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Cardiello v. Community Medical Center


March 19, 2008


On appeal from the New Jersey Department of Labor and Workforce Development, Division of Workers' Compensation, Claim Petition No. 2002-11679.

Per curiam.


Argued January 9, 2008

Before Judges Sapp-Peterson and Messano.

Respondent, Community Medical Center, appeals from the January 8, 2007 order of the judge of the workers' compensation court approving the settlement of petitioner Valerie Cardiello's workers' compensation claim, and from the April 4, 2007 order denying respondent's motion to vacate the award. Respondent contends the judge should not have entered the order approving the settlement because (1) it never signed the agreement as it is required to do pursuant to N.J.S.A. 34:15-50; (2) even if there was a valid agreement, it was reached based upon petitioner's misrepresentation about her ability to work; (3) had respondent been aware that, contrary to petitioner's November 6, 2006 testimony, she had in fact been working, such information would have been relevant to the settlement negotiations; and (4) petitioner's misrepresentation as to her working status rose to the level of fraud, providing yet another reason why the court should not have approved the settlement, but should have instead granted respondent's request for a one- cycle adjournment to conduct further investigation. We agree that the court erred in approving the settlement without respondent's written consent and also that the judge abused his discretion in denying the one-cycle adjournment to further investigate whether petitioner deliberately misrepresented her working status during the November 6, 2006 hearing.

On April 9, 2002, petitioner, Valerie Cardiello, filed Claim Petition No. 2002-11679 with the Division of Workers' Compensation (Division) alleging that she sustained an injury to her lower back on December 30, 2001, while working for respondent. Respondent filed an answer to the claim petition on May 28, 2002, conceding that petitioner's injury was compensable and noting that it had provided full benefits to petitioner. Respondent denied that petitioner required further medical treatment or temporary disability benefits.

Thereafter, on July 15, 2002, petitioner filed an amended claim petition alleging that her neck and shoulder were also injured as a result of the December 30, 2001 accident. In turn, respondent filed an answer to the amended claim petition denying that the alleged injuries to petitioner's neck and shoulder were work-related. Petitioner also filed a verified petition alleging that she was entitled to benefits under the Second Injury Fund*fn2 on the basis that she was rendered totally and permanently disabled by the work-related accident and her pre-existing conditions.

Trial commenced on November 6, 2006. Respondent stipulated that petitioner did suffer a work-related accident on December 30, 2001. The court then heard the testimony of petitioner. During her direct examination, petitioner testified about her employment history:

Q: You began working in 1977 as an LPN?

A: Correct.

Q: And you worked various places as an LPN until your last day of employment, January 22nd, 2002?

A: That's correct.

Q: Have you worked anywhere since then?

A: No.

Q: Any family business or off the books jobs, anything of that nature?

A: No.

Q: And your last place of employment was the Community Medical Center?

A: Correct.

On January 3, 2007, respondent extended a settlement offer to petitioner of sixty percent of permanent partial disability with a total credit of twelve and one-half percent. The settlement would entitle petitioner to 332 weeks of compensation at $455.36 per week, for a total of $151,179.60. The parties appeared before the workers' compensation judge on January 8, 2007 to place the settlement on the record and to secure the judge's approval. At that time, however, respondent's attorney advised the court that she could not put through the settlement because he believed that petitioner had engaged in fraudulent conduct in connection with the claim. Respondent's counsel sought a one-cycle adjournment of the matter to conduct further investigation. The attorney for the Second Injury Fund joined in the adjournment request. The court denied the request.

Over objection from petitioner's counsel, the court recalled petitioner for further testimony, not only with respect to the terms of the settlement but also with respect to her then current employment. Petitioner admitted that she was employed at the time as a supervisor at a nursing home where she was "just at a desk, paperwork." The court cut off any questioning beyond petitioner's current employment.

Despite respondent's repeated objections and request to withdraw the settlement offer, the court entered an order approving the settlement. The court noted that under the settlement, the Second Injury Fund claim for permanent total disability was being dismissed. As such, the court reasoned, "[W]e're dealing with permanent partial disability, all right, we're not dealing with total disability. So permanent partial disability does not preclude the ability to work, all right, and whether or not it only includes an extent to which a person may be disabled." The court reasoned further that "[t]he settlement has nothing to do with her being totally unable to work, it has to do with her ability to function being partially restricted and on that basis I'm ordering the settlement to be honored[.]"

