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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.

Facts of New Jersey Transit v. Sanchez.

The accident in this case took place on December 14, 2015. A car owned by New Jersey Transit and driven by one of its employees, David Mercogliano, was struck by a car driven by Sandra Sanchez. The car driven by Sanchez was owned by Chad Smith. All of the parties had auto insurance and were compliant with AICRA (Automobile Insurance Cost Reduction Act). AICRA prohibits claims for non-economic damages when there is no personal injury.

The Workers’ Compensation case.

Because the NJ Transit car was operated during the course of business, the driver recovered benefits under the New Jersey Workers’ Compensation Act. This is because Workers’ Compensation Benefits are primary to automobile medical benefits (“PIP” or “Personal Injury Protection” health benefits). Driver David Mercogliano received a total of $33,625 under the Workers’ Compensation Act. This is despite the fact that his injuries were considered so minor that they would not result in any claims for non-economic damages under AICRA (in civil court). The worker’s compensation carrier paid $6,694 in medical bills, $3,922 in temporary disability benefits (wage replacement benefits), and $22,949 in permanent indemnity benefits.

Workers’ Compensation Carrier’s Action to Recover Payments.

The workers’ compensation carrier filed a subrogation claim against the tortfeasors in civil court (“Superior Court” in New Jersey terms). The trial judge granted summary judgment in favor of the tortfeasors, holding that AICRA bars the subrogation claim. The trial judge reasoned that because the Mercogliano suffered injuries so minor he (Mercogliano) could not have recovered for non-economic damages (pain and suffering) under AICRA, then the worker’s compensation carrier “stepping into the shoes of Mercogliano” could not recover the amounts it had paid out either.

Trial Court Decision Reversed.

The worker’s compensation carrier appealed the dismissal of the subrogation action. An appeals panel reversed, stating

“[w]e hold that in subrogation actions against tortfeasors, the reimbursement rights of the workers’ compensation carrier are governed by the Workers’ Compensation Act, not AICRA. Therefore, the workers’ compensation carrier is entitled to reimbursement from the negligent tortfeasor, even though the injured employee could not recover medical expenses and wage loss from his own automobile insurer or non-economic damages from the tortfeasor.”

Practical advice.

In this case decision the appeals court allowed a workers’ compensation carrier to pursue a claim for reimbursement in the shoes of a claimant where the claimant themselves would not have been successful. This enables carriers to subrogate nearly all workers’ compensation cases involving minor injury where payment was made in the workers’ compensation context and another tortfeasor may have been at fault, regardless of the minor nature of the injuries (which would have made the same suit by the injured worker impossible).

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New Jersey Workers’ Compensation Defense at Lois Law Firm

For more than 20 years we have represented insurance carriers, self-insured employers, third party claim administrators, and employers before New Jersey’s Division of Workers’ Compensation. Our founding partner, Greg Lois, is co-author of the LexisNexis “Practice Guide to Workers’ Compensation in New Jersey published by Matthew Bender (2017-2023, ISBN:9781663363053) and served as Law Clerk to Hon. Joan Mott, Administrative Supervisor of Workers Compensation.

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