Jennifer Lambert and Gary Lambert v. Travelers Indemnity , 447 N.J. Super. 61 ( 2016 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1073-14T3
A-3040-14T1
A-3107-14T1
JENNIFER LAMBERT and
GARY LAMBERT,
APPROVED FOR PUBLICATION
Plaintiffs-Respondents,
August 24, 2016
v. APPELLATE DIVISION
TRAVELERS INDEMNITY COMPANY OF
AMERICA,
Defendant-Appellant.
_______________________________
PAUL REED,
Plaintiff-Respondent,
v.
QUAL-LYNX and TOWNSHIP OF
MARLBORO,
Defendants,
and
MONMOUTH MUNICIPAL JOINT
INSURANCE FUND,1
Defendant-Appellant.
_______________________________
1
This party was incorrectly designated as "Monmouth County Joint
Insurance Fund" in both the Reed and Agar complaints.
WILLIAM AGAR,
Plaintiff-Respondent,
v.
QUAL-LYNX and TOWNSHIP OF
HAZLET,
Defendants,
and
MONMOUTH MUNICIPAL JOINT
INSURANCE FUND,
Defendant-Appellant.
_______________________________
Argued June 2, 2016 - Decided August 24, 2016
Before Judges Koblitz, Kennedy and Gilson.
On appeal from Superior Court of New Jersey,
Law Division, Monmouth County, Docket Nos.
L-2702-14, L-4610-14, and L-4911-14.
Jeffrey W. Mazzola argued the cause for
appellant Travelers Indemnity Company of
America (Law Offices of William E. Staehle,
attorneys; Mr. Mazzola, on the brief).
Danielle Pantaleo argued the cause for
appellant Monmouth Municipal Joint Insurance
Fund (Cleary Giacobbe Alfieri Jacobs, LLC,
attorneys; Ms. Pantaleo, on the brief).
Richard N. Schibell argued the cause for
respondents Jennifer Lambert and Gary
Lambert (Schibell Mennie & Kentos, LLC,
attorneys; John G. Mennie, on the brief).
Michael J. Hanus argued the cause for
respondents Paul Reed and William Agar (Mr.
2 A-1073-14T3
Hanus, attorney; Richard T. Smith, on the
brief).
Daniel A. Levy argued the cause for amicus
curiae New Jersey Association for Justice-
New Jersey (Raff & Raff, LLP, attorneys; Mr.
Levy, on the brief).
Gibson Kolb, attorneys for amicus curiae The
National Association of Subrogation
Professionals (Rachael E. Banks, of counsel
and on the brief).
The opinion of the court was delivered by
GILSON, J.A.D.
These appeals2 present the same legal questions: Is a
worker, who is injured in a work-related motor vehicle accident,
permitted to recover medical expenses from a tortfeasor if those
medical expenses are paid by the workers' compensation insurer
as distinguished from personal injury protection (PIP) benefits
paid by the worker's automobile liability insurer? If so, is
the workers' compensation insurer entitled to recover the
medical expenses from the proceeds of any recovery the worker
obtains from the third-party tortfeasor?
The motion judge ruled that the workers' compensation
insurers were not entitled to recover the medical expenses
because the injured workers were not entitled to recover such
2
We write one opinion to dispose of both the consolidated
appeal, A-3040-14 and A-3107-14, and the separate appeal, A-
1073-14.
3 A-1073-14T3
expenses from the tortfeasors under N.J.S.A. 39:6A-12, which
bars evidence in an action against the tortfeasor of amounts
"collectible or paid" under PIP coverage. Thus, the motion
judge reasoned that the injured workers were limited by the no-
fault system established by the Automobile Insurance Cost
Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35, that the
workers' compensation insurer effectively stepped into the shoes
of the automobile insurer, and that the normal recovery
provisions of the Workers' Compensation Act (WCA), N.J.S.A.
34:15-1 to -142, did not apply.
We reject that interpretation of the interplay between
AICRA and the WCA, and hold that when a worker is injured in the
course of his or her employment in a motor vehicle accident and
workers' compensation coverage is available, the right of the
injured worker to pursue claims against the third-party
tortfeasor and the right of the workers' compensation insurer to
be reimbursed are governed by the WCA and not AICRA.
Accordingly, the injured worker may recover medical expenses
from the third-party tortfeasor and N.J.S.A. 39:6A-12 does not
apply. The workers' compensation insurer, in turn, has a right
to be reimbursed for the appropriate portion of the medical
expenses it has already paid under N.J.S.A. 34:15-40 (Section
40).
4 A-1073-14T3
I.
The three cases that give rise to these appeals all present
similar material facts. First, each plaintiff was injured in a
motor vehicle accident while working. Second, the applicable
automobile insurance provided PIP coverage. Third, the medical
expenses of each plaintiff were paid by his or her employer's
workers' compensation insurer. Plaintiffs were also paid
compensation benefits (also referred to as indemnity benefits)
for such things as lost wages. Fourth, plaintiffs all sued the
tortfeasors, and each of those suits was settled. In each case,
plaintiff's recovery from the tortfeasor exceeded the payments
he or she had received from the workers' compensation insurer.
The settlements, however, apparently did not disclose whether
the settlement payment included a payment for medical expenses.
Fifth, each plaintiff offered to reimburse the workers'
compensation insurer for the appropriate portion of the
compensation benefits, but refused to reimburse the workers'
compensation insurer for the medical expenses arguing he or she
had not recovered medical expenses from the tortfeasor.
To put these similar material facts in context, we
summarize the circumstances of the three plaintiffs involved in
these appeals.
5 A-1073-14T3
Plaintiff Jennifer Lambert worked for the Howell Township
Board of Education as a school bus aid. On August 6, 2010,
Lambert was injured when an automobile driven by Kaitlin
Antonaccio collided with the rear of the school bus in which
Lambert was working. The Travelers Indemnity Company of America
(Travelers) provided workers' compensation insurance to
Lambert's employer. As a result of her injuries, Lambert filed
a workers' compensation claim, and Travelers paid Lambert
$94,705.22 for medical expenses and $54,695.87 for compensation
benefits.
Thereafter, Lambert sued Antonaccio. Ultimately that
lawsuit settled, with Antonaccio paying Lambert $300,000.
Following the settlement, Lambert's counsel offered to pay
Travelers $35,713.91, which represented two-thirds of the
compensation benefits of $54,695.87, minus statutory costs of
$750. Counsel for Lambert, however, refused to pay any
reimbursement for medical expenses. Travelers rejected that
offer, and Lambert filed a complaint and an order to show cause
seeking to extinguish Travelers' lien for medical expenses.
Plaintiff Paul Reed worked for the Township of Marlboro as
a police officer. On August 19, 2011, Reed, while in the course
of his employment, was redirecting traffic when he was struck by
a car driven by Vladen Futernik. Marlboro has workers'
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compensation insurance through Monmouth Municipal Joint
Insurance Fund (MMJIF), which is a joint insurance fund for
municipalities of Monmouth County organized under N.J.S.A.
40A:10-36. Defendant Qual-Lynx is MMJIF's third-party
administrator for certain claims. Accordingly, Reed filed a
workers' compensation claim, and MMJIF paid him $60,430.48 for
medical expenses and $44,578.29 in compensation benefits.
Reed also filed a negligence action against Futernik, which
later settled for $100,000. Reed also brought an underinsured
motorist (UIM) claim against New Jersey Manufacturers Insurance
Company, and that suit settled for $199,000. Thus, Reed's total
recoveries against the third-party tortfeasor were $299,000.3
Counsel for Reed offered to reimburse MMJIF for its
proportional share of the compensation benefits, but refused to
reimburse any of the medical expenses. When MMJIF refused that
offer, Reed filed a complaint and an order to show cause seeking
to extinguish the medical portion of MMJIF's workers'
compensation lien.
