Section 20 vs. Section 22 Workers' Compensation Settlements in New Jersey: Which is Better?

When you are injured on the job in New Jersey, reaching the end of your medical treatment often means negotiating a financial settlement with the workers' compensation insurance company. Understanding the difference between the two main types of settlements is crucial. Choosing the wrong one could leave you without medical coverage if your injury acts up years later. Whether your case is being heard at the New Jersey Division of Workers' Compensation, Newark or the New Jersey Division of Workers' Compensation, Trenton, it is highly recommended to search our US Lawyers Directory for a local workers' comp attorney to guide you through these complex options.

Understanding New Jersey Settlement Types

In New Jersey, workers' compensation settlements are governed by specific state statutes. They are generally categorized by the section of the law that dictates them. The two most common paths are Section 20 and Section 22. Each serves a very different purpose depending on the severity of your injury, whether the insurance company admits liability, and your need for future medical treatment.

Section 20 Settlements: Full and Final

A Section 20 settlement, governed by N.J.S.A. § 34:15-20, is a full and final lump-sum payout. This type of settlement is typically used when the insurance company disputes your claim-meaning they deny that your injury happened at work or argue that your medical issues are not related to your job. If you agree to a Section 20, you receive a single payment, but you completely surrender all future rights to medical benefits or wage replacement for that specific injury. The landmark case Kibble v. Weeks Dredging & Construction Co., 161 N.J. 178 (NJ Supreme Court 1999) confirms the absolute finality of these agreements; once signed and approved by a judge, you cannot go back and ask for more money or treatment.

Section 22 Settlements: Order Approving Settlement

An Order Approving Settlement, governed by N.J.S.A. § 34:15-22, operates very differently. In this scenario, the insurance company accepts that your injury is work-related. The settlement compensates you for a specific percentage of permanent partial disability. For example, a judge might agree you have a 15% disability of your right arm. Unlike Section 20, these benefits are often paid out in structured weekly installments rather than a single lump sum, although a lump sum can sometimes be negotiated. This process uses the official Form WC-100, New Jersey, Division of Workers' Compensation, Order Approving Settlement.

Key Differences Between the Two Options

Choosing between these settlements depends heavily on your medical prognosis.

Lump-Sum Payouts vs. Structured Benefits

A Section 20 offers the immediate gratification of a large lump sum. You get all your money at once and can use it however you wish. Section 22 settlements are typically paid as weekly checks over a period of months or years based on a state-mandated chart, unless the accumulated weeks have already passed by the time the settlement is finalized.

The Finality of Medical Rights Closure

With Section 20, your medical rights for that injury are permanently closed. If your back injury suddenly requires surgery five years from now, the workers' comp insurer will pay nothing. With a Section 22, the insurer may remain responsible for authorized future medical care related to the injury if it is reasonably necessary.

Reopening a Claim for Worsening Conditions

Under N.J.S.A. § 34:15-27, a major advantage of a Section 22 settlement is the right to reopen the claim. If your condition becomes significantly worse, you have exactly two years from the date of your last settlement payment (or last authorized medical treatment) to file a petition to reopen your case for additional medical treatment or an increased disability percentage.

How Much Does it Cost in NJ?

You do not pay upfront fees for a workers' comp lawyer in New Jersey.

• Attorney Fees: Under N.J.S.A. § 34:15-64, state law caps attorney fees at 25% of your settlement. In Section 22 cases, the judge typically orders the insurance company to pay 60% of your attorney's fee (15% of the total award), leaving you to pay only 40% of the fee (10% of your total settlement).
• Medical Expert Fees: If your lawyer hires an independent doctor to evaluate your disability, these statutory evaluation fees can be awarded up to $1,000 under N.J.S.A. § 34:15-64 and are typically split between you and the insurer, meaning your share is usually up to $500 out of your settlement.

How Long Does the Process Take?

You generally cannot settle a claim until you reach Maximum Medical Improvement (MMI)-the point where doctors say you will not get any better with further treatment. Reaching MMI can take anywhere from 6 to 18 months depending on your injury. Once MMI is reached, negotiating and scheduling a settlement hearing before a judge typically takes an additional 2 to 4 months.

Frequently Asked Questions (FAQ)