State News : New Jersey

Ever since the decision in Dever v. New Jersey Mfrs. Ins. Co., No. A-3102-11T2, (App. Div. Oct. 23, 2013), plaintiffs’ counsel have been arguing that respondents do not have a lien for medical bills paid in workers’ compensation from a work-related car accident where the plaintiff had PIP coverage.  But civil courts have not been following Dever, and workers’ compensation carriers won another big decision on this issue in Talmadge v. Burn, No. A-3160-14T1 (App. Div. June 22, 2016).

Tina Talmadge was injured while working for Child and Family Services, Inc.  She was driving her own car when her vehicle was struck by a car driven by Ms. Burn.  Plaintiff underwent a cervical fusion procedure, and The Hartford Insurance Company (workers’ compensation carrier) paid $127,000 in medical and indemnity benefits.  The Hartford sought reimbursement of two thirds or approximately $84,500 and intervened in the civil case from which plaintiff recovered $250,000 as damages.   Plaintiff conceded that she owed two thirds of the indemnity benefits but argued that The Hartford had no right to a lien on medical benefits because as a no-fault insured, she herself could not recover medical benefits from the other no-fault insured Burns.  She contended that if she could not make a recovery of medicals in her law suit, The Hartford could not either as its rights are derivative of her own rights.

Both the trial judge and the Appellate Division rejected plaintiff’s arguments. The Appellate Division initially observed, “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.'” 

The Court went on to discuss how the PIP statute interacts with the workers’ compensation statute.  “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.”

The Appellate Division concluded, “The employer’s workers’ compensation carrier’s lien, which includes medical expenses paid, must be satisfied from plaintiff’s $250,000 recovery from Burn.”  It did not matter that plaintiff could not recover the medicals from the other party in her law suit.  The Court made clear that this was still a double recovery.  In this practitioner’s opinion, the Appellate Division got it right in Talmadge.Dever is an outlier case because the workers’ compensation carrier was not even a party to that decision.  The dispute in that case involved the UIM carrier, and the comments in Dever regarding the workers’ compensation lien were what is known as “dicta,” the expression of an opinion that went beyond the facts before the court.

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John H. Geaney, Esq., is an Executive Committee Member and a Shareholder in Capehart Scatchard's Workers’ Compensation Group.  Mr. Geaney concentrates his practice in the representation of employers, self-insured companies, third-party administrators, and insurance carriers in workers’ compensation, the Americans with Disabilities Act and Family and Medical Leave Act. Should you have any questions or would like more information, please contact Mr. Geaney at 856.914.2063 or by e‑mail at jgeaney@capehart.com.