On January 12, 2007, respondent filed a motion to vacate the order approving settlement on the basis that (1) petitioner potentially violated the fraud statute, (2) petitioner made a material misrepresentation in obtaining the settlement offer, (3) respondent offered the settlement based on a mistake of fact, and (4) the settlement was void as it did not meet the requirements of N.J.S.A. 34:15-50. The judge entertained oral argument on January 29, 2007, and orally denied the motion, incorporating the reasons he placed on the record at the time he approved the settlement on January 8, 2007, as the basis for the denial.*fn3 Respondent filed a notice of appeal on February 20, 2007. Respondent also filed a motion for stay of the order approving settlement, which is still pending.

Respondent raises the following points for our consideration on appeal:




The scope of review of final decisions from the Division "is the same as that on an appeal in any non-jury [sic] case[.]" Close v. Kordulak Bros., 44 N.J. 589, 599 (1965). That is, the appellate review is limited to "'whether the findings made could reasonably have been reached on sufficient credible evidence present in the record,' considering 'the proofs as a whole,' with due regard to the opportunity of the one who heard the witnesses to judge of their credibility," and "in the case of agency review, with due regard also to the agency's expertise where such expertise is a pertinent factor." Ibid.

Therefore, deference should be accorded to workers' compensation judges where they have furnished clear, complete and articulate reasons grounded in the evidence. In re Vey, supra, 124 N.J. at 534, 543-44 (1991); Lewicki v. New Jersey Art Foundry, 88 N.J. 75, 89-90 (N.J. 1981). However, as with any non-jury case, deference will not be given to legal determinations which are "'manifestly unsupported by or inconsistent with competent, relevant and reasonably credible evidence as to offend the interests of justice.'" Perez v. Monmouth Cable Vision, 278 N.J. Super. 275, 282 (App. Div. 1994) (quoting Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 484 (1974)), certif. denied, 140 N.J. 277 (1995).

Against that standard of review, we first turn to the general principles that govern settlement agreements between parties. Ordinarily, once parties voluntarily enter into an agreement to settle a lawsuit, the agreement is binding upon the parties, whether or not it is made in the presence of the court and even in the absence of a writing. Pascarella v. Bruck, 190 N.J. Super. 118, 124 (App. Div.), certif. denied, 94 N.J. 600 (1983). A settlement agreement is enforceable "absent a demonstration of 'fraud or other compelling circumstances.'"

Id. at 124-25. "[I]f a settlement agreement is achieved through coercion, deception, fraud, undue pressure, or unseemly conduct, or if one party was not competent to voluntarily consent thereto, the settlement agreement must be set aside." Peskin v. Peskin, 271 N.J. Super. 261, 276 (App. Div. 1994). Because the settlement here arose in the context of a workers' compensation claim,, it must be analyzed under the statutory scheme of the Workers' Compensation Act (Act), N.J.S.A. 34:15-1 to -142, and, in particular, the provisions governing settlements.

Under the Act, the Division has limited jurisdiction. Aetna Cas. & Surety Co. v. Para Mfg. Co., 176 N.J. Super. 532, 538 (App. Div. 1980). The Division "'may only exercise [those] powers expressly allocated to it or those which are fairly implied as an incident to its expressly granted powers.' The Division is a specialized administrative agency, not a court of law with general jurisdiction to decide common-law rights." Sherwood v. Johnson, 246 N.J. Super. 530, 533 (App. Div. 1991) (citations omitted). N.J.S.A. 34:15-50 provides, Whenever an employer or his insurance carrier and an injured employee, or the dependents of a deceased employee, shall, by agreement, duly signed, settle upon and determine the compensation due to the injured employee, or to the dependents of a deceased employee, as provided by law, the employer or the insurance carrier shall forthwith file with the [Division] a true copy of the agreement. The agreement shall not bind the employer or injured employee, or the dependents of a deceased employee, unless approved by the [Division]. [(emphasis added).]

Therefore, a settlement agreement intended to resolve a workers' compensation claim must meet the requirements of N.J.S.A. 34:15-50 to become binding. Consequently, the general principles governing settlement agreements, while relevant in determining whether an enforceable agreement exists, must nonetheless give way to the express provisions of N.J.S.A. 34:15-50, absent some compelling basis to do otherwise. Sherwood, supra, 246 N.J. Super. at 533.

