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Kibble v. Weeks Dredging & Construction Co.

August 09, 1999

MARY KIBBLE, PETITIONER-APPELLANT,
v.
WEEKS DREDGING & CONSTRUCTION CO., RESPONDENT-RESPONDENT.



The opinion of the court was delivered by: Stein, J.

On certification to the Superior Court, Appellate Division.

The critical issue in this appeal is whether a worker who settles his or her workers' compensation claim pursuant to N.J.S.A. 34:15-20 (Section 20) simultaneously can waive the future right of his or her spouse to assert a statutory claim for dependency benefits in the event of the worker's death. See N.J.S.A. 34:15-13. The Division of Workers' Compensation held that the worker's waiver of his spouse's dependency claim was binding on his widow. In an unpublished opinion the Appellate Division affirmed. We granted certification, 157 N.J. 541 (1998), and now reverse.

I.

Carl Kibble was employed by respondent Weeks Dredging & Construction Co. from September 1980 until March 1984 as a welder/torch cutter. He had worked for other employers in the same capacity from the mid-1950s until 1980. During the course of that employment, Kibble was exposed to chromium, nickel, and other welding fumes.

A chest x-ray taken in 1977 revealed that he was suffering from pneumonoconiosis, a lung condition caused by the retention of dust in the lungs. In 1984, he sought treatment from his family physician, Dr. James R. Robin, for a chronic cough. Dr. Robin diagnosed Kibble with pulmonary fibrosis and concluded that that condition had been caused by Kibble's exposure to welding fumes. Dr. Robin also concluded that Kibble was "totally disabled with welder[']s lung," and advised him that he "absolutely should not work in this field again."

In June 1984, Kibble filed a workers' compensation claim against Weeks and seven other prior employers, seeking benefits for "permanent disability to lungs, internal and nervous system." A doctor who evaluated Kibble in connection with his claim concurred with Dr. Robin's Conclusion that Kibble was totally disabled and found that because of his exposure to welding fumes he was at an "increased risk" of developing lung cancer in the future. In January 1989, Kibble settled his compensation claim pursuant to Section 20 for a lump-sum payment of $36,000. *fn1 As part of the prevailing practice in the Division of Workers' Compensation (Division), the settlement was placed on the official record of the proceedings and approved by the Judge of compensation. Regrettably, the transcript of those proceedings was lost or destroyed. The pre-printed settlement form that apparently was used routinely by the Workers' Compensation Court in processing Section 20 settlements stated that the settlement "has the effect of a dismissal with prejudice, being final as to all right[s] and benefits of the petitioner and the petitioner's dependents and is a complete and absolute surrender and release of all their rights arising out of this/these claim(s)." (Emphasis supplied).

Kibble and his wife Mary (petitioner) also had filed suit in federal court alleging claims based on products liability and failure to provide a safe workplace. That case settled prior to the Section 20 settlement. The release in the third-party action explicitly waived any and all claims for injury "including pulmonary fibrosis or any other illness or injury yet undiagnosed, past, present or future . . . and all future claims for wrongful death . . . caused by any occupational disease, diagnosed, or yet undiagnosed, past, present, or future."

In November 1993, almost four years after the Section 20 settlement, Kibble was diagnosed with lung cancer. He died on March 5, 1994. Kibble's death certificate lists his cause of death as "lung cancer [and] pneumoconiosis." In April 1994, petitioner filed a dependency claim, pursuant to N.J.S.A. 34:15-13, alleging that her husband's lung cancer and death were caused by his occupational exposure to welding fumes. The Division dismissed petitioner's claim, finding that "the intention of the parties [in the Section 20 settlement] was to make a total settlement of all claims related to lung problems, including dependency claims." The Appellate Division affirmed that judgment, finding ample support in the record to sustain the Division's Conclusion.

Petitioner argues that Section 20 settlements do not extinguish future causes of action, such as those for dependency benefits and claims for diseases not manifest at the time of settlement. She maintains that her husband's original claims related solely to pulmonary fibrosis, and that the lung cancer that caused his death did not manifest until four years after the Section 20 settlement. Thus, she argues that because her dependency claim is based on the cancer that had not manifested itself at the time of the Section 20 settlement, it is not barred. She also contends that even if dependency claims can be waived in a Section 20 settlement, the evidence in this case failed to establish that the parties intended to waive dependency benefits.

Respondent counters that Kibble's original claim was for "permanent disability to the lungs, internal and nervous systems" and was not restricted to pulmonary fibrosis. It maintains that the scope of a Section 20 settlement must be derived from the intent of the parties.

The New Jersey State AFL-CIO, New Jersey State Industrial Union Council, AFL-CIO, District 15 of The International Association of Machinists and Aerospace Workers, AFL-CIO, and New Jersey Advisory Council on Safety and Health, as amici curiae, argue in support of the petitioner's position that Section 20 settlements should not extinguish future dependency claims unless "such claims arise from the same condition that was the basis for the settlement of the compensation claim." The amici argue that because the cancer was not manifest when the Section 20 settlement was approved by the Judge, the dependency claims based on cancer were not waived.

