Advance Disclaimer by Employee of Right to Sue Third Party for Injuries Covered by Workers’ Compensation Statutes Violates Public Policy

Vitale v. Schering-Plough Corp., ___ N.J. ___ (2017).  Plaintiff was hired as a security guard by a security company.  The company required him to agree to waive any claim against any customer of the security company to whom he might be assigned “arising from or related to injuries which are covered under the Workers’ Compensation statutes” (“the “Disclaimer”).

Plaintiff was assigned to defendant Schering-Plough, where he was seriously injured.  After recovering workers’ compensation benefits, plaintiff sued Schering for negligence that he said caused his injury. Schering moved for summary judgment based on the Disclaimer.  The Law Division found the disclaimer void as against public policy and denied the motion.  Plaintiff then won a jury trial verdict.

Schering appealed.  The Appellate Division affirmed the denial of summary judgment, upheld the damages award, but ordered a new trial on liability.  Schering sought Supreme Court review, which the Court granted, but only as to the disclaimer issue.  On that issue, the Court unanimously affirmed the decisions below, with Justice Patterson authoring the opinion.

Two separate provisions of the Workers Compensation Act called for the rejection of the Disclaimer.  First, N.J.S.A. 34:15-40 “provides that an employee’s right to workers’ compensation benefits does not preclude his or her assertion of common-law personal-injury or wrongful-death claims against a liable third party.”  The Disclaimer was void because it “would alter the balancing of interests of the employer, the employee, and a potentially liable party that the Legislature envisioned when it enacted that provision.”

Second, N.J.S.A. 34:15-39 declares contrary to public policy any “agreement, composition, or release of damages made before the happening of an accident,” subject to an exception not applicable here.  That “plain language,” Justice Patterson said, voided the Disclaimer.  The result in the Appellate Division– a new trial on liability– stands.

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