Host Christian Sison welcomes guest Christoper Major to this episode of Third Fridays for a follow-up discussion on the Appellate Division and Supreme Court’s decision in Vitale v. Schering Plough containing an analysis of contracts of employment where an employee waives the right to pursue damages when injured by the acts of the employer’s client or customer. Continue reading Litigation waivers, Assumption of Risk, and the General-Special Employee: Third Friday Podcast
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.
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
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