In a recent published opinion, Lambert v. Travelers Indemnity Co. of America, N.J. Super. App. Div. (A-0T3; A-3040-14T1; A-3107-14T1; August 24, 2016), the NJ Superior Court 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 injured worker to pursue claims against the third party tortfeasor, and the right of the workers’ compensation carrier to be reimbursed, are governed by the NJ Workers’ Compensation Act (WCA) and not the Automobile Cost Reduction Act (AICRA).
The Lambert Decision involves 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; however, medical benefits paid through PIP are not recoverable from a tortfeasor in a civil lawsuit. N.J.S.A 39:6A-12. If the motor vehicle accident arose out of the course and scope of the injured victim’s employment, medical expenses are paid through Workers’ Compensation and not through PIP. See N.J.S.A., 39:6A-6, Lefkin v. Venturini, 229 N.J. Super. 1, 7 (App. Div. 1988). AICRA does not expressly comment on whether medical expenses paid through Workers’ Compensation are recoverable in a civil lawsuit.
On August 6, 2010, Jennifer Lambert was injured in a work related motor vehicle accident. Lambert’s medical expenses were paid by her employer’s Workers’ Compensation carrier, Travelers Indemnity Company of America (Travelers). Travelers paid Lambert $94,705.22 in medical benefits and $54,695.87 in wage loss compensation. Thereafter, Lambert sued the liable tortfeasor, and her case settled for $300,000.
Travelers asserted a lien against Lambert’s settlement for benefits paid on her behalf. Under N.J.S.A. 34:15-40 (Section 40 of the WCA), when an injured worker obtains a third party recovery, the carrier is entitled to repayment of the medical and compensation benefits paid less the worker’s litigation costs and attorney’s fee. Lambert’s attorneys refused to reimburse Travelers’ medical lien. Citing AICRA, they argued that a Workers’ Compensation carrier is not entitled to reimbursement of its medical lien when the worker’s injuries are sustained in a motor vehicle accident. Ultimately, Lambert filed a complaint and Order to Show Cause seeking to extinguish Travelers’ medical lien.
Contemporaneous to the Lambert matter, Plaintiffs Paul Reed and William Agar had factually similar cases pending. Each Plaintiff was injured in a work related motor vehicle accident; the Plaintiffs’ medical expenses were paid by their employer’s Workers’ Compensation carrier; the Plaintiffs sued the third party tortfeasors; and their cases settled. Like Lambert, Reed and Agar both argued that the evidentiary bar in AICRA precluded reimbursement of the carriers’ medical liens.
The Plaintiffs’ motions were all heard by the same motion judge, and the judge entered Orders in each case granting the Plaintiffs’ applications to extinguish the medical liens. Relying on an unpublished decision, the judge reasoned that since a worker injured in a work related motor vehicle accident is treated as a no fault insured, AICRA would preclude the worker from recovering the paid medical expenses from a third party tortfeasor. The Workers’ Compensation carrier was simply stepping into the shoes of the automobile insurer, and it was immaterial that the benefits were paid through Workers’ Compensation instead of PIP. As the medical expenses were not recoverable in the third party action, the Workers’ Compensation carrier could not seek repayment from the third party award. The carriers appealed.
The Appellate Division decision in Lambert reversed the Orders of the motion court judge in all three cases. The Court held that when a worker is injured in a motor vehicle accident, and Workers’ Compensation benefits have been paid or are payable, the rights of the injured worker to pursue claims against the tortfeasor are governed by the WCA, not AICRA. There is no evidence of any intent by the State Legislature to alter the existing Workers’ Compensation scheme. Workers injured in automobile accidents are not to be treated differently than workers injured in non-automobile accidents. Any recovery obtained by injured workers from third party tortfeasors is subject to Section 40 lien rights. AICRA is not applicable.
The Appellate Division decision is consistent with the existing case law. In 1988, the Court held that a worker injured in an automobile accident could recover medical expenses paid by his Workers’ Compensation carrier from a third party tortfeasor. Lefkin v, Venturuini, 229 N.J. Super. 1 (App. Div. 1988). The Court noted that PIP benefits are not available to an insured if he is eligible for Workers’ Compensation benefit. Id. When AICRA was enacted ten years later, it did not change the statutory provisions that guided the Lefkin Court. The case remains good law. Similarly, in the recent June 2016 decision, Talmadge v. Burn, the Appellate Division held that “[the WCA] 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.” Talmadge v. Burn, 2016 N.J. Super. Lexis 100 (App. Div. 2016), citing Green v. AIG Ca. Co., 433 N.J. Super. 59, 68 (App. Div. 2013).
The impact of the Court’s decision in Lambert is twofold. For the Workers’ Compensation carrier, it is a triumphant resolution of an ongoing frustration. Plaintiffs have increasingly refused to voluntarily reimburse Workers’ Compensation carriers for payment of medical expenses by relying on AICRA. Lambert provides staunch protection for the carrier’s Section 40 lien rights. For automobile insurers and defendants, the case is grim. In recognizing the Workers’ Compensation carrier’s absolute right of reimbursement, the case also affirms the plaintiff’s ability to put evidence of Workers’ Compensation paid medical expenses on the board in civil lawsuits. These medical costs, which would be excluded if paid through PIP, must now be factored into the liability carrier’s exposure. As a result, liability carriers will face greater settlements and awards if the plaintiff was working at the time of the motor vehicle accident.
 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 email@example.com.
 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 firstname.lastname@example.org.