After argument of this appeal, the Court requested and the parties submitted supplemental briefs on whether waivers of dependency claims in connection with Section 20 settlements were statutorily authorized and, if so, what proofs should be required to establish the validity of such waivers.

II.

Separate from and in addition to the right of workers to receive compensation benefits under the Workers' Compensation Act (Act or WCA), N.J.S.A. 34:15-1 to -128, in the event of permanent partial or total disability caused by a compensable accident or occupational disease, the Act provides benefits to dependents of deceased workers. Accordingly, if an accident or occupational disease that arises out of and in the course of employment causes or contributes to the cause of the employee's death, the Act requires payment of benefits to the workers' dependents. N.J.S.A. 34:15-13. Our cases emphasize that "[t]he rights of dependents to compensation are independent and separate rights flowing to them from the [WCA] itself. They are not rights to which [dependents] succeed as the representatives of the [deceased employee]." Eckert v. New Jersey State Highway Dep't, 1 N.J. 474, 480 (1949); accord McAllister v. Board of Educ., 42 N.J. 56, 59-60 (1964); Lusczy v. Seaboard By-Products Co., 101 N.J.L. 170, 173 (E. & A. 1925); Adams v. Woodbridge Sanitary Pottery Corp., 174 N.J. Super. 284, 287-88 (App. Div. 1980); Roberts v. All Am. Eng'g Co., 104 N.J. Super. 1, 7 (App. Div. 1968), certif. denied, 53 N.J. 351 (1969). Professor Larson succinctly describes the separate and independent status of dependency claims:

"The dependent's right to death benefits is an independent right derived from statute, not from the rights of the decedent. Accordingly, death benefits are not affected by compromises or releases executed by decedent, or by an adverse holding on decedent's claim, or by claimant's failure to claim within the statutory period." [2 Arthur Larson, The Law of Workmen's Compensation § 64.00 (1989).]

Only a small minority of states permits a settlement of a compensation claim by a worker during his or her lifetime to preclude a claim for future death benefits by that worker's dependents. In the vast majority of states, a dependent's right to seek worker's compensation death benefits is not affected by a lump-sum settlement agreement between an injured worker and that worker's employer. Deborah Tauber, A Proposal to Resuscitate the Abrogated Rights of Dependents Under Section 20 of the New Jersey Workers' Compensation Act, 20 Rutgers L.J. 513, 519 n.30 (1989). The majority rule is based on the "sound theory that the dependents' rights are not derived from the employee's rights, but instead, are separate and independent rights of the dependent." Ibid.; accord Lewis v. Connolly Contracting Co., 264 N.W. 581, 586 (Minn. 1936); Industrial Comm'n v. Davis, 186 N.E. 505, 505 (Ohio 1933); Hotel Claridge Co. v. Blank, 89 S.W.2d 758, 760 (Tenn. 1936); Laird v. Vermont Highway Dep't, 20 A.2d 555, 561 (Vt. 1941). In those jurisdictions adopting the majority view, "[a] unilateral settlement or release by a worker of his or her own claims does not bar the surviving dependent's claim even if the release signed by the worker explicitly purports to release the dependent's claim." Buchanan v. Kerr-McGee Corp., 908 P.2d 242, 245 (N.M. Ct. App.) (emphasis supplied), cert. denied, 905 P.2d 1119 (N.M. 1995).

The New Mexico Supreme Court in Buchanan, explained the majority rule:

"The WCJ's decision presupposes that Worker's valid release is also effective to release Claimant's cause of action as a surviving dependent under the Occupational Disease Law. We disagree with this premise and the Conclusion that follows from it. We hold that Claimant, as Worker's widow and dependent, has independent statutory rights to death benefits which arise upon Worker's death, and Claimant is not bound by the Release. The claim of a dependent arising from the death of a worker is a new and separate claim and is not derivative of the worker's claim. A unilateral settlement or release by a worker of his or her own claims does not bar the surviving dependent's claim even if the release signed by the worker explicitly purports to release the dependent's claim, as was the case here. Our holding is in accord with the great weight of authority from other jurisdictions." [Id. at 245 (emphasis supplied) (citations omitted).]

Professor Larson observes that a

"striking consequence of the independent status of dependency rights is the rule, accepted by the majority of jurisdictions, that an adverse decision on the merits of a claim by the employee while he was alive does not bar a dependency claim under the doctrine of res judicata, since the parties and rights involved are different, and since the dependent is not in privity with the injured employee as to the rights asserted by him." [Larson, supra, § 64.14.]

Prior to 1980, there was no provision in the WCA, that permitted a worker to settle a compensation claim with his or her employer. However, that did not prevent parties from entering into "surreptitiously negotiated" settlements whereby the worker would agree to dismiss his or her claim voluntarily and with prejudice in exchange for a subsequent payment from the employer. See Tauber, supra, 20 Rutgers L.J. at 515.

