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Montedoro v. City of Asbury Park

Decided: May 30, 1980.

ANTHONY MONTEDORO, PETITIONER-RESPONDENT,
v.
CITY OF ASBURY PARK, RESPONDENT-APPELLANT



On appeal from Division of Workers' Compensation.

Allcorn, Morgan and Francis. The opinion of the court was delivered by Morgan, J.A.D.

Morgan

In this appeal we must decide whether a worker's compensation lien, provided for by N.J.S.A. 34:15-40, attaches to the proceeds of an uninsured motorist's policy. The judge of compensation rejected the employer's carrier's lien claim. The employer appeals.

The relevant facts are not in dispute. The petitioner, a patrolman employed by appellant Asbury Park, was injured in a work-related automobile accident with an uninsured motorist. His claim filed against Asbury Park's uninsured motorist coverage (UMC) resulted, following arbitration, in an award of $14,500 exclusive of personal injury protection benefits. His claim petition seeking worker's compensation benefits for the same injuries resulted in a total compensation award of $2,750. It was during the worker's compensation hearing that the employer unsuccessfully asserted its lien against the UMC recovery in extinction of its adjudicated worker's compensation liability.

Walkowitz v. Royal Globe Ins. Co. , 149 N.J. Super. 442 (App.Div.1977), and Sweeney v. Hartford Acc. & Indem. Co. , 136 N.J. Super. 591 (Law Div. 1975), provided the principal predicate

for the judge's ruling in this case. Both cases invalidated, because of repugnancy to statute and public policy, those provisions of a statutorily prescribed UMC policy which attempted to diminish liability thereon by the amount of worker's compensation received by the insured for his injuries. Neither, however, dealt with the issue involved here, whether N.J.S.A. 34:15-40 invests the employer or his carrier with a compensation lien on an injured employee's right to recover on a UMC policy provided by his employer. The reason given in Walkowitz and Sweeney for invalidating the policy provisions crediting the carrier with the amount of worker's compensation received by the insured underscore the distinction between the two issues.

The compensation lien, however, created by N.J.S.A. 34:15-40, is not in violation of statute, and having been enforced for well over 60 years is hardly against public policy. It was adopted to prevent what had been previously occurring -- an injured employee retaining worker's compensation benefits while also retaining the fruits of a common law recovery in damages from the third-party tortfeasor responsible for the injuries for which the employee recovered worker's compensation. New Amsterdam Cas. Co. v. Popovich , 18 N.J. 218, 225-226 (1955). N.J.S.A. 34:15-40 first preserves an employee's right of action against "a third person . . . liable to the employee or his dependents for an injury or death . . .." The next portions, critical to this appeal, read as follows:

(b) If the sum recovered by the employee . . . 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 . .

for the medical expenses incurred and compensation payments theretofore paid to the injured employee . . ..

First, we note that, with one exception which we view as minor, the given facts fall precisely within the statutory language. A "third party" (uninsured motorist) has been found liable to the employee for the employee's injury and the sum recovered by the employee from the UM carrier is greater than that the worker's compensation to which he has been adjudicated entitled. The one distinction is that the third-party recovery was not from "the third person or his insurance carrier" but rather from the employer's insurance carrier whose responsibility is predicated on the liability of the third person, in this case an uninsured driver.

Notwithstanding this distinction, we view the demands of the situation we confront as requiring application of N.J.S.A. 34:15-40. UM coverage was adopted to provide to automobile accident victims of uninsured drivers the minimum amount of insurance coverage available to those fortuitously injured by negligent insured drivers. Thus, with the adoption of uninsured motorists' coverage on a mandatory basis, more persons than before are assured of having available to them, in case of accident, the minimum amount of insurance coverage, presently $15,000-$30,000, whether by an insured driver or by way of uninsured motorists' coverage. An employee injured in a worker-related automobile accident by an insured tortfeasor cannot, under N.J.S.A. 34:15-40, retain both worker's compensation benefits and the fruits of the common law damage action against a third-party tortfeasor. We have been unable to conceive of ...


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