Plaintiff William Agar worked as a police officer for the
Township of Hazlet. On June 26, 2011, Agar was sitting in his
3
A recovery from an insurer that provides UIM coverage is "the
functional equivalent of a recovery from the actual third-party
tortfeasor." Frazier v. N.J. Mfrs. Ins. Co., 142 N.J. 590, 598
(1995).
7 A-1073-14T3
patrol car overseeing road construction when his vehicle was
rear-ended by a car driven by Ethel McCaffrey. MMJIF provides
insurance for Hazlet, including workers' compensation insurance.
Agar filed a claim for workers' compensation and was paid
$4331.02 for medical expenses and $15,693 in compensation
benefits.
Agar also filed a suit against McCaffrey and settled that
action for a payment of $60,000. MMJIF asserted a lien against
Agar's settlement and sought reimbursement for both the amounts
it paid for compensation benefits and medical expenses. Counsel
for Agar offered to reimburse MMJIF for the compensation
benefits, but refused to make any reimbursement for medical
expenses. When the parties could not reach an accord, Agar
filed a complaint and an order to show cause seeking to
extinguish the portion of the lien that sought to recover the
medical expenses.
The orders to show cause filed by the three plaintiffs were
all heard by the same motion judge. In all three matters, the
judge entered orders granting plaintiffs' applications to
extinguish the portion of the workers' compensation lien seeking
reimbursement of the medical expenses, relying on an unpublished
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case.4 The judge reasoned that when a worker is injured in a
motor vehicle accident during the course of employment, the
worker is treated as a no-fault insured and, therefore, under
N.J.S.A. 39:6A-12, any recovery from the tortfeasor cannot
include medical expenses that had been paid by an insurer. The
judge also reasoned that since the injured worker had no right
to recover paid medical expenses from the tortfeasor, the
workers' compensation insurer could not seek reimbursement of
those medical expenses under Section 40 of the WCA.
The workers' compensation insurers (Travelers and MMJIF)
appeal the orders that extinguished the medical expense portion
of their liens under Section 40 of the WCA. Amicus curiae
National Association of Subrogation Professionals filed a brief
in support of the position of the workers' compensation
insurers. Amicus Curiae New Jersey Association for Justice-New
Jersey filed a brief in support of plaintiffs' position. We
granted MMJIF's motion to consolidate the appeals filed in the
Reed and Agar cases. We denied a motion to consolidate the
Lambert appeal because that appeal had already been fully
briefed when the motion was filed. We now issue this
4
As the judge acknowledged, Rule 1:36-3 provides that, except
for reasons which do not apply here, "no unpublished opinion
shall be cited by any court."
9 A-1073-14T3
consolidated opinion to address the legal issues raised in all
three appeals.
II.
The issues raised by these appeals concern the
interpretation of the interplay between AICRA and the WCA.
Therefore, we review these issues of law de novo. Farmers Mut.
Fire Ins. Co. of Salem v. N.J. Prop.-Liab. Ins. Guar. Ass'n, 215
N.J. 522, 535-36 (2013).
We hold that because workers' compensation benefits are the
primary source of recovery for injuries suffered by employees in
a work-related automobile accident, and PIP insurers are
relieved from the obligation to pay medical expenses under
N.J.S.A 39:6A-6, any recovery obtained by employees from third-
party tortfeasors, whether through settlement, trial or
otherwise, is subject to Section 40 liens under the WCA. We
further hold that in any action by such employees against third-
party tortfeasors, the evidential bar of N.J.S.A. 39:6A-12 does
not apply.
The statutes and case law support this holding. We
therefore examine AICRA, the WCA, and the interplay between
those two statutes. We also review the existing case law.
10 A-1073-14T3
A. AICRA
Since 1972, New Jersey has made "legislative efforts to
control the rising cost of automobile insurance by placing
restrictions on an accident victim's right to sue for
noneconomic damages." DiProspero v. Penn, 183 N.J. 477, 485
(2005). In 1998, the Legislature enacted AICRA "with a multi-
pronged approach aimed at achieving the goals of containing
[automobile insurance] costs." Id. at 488. The goal of AICRA
was to reduce the cost of automobile insurance by reducing the
number of litigated claims. See James v. Torres, 354 N.J.
