers greatly benefit from this type of settlement because they won’t have to pay any additional amount of money in the future in the case of re-injury, and the employer does not have to admit fault or liability in the workplace accident. This is an easy way out for the employer and a way to save money they won’t have to dedicate to future doctors’ visits or treatment, which is why they prefer Section 20 to Section 22. However, the employee filing the claim is not as fortunate in this situation.
A Section 20 settlement is purely for insurance rating purposes and is not an actual workers’ comp payout, and will not provide the employee with additional medical bill or wage loss assistance in the future if they suffer further injury to the body part they already injured at work.
In some cases or pre-existing conditions or re-injury, employers and their insurance companies are having to pay ten times more than they had ever imagined. This is called “Apportionment.” Knowing whether your employer relies on this practice is very beneficial to the potential of future workers’ compensation cases you might have and what their outcome may be.
Pros and Cons of Orders Approving Settlement, Or Section 22
Most workers’ comp lawyers will advise against a Section 20 settlement if you’ve been hurt on the job; instead, they will guide you towards the option of an Order Approving Settlement, detailed in Section 22 of New Jersey’s Workers’ Comp Law. This type of settlement is paid out in weekly installments, and the employee receives a percentage of disability paid out by the employer.
Unlike the permanence of a Section 20 closure, a Section 22 allows the employee to seek more money for future treatments if they re-injure their originally injured body part within two years of the last date of payment, and will give an employer a credit for the percentage of workers’ comp they’ve paid. However, settling under Section 22 requires the employer to admit fault for their employee’s workplace injury, and it can potentially cost them more money over time if they have to pay an extra amount to the injured employee in case of future re-injury.
Why Does This Difference Matter?
These two types of settlement have the same end goal in mind—to ensure you end up with the workers’ compensation you rightfully deserve for suffering an injury or contracting an illness while on the job. However, there are only certain instances where you can file a Section 20 settlement, and it must be approved by a judge before you see any benefits. This type of settlement really benefits your employer more than it will benefit you for a number of reasons.
Remember that your employer does not have to admit fault or liability for your accident in a Section 20 settlement. All they have to do is request a judge’s approval and payout a lump sum in order to send your claim to the archives forever, without the fear of you reopening it and demanding more money from them. However, it means you can’t reopen the case at a later date if you re-injure your same body part, and you won’t receive any additional funds for future medical treatments, hospital bills or lost wages if that’s the case.
Section 22 settlements are a far better situation for you to be in, but a much worse situation for your employer. Neither type of settlement accounts for or can prevent a future re-injury from happening, but a Section 22 settlement means a higher payout rate for your employer, which they’ll most likely do anything to prevent.
A percentage of disability is paid by your employer based on the body part injured, and severity of the injury suffered, so if they’re paying 25% for your injury now, and in 2020, you re-injure your back, for example, their percentage paid will most likely increase, which costs them more money in the long run. The Section 20 settlement option allows for an employer to argue for a lower credit since there is no initial credit amount established when a claim is first filed, and they can still file for a retroactive credit for the previous injury in the event of a re-injury.
Which Type of Settlement is Right for You?
New Jersey’s workers’ comp settlement options give you a choice if you’ve suffered an injury or contracted an illness at work, but you may still be a bit confused as to which option is right for your specific situation. Before you file your claim, it’s highly recommended to consult with a seasoned workers’ compensation attorney to determine which settlement option you should go with, and to make sure you’ve correctly filled out all necessary documents by the proper deadlines.
Your attorney can review Section 20 vs. Section 22 settlements with you and help you make an informed decision based on which one will most benefit you. In the event of a re-injury to your already injured body part if you originally settled your case under an Order Approving Settlement, it’s important to document all additional medical expenses and time out of work within two years after your last benefit payment so the Division of Labor can review your claim and adjust your payout accordingly.
When in Doubt, Contact an Experienced NJ Workers’ Comp Lawyer
If you’re feeling any uneasiness about your workers’ comp claim or fearing possible retaliation from your employer, you should turn to an experienced workers’ comp lawyer to help you sort out the details of your case and ensure you receive the full amount of compensation to which you’re entitled.
Goldberg & Wolf have fought and won thousands of cases in the courtroom for injured workers throughout Cherry Hill and the surrounding areas. We’ve been relentless advocates for workers’ rights and benefits since 1992, and now we’re ready to learn more about how your work injury has impacted your life. Call us today for a free consultation at 856-651-1600 or visit our office at 1949 Berlin Road in Cherry Hill, NJ.