NJ Appellate Division Determines that Employment Separation Agreement does not Constitute Payment for Disputed Workers’ Compensation Claim filed Outside Two Year Statute of Limitations
In the case of Donald Servais v. Ocean Wholesale Nursery, LLC., A-2988-20, (App. Div. July 14, 2022), the legal question presented was whether a Separation Agreement constituted a payment for a contested workers’ compensation case. In this matter, Petitioner alleged that he suffered an amputation of three fingers on his right hand while at work on January 26, 2016. Petitioner failed to file a workers’ compensation claim within the two-year statutory limitations period. Additionally, Respondent never paid Petitioner any temporary disability benefits as Respondent believed the injury happened while Petitioner was at home. Further, Respondent disputed the employee relationship with Petitioner as he was hired as a consultant rather than an employee. On October 26, 2018, Petitioner filed a formal claim petition. The claim was denied, and Respondent filed a motion to dismiss the claim petition. Petitioner argued that under a January 31, 2017 Employment Separation Agreement, Respondent paid Petitioner $5,000.00 to resolve their business relationship. Petitioner argued that at least part of this payment was for the loss of his fingers; therefore, the claim petition was timely filed from the date of separation agreement.
The issue was litigated and the Compensation Judge determined that Petitioner was in fact an employee and that Section 7 of the Separation Agreement was ambiguous. Despite there being no mention in the Agreement of Petitioner’s injury to his fingers, the Judge found that the Separation Agreement included any and all claims, including the loss of fingers, and apportioned $1,000.00 of the $5,000.00 paid under the separation agreement to the injury to the fingers. Therefore, a judgment was entered in favor of Petitioner. Respondent then appealed the decision. The Appellate Division ultimately reversed in favor of the Respondent. The Appellate Division determined that the language of the Agreement expressly excluded Petitioner’s workers’ compensation claim, stating:
“Paragraphs five and six of the Agreement would not reasonably lead a person to believe that the $5,000 payment under the Agreement was also a partial payment for his work-related injury because paragraph seven of the Agreement, clearly entitled in bold ‘Exceptions,’ expressly stated that the release in the Agreement did not ‘affect or limit’ his right to receive benefits for occupational injury under the Workers’ Compensation Law.”
The Appellate Division therefore held that Petitioner failed to file his claim petition in timely manner. It reversed the Order denying Respondent’s motion to dismiss and vacated the final judgment.