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Kramer v. Sony Corp.

Decided: May 6, 1985.


On appeal from the Division of Workers' Compensation, Department of Labor.

Morton I. Greenberg, O'Brien and Gaynor. The opinion of the court was delivered by Morton I. Greenberg, P.J.A.D.


[201 NJSuper Page 315] This matter comes on before this court on appeal from an order of September 4, 1984 of the Division of Workers' Compensation requiring that respondent Sony Corporation*fn1 pay workers' compensation death benefits of $199 per week for 450 weeks or $89,550 less a credit for payments previously made. The order followed a hearing of July 30, 1984 at which Judge of Compensation William D. Hill held that respondent was not entitled to a credit by reason of a settlement petitioner received in a third-party action. Respondent does not question its basic

liability for compensation benefits and thus the only issue raised here relates to the effect of the settlement of the third-party action.

The facts are not in dispute. Petitioner's decedent while employed by respondent was killed in an automobile accident arising out of and in the course of his employment. As a result respondent's insurance carrier, Great American Insurance Company, voluntarily began paying dependency benefits to his widow, the petitioner. Petitioner instituted a third-party wrongful death and survivorship action against the owner of the other vehicle in the accident, the Township of Voorhees, and its employee, Charles Thomas Jack, who was operating the vehicle. The township and its employee were insured for the claim and defended by Underwriters Adjusting Company, which settled the third-party action for $400,000, divided $395,000 for the wrongful death and $5,000 for the survivorship claim. When the third-party action was settled the parties to it were aware of the ongoing compensation payments. In recognition of them the following provision was included in the release delivered by petitioner as general administratrix and administratrix ad prosequendum:

In the event that Great American Insurance Co., Worker's Compensation carrier for Sony Corporation, attempts to withhold payment of further compensation, or attempts to recover any compensation payments previously made to Marsha Kramer upon the ground that the settlement herein has relieved the compensation carrier from further payments or that said compensation carrier is entitled to reimbursement for the benefits paid, then Underwriters Adjusting Company, on behalf of the Township of Voorhees and Charles Thomas Jack, shall defend any such claim brought by the compensation carrier or it shall institute an appropriate action to compel continued compensation payments; and if the compensation carrier is successful in obtaining reimbursement or in being relieved of further payments of compensation because of the settlement herein, then Underwriters Adjusting Company shall make such compensation payments as would have been made by the compensation carrier.

If the Worker's Compensation carrier discontinues payments to the Releasor because of the settlement herein, written notice shall be given to Underwriters Adjusting Company who shall make such payments as the compensation carrier would have made and the Releasor shall and does hereby assign her right of

recovery from the Worker's Compensation carrier to Underwriters Adjusting Company to the extent of payments so made.

Following the third-party settlement respondent discontinued paying compensation to petitioner. Consequently Underwriters filed a motion in the Division of Workers' Compensation seeking an order compelling respondent to continue making the dependency claim benefits. This motion was considered on July 30, 1984. At that time Judge Hill in an oral opinion held that it was the policy of the New Jersey Torts Claims Act, N.J.S.A. 59:1-1 et seq., to relieve the municipality of the burden of the loss from claims and this end would be furthered by precluding respondent from bringing a subrogation claim for its compensation payments. It thus followed that respondent's liability for compensation payments was not discharged. In the judge's view the fact that the third-party settlement was paid by an insurance carrier rather than the defendