Young, J.c.c., Temporarily Assigned.
[153 NJSuper Page 587] The disposition of motions by both parties calls for an interpretation of the term "covered claim" as that term is used in the New Jersey
Property-Liability Insurance Guaranty Association Act, N.J.S.A. 17:30A-1, et seq. (hereinafter Guaranty Association Act.) The motions also present for determination the effect of certain provisions of the Guaranty Association Act upon the distribution of the proceeds of a settlement entered into between a plaintiff and a defendant third-party tortfeasor who is represented by the Guaranty Association, when the plaintiff has previously recovered a worker's compensation award arising out of the same incident.
Plaintiff Anthony Arnone alleges that he sustained injuries while employed by Schiavone Construction Company on the Garden State Parkway April 22, 1974 as the result of the negligent operation of a motor vehicle by defendant Raphael J. Murphy. Plaintiff Laura Arnone asserts a per quod claim. At the time of the accident Murphy carried automobile liability coverage issued by Gateway Insurance Company, now in liquidation. The Guaranty Association undertook to defend Murphy. When the suit was reached for trial the attorneys advised the court that the case was settled for the policy limits of $15,000, subject to the terms of a "Stipulation of Dismissal" which are set out in the margin.*fn1
It appears that Arnone received a worker's compensation award comprising temporary compensation of $5,488, permanent compensation of $13,200 and medical expenses of $9,451, for a total of $28,039. On or about May 9, 1974 the Underwriters Adjusting Company, on behalf of its principal, Kansas City Fire and Marine Insurance Company, advised Murphy in writing, in compliance with provisions of the Workmen's [now Workers'] Compensation Act, N.J.S.A. 34:15-40, that the carrier expected to be reimbursed "out of any settlement which may be effected or any judgment entered" for any payments which it may make in the compensation proceedings.
The contentions of the parties and of the compensation carrier are here summarized. Counsel for the Guaranty Association, in moving for an order directing a return of the sum on deposit with the court, contends that the presence of
the worker's compensation lien takes plaintiff's claim out of the statutory category of a "covered claim" which, by definition, may not include any amounts due any reinsurer, or insurer as subrogation or otherwise. N.J.S.A. 17:30A-5(d). Counsel projects that legal premise to support the proposition that any plaintiff who has previously recovered a worker's compensation award would thereafter be barred from recovering, either in settlement or judgment, against a tortfeasor whose liability insurance was issued by an insurer now represented by the Guaranty Association. In effect, recovery against the third-party tortfeasor would be barred in such instances.
Plaintiffs have also filed a motion for an order to direct the Clerk of the Superior Court to pay to them the funds on deposit. In his affidavit plaintiffs' counsel represents that he does not intend to remit any of the proceeds of the settlement to any insurance company as subrogation or otherwise, "unless mandated by law." Moreover, counsel argues that nothing in the applicable statute would preclude him from earning a counsel fee in his third-party action.
Counsel for the compensation carrier was permitted, without objection from the parties, to argue and to present a memorandum of law. The compensation carrier argues that the motion of the Guaranty Association comes too late, pointing to the fact that payment has already been made to the registry of the court so that whatever happens to the money is no longer of concern to the Guaranty Association. Additionally, the compensation carrier distinguishes a "lien" from a "claim," and concludes that Arnone asserts a valid claim under the statute, notwithstanding the fact that the compensation carrier is holder of a lien conferred by the Worker's Compensation Act, N.J.S.A. 34:15-40, which may or may not be enforced or compromised.
What counsel for the Guaranty Association is asking this court to declare is that a third-party tortfeasor may avoid his liability entirely ...