Opinion
DOCKET NO.: BER-L-8504-16
09-11-2017
New Jersey Transit Corporation, a/s/o David Mercogliano, Plaintiff(s), v. Sandra Sanchez and Chad Smith, Defendant(s).
Shawn C. Huber, Esq. attorney for plaintiff (Brown & Connery, attorneys). Ryan J. Gaffney, Esq., attorney for defendant (Chasan Lamparello Mallon & Cappuzzo, attorneys).
NOT TO BE PUBLISHED WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS
Defendant's Motion for Summary Judgment Seeking to Dismiss the Complaint and Plaintiff's Cross-Motion for Partial Summary Judgment
Shawn C. Huber, Esq. attorney for plaintiff (Brown & Connery, attorneys). Ryan J. Gaffney, Esq., attorney for defendant (Chasan Lamparello Mallon & Cappuzzo, attorneys). Hon. Robert L. Polifroni, P.J.Cv.
This matter comes before the court by way of defendant's motion for summary judgment seeking to dismiss the complaint, and plaintiff's cross-motion for partial summary judgment. Oral argument was conducted August 18, 2017.
The specific question raised by the competing summary judgment motions in this matter is whether the workers' compensation carrier may subrogate against a tortfeasor insured within the AICRA statutory scheme, when the injured employee is precluded from pursuing an independent claim against the tortfeasor due to the no lawsuit threshold on the injured party's automobile policy, and the complaint seeks reimbursement for economic costs paid by the workers' compensation carrier. This issue must be decided in the context of established law regarding the Workers' Compensation Act (WCA), N.J.S.A. 34:15-1, and the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1.1.
For the reasons set forth below, this court's answer to the above question is that since the person suffering the injuries fails to present a course of action against the tortfeasor, the workers' compensation lien may not be recovered from the tortfeasor. LEGAL ARGUMENTS
Defendant's Motion for Summary Judgment
Plaintiff New Jersey Transit alleges on December 2, 2014, defendants Sanchez and Smith ("defendants") negligently operated a vehicle, causing injury to subrogor David Mercogliano. New Jersey Transit paid benefits to Mercogliano because he was eligible for workers' compensation.
N.J.S.A 34:15-40(f) describes workers' compensation carrier's statutory subrogation rights. Defendant asserts plaintiff New Jersey Transit's rights as subrogee of David Mercogliano do not exceed those of the worker that received those benefits. Defendant argues here, the subrogor was entitled to receive PIP benefits for his economic loss, and could not make an additional claim unless he vaulted the verbal threshold, specifically with prima facie proof of a permanent injury.
Defendant submits this action seeks reimbursement of the benefits paid after the December 2, 2014 accident including medical expenses and lost wages. Defendant asserts New Jersey Transit paid workers compensation benefits because Mr. Mercogliano was eligible for them, but argues it is well settled that a defendant's liability is not affected by a plaintiff's entitlement to workers' compensation. Defendant relies on Continental Ins. Co. v. McClelland for the proposition that:
Whether or not an injured plaintiff who is subject to the verbal threshold by his own automobile insurance policy is able to recover workers' compensation benefits is immaterial to an action against a defendant tortfeasor. Defendant's liability is not affected by the fortuitous circumstance that plaintiff was entitled to workers' compensation benefits. The compensation carrier's rights rise no higher than the employee's rights to which it is subrogated. Plaintiff was clearly entitled to receive PIP benefits for his economic loss. Whether he received them is immaterial.
Continental Ins. Co. v. McClelland, 288 N.J. Super. 185, 189-90 (App. Div. 1996).
Defendant argues absent evidence of a permanent injury it is entitled to summary judgment. Defendant notes the medical report of January 16, 2015 remains the same since December 2, 2014, in that Mr. Mercogliano was diagnosed with cervical stenosis and cervical radiculitis. Further, the January 16, 2015 report indicates Mr. Mercogliano is at maximum medical improvement and was permitted to return to work, without restrictions.
Thus, defendant requests summary judgment be granted in its favor, dismissing the complaint with prejudice.
Plaintiff's Cross Motion for Partial Summary Judgment
Plaintiff cross-moves for partial summary judgment. Plaintiff submits it does not allege that its subject employee suffered from a permanent injury as a direct result of the crash. Plaintiff asserts the claim is for reimbursement of all workers' compensation benefits its workers' compensation carrier paid the subject employee as a direct result of the accident. Plaintiff asserts Mr. Mercogliano received a total of $33,625.70 in workers' compensation benefits, specifically, $6,694.04 in medical and $3,982.40 in temporary and $22,949.26 in permanent indemnity (lost wages).
