Distribution of Personal Injury and Workers’ Compensation Awards During Divorce

The question that frequently arises when people are going through a divorce is whether  my ex-spouse entitled to part of my personal injury and workers’ compensation award in the divorce?

A large part of the process in any divorce is the division of the money and property the couple has accumulated, also known as the marital property. When most people think of division of marital property, they think of things like bank accounts, retirement accounts, real estate and personal property.

Personal injury and workers’ compensation awards, however, may also be divided upon divorce.  Personal injury awards and settlements often include damages for pain and suffering, lost wages, loss of future earning capacity loss of consortium (i.e., the loss of the benefits of a family relationship due to the injuries), medical expenses and damages to property.

The question then becomes: is my personal injury or workers’ compensation award considered marital property? When answering that question, it is first important to look at whether the cause of action (i.e. the accident, injury, or medical problem) which resulted in the personal injury or workman’s compensation award occurred during the marriage. If the cause of action accrued during the marriage, it can be characterized as “marital property”. In New Jersey, all martial property is subject to division at divorce.

On the other hand, if the cause of action which led to the personal injury or workers’ compensation award occurred before or after the marriage, the award would generally be considered separate or non-marital property and is generally the sole property of the injured spouse.

What happens when a personal injury or worker’s compensation award is considered marital property?  The Court next has to decide how to divide the award. New Jersey courts follow what is called the “analytic approach”.

New Jersey’s Analytical Approach

The Analytic approach specifically evaluates the purposes of the settlement or award and the specific elements of damages and divides assets based upon what the award was intended to replace. When examining a worker’s compensation or personal injury award, the Court will look at what exactly the award was meant to compensate for.

In some instances, a personal injury or workers’ compensation award is meant to replace the financial or economic loss the underlying injury caused, i.e. an individual’s lost wages or medical expenses incurred and paid for during the marriage.

In other instances, however, the awards are non-economic and are intended to compensate for the effects of the injury. When a person is seriously injured, the injury can cause a permanent disability and inability to work. The injury can also cause loss of enjoyment of life, pain and suffering, and loss of satisfaction in life. These are non-economic injuries.

An injury can take away the enjoyment and pleasure in living daily lives: waking up without pain; drinking a cup of coffee without someone’s help; dressing a child in mismatched clothes that she insists on wearing, rather than have that child dress you; walking to the bus stop or subway in the brisk air, rather than being wheeled to a lift van; accomplishing a job well done at work, rather than being limited to a make-work project for the disabled; deciding what to make for dinner and preparing it. In addition to causing  physical pain and suffering,  injuries can frequently cause mental anguish, anxiety and often shame at being transposed from an able-bodied working person to an individual who is dependent on others.

In Amato v. Amato 180 N.J. Super. 210 (App. Div. 1981), the court noted that:

“nothing is more personal than the entirely subjective sensations of agonizing pain, mental anguish, embarrassment because of scarring or disfigurement, and outrage attending severe bodily injury… None of these, including the frustrations of diminution or loss of normal bodily functions or movements, can be sensed or need they be borne, by anyone but the injured spouse. Why, then, should the law seeking to be equitable, coin these factors into money to even partially benefit the uninjured and estranged spouse?”

The court in Amato v. Amato, 180 N.J. Super. 210 (1981)  thus held that such awards will be divided into two parts: 1) awards to the injured spouse for his or her lost wages and medical expenses incurred, and 2) awards compensating for issues such as disfigurement, pain and suffering and disability.  The Court then determined that the first award (i.e. an award for lost wages and/or medical expenses) is classified as marital property whereas the second award (i.e. an award for disfigurement, disability and/or paint and suffering) is classified as separate or non-marital property.

Using the Amato v. Amato framework, courts will need to determine whether the award is for economic or non-economic damages. Sometimes, the award itself will outline its purpose, designating exactly what each portion of funds is meant to compensate for.  In other instances, the court will need to turn to the relevant case law and statutes to determine the purpose of the award. The judge will review the facts surrounding the injury, the effect the injury will have on the injured person’s life moving forward, and whether there were lost wages or medical expenses incurred by the injured person, during the marriage, which are now being recouped and make a determination based upon the overall picture.