That informal, out-of-court settlement procedure was found to be "contrary to public policy" by the Appellate Division in Brown v. General Aniline & Film Corp., 127 N.J. Super. 93, 95, aff'd o.b., 65 N.J. 555 (1974). In Brown, the injured worker testified before a Judge of compensation that "he could not prove a compensable accident, and requested a dismissal of his petitions with prejudice against ever reopening his claims." Id. at 94. After the Judge dismissed the worker's claims, the employer paid the worker $20,000. Following the worker's death, his widow filed dependency petitions, which were dismissed by the Judge of compensation on the theory that the widow was "collaterally estopped from relitigating decedent's claim which had been dismissed with prejudice because a compensable claim had not been proven." Id. at 95. The Appellate Division reversed, holding that the WCA precluded the out-of-court settlement. Relying on Larson, supra, the court held that because dependency benefits are "separate and distinct" from the benefits due to an injured worker, "nothing that the decedent does, or attempts to do during his lifetime, can deprive dependents of their statutory benefits." Id. at 96.

In 1980, as part of extensive revisions to the WCA, the Legislature amended Section 20 to include a provision allowing lump-sum settlements between employers and employees. L. 1979, c. 283, § 8. That amendment apparently was enacted as a partial response to the Appellate Division's holding in Brown, supra:

"[Section 20] would benefit employers by ... clarifying the effect of the decision in Brown v. General Aniline by permitting compensation Judges to enter an award approving settlement in matters where causal relationship, jurisdiction, dependency or liability are in issue, resulting in the payment of a lump sum having the effect of a dismissal of the petition and a complete surrender of any future right to compensation or other benefits arising out of that claim." [Senate Labor, Industry & Professions Committee, Joint Statement to Senate Committee Substitute for S. Bill 802 and Assembly Committee Substitute for A. Bill 840, Nov. 13, 1979, at 2.]

In relevant part the amended Section 20 reads as follows:

"[A] Judge of compensation may with the consent of the parties, after considering the testimony of the petitioner and other witnesses, together with any stipulation of the parties, and after such Judge of compensation has determined that such settlement is fair and just under all the circumstances, enter "an order approving settlement." Such settlement, when so approved, notwithstanding any other provisions of this chapter, shall have the force and effect of a dismissal of the claim petition and shall be final and conclusive upon the employee and the employee's dependents, and shall be a complete surrender of any right to compensation or other benefits arising out of such claim under the statute." [N.J.S.A. 34:15-20.]

For a Section 20 lump-sum settlement to be effective, the only statutory requirements are that the settlement be approved by the Judge of compensation as "fair and just under all the circumstances," and that the settling petitioner be represented by counsel. Ibid. The applicable regulations require that the terms of the settlement be entered on a prescribed form, that the employee, employer and compensation Judge sign the form, and that the employee "be fully advised of all rights." See N.J.A.C. 12:235-6.14. The regulations impose no other procedural requirements.

Since the adoption of the 1980 amendments there has been virtually no New Jersey case law considering the preclusive effect of Section 20 settlements on subsequently-filed dependency claims. That entire body of law consists of one unpublished Appellate Division opinion and a written opinion of the Division of Workers' Compensation.

B

(1)

In Alfone v. Sarno, 87 N.J. 99 (1981), this Court was presented with an issue analogous to the primary issue in this appeal: whether a judgment in favor of a plaintiff in a personal injury suit precluded a subsequent action for wrongful death on behalf of that plaintiff's heirs. Noting that wrongful death actions create in a decedent's beneficiaries rights independent of and distinct from those involved in the underlying personal injury claim, we held that the wrongful death action could be maintained provided there was no duplication of damages. Id. at 114-23. We recognized that that holding "may prevent insurance carriers from obtaining complete releases from all possible wrongful death claims, except perhaps by the inclusion in any such agreement of all persons who subsequently are determined to be wrongful death beneficiaries." Id. at 123 (emphasis supplied). *fn2

The analogy to Alfone is germane to our Disposition of this appeal. Both a wrongful death claim sounding in negligence, N.J.S.A. 2A:31-1 to -6, and a workers' compensation dependency claim, N.J.S.A. 34:15-13, are statutory causes of action with the same purpose: to compensate surviving dependents for the pecuniary losses resulting from death. Further, both causes of action are independent and distinct from the underlying claim of the injured party. See Alfone, supra, 87 N.J. at 107 ("New Jersey's wrongful death statute created a new cause of action `beyond that which the deceased would have had if he had survived, and based on a different principle -- a new right of action.'") (quoting Cooper v. Shore Electric Co., 63 N.J.L. 558, 563 (E. & A. 1899)); Eckert, supra, 1 N.J. at 480 (holding that rights of dependents to compensation are independent and separate rights that are derived from WCA).

(2)

A loss of consortium, or per quod, claim is intended to compensate a person for the loss of a spouse's "society, companionship and services due to the fault of another." Wolfe v. State Farm Ins. Co., 224 N.J. Super. 348, 350 (App. Div.), certif. denied, 111 N.J. 654 (1988). Although a per quod claim is derivative of the injured spouse's personal injury cause of action, Tichenor v. Santillo, 218 N.J. Super. 165, 173 (App. Div. 1987), "it is also independent, as the damages which may be awarded to the spouse pursuant to the per quod claim are clearly ...


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