Plaintiff argues AICRA only applies to noneconomic loss, and the workers' compensation statute applies here. Plaintiff states that Lambert v. Travelers Indem. Co. of Am., 447 N.J. Super. 61 (App. Div. 2016), has effectively overruled Continental Ins., in that Lambert states:
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).
Lambert, supra, 447 N.J. Super. at 67.
Plaintiff contends they are seeking economic loss in the form of reimbursement for workers' compensation benefits paid, not "noneconomic loss." Plaintiff argues N.J.S.A. 34:15-40(f) allows plaintiff to recoup the workers' compensation benefits paid to its employee, and medical expenses.
Thus, plaintiff seeks partial summary judgment on this issue, in that defendant's defense of the limitation on lawsuit threshold shall not be a bar to plaintiff's recovery.
Defendant's Reply/Opposition
Defendant's reply/opposition asserts plaintiff concedes that they are not alleging permanent injury as a direct result of the subject accident. Further, defendant emphasizes Mr. Mercogliano has not sustained any uncompensated economic loss.
Defendant notes plaintiff fully compensated Mr. Mercogliano's for his medical expenses and lost wages, and further those amounts are neither collectible, nor paid by Mr. Mercogliano. Defendant maintains plaintiff cannot prove damages because the subrogor, Mercogliano did not sustain an uncompensated economic loss. Defendant argues plaintiff's concession to the applicability of the verbal threshold bars non-economic damages, and leaves economic damages only. To that end, the defendant again emphasizes that the plaintiff as subrogee stands in the shoes of Mr. Mercogliano.
Defendant maintains Mr. Mercogliano has not sustained an economic loss. Defendant notes the statutory language against double recovery, and distinguishes plaintiff's reliance on Lambert by claiming Lambert and its predecessors instead involved "conjoined" sources of reimbursement involving a settlement recovery from a third-party tortfeasor. Specifically, defendant claims that the Lambert case arose out of Lefkin v. Venturini, 229 N.J. Super. 1 (App. Div. 1988), which held, recovery of medical expenses is not prohibited by N.J.S.A. 39:6A-12 when recovery is "conjoined." In the instant case there is no conjoined recovery from the defendant tortfeasor to Mr. Mercogliano. LEGAL ANALYSIS
Rule 4:46-2(c) sets forth the showing that must be made for summary judgment motions:
The judgment or order sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law. An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact.
Summary judgment is authorized upon a showing that "there is no genuine issue as to any material fact." See Brill v. Guardian Life Insurance Co. of America, 142 N.J. 520 (1995). In determining whether a genuine issue of material fact exists, the New Jersey Supreme Court has provided the following test:
[T]he motion judge [must] consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party . . . are sufficient to permit a rational fact finder to resolve the alleged disputed issue in favor of the non-moving party.The parties here agree the facts are uncontested, and the issue is ripe for adjudication.
Brill, 142 N.J. at 523.
It is well settled a workers' compensation carrier may independently subrogate against a tortfeasor, even if the injured worker declines to bring suit against the tortfeasor. It is also well settled that a subrogor stands in the shoes of a subrogee, and has no rights to recover superior to its subrogee. Continental Ins., supra, 288 N.J. Super. at 190; Foster Estates, Inc. v. Wolek, 105 N.J. Super. 339, 341 (App. Div. 1969). It is also well established a person injured in connection with a motor vehicle accident against a tortfeasor who is insured under the AICRA statutory scheme, and who has selected the "lawsuit threshold," may not recover non-economic damages unless that person has sustained a permanent injury as defined by the statute and interpreted by case law. DiProspero v. Penn, 183 N.J. 477, 488 (2005); Serrano v. Serrano, 183 N.J. 508, 514 (2005).
The specific question raised by the competing summary judgment motions central to the resolution of the case at bar requires an analysis of the interplay between two statutory schemes: the WCA and AICRA. Appellate courts in this state have analyzed this subject and have discussed the interplay between these two statutes.