Division of Settlement Proceeds Received During the Marriage

What happens when a personal injury case, where the award includes monies for pain and suffering for the injured spouse and monies for loss of consortium for the remaining spouse, is settled while the parties are still married? In Ryan v. Ryan, 238 N.J. Super.21 (Ch. Div. 1993), a New Jersey court addressed this exact issue.

Specifically, in that Ryan v. Ryan, the husband’s net settlement was $182,946.96 which was allocated to defendant husband for his pain and suffering and to the plaintiff wife for her loss of consortium. The settlement check was endorsed by the parties and deposited into two separate accounts in the name of the Wife alone as custodian for each of the parties’ two children. Thereafter, the Wife withdrew portions of the funds for various purposes.  By the time of the divorce, the asset could no longer be identified and categorized. The question during divorce is whether these funds were subject to equitable distribution.  Ultimately, the court noted that commingling of separate funds for pain and suffering and loss of consortium with marital property converted those funds into marital property.

Equitable Distribution

Once the Court determines how much, if any, of a personal injury or workers’ compensation award is marital property, the Court will attempt to equitably divide the marital portion of the personal injury or worker’s compensation award as part of the general equitable distribution of assets. Equitable does not necessarily mean equal or a 50/50 split, instead it means fair. The court attempts to divide property in a way that is most fair to both parties.

In determining how to best equitably distribute the marital property, the Court looks at the following factors under N.J.S.A. 2A:34-23.1:

  • the length of the marriage
  • each spouse’s physical health, emotional health, and age
  • any income or property either spouse brought into the marriage
  • the standard of living the couple established during the marriage
  • any written prenuptial or post-nuptial agreements covering property division
  • each spouse’s overall economic circumstances
  • each spouse’s income and earning capacity (ability to earn income based on education, training, experience, length of any absence from the job market, and custodial responsibilities for the couple’s children)
  • the extent to which either spouse may have delayed pursuing career goals during the marriage
  • any time and expense required for a spouse to acquire the education or training necessary to achieve a standard of living comparable to the marital standard
  • any contributions either spouse made to the education or earning power of the other spouse
  • any contribution by either spouse to acquiring, preserving, improving, or wasting marital property, including contributions as a homemaker
  • the tax consequences of a proposed distribution
  • the present value of all property
  • the need of a parent with physical custody of a child to own or occupy the marital residence or use household effects
  • each spouse’s debts and liabilities
  • any present or future need for a medical or educational trust for either spouse or a child, and
  • any other relevant factors.

N.J.S.A. 2A:34-23.1.

Equitable distribution of personal injury and worker’s compensation awards, as well as equitable distribution in general, can be a complicated issue to address on your own. If you or your spouse have received a personal injury or workers’ compensation award and you are considering divorce, call the Fuggi Law Firm at 732-240-9095 for a free consultation, or visit us at our website www.fuggilaw.com




Should there be any statute of limitations on sexual abuse?

Last week, we talked about the difficulties of pursuing a case as a victim of sexual abuse because of the two year statute of limitations. While, the statute of limitations does not begin to run until the victim of the sexual abuse both realizes that he/she is a victim of sexual abuse AND relates the sexual abuse to the physical, psychological, mental and emotional harm that they have suffered, one question still remains: Should there be a statute of limitations for sexual abuse at all?

New York State is considering eliminating the statute of limitations regarding sexual abuse cases. Presently in New York, a victim of child sexual abuse MUST bring any civil lawsuit regarding same prior turning twenty three (23). The New York legislature is looking to change that and Governor Cuomo of New York is supporting that change.

Recently, the NY Daily News looked at the statutes of limitation for sexual abuse in New Jersey. See New Jersey’s victim-friendly statute of limitations law helps child sex abuse victim sue the teacher that scarred his life, decades later. The NY Daily News considered the statute of limitations in New Jersey as victim friendly. But does it go far enough?

Similar to the bills being pushed forward in New York, New Jersey has considered its own bills to end the statute of limitation for childhood sexual abuse cases such  as New  Jersey State Bill 868.

