Workers comp carrier gets reimbursed from PI settlement
TINA L. TALMADGE,
CONNIE S. BURN and ALVAN A. BURN,
June 22, 2016
Argued May 16, 2016 - Decided
Before Judges Lihotz, Fasciale and Higbee.
On appeal from Superior Court of New Jersey, Law
Division, Sussex County, Docket No. L-401-13.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-3160-14T1
Talmadge appeals from a January 29, 2015 order denying to declare the medical
benefits portion of a workers' compensation lien unenforceable. The Hartford intervened in this matter seeking
reimbursement from any recovery the defendant tortfeasor paid to
plaintiff. On appeal, plaintiff argues
because benefits that could have been paid through plaintiff's personal injury
protection (PIP) provisions of her automobile liability policy are not
recoverable from the tortfeasor, a workers' compensation lien for payment of
similar costs should be denied. We disagree
The facts are not
disputed. Plaintiff, while working for
her employer, Child and Family Services, Inc., was driving her personal
automobile when involved in an auto accident caused by defendant Connie Burns. As a result of the accident, plaintiff
underwent an anterior cervical fusion. The
Hartford, as the workers' compensation carrier of plaintiff's employer, paid
plaintiff over $127,000 in medical, wage, and indemnity benefits.
Plaintiff filed a
complaint and ultimately settled her claims against Burns in the amount of Burn's
auto insurance policy limit of $250,000. The Hartford asserts a workers' compensation lien
of $84,510.78 against this third-party recovery.
Plaintiff moved to
reduce The Hartford's claimed lien. She
argued The Hartford's inclusion of any medical benefits paid to plaintiff was
legally unenforceable and not subject to reimbursement. The Law Division judge denied plaintiff's motion,
citing N.J.S.A. 34:15-40 (section 40) of the Workers' Compensation Act
(the Act), N.J.S.A. 34:15-1 to -142. Plaintiff filed this appeal.
In enacting the
Act, the Legislature sought to streamline recovery of benefits to workers
injured in the course of employment. Estate
of Kotsovska, ex rel. Kotsovska v. Liebman, 221 N.J. 568, 583-84
(2015). Under the Act's remedial
no-fault system, qualified employees receive medical treatment and limited
compensation "without regard to the negligence of the employer." Id. at 584 (quoting N.J.S.A.
34:15-7); see alsoTlumac v. High Bridge Stone, 187 N.J.
567, 573 (2006) ("[T]he remedial purpose of the Workers' Compensation Act [is]
to make benefits readily and broadly available to injured workers through a
Section 40 permits
a workers' compensation insurance carrier to seek reimbursement of benefits it
pays when a third party, other than the employer, caused the employee's
injury. Utica Mut. Ins. Co. v. Maran
& Maran, 142 N.J. 609, 613 (1995) ("Under section 40, the
workers' compensation carrier is entitled to reimbursement whether or not the
employee is fully compensated."). The
obligation of the employer . . . under this statute to make compensation
payments shall continue until the payment, if any, by such third party or his [or
her] insurance carrier is made.
(b) If the sum
recovered by the employee . . . from the third person or his [or her] insurance
carrier is equivalent to or greater than the liability of the employer . . . under this statute, the employer . . . shall
be released from such liability and shall be entitled to be reimbursed, . . . for
the medical expenses incurred and compensation payments theretofore paid to the
injured employee . . . less employee's expenses of suit and attorney's fee as
More specifically, "section 40
prevents the worker from retaining any workers' compensation benefits that have
been supplemented by a recovery against the liable third party." Utica, supra, 142 N.J.
as a no-fault insured, she may not recover medical benefits from another
no-fault insured. Since The Hartford's
subrogation rights are limited to claims plaintiff may assert, N.J.S.A.
34:15-40(f), she concludes the workers' compensation carrier has no entitlement
to attach the recovery from the tortfeasor to recover medical expenses it previously
paid. We reject this syllogism as an inaccurate
statement of the law.
The statutory construct
under the no-fault insurance system provisions of the Automobile Insurance Cost
Reduction Act, N.J.S.A. 39:6A-1.1 to -35, is "intended to serve as
the exclusive remedy for payment of out-of-pocket medical expenses arising from
an automobile accident" as a "trade-off for lower premiums and prompt
payment of medical expenses." Caviglia
v. Royal Tours of Am., 178 N.J. 460, 466-67 (2004) (citing Roig
v. Kelsey, 135 N.J. 500, 503, 511-12 (1994)). Accordingly, an injured no-fault insured person
who receives PIP benefits may not seek recovery from the tortfeasor for claims
resulting from "medical, hospital and other losses for which he had
already been reimbursed." Bardis
v. First Trenton Ins. Co., 199 N.J. 265, 279 (2009) (quoting Cirelli
v. Ohio Cas. Ins. Co., 72 N.J. 380, 387 (1977)). Thus, the Legislature did not intend "to
leave the door open for fault-based suits when enacting the No-Fault Law."
Roig, supra, 135 N.J.
When an employee
suffers an automobile accident while in the course of employment, workers'
compensation is the primary source of satisfaction of the employee's medical
bills, as provided by the collateral source rule, N.J.S.A. 39:6A-6,
which "relieves the PIP carrier from the obligation of making payments for
expenses incurred by the insured which are covered by workers' compensation benefits." Lefkin v. Venturini, 229 N.J.
Super. 1, 7 (App. Div. 1988).
"Where only workers' compensation benefits and PIP benefits are
available, the primary burden is placed on workers' compensation as a matter of
legislative policy by way of the collateral source rule of N.J.S.A.
39:6A-6." Id. at 9 (citing Aetna
Ins. Co. v. Gilchrist Bros., Inc., 85 N.J. 550 (1981)).
In instances where
an employee, as a result of a work related automobile accident injury, also has
a claim for recovery against a third party, the Legislature overcame the
possible "inequity of double recovery" by including section 40, which
requires an injured employee to refund paid workers' compensation benefits once
recovery is obtained from the tortfeasor, thereby avoiding duplication of the
workers' compensation benefits by the tort recovery. Frazier v. New Jersey Mfrs. Ins. Co.,
142 N.J. 590, 597-98 (1995). The
statute clearly permits an employee who received workers' compensation benefits
to seek recovery against the third-party for those benefits, including paid
medical expenses. The statute also expressly
entitles the workers' compensation carrier to repayment of all benefits paid to
the employee. SeeGreene v.
AIG Cas. Co., 433 N.J. Super. 59, 68 (App. Div. 2013).
In Greene, we
stated "[i]t has long been understood that the clear intent of [s]ection
40 . . . is to prevent an injured employee from recovering and retaining
workers' compensation payments, while at the same time recovering and retaining
the full damages resulting from a third-party tort suit." Id. at 64 (citing United States Cas.
Co. v. Hercules Powder Co., 4 N.J. 157, 163–65 (1950)). This is so even if the net recovery after
satisfaction of the workers' compensation lien does not fully compensate the
employee. Frazier, supra, 142
N.J. at 602.
there is no basis to interfere with the Law Division order. The employer's workers' compensation carrier's
lien, which includes medical expenses paid, must be satisfied from plaintiff's
$250,000 recovery from Burns. N.J.S.A.