By: Catherine M Shiels, Esq. and Samantha E Hahn, Esq.
In a recent published opinion, NJ Transit Corp. v. Sanchez, N.J. Super. App. Div. (Geiger, J.A.D), the New Jersey Appellate Division held that when a worker is injured in a motor vehicle accident while in the course and scope of his employment, the right of the workers’ compensation carrier to pursue a subrogation action against the third party tortfeasor is governed by the New Jersey Workers’ Compensation Act (WCA) and not the Automobile Cost Reduction Act (AICRA). The carrier can recover against the third party tortfeasor even if AICRA’s verbal threshold requirement would preclude the injured worker from recovering non-economic damages.
The Sanchez decision is the latest case addressing the interplay between AICRA and the WCA. AICRA was passed in an effort to reduce automobile insurance costs by requiring auto insurers to provide Personal Injury Protection (PIP) benefits. PIP benefits are available to the named insured injured in a motor vehicle accident regardless of fault. If a motor vehicle accident arises out of the course and scope of the injured victim’s employment, medical expenses must be paid through workers’ compensation and not through PIP. See N.J.S.A., 39:6A-6. Although medical expenses paid through PIP are not recoverable from a tortfeasor in a civil lawsuit, a plaintiff injured in a work related motor vehicle accident can recover medical expenses paid by his workers’ compensation carrier from a negligent tortfeasor. N.J.S.A 39:6A-12, Lambert v. Travelers Indemnity Co. of America, 447 N.J. Super. 61 (App. Div. 2016).
On December 2, 2014, David Mercogliano was injured in a work related motor vehicle accident. Under AICRA, insureds have the option of purchasing an auto insurance policy with, or without, limitations on their ability to file a lawsuit. N.J.S.A 39-8(a). Plaintiffs who elect policies with lawsuit limitations are generally unable to sue for non-economic damages (i.e.: pain and suffering). This is known as the “verbal threshold.” Mercogliano’s insurance contained the lawsuit limitation, and his injuries were not severe enough to overcome the verbal threshold. He did not file a lawsuit against the other vehicle’s driver, Sandra Sanchez, or the vehicle’s owner, Chad Smith. Instead, he only received workers’ compensation benefits from his employer, NJ Transit.
NJ Transit filed a subrogation action against Sanchez and Smith. Under Section 40 of the WCA, a workers’ compensation carrier has the right to institute proceedings against third party tortfeasors for recovery of benefits paid to the injured worker. The Defendants’ filed a Motion for Summary Judgment arguing that NJ Transit’s claims were barred by AICRA’s verbal threshold.
The motion judge dismissed NJ Transit’s claims. Relying on the 1996 case, Continental v McClelland, the Judge held that a workers’ compensation carrier did not have a right to subrogate against a tortfeasor when the injured worker could not establish his own cause of action. 288 N.J. Super. 185 (App. Div. 1996). Indeed, the Appellate Division in Continental expressly held that an injured workers’ election of the verbal threshold barred an employer’s claim for subrogation. Since Mercogliano could not overcome the verbal threshold and establish his own claim, neither could NJ Transit. The Defendant’s summary judgement motion was granted, and NJ Transit then appealed.
The Appellate Division reversed the order of the motion court judge. The Appeals Court noted that the WCA was enacted eighty-four years before AICRA. There is no indication that the Legislature intended to substantively change the rights of workers injured in motor vehicle accidents, or their workers’ compensation carriers, in AICRA’s statutory language or legislative history. Had that been the Legislature’s intent, it would have done so unambiguously. The Appellate Division also dismissed the motion judge’s reliance on Continental. In 1988, the Appeals Court held in Lefkin v, Venturuini, that a worker injured in an automobile accident could recover medical expenses paid by his workers’ compensation carrier from a third party tortfeasor. Lefkin, 229 N.J. Super 1 (App. Div. 1988). Although Continental was decided after Lefkin, subsequent published decisions have all followed the Lefkin precedent. Talmadge v. Burn, 2016 N.J. Super Lexis 100 (App. Div. 2016); Green v. AIG Ca. Co., 433 N.J. Super. 59, 68 (App. Div. 2013). Lastly, the Appellate Division noted that NJ Transit sought to recover benefits it paid to Mercogliano for economic losses. The verbal threshold applies only to non-economic losses. The matter was reversed and remanded.
The Court’s Decision in Sanchez is a reaffirmation of the workers’ compensation carrier’s lien rights. Over the years, plaintiffs and defendants alike have sought to use AICRA as a means to limit or preclude workers’ compensation liens. The Appellate Division has repeatedly rejected those attempts. There is no ambiguity. If a plaintiff is injured in a work related motor vehicle accident, and receives workers’ compensation benefits, the carrier has an absolute statutory right to recovery against any third party award from the negligent tortfeasor.
Catherine M. Shiels, Esq. is a Shareholder in GRSLB&G’s Workers’ Compensation Department. She defends employers, insurers, and third party administrators against workers’ compensation claims in New Jersey and New York. Catherine can be reached at firstname.lastname@example.org.
Samantha E. Hahn, Esq. is an Associate in GRSLB&G’s Workers’ Compensation Department. She defends employers, insurers, and third party administrators against workers’ compensation claims in New Jersey and Pennsylvania. Sam can be reached at SHahn@grsl.com