Employee Can Reopen Terms of a Consent Settlement to Reconstruct Wages, Court Rules
The case of Calero v. Target Corporation brings up an interesting question: can a party to a consent settlement reopen the case to dispute the rate that was originally settled upon to in order to reconstruct wages?
On August 23, 2016, petitioner Ms. Calero, who was injured on the job, and Target Corporation, her employer, came to an agreement for a percentage of partial permanent disability. As a part of the settlement, wages were set at $276.17 per week, with a maximum rate of $193.32 and no more. All parties, including the petitioner, signed the final order. Months later, the petitioner filed another motion for reconsideration of the wage which had been stipulated to in the settlement order with a new lawyer. The petitioner’s new lawyer then argued that the disability payments should have been set based on a full time wage, rather than the part time wage on which they were set. Target Corporation opposed the petitioner’s motion for reconsideration.
On September 12, 2018, a hearing took place at which the petitioner testified that the consent award agreed to in the last trial was wrong on her wage. She agreed that she earned $11.50 per hour but she was not seeking a higher percentage of disability. She testified that she “worked the hours that were posted” for her. She maintained that she was always available for 40 hours, as she was hired on a full-time basis. After the petitioner’s accident, she tried to return to work but was physically unable to do so due to her injury. After that, she testified that her hours continued to be reduced until there was no more work for her. After leaving Target, she had not worked anywhere else.
Throughout her cross-examination, the petitioner testified she sometimes worked less than 20 hours a week, though she stated that most times she worked 40 hours a week. Target’s counsel did not provide documentation of hours worked, nor did they produce any statements from other Target employees that disproved her testimony. In the decision, it does not state whether she was asked why she had originally agreed to the rate of $193.32 at the first settlement.
On January 16, 2019, the Judge of Compensation delivered his decision to reconstruct the petitioner’s wages to be based on a total of 40 hours of work each week. The judge applied the precedent set forth in Katsoris v. S. J. Publ’g Co., 131 N.J. 535 (1993), which states that a case requires proof of a permanent diminution of earnings capacity to reconstruct wages. Considering that the petitioner stated that she most often worked 40 hours per week and that she could no longer do so due to her injury, the judge held that petitioner had proven a permanent diminution of wage earning capacity. Therefore, the judge applied Civil Rule 4:50-1 to uphold the petitioner’s argument, which allows for judicial relief that “involves mistake, inadvertent surprise or excusable neglect,” as exists in this case according to the Judge.
In accordance with the reconstructed wage based on 40 hours a week, the petitioner’s new wage became $460 per week, which allowed for a permanency rate up to $322 per week, which is significantly higher than the original rate of $193.32 per week that was agreed upon in 2016.
Target appealed and argued that under N.J.S.A. 34:15-27, a request for modifications of a wage construction does not allow a party to reopen a case on stipulated facts such as wage and rate. Instead, the rule works for request of modifications to the percentage of disability, further treatment or further temporary disability benefits. Target failed to argue this before the Judge of Compensation, and thus the Appellate Court refused to hear this case, in accordance with their policy.
The Appellate Division noted that even had it considered Target’s argument that the subject of a reconsideration cannot rest on stipulations of wages and rates, stating that “… we would find no error because regardless of the Act’s provisions, a judge of compensation has inherent authority to open judgments or orders in the interest of justice and that decision will not be disturbed absent an abuse of discretion.”
While this case is unpublished, and thus other courts are not bound by this as precedent, it does raise important questions for future similar cases of capped permanency rates for full-time workers. For example, if a petitioner settles on the record to the wage and rate and testifies as such, is that petitioner still able to later hire new counsel and argue that wages should have been reconstructed? Are there ways that a respondent can protect itself from a similar situation? Further, can the respondent also reopen awards on their end if records show that a petitioner actually earned less than what was settled upon?
In this particular case, the evidence produced by the petitioner for reconstruction of wages was strong and consistent with the Katsoris decision because petitioner argued she had a permanent diminution of earning capacity. In the case of Calero v. Target Corporation, the petitioner’s case was strong and consistent with existing precedent such as the Katsoris ruling. Target did not offer any evidence to dispute the claims made by the petitioner, and instead focused its argument on the overall fairness of the case to a company when a petitioner files a claim to reopen a consent settlement to construct wages. While in this case the Court ruled in favor of the petitioner, it does raise important points for both respondents and petitioners to evaluate in future filings to best protect themselves and receive the proper award.
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