See, e.g., Aetna Cas. & Sur. Co. v. Para Mfg. Co. and Lefkin v. Venturini, finding the proper forum for a PIP carrier's claim for reimbursement of benefits from the injured person's workers' compensation carrier is the Division of Workers' Compensation. (Aetna Cas. & Sur. Co. v. Para Mfg. Co., 176 N.J. Super. 532, 536 (App. Div. 1980) ("The Division of Workers' Compensation is vested by statute with exclusive original jurisdiction of all claims for workers' compensation benefits."); Lefkin v. Venturini, 229 N.J. Super. 1, 12-14 (App. Div. 1988)). Due to the exclusive grant of jurisdiction over these issues, the determination by the Division of Workers' Compensation will be binding as to whether the claim was initiated by the insured worker, or the PIP carrier on the worker's behalf; Lambert v. Travelers Indem. Co. of America, 447 N.J. Super. 61, 71 (App. Div. 2016) ("The issues on these appeals turn on the interpretation of the interplay between AICRA and WCA."); Greene v. AIG Cas. Co., 433 N.J. Super. 59, 67 (App. Div. 2013) (" the interplay of the controlling statutes reflects a legislative intention to assure but a single recovery to the injured worker").
In New Jersey, an automobile accident victim subject to the verbal threshold cannot recover non-economic damages unless he or she satisfies one of the following six threshold categories under AICRA: (1) death; (2) dismemberment; (3) significant disfigurement or significant scarring; (4) displaced fractures; (5) loss of fetus; or (6) permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement. N.J.S.A. 39:6A-8(a). Proof of any of the above must be based on "objective clinical evidence." Id. Such evidence includes both "medical testing" and "valid diagnostic tests," so long as they are not "experimental in nature or dependent entirely upon subjective patient response." Id. Moreover, an injury will be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment. See N.J.S.A. 39:6A-8 (a).
Plaintiff in this case concedes it does not allege that its subject employee suffered from a permanent injury, instead it is seeking reimbursement of the workers' compensation benefits it paid as a result of the accident - contending these are merely economic losses. The defense accurately notes the economic loss was borne by the workers' compensation carrier, and not the injured person.
Both parties agree that N.J.S.A. 34:15-40(f) describes workers' compensation carrier's statutory subrogation rights:
(f) When an injured employee or his dependents fail within 1 year of the accident to either effect a settlement with the third person or his insurance carrier or institute proceedings for recovery of damages for his injuries and loss against the third person, the employer or his insurance carrier, 10 days after a written demand on the injured employee or his dependents, can either effect a settlement with the third person or his insurance carrier or institute
proceedings against the third person for the recovery of damages for the injuries and loss sustained by such injured employee or his dependents and any settlement made with the third person or his insurance carrier or proceedings had and taken by such employer or his insurance carrier against such third person, and such right of action shall be only for such right of action that the injured employee or his dependents would have had against the third person, and shall constitute a bar to any further claim or action by the injured employee or his dependents against the third person.
Defendant maintains plaintiff New Jersey Transit's rights as subrogee of David Mercogliano do not exceed those of the worker that received those benefits. The facts at issue are similar to those in Continental Ins., where the New Jersey Appellate Division stated clearly that the compensation carrier's rights rise no higher than the employee's rights to which it is subrogated. Continental Ins., supra, 288 N.J. Super. at 190.
Plaintiff, on the other hand, maintains that N.J.S.A. 34:15-40(f) allows plaintiff to recoup the workers' compensation benefits paid to its employee, and medical expenses. While Lambert allowed for recovery by the workers' compensation insurer versus an insured employee, that avenue of recovery is not without limits. In the lawsuits addressed by the Lambert court, the injured employees recovered damages as successful plaintiffs in their lawsuits against tortfeasors. In the case at bar, the injured employee cannot achieve success against the tortfeasor, and is not attempting to do so.
Plaintiff New Jersey Transit, concedes this action is solely for reimbursement of the benefits paid to the injured employee, Mercogliano, for an economic loss. N.J.S.A. 39:6A-2(k) defines economic damages as:
"Economic loss" means uncompensated loss of income or property, or other uncompensated expenses, including, but not limited to, medical expenses.Mercogliano has no uncompensated loss, as the workers' compensation carrier paid the entirety of his claims for medical expenses and lost income. The AICRA statute bars claims for compensated economic damages.
(Emphasis added.)
The consolidated appeals addressed in Lambert resolved troubling situations common to the trial courts. In Lambert, the court addressed the vexing problem faced by plaintiffs at trial when seeking damages for personal injuries in a motor vehicle accident which occurred while the plaintiff was in the course of employment. In these situations, plaintiffs had appropriately sought benefits from their workers' compensation for economic loss, particularly medical expenses, then sued the tortfeasor for non-economic loss, i.e., pain and suffering. When the tortfeasor was insured under an AICRA policy, the tortfeasor would successfully bar admission of medical bills at trial. The anomaly which would result was that the plaintiff - when successful - was obligated to reimburse the workers' compensation carrier for medical expenses incurred from the compensation awarded to the plaintiff for pain and suffering. In fact, during the typical automobile negligence trial, the court would instruct the jury to disregard any consideration of medical bills. Under that scenario, a theoretical plaintiff could recover $50,000 for pain and suffering and be obligated to reimburse the workers' compensation carrier up to the entire amount of the verdict on an asserted medical lien which was not considered by the jury.
