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Appellate Division Provides Clarity: Medical Expenses Are Recoverable by Workers’ Compensation Carriers Under Section 40

September 1, 2016

The Appellate Division of the New Jersey Superior Court issued a published decision on August 24, 2016 confirming the right of workers’ compensation insurers to recover medical expenses from the proceeds of any recovery the worker obtains from a third-party tortfeasor under Section 40 of the New Jersey Workers’ Compensation Act. The decision in Lambert v. Travelers Indemnity Co. of America offers welcome clarity concerning reimbursement of medical payments under Section 40 (see No. A-1073-14T3, __ N.J. Super. __, __ (App. Div. 2016)).

Following the unpublished 2013 decision in Dever v. New Jersey Mfrs Ins. Co. No. A-3102-11T2 (App. Div. Oct. 23, 2013), claimants’ counsel have argued that respondents do not have a lien for medical bills paid in workers’ compensation from a compensable motor vehicle accident where the injured worker had personal injury protection (PIP) coverage. This was the exact argument advanced by the plaintiffs in the consolidated appeals in Lambert, and it was adopted by the trial judge. Relying on Dever, the trial judge held that an injured worker involved in a compensable motor vehicle accident is treated as a no-fault insured, and that N.J.S.A. 39:6A-12, part of the Automobile Insurance Cost Reduction Act, bars recovery of medical expenses paid by an insurer from the tortfeasor.

The Appellate Division rejected this interpretation, and instead held 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 a third-party tortfeasor and the right of the workers’ compensation insurer to be reimbursed are governed by the New Jersey Workers’ Compensation Act. Because workers’ compensation benefits are the primary source of recovery for employees in compensable motor vehicle accidents, and PIP insurers are relieved from the obligation to pay medical expenses, any recovery from third-party tortfeasors is lienable under Section 40. The workers’ compensation insurer thus has the right to be reimbursed for the appropriate portion of the medical expenses it has already paid under Section 40.

Lambert is the most recent in a string of decisions from the Appellate Division remedying the confusion that Dever brought to a long-settled area of law. The Section 40 lien remains a powerful tool created by the legislature to ensure that claimants do not collect twice for injuries arising out of the course and scope of their employment. 

For more information on the practical implications of this development, please contact:

September 1, 2016