Where an injured worker has the ability to bring a third-party action arising from the circumstances surrounding a work injury, the employer may be entitled to reimbursement for compensation benefits paid. N.J.S.A. 35:15-40. Specifically, Section 40 details that where the sum recovered by the injured worker in the third-party case is equivalent or greater than the liability of the employer, the employer is released from its liability and entitled to reimbursement for the medical expenses incurred and compensation payments paid to the injured worker.

Medicare’s interests must be protected when negotiating settlements in worker’s compensation claims. This includes scenarios where the settlement also resolves the defendant’s obligation to pay future medical benefits, such as with a full Compromise and Release Agreement in Pennsylvania or a Section 20 settlement in New Jersey.

On August 22, 2024, Acting New Jersey Governor Nicholas Scutari signed legislation amending the existing N.J.S.A. 34:15-64 to increase the cap on attorneys’ fees from 20% to 25% of the settlement award. This amendment was effective immediately.