The Lambert court discussed the three consolidated cases where plaintiff settled personal injury cases, and resisted payment of the medical lien. The trial court's analysis was since the above scenario was patently unfair to the injured party, the workers' compensation carrier should endure the dissipation of its lien. The motion judge, finding the analysis of an unpublished Appellate Division case persuasive, found 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 any recovery from the tortfeasor cannot include medical expenses paid by an insurer, including payments made by workers' compensation insurer. The motion judge further ruled that since the injured worker had no right to recover paid medical expenses from the tortfeasor, the workers' compensation carrier could not seek reimbursement of those medical expenses.
Dever v. New Jersey Mfrs. Ins. Co., 2013 N.J. Super. Unpub. LEXIS 2553, *4-5, 2013 WL 5730033 (App. Div. 2013).
In Lambert, the court held that because workers' compensation benefits were the primary source of recovery for injuries suffered by employees in a work related automobile accident, and PIP insurers are relieved from the obligation of paying medical expenses, any recovery obtained by employees from third-party tortfeasors, whether through trial or settlement, is subject to liens under the WCA. The court further held 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. After thorough review of the interplay between AICRA and the WCA, the Lambert court concluded that the collateral source rule did not make workers' compensation insurance part of the PIP no-fault system; rather it shifted the burden of providing insurance from the automobile insurance system to the workers' compensation system. Lambert, supra, 447 N.J. Super. at 73-74. The Lambert court concluded that there was a legislative policy determination that loses resulting from work related automobile accidents should be borne by the entity responsible for the losses, i.e. the tortfeasor. The court held that there is nothing in the legislative history of AICRA suggesting the Legislature sought to treat workers who were injured in a work related automobile accident as if they were limited by AICRA's no-fault system; nor did the Legislature intend to treat workers' compensation insurers as if they were PIP insurers.
On the other hand, in Lefkin, supra, 229 N.J. Super. at 12, Judge Pressler wrote:
As we have pointed out, N.J.S.A. 39:6A-6 places the primary obligation for the payment of benefits covered both by workers' compensation and PIP on the employer rather than the PIP carrier. This policy decision may be presumed to have been based on the legislative perception that in terms of societal distribution of the burden of loss resulting from automobile-accident injury, the primary cost of work-related injuries should continue to be borne by the ultimate consumers of goods and services in whose
production they are incurred. Thus, the automobile-owning public, whose insurance rates are proportionally related to the PIP claims experience of the insurance industry, is relieved of that portion of the overall burden. This policy decision is clearly implemented by according the workers' compensation court the essential responsibility for determining employee status for PIP purposes just as it has exclusive jurisdiction for determining it for workers' compensation purposes. N.J.S.A. 34:15-49.Although Judge Pressler's analysis specifically addressed the interplay between the PIP statute and the WCA, the commentary is analogous to the interplay here for reasons set forth below.
Plaintiff here argues the Lambert court "effectively overruled" Continental Ins., supra, 288 N.J. Super. 185. This court disagrees. The Lambert court did not cite or discuss the holding in Continental Ins. The Lambert court specifically held that when a worker is injured in the course of his/her employment in a motor vehicle accident, and workers' compensation benefits have been paid or are payable on behalf of the worker, and the worker successfully secures compensation from the tortfeasor, the right of the injured worker to pursue claims against the tortfeasor and the right of the workers' compensation carrier to be reimbursed are governed by the WCA and not AICRA.
The court in Continental Ins. held:
Defendant's liability is not affected by the fortuitous circumstance that plaintiff was entitled to workers' compensation benefits. The compensation carrier's rights rise no higher than the employee's rights to which it is subrogated.
