Gaulkin, Collester and Labrecque. The opinion of the court was delivered by Labrecque, J.A.D.
The Commissioner of the Department of Labor and Industry (Commissioner), as trustee of the Two Per Cent Fund, also known as the Second Injury Fund (Fund), appeals from a judgment of the Essex County Court denying the Fund credit, in its computation of the benefits due petitioner James A. Bello, for monies received in settlement of his third-party claim.
In July 1959 Bello filed a petition in the Division of Workmen's Compensation against his employer, Goodyear Tire and Rubber Company, claiming compensation benefits for
disability sustained by reason of his having contracted an occupational disease and developed systemic poisoning due to the inhalation and ingestion of harmful dusts and gases. On October 24, 1961 a stipulation was entered providing for payment by Goodyear of a sum equal to 25% of partial permanent disability, or 137 1/2 weeks at $35 per week, totalling $4,812.50 for petitioner's work connected injuries.
Thereafter petitioner obtained a third-party recovery (by way of a settlement) against Public Service Coordinated Transport in the sum of $30,000. Following this the petition in the Division of Workmen's Compensation was amended to include a claim for benefits under the One Per Cent (now Two Per Cent) Fund. N.J.S.A. 34:15-95.1. The judge of compensation found that petitioner had suffered a toxic encephalopathy as the result of inhaling harmful fumes and gases while on the job, by reason of which he was permanently disabled to the extent of 75% total. The permanent disability was found to be neurological and neuropsychiatric in nature. He further found that petitioner, prior to his employment with respondent, had been disabled to the extent of 25% of total permanent by reason of a number of noncompensable preexisting pathological conditions, including a respiratory condition in the nature of a chronic bronchitis and cardiovascular disability in the nature of arteriosclerotic heart disease with coronary insufficiency. Petitioner was found to be totally and permanently disabled as a result of the combination of the two and was awarded $13,500 for his 75% work connected disability, on account of which his employer was held to be entitled to a credit on the basis of petitioner's third-party recovery.
On the issue of whether the Fund was also entitled to credit out of the third-party recovery, the judge of compensation, in an advisory report to the Commissioner, held that it was and recommended that the benefits allowed Bello from the fund be restricted to $13.33 per week until such time as the balance of the third-party award was expended, and thereafter be increased to the full rate of $40 per week.
When, despite Bello's exceptions, these recommendations were adopted by the Commissioner, petitioner appealed to the County Court where the Commissioner's action was reversed. The present appeal followed.
The issue is one of novel impression. Decisions of our sister states are at variance. See Cole v. Morris , 409 S.W. 2 d 668 (Mo. Sup. Ct. 1966) (holding Missouri's Second Injury Fund entitled to be subrogated to the workman's right to recover in the third-party action). Compare Orth v. Shiely Petter Crushed Stone Company , 253 Minn. 142, 91 N.W. 2 d 463 (Sup. Ct. 1958) (denying subrogation to special compensation fund in the absence of specific statutory authorization).
N.J.S.A. 34:15-40 preserves the right of an employee to sue a third-party tortfeasor, notwithstanding that the injuries for which he seeks recovery are also compensable. It provides, however, that:
"(a) The obligation of the employer or his insurance carrier under this statute to make compensation payments shall continue under the payment, if any, by such third person or his insurance carrier is made.
(b) If the sum recovered by the employee or his dependents from the third person or his insurance carrier is equivalent to or greater than the liability of the employer or his insurance carrier under this statute, the employer or his insurance carrier shall be released from such liability and shall be entitled to be reimbursed, as hereinafter provided, for the medical expenses incurred and compensation payments theretofore paid to the injured employee or his dependents less employee's expenses of suit and attorney's fee as hereinafter defined.
(c) If the sum recovered by the employee or his dependents as aforesaid is less than the liability of the employer or his insurance carrier under this statute, the employer or his insurance carrier shall be liable for the difference, plus the employee's expenses of suit and attorney's fee as hereinafter defined, and shall be entitled to be reimbursed, as hereinafter provided for so much of the medical expenses incurred and compensation payments theretofore paid to the injured employee or his dependents as exceeds the amount of such difference plus such employee's expenses of suit and attorney's fee."
In the event that the employee fails to bring a third-party action within one year of the accident, his employer or its
insurance carrier may do so under certain conditions. L. 1931, c. 279, now N.J.S.A. 34:15-40 (f).
Benefits under the One Per Cent Fund were first made available by L. 1923, c. 81. At the time of the occurrence of Bello's work-connected disability the statute as amended, N.J.S.A. 34:15-95, provided for payment of benefits out of the Fund to "persons totally disabled, as a result of experiencing a subsequent permanent injury under conditions entitling such persons to compensation therefor, when such persons had previously been permanently and ...