Sullivan, Collester and Labrecque. The opinion of the court was delivered by Labrecque, J.A.D.
Plaintiff John F. Lahm, Jr. appeals from a final determination of the Division of Pensions in the Department of the Treasury (Division) holding that he was not eligible for accidental disability retirement.
On March 29, 1965 plaintiff, a custodian employed by the Verona Board of Education (board), fell from a stepladder, striking his back against a row of wooden auditorium chairs. Although he sought treatment that same day from
his family doctor, it was not discovered until April 6, 1965 that he had sustained a compression fracture of the lumbar vertebrae. His injury involved damage to the spinal cord and has resulted in permanent paraparesis (paralysis of the lower extremities). He subsequently filed a petition in the Division of Workmen's Compensation and was awarded a judgment on October 2, 1968 finding him totally and permanently disabled and awarding him 77 weeks of temporary disability at $45 a week and 450 weeks of permanent disability at the same rate. A rider attached to the judgment provided that payments were to continue beyond the 450-week period subject to such physical or educational rehabilitation as might be ordered by the Rehabilitation Commission. Liability for future medical expenses was also ordered.
Plaintiff also instituted a separate action for malpractice against the physician who had treated him following his fall. On October 3, 1969, during the course of trial, that case was settled for $85,000. On the same day an order was entered in the Division of Workmen's Compensation modifying the previous judgment to the extent that: (1) respondent board of education, through its carrier, agreed to be responsible for all authorized medical bills incurred by plaintiff up to October 3, 1969; (2) it agreed to waive its right to reimbursement under N.J.S.A. 34:15-40 for medical expenses and compensation benefits paid to that date (amounting to approximately $30,000), and (3) further payment of compensation benefits (including future medical expenses) was suspended "until a credit of $60,000 had been completely utilized by the petitioner at the rate of $45 per week in respect to compensation benefits and for the aggregate sum of any medical expenses incurred by him for treatment of causally related conditions." The order further provided that when and if plaintiff exhausted the $60,000 credit, the board and its carrier should "reassume liability" for compensation benefits and payment of medical expenses in the same manner as set forth in the original judgment dated October 2, 1968.
Thereafter, on December 4, 1969 plaintiff made application to the Teachers' Pension and Annuity Fund for accidental disability retirement on the ground that he had become totally and permanently disabled as the result of his accident. On February 2, 1970 he was advised by letter that his application could not be accepted because he was receiving workmen's compensation benefits and hence not eligible to apply for retirement until his workmen's compensation benefits had "terminated." At the same time the board was notified of its obligation to assume liability for the continued payment of his contributions to the Teachers' Pension and Annuity Fund. His request for a formal hearing was subsequently denied by the board of trustees and he appeals.
N.J.S.A. 18A:66-32.1, on which the Division based its denial of plaintiff's application, provides as follows:
a. If any member of the retirement system receives periodic benefits payable under the workmen's compensation law during the course of his active service, in lieu of his normal compensation, his regular salary deductions shall be paid to the retirement system by his employer. Such payments shall be computed at the full rate of contribution on the base salary subject to the retirement system, just prior to the receipt of the workmen's compensation benefits. The moneys paid by the employer shall be credited to the member's account in the annuity savings fund and shall be treated as employee contributions for all purposes. The employer will terminate the payment of these moneys when the periodic benefits payable under the workmen's compensation law are terminated.
The member for whom the employer is making such payments, will be considered as if he were in the active service and shall be permitted to continue to make contributions to purchase the additional death benefit coverage provided by section 18A:66-53.
b. No application for retirement benefits may be approved by the board of trustees while the member, applying for such benefits, is in receipt of periodic benefits under the workmen's compensation law. [Emphasis added]
N.J.S.A. 34:15-40, covering the right of employers and their carriers to reimbursement from third parties, ...