288 N.J. Super. at 189-90 (emphasis added).
In this court's view, the holdings in Lambert and Continental Ins. are not inconsistent. The Lambert court upheld the right of the workers' compensation carrier to reimbursement of his lien when and if the injured worker pursues damages against the tortfeasor. Further, in light of the fundamentally unfair scenario described above, where an injured plaintiff would face the obligation of reimbursing a medical expense lien from the proceeds of a pain and suffering award, it is appropriate that the medical bills paid by the workers' compensation carrier be evidential at trial so that they may be appropriately compensated by the tortfeasor, even where the tortfeasor is insured under an automobile policy provided pursuant to the AICRA statutory scheme. That finding, however, does not logically give the workers' compensation carrier an independent right to subrogate against a tortfeasor who is insured pursuant to the AICRA scheme when the injured employee is unable to establish a cause of action against the tortfeasor.
The defendant here argues the Lambert decision is to be limited to situations where there are "conjoined" sources of reimbursement involving a settlement recovery from a tortfeasor, citing to Lefkin, supra, 229 N.J. Super. 1, as support. This court agrees with defendant's proposed result, but for different reasons. In the three (3) cases resolved within the Lambert opinion, all plaintiffs either were not restricted by the no-lawsuit threshold, or presumptively vaulted it. In other words, each of the three plaintiffs could prove a viable cause of action against the tortfeasor. In the three cases presented to the Lambert court in the consolidated appeal, the three plaintiffs were injured in the course of their employment by tortfeasors operating motor vehicles. Although the applicable no-fault threshold in each case was not discussed within the Lambert decision, two of the three effectively settled for policy limits available, and the third case settled for $60,000. The reasonable presumption is that all three cases were settled by the automobile liability carrier(s) on behalf of their insureds, due to the evaluation that the plaintiffs would be successful at trial on liability, and that the plaintiffs would successfully overcome any statutory restrictions on the right to sue for personal injuries. In these situations, it is appropriate that the lien on economic damages paid by the workers' compensation carrier is satisfied.
The Legislature's restrictions on the right to sue for personal injuries sustained in motor vehicle accidents reflects a public policy to be respected, as is the public policy reflected in legislation permitting subrogation of workers' compensation liens against tortfeasors. Clearly, however, the right of subrogation cannot be superior to the subrogee's right to sue. If it were, a workers' compensation carrier could seek reimbursement for its lien in other situations where there exists other statutory bars to recovery for personal injuries, such as the New Jersey Tort Claims Act, N.J.S.A. 59:1-1, or the Charitable Immunity Act, N.J.S.A. 2A:53A-7. If an injured employee is unable to successfully sue a public or charitable entity pursuant to statutory restrictions, the workers' compensation carrier who pays economic benefits cannot seek reimbursement for the same reasons.
The Legislature enacted AICRA as a multi-pronged approach aimed at achieving the goals of containing automobile insurance costs. DiProspero v. Penn, 183 N.J. 477, 485-88 (2005). --------
The three plaintiffs in the Lambert case were able to present proofs sufficient to overcome statutory restrictions on their right to sue, and were therefore required to reimburse their respective workers' compensation carriers. For that reason, the Lambert court has established that the economic payments which created the lien are admissible as evidence at trial, and ought to be considered during settlement negotiations. In the case at bar, the inability of the injured employee to overcome the statutory restriction of his right to sue bars this subrogation claim of the workers' compensation carrier who paid his economic losses. Plaintiff here cannot overcome the statutory restriction of the right to sue for non-economic damages, or the restriction on suits for compensated economic damages.
It is the public policy of the state to have injured persons secure prompt medical attention with assurances the bills will be paid if they are in the course of their employment or if they are involved in an automobile accident. If the injured person's no-fault carrier pays PIP benefits, it can seek reimbursement from the injured person's workers' compensation carrier once it is established the injured person was in the course of his or her employment when the accident occurred. See Aetna Cas. & Sur. Co. v. Para Mfg. Co., 176 N.J. Super. 532, 536 (App. Div. 1980). If plaintiff's view here were accepted, the workers' compensation carrier would pay the PIP carrier, and then seek reimbursement from the tortfeasor who is insured under an AICRA policy. The Legislature specifically sought to eliminate the expensive and complicated claims process by creating the "no-fault" automobile insurance statute in the first place. Said public policy, a significant underpinning to the automobile no-fault scheme, would be thwarted if the automobile PIP carriers secure reimbursement from the injured person's workers' compensation carrier, and then that workers' compensation carrier subrogates the economic loss against a motor vehicle tortfeasor who is part of the no-fault insurance system. Such a result would be contrary to a goal of AICRA, i.e. 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).
For the reasons set forth above, defendant summary judgment motion is granted, plaintiff's summary judgment motion is denied, and plaintiff's complaint is dismissed with prejudice.