Category Archives: Subrogation

Workers’ Compensation Carrier Entitled to Reimbursement from Third Party Action Net of Legal Fees

New Jersey’s Appellate Division clarified the longstanding right of a workers’ compensation carrier to recover monies paid for medical, lost time and permanent disability benefits form the proceeds of any third-party settlement obtained by the workers’ compensation petitioner in another action. In Liberty Mutual Insurance v. Rodriguez the Court ruled that the workers’ compensation is entitled to reimbursement net of actual legal fees paid and the statutory $750 in court costs (as per N.J.S.A. 34:15-40). In this case, where the claimant was awarded $1.2M in a civil action, pursuing the full recovery for the carrier resulted in excess of the “normal” 66% reimbursement because the plaintiff in the civil action has a “sliding scale” fee agreement with his civil attorneys.

The Sliding Scale Legal Fee

Rodriguez entered into an Agreement to Provide Legal Services in 2002 that provided the law firm would receive a fee, under the 2012 version of Rule 1:21-7(c), as follows:

  1. 33.33% of the first $500,000 recovered;
  2. 30% on the next $500,000 recovered;
  3. 25% on the next $500,000 recovered;
  4. 20% on the next $500,000 recovered; and
  5. on all amounts recovered in excess of the above by application for a reasonable fee in accordance with the provisions of paragraph (f) hereof.

A settlement was achieved on behalf of Rodriguez with the tortfeasor for $1.2 million dollars. The parties stipulated that Rodriguez’s workers’ compensation benefits totaled $148,590.40.2

The Right of the Carrier to Recovery.

The workers’ compensation carrier asserted its rights to reimbursement of its lien under N.J.S.A. 34:15-40(b) (Section 40) from the third-party settlement. Section 40 makes clear that the remedies provided the employee by the workers’ compensation laws do not preclude an employee from pursuing damages from a tortfeasor, referred to in Section 40 as the “third person”:

In the event that the employee or his dependents shall recover and be paid from the said third person or his insurance carrier, any sum in release or in judgment on account of his or its liability to the injured employee or his dependents, the liability of the employer under this statute thereupon shall be only such as is hereinafter in this section provided.

So, What Was the Fee Actually paid?

All parties admitted that the plaintiff in the civil (third-party) action agreed to a “sliding scale” fee. It was indisputable that the fee actually earned by the plaintiff’s attorney was less than 33.33% of the total amount recovered. To calculate the fee, the court was presented with he following calculation: in the third-party action, the law firm was entitled to 33.33% of the first $500,000 recovered, or $166,666.67; 30% of the next $500,000 recovered, or $150,000; and 25% of the remaining $200,000 recovered, or $50,000, for a total fee of $366,666.67.

The third-party counsel fee equaled 30.56% of Rodriguez’s $1.2 million settlement.

The Takeaway: Get the Civil Attorneys’ Fee Agreement!

In a decision issued April 2, 2019, the Appellate Court ruled that the claimant was entitled to keep 69.44% of his $1.2M award and had to remit 69.44% to the workers’ compensation carrier. This demonstrates that the workers’ compensation carrier can recover MORE than 66% of a third party settlement where a fee agreement or actual fees are less than the “normal” one-third (1/3rd) attorneys’ fee. Kudos to the workers’ compensation carrier for requesting the actual fee calculation used by the plaintiffs in the civil action and demanding that they be reimbursed for all amounts due to the carrier.

New Case Decision: New Jersey Workers’ Compensation Carriers Can Subrogate Minor Injuries Even Where Petitioner Could Not

In a decision released December 4, 2018, a New Jersey appeals court ruled that a workers’ compensation carrier can sue the tortfeasor in an auto accident case even though petitioner, who wasn’t permanently injured, could not. This decision will be of interest to all workers’ compensation carriers in New Jersey. Continue reading New Case Decision: New Jersey Workers’ Compensation Carriers Can Subrogate Minor Injuries Even Where Petitioner Could Not

Video: Maximizing Recovery via Reimbursement and Subrogation Under New Jersey Section 40

Attorneys Christopher Major and Greg Lois present a webinar on carrier recovery through reimbursement and subrogation under New Jersey’s Section 40 (N.J.S.A. 34:15-40). They discuss the impact of recent cases, such as the December 11, 2017 Supreme Court decision in Vitale v. Schering Plough and the November 22, 2017 Appellate Decision in Pino v. Polanco. The attorneys discuss reimbursement to the carrier/employer from the proceeds of civil actions as well as tactics for maximizing recovery – including practical negotiation tips for dealing with plaintiff’s attorneys who always demand a lien reduction to “1/3rd.”

Subject: New Jersey, Workers’ Compensation Law, Exposure, Permanency, MMI
Date Presented: December 26, 2017
Presenter(s): Christopher Major and Greg Lois
Run time: 29:42

Continue reading Video: Maximizing Recovery via Reimbursement and Subrogation Under New Jersey Section 40

Video: Section 29 Reimbursement, Lien recovery, and Subrogation in New York

Attorneys Christopher Major and Glenn Johnston lead a presentation on Section 29 reimbursement and subrogation in New York workers’ compensation claims. The attorneys discuss reimbursement to the carrier/employer from the proceeds of civil actions as well as tactics for maximizing recovery – including negotiation tips for dealing with plaintiff’s attorneys who always demand a lien reduction to “1/3rd.”

Subject: New York, Workers’ Compensation Law, LWEC, Permanency, Exposure
Date Presented: December 18, 2017
Presenter(s): Christopher Major and Glenn Johnston
Run time: 22:51


Continue reading Video: Section 29 Reimbursement, Lien recovery, and Subrogation in New York

No Double Recovery: Don’t Accept “One Third Each”

When seeking reimbursement on behalf of a carrier or employer under New York Workers’ Compensation Law Section 29 (“Section 29”) or N.J.S.A. 34:15-40 (“Section 40”) a particular scenario arises all too frequently: one of the other parties asking that the reimbursement right be reduced by equal measure against all parties; the “one-third, one-thirds one-third” offer. The carrier does not have to accept this reimbursement offer and in many cases should not!

At the most simplified level there are three prospective recipients of any settlement value in a civil case that involves a Section 29 or Section 40 lien: the claimant/petitioner, the third-party plaintiff’s attorney and the employer or workers’ compensation carrier. In this basic three-party structure, an even split of the settlement proceeds in to thirds would seem to make logical sense. In fact, the third-party plaintiff’s attorney will frequently assert that this is the “norm,” and that this is how “every case” ultimately resolves. They will also usually proffer some rationale as to why the Section 29 or Section 40 lien should be compromised, typically regarding issues with liability and allegedly poor chances of success at trial. Essentially, their argument is that some reimbursement is better than no reimbursement, and therefore the lien should be compromised to induce the claimant/petitioner’s consent to settlement. When it comes to such arguments, however, it is vital to keep in mind the legislative intent behind Section 29 and Section 40 and the protection the courts give that intent.

Continue reading No Double Recovery: Don’t Accept “One Third Each”