Super. 586, 594 (App. Div. 2002), certif. denied, 175 N.J. 547
(2003). AICRA expanded New Jersey's no-fault automobile
insurance system by, among other things, requiring every
automobile insurance policy to provide PIP benefits, "which
guarantee 'without regard to fault,' medical expense coverage
for the named insured" who suffers bodily injury in an
automobile accident. Perrelli v. Pastorelle, 206 N.J. 193, 201
(2011) (quoting Caviglia v. Royal Tours of Am., 178 N.J. 460,
466 (2004)). AICRA accordingly prohibits an injured person from
seeking to recover from a tortfeasor medical expenses already
paid under PIP coverage from the injured person's own automobile
insurer. N.J.S.A. 39:6A-12; see Bardis v. First Trenton Ins.
Co., 199 N.J. 265, 279 (2009) (stating that the "injured person
11 A-1073-14T3
who was the beneficiary of the PIP payments could not and should
not recover from the tortfeasor the medical, hospital and other
losses for which he [or she] had already been reimbursed"
(quoting Cirelli v. Ohio Cas. Ins. Co., 72 N.J. 380, 387
(1977))). Thus, N.J.S.A. 39:6A-12, which pre-dated AICRA,
continues to preclude the introduction of "evidence of the
amounts collectible or paid" by an automobile insurer under PIP
coverage. In other words, N.J.S.A. 39:6A-12 precludes a
plaintiff from recovering medical expenses already paid by a PIP
insurer.
B. The WCA
The WCA provides a "system of compensation for workers"
injured in the course of their employment. Estate of Kotsovska
ex rel. Kotsovska v. Liebman, 221 N.J. 568, 583-84 (2015)
(quoting Fitzgerald v. Tom Coddington Stables, 186 N.J. 21, 31
(2006)). The WCA represents a "historic 'trade-off' whereby
employees relinquish their right to pursue common-law remedies
[against their employers] in exchange for prompt and automatic
entitlement to benefits for work-related injuries." Laidlow v.
Hariton Mach. Co., 170 N.J. 602, 605 (quoting Millison v. E.I.
du Pont de Nemours & Co., 101 N.J. 161, 174 (1985)); see Tlumac
v. High Bridge Stone, 187 N.J. 567, 573 (2006) (explaining that
the WCA's "remedial purpose" is "to make benefits readily and
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broadly available to injured workers through a non-complicated
process"). While the WCA limits injured workers from suing
their employers, it does not preclude suits against third-
persons responsible for their injuries. See N.J.S.A. 34:15-40;
Danesi v. Am. Mfrs. Mut. Ins. Co., 189 N.J. Super. 160, 162-66
(App. Div.), certif. denied, 94 N.J. 544 (1983).
N.J.S.A. 34:15-40 was enacted as a means of "regulating and
marshaling the rights and responsibilities of the several
parties concerned in compensation payments where" a worker's
injuries are caused by a third-party. U.S. Cas. Co. v. Hercules
Powder Co., 4 N.J. 157, 165 (1950). To overcome the inequity of
a double recovery, the WCA provides that a workers' compensation
insurer is entitled to repayment of "medical expenses incurred
and compensation payments theretofore paid to the injured
employee . . . less [the] employee's expenses of suit and
attorney's fee." N.J.S.A. 34:15-40(b); see also Frazier, supra,
142 N.J. at 597. N.J.S.A. 34:15-40(b) "imposes a lien in favor
of the workers compensation carrier against the proceeds of a
third-party recovery obtained by an injured worker." Raso v.
Ross Steel Erectors, Inc., 319 N.J. Super. 373, 381 (App. Div.),
certif. denied, 161 N.J. 148 (1999). "The compensation lien is
statutorily created and generally attaches to 'any sum'
recovered by the injured worker from a third-party, without
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regard to such equitable considerations as whether the worker
has been fully compensated." Primus v. Alfred Sanzari Enters.,
372 N.J. Super. 392, 400 (App. Div. 2004), certif. denied, 182
N.J. 430 (2005).