Here, at the time the January 8, 2007 hearing commenced, respondent had not signed the agreement, despite the fact that the purpose of the proceeding was to formalize the offer it had extended to petitioner and which she had accepted. Respondent advised the court that it was not prepared to move forward with the settlement due to suspected fraud. The court, however, determined otherwise:

I think you have got a settlement. The parties have agreed that she's permanently and partially disabled. Now somebody thinks, well, gee, we got more evidence now that she might have been working somewhere. Well, the total disability issue is over. It sounds to me like somebody just doesn't like this lady and they're trying to kill the settlement. And, you know, once --there is a Yiddish expression Judge Moncher once told me; gemacht ist gemacht. That means what's settled is settled.

If there is a settlement, I will bring the Petitioner in and, you know, approve the settlement and your remedy would be to go to an Appellate court.

The court made no inquiry into the circumstances surrounding the respondent's discovery of the information that led it to believe that petitioner had engaged in fraudulent conduct. The court did note that respondent's investigator testified during the November 8 hearing about a surveillance conducted of petitioner two months earlier for a period of three days and that "[t]here was nothing in [the investigator's] testimony that pertained to any further [working] -- we keep going on and on forever here." However, the court made no inquiry into why that information would not have been reasonably available earlier through the exercise of due diligence and refused to permit respondent to question petitioner further about her work status. The judge concluded that because the settlement between the parties was for permanent partial disability, a status that did not preclude petitioner from working, whether she was working was irrelevant. We disagree.

Although petitioner, as part of the settlement agreement was no longer claiming a permanent total disability, "an employee's ability to work is also critical to the evaluation of the worker's permanent partial disability award." Perez v. Copital Ornamental, Concrete Specialties, Inc., 288 N.J. Super. 359, 370 (App. Div. 1996). Thus, even assuming, as the court did, that petitioner's acceptance of the settlement offer represented petitioner's concession that she was not totally disabled, the extent of her working ability was critical to the resolution of whether, as a result of the injury, "there ha[d] been a lessening to a material degree of [her] working ability" N.J.S.A. 34:15-36; Perez, supra, 288 N.J. Super. at 370. Consequently, the judge abused his discretion in limiting the questioning of petitioner's working status to her then current working status.*fn4

In our view, given the fact that respondent had not signed the agreement because of the allegedly newly-discovered information, the absence of an informed record surrounding the circumstances under which this newly-discovered information was obtained, and the limited inquiry of petitioner regarding her employment prior to the November 6 hearing, the judge's determination that the parties had settled the matter was manifestly unsupported by the record and not entitled to our deference. Perez, supra, 278 N.J. Super. at 275

Further, since the record did not support the judge's conclusion that the parties had settled the matter, we find it unnecessary to address at length the merits of respondent's claim that petitioner violated the fraud provisions of the Act. We add these brief comments.

Even assuming respondent should have known about petitioner's employment status prior to extending its offer, the court should have still considered evidence proferred as to her work history in order to determine whether to grant respondent's motion to vacate the award on the basis of fraud. Under the Act, the Division may order an immediate "termination or denial of benefits" and "forfeiture of all rights of compensation or payments sought with respect to [a] claim" whenever a "false or misleading statement, representation or submission" is made in connection with a claim. N.J.S.A. 34:15-57.4(a)(1) and (c)(1). Thus, the Act does not restrict its application to the time period before a settlement agreement is approved.

When the parties appeared before the judge at the January 29, 2007 motion to vacate the award, a mere three weeks after the court, over respondent's objection, had approved the settlement, respondent offered employment applications and payroll records completed by petitioner during the time period when, according to her November 6 testimony, she was not working. Additionally, at the time of her testimony, her claim for total permanent disability with the Second Injury Fund was still pending. These documents raise genuine questions as to whether petitioner made false or, at the very least, misleading statements at the November 6, 2006 hearing. For example, respondent produced a document that indicated that petitioner received an employee of the month award at Rose Garden on June 18, 2006, just five months before she testified that she had not been employed since January 22, 2002. Therefore, the court erred in refusing to consider this proffered evidence in relation to respondent's motion to vacate.

The January 8, 2007 order approving the settlement and the April 4, 2007 order denying respondent's motion to vacate the award are vacated. We remand the matter to the Division for further proceedings consistent with this opinion. We do not retain jurisdiction.

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