N.J.S.A. 34:15-40 (“Section 40”) grants a right of reimbursement to workers’ compensation carriers. This reimbursement is to the extent of benefits paid to an injured worker should that injured worker file a third-party civil suit against the responsible tortfeasor. See N.J.S.A. 34:15-40. The limitations on this recovery are set forth in subsections (b) and (c) of Section 40, which both provide that any third-party recovery is reduced by the employee’s “expenses of suit” and the attorney’s fee. Subsection (e) goes on to define “expenses of suit” as an amount not to exceed $750.00 and the attorney’s fee as an amount not to exceed 1/3rd of the ultimate settlement proceeds.
While the language of the statute is plain on its face, there is confusion regarding the precise application of the aforementioned reductions. For instance, it is common knowledge that, in a typical civil suit settlement, disbursements come “off the top” of the settlement proceeds. Disbursements are, by their very nature, not part of the amount to be divided amongst the intended recipients. By way of illustration, assume a civil case settles for $100,000.00 and there are exactly $10,000.00 in disbursements. Under such a structure, the plaintiff’s attorney would receive $30,000.00 as their fee and the plaintiff would receive the remaining $60,000.00. Continue reading Properly Calculating Your Section 40 Reimbursement in New Jersey→
When an accident occurs outside the State of New York the $50,000.00 “carve-out” under New York Insurance Law §§ 5102 and 5104 does not apply to a Workers’ Compensation Law Section 29 lien.
The seminal case setting forth this bright-line rule is McHenry v. State Ins. Fund, 236 A.D.2d 89, 666 N.Y.S.2d 221 (3rd Dept. 1997). The Court in McHenry held that “absent an express statutory provision, a workers’ compensation carrier has the ‘inviolable’ right to a lien against the proceeds of ‘any recovery obtained by a compensation claimant in a third-party action.” Id. at 90-91 (citing Matter of Granger v. Urda, 44 N.Y.2d 91, 96 (1978)). The Court further stated that by the express terms of Insurance Law § 5104 itself the statute applies only to injuries stemming from the negligent operation of a motor vehicle in the State of New York. Id. at 91. Insurance Law § 5104(a) is not given “extraterritorial effect” even in situations where all parties are New York residents and the accident merely occurred in another state. Id. (citing Morgan v. Bisorni, 100 A.D.2d 956, 475 N.Y.S.2d 98 (1984)).
Here is the post-webinar video from our most recent presentation, “Liens and Subrogation in New York” from our New York workers’ compensation webinar training series. Christian Sison, Esq., and Greg Lois, Esq., discuss reimbursement and subrogation under Section 29 in New York workers compensation matters.
N.J.S.A. 34:15-40 (“Section 40”) governs the credit due a respondent for any third-party recovery by the petitioner and provides in part:
. . . out of that part of any amount about to be paid in release or in judgment by such third person or his insurance carrier on account of his or its liability to the injured employee or his dependents, the employer or his insurance carrier shall be entitled to receive from such third person or his insurance carrier so much thereof as may be due the employer or insurance carrier pursuant to subparagraph (b) or (c) of this section. Such sum shall be deducted by such third person or his insurance carrier from the sum to be paid in release or in judgment to the injured employee or his dependents and shall be paid by such third person or his insurance carrier to the employer or his insurance carrier. Service of notice, hereinbefore required to be made by the employer or his insurance carrier upon such third person or his insurance carrier, shall be by registered mail, return receipt and in cases other than an individual shall be mailed to the registered office of such other third person or his insurance carrier.
The Appellate Division has recently held that where an individual settles an intentional tort suit against an employer, the workers’ compensation carrier is entitled to assert its N.J.S.A. 34:15-40 lien with respect to the settlement amount. Specifically, the court found that the tort litigation is equivalent to a third party action and that without the lien the petitioner might receive a double recovery for the injuries.
How to assert a workers’ compensation lien under N.J.S.A. 34:15-40.
Serve notice upon the liable third person or that person’s insurance carrier that compensation has been applied for by the injured employee (or his dependents). As a practical matter, it is a good idea to serve a notice letter upon the plaintiff/worker, as well as the plaintiff’s attorney, usually the same attorney representing the worker in the compensation matter. Continue reading Reimbursement from Third-Party Recoveries in New Jersey→
The Workers’ Compensation “Bar” on Civil Exposure.
In New York, an employer’s liability for a work-related injury is generally limited to payment of wage loss (indemnity) and medical benefits under the Workers’ Compensation Law (WCL). The WCL prevents an injured worker from suing his employer for his work-related injury, except in cases where the worker sustained a grave injury. It would seem to make sense that a worker who sustained a grave injury would be able to recover more than just Workers’ Compensation benefits given the seriousness of his injury. However, in order for this to happen, there must be a third-party action, wherein a third-party tortfeasor is being sued, and this third-party tortfeasor seeks contribution or indemnification from the employer. Otherwise, if there is no third-party action, the worker cannot directly sue his employer, even if he sustained grave injuries. Continue reading Grave Injuries: When A New York Employee Can Recover From His Employer Outside of Workers’ Compensation→
Those familiar with subrogation, liens on third-party lawsuits, and Section 29 of the New York Workers’ Compensation Law may be able to recite the holdings of Matter of Kelly v. State Ins. Fund. and Burns v. Varrialeby heart. For a quick review, the Kelly case dealt with a widow whose husband had passed away in the course of employment. The Court of Appeals held that an insurance carrier’s equitable share of the litigation costs and disbursements incurred by a claimant must be apportioned based on the total benefit received. Inclusive in this total benefit is the relief obtained by the Workers’ Compensation carrier of its obligation to make future benefit payments to the claimant. However, and most importantly, the Court of Appeals noted that when the carrier’s future benefit is “speculative,” it would be inappropriate to apportion attorney’s fees based on such benefit.
The Burns case highlighted a situation where the future benefit is speculative. Unlike the situation in Kelly, when the death of the employee can result in a fixed rate payable to the dependent spouse, the Burns employee was awarded a reduced earnings weekly benefit, based on having sustained a permanent partial disability. Because the reduced earnings could fluctuate based on future wages earned by the employee, the Court of Appeals ruled that the Workers’ Compensation insurance carrier’s future benefit was indeed speculative. Therefore, the carrier was entitled to a reimbursement of its Section 29 lien, after deducting its pro-rated share of the employee’s third-party litigation costs and expenses. Continue reading New York Subrogation Case Law Upheld by Third Department→