C. The Interplay between AICRA and the WCA
When a worker suffers a work-related injury in a motor
vehicle accident, workers' compensation coverage is the primary
source of insurance under the collateral source rule. See
N.J.S.A. 39:6A-6. N.J.S.A. 39:6A-6 provides that "medical
expense benefits . . . shall be payable as loss accrues, upon
written notice of such loss and without regard to collateral
sources, except that benefits, collectible under workers'
compensation insurance . . . shall be deducted from the benefits
collectible under [PIP]." N.J.S.A. 39:6A-6 "relieves the PIP
carrier from the obligation of making payments for expenses
incurred by the insured[, including medical expenses] which are
covered by workers' compensation benefits." Lefkin v.
Venturini, 229 N.J. Super. 1, 7 (App. Div. 1988).
The issues on these appeals turn on the interpretation of
the interplay between AICRA and WCA. The question is: Did the
Legislature intend N.J.S.A. 39:6A-6 to treat workers'
compensation insurance like PIP automobile insurance or, did the
Legislature intend that a worker injured in an automobile
14 A-1073-14T3
accident be covered under the workers' compensation system
without regard to the no-fault provisions of AICRA? Given the
language used in AICRA we conclude that AICRA did not displace
the workers' compensation system.
The collateral source rule does not make workers'
compensation insurance part of the PIP no-fault system; rather
it shifts the burden of providing insurance from the automobile
insurance system to the workers' compensation system. Thus, the
collateral source rule states that "benefits[] collectible under
workers' compensation insurance . . . shall be deducted from the
benefits collectible under [N.J.S.A. 39:6A-4 and 39:6A-10], the
medical expense benefits provided in [N.J.S.A. 39:6A-3.1] and
the benefits provided in [N.J.S.A. 39:6A-3.3]." N.J.S.A. 39:6A-
6. Nothing in that language suggests that the Legislature
intended to treat a worker injured in an automobile accident in
a different manner than a worker injured in a non-automobile
work-related accident. Just as important, nothing in that
statutory language suggests that the Legislature intended to
treat a workers' compensation insurer as if it were an
automobile insurer.
Indeed, the statutory words "deducted from" are most
clearly understood as shifting the insurance coverage from
automobile insurance to workers' compensation insurance.
15 A-1073-14T3
Moreover, such statutory language reflects "a legislative policy
determination that losses resulting from work-related automobile
accidents should be borne by the 'ultimate consumers of the
goods and services in whose production they are incurred.'"
Portnoff v. N.J. Mfrs. Ins. Co., 392 N.J. Super. 377, 383 (App.
Div.) (quoting Lefkin, supra, 229 N.J. Super. at 12), certif.
denied, 192 N.J. 477 (2007).
In addition, nothing in the legislative history of AICRA
suggests the Legislature meant to treat workers, who are injured
in a work-related automobile accident, as if they were limited
by AICRA's no-fault system. Nor is there any suggestion that
the Legislature intended to treat workers' compensation insurers
as if they were PIP insurers. Indeed, there is simply no
discussion of such an incorporation. It is fair to assume that
had the Legislature intended to effectuate such a major change,
it would have used express language in the statute and discussed
that incorporation in AICRA's legislative history.
D. The Case Law
Our holding is also consistent with existing case law. Two
opinions have addressed these issues. See Lefkin, supra, 229
N.J. Super. at 7; Talmadge v. Burn, ___ N.J. Super. ___, ___
(App. Div. 2016) (slip op. at 1).
16 A-1073-14T3
In Lefkin, this court found no bar against a worker,
injured in an automobile accident, from recovering from a third-
party tortfeasor medical expenses collected in workers'
compensation. Lefkin, supra, 229 N.J. Super. at 9. We
explained that "PIP benefits are not available to an insured if
workers' compensation benefits are also available to him [or
her]." Ibid. We also noted that the recovery of the medical
expenses from the third-party tortfeasor would be subject to
reimbursement to the workers' compensation insurer under the
"compensation lien." Ibid.