Bill 868 proposes sweeping reform as it relates to victims of sexual abuse and their access to the court system. This new bill, if passed in the New Jersey Legislature, will eliminate the statute of limitations in civil actions for sexual abuse, expand the categories of entities and individuals that may be held responsible for the sexual abuse and clarify civil actions against public entities.

If enacted, the bill would be a sweeping victory for victims of sexual abuse. These victims would then be able to pursue legal remedies without the harsh time constraints. Moreover, the elimination of the statute of limitations for sexual abuse would lift the burden on victims to demonstrate, not only that they are suffering as a result of the abuse, but also that they were unaware that their suffering was related to the sexual abuse until recently.

Presently, victims face the burden of demonstrating the repressed memories, mental trauma or delayed recognition of the abuse and its effect to be able to pursue their legal rights beyond the two years. The present system essentially asks victims, who are at their most vulnerable and may be beginning to identify their abuse, to move very quickly in filing in any action against their abuser and to pursue claims before they are ready to do so.

Thus while New Jersey is certainly more victim friendly than our neighbor, the state still does not do enough to protect victims of child sexual abuse and to encourage them to bring their cases to court only when they are mentally, emotionally, and physically prepared.

What Victims of Sexual Abuse Need to Know About New Jersey’s Statute of Limitations

Recently, a New Jersey man, J.D., filed suit against his former Spanish teacher, Ratner, for the abuse she committed against him when he was sixteen years old and a student in her class. This case was covered by the media (see i.e., N.J. teacher accused of sex with student 30 years ago placed on leave; Why this N.J. teacher is shielded from sex-with-student charge).

Many of the comments on these stories question why a student can bring a sexual assault claim stemming from sexual abuse thirty years ago. In New Jersey, the standard statute of limitations for any and all personal injuries, including sexual abuse, require that all personal injury cases commence within two years.  See N.J.S.A. 2A:14-2 and 2A:61 B-1 (b).

However, with sexual abuse, the statute of limitations is essentially put on pause where the victim has suffered from psychological, physical, mental or emotional problems as a result of the abuse and has not fully realized the scope of the abuse. The statute of limitations does not begin to run until the victim of the sexual abuse both realizes that he/she is a victim of sexual abuse AND relates the sexual abuse to the physical, psychological, mental and emotional harm that they have suffered.

Victims of child sexual assault and abuse do indeed suffer greatly. Studies that there is “a powerful relationship between our emotional experiences as children and our physical and mental health as adults….traumatic emotional experiences in childhood (grow) into organic disease later in life.”10 (Felitti, Vincent J., MD. “The Relationship of Adverse Childhood Experiences to Adult Heath: Turning Gold into Lead.” Kaiser Permanente Medical Care Program., n.p., 2002. Web. ).  Many victims of childhood sexual abuse experience alcohol abuse, drug abuse, chronic depression, morbid obesity, diabetes, hypertension, coronary artery disease and many other effects.

In the case of J.D., the sexual abuse by his Spanish teacher continued for nine years and she twice became pregnant. Both pregnancies ended in abortions. Following the abuse, J.D. continued to be involved with Ratner and her family. However, in 2013, J.D. started to have intense and frequent panic attacks. He had to be hospitalized and was diagnosed with depression and anxiety disorder.

The diagnosis prompted counselor’s visits and treatment that ultimately resulted in a breakthrough on May 14, 2015, during which J.D. realized sexual abuse was to blame for his emotional issues. Because J.D. did not realize that he was a victim of sexual abuse and that sexual abuse was the cause of his ongoing psychological and emotional harm until May 14, 2015, the statute of limitations on J.D.’s case did not begin to run until May 14, 2015.

J.D.’s delayed realization that the “relationship” he experienced was actually sexual abuse is not uncommon. Data on sexual abuse victims tells us that the trauma involved in sexual abuse is difficult to not only understand but also to process. (Summit, Roland, C. M.D., “The Child Sexual Abuse Accommodation Syndrome.”, Child Abuse & Neglect, Vol. 7). Many children who are victims of sexual abuse will repress or deny their memories in order to function in daily life. Many victims of sexual abuse are ill-equipped on their own to deal with these issues. They are afraid to come forward for fear of unbelief; that they are lying, and that they are manipulating and fearful of being rejected or abused again.