Lefkin involved a claim by a worker injured in a work-
related automobile accident. Id. at 5-6. The worker's medical
expenses were paid by the workers' compensation insurer and,
thus, the PIP automobile insurer did not pay those medical
expenses. Id. at 6. The worker sued his PIP automobile
insurer, Aetna Insurance Company, and the tortfeasors who caused
the automobile accident. Id. at 5. The claims against the
tortfeasors were settled and the worker sought to have Aetna pay
the portion of his workers' compensation lien related to medical
expenses. Id. at 6-7. In that regard, the worker argued that,
because such a recovery was barred by N.J.S.A. 39:6A-12, his
settlement with the tortfeasors could not have included his
17 A-1073-14T3
medical expenses. This court rejected that argument. Lefkin,
supra, 229 N.J. Super. at 9.
We explained that there are "three potential sources of
reimbursement of [the worker's] medical expenses . . . :
workers' compensation benefits, PIP benefits, and recovery from
the tortfeasor." Id. at 7. When all three potential payment
sources "conjoin," the worker can recover his medical expenses
from the tortfeasor. The workers' compensation insurer, in
turn, is entitled to reimbursement for the medical expenses
previously paid, less attorney's fees and costs of suit. Id. at
9.
While Lefkin, which was issued in 1988, pre-dated AICRA,
which was enacted in 1998, see L. 1998, c. 21, nothing in AICRA
changed the statutory provisions on which Lefkin relied.
Importantly, both N.J.S.A. 39:6A-12 and N.J.S.A. 39:6A-6 pre-
dated AICRA and neither of those provisions were substantively
changed by AICRA so as to require a result different from the
conclusion reached in Lefkin.
In Talmadge, this court recently reached a conclusion
consistent with Lefkin. Talmadge, supra, slip op. at 6. We
held that a workers' compensation insurer was entitled to be
reimbursed for medical expenses when a worker, injured in an
automobile accident, made a subsequent recovery from the third-
18 A-1073-14T3
party tortfeasor. Ibid. The plaintiff in Talmadge was injured
while driving her personal car on work-related business. Id. at
2. Her employer's workers' compensation insurer, The Hartford,
paid over $127,000 in medical expenses and compensation
benefits. Ibid. The plaintiff then sued the driver of the car
that caused the accident and that case settled with the
plaintiff receiving $250,000. Ibid.
The Hartford asserted a workers' compensation lien of
$84,510.78 against that third-party recovery. Ibid. The
plaintiff moved to reduce the workers' compensation lien to
exclude the medical expenses. Ibid. The Law Division denied
that motion, and we affirmed. In affirming, we explained that
"[t]he [Workers' Compensation Act] 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." Id. at 6-7 (citing Greene v. AIG Cas. Co.,
433 N.J. Super. 59, 68 (App. Div. 2013)).
The motion judge here relied on the "rationale" of an
unpublished opinion and ruled that workers' compensation
insurers were not entitled to recover medical expenses they paid
because injured workers were not entitled to recover such
19 A-1073-14T3
expenses from the tortfeasor under AICRA. We reject such an
interpretation of AICRA. For the reasons we have already
explained, we hold that when a worker is injured in the course
of his or her employment in a motor vehicle accident and
workers' compensation benefits have been paid or are payable on
behalf of the worker, the right of the injured worker to pursue
claims against the tortfeasor and the right of the workers'
compensation insurer to be reimbursed are governed by the WCA
and not AICRA.
Accordingly, the orders extinguishing the portion of the
workers' compensation liens related to medical expenses are
reversed in all three cases on appeal. All three matters are
remanded for entry of appropriate orders enforcing the workers'
compensation liens.
Reversed and remanded. We do not retain jurisdiction.
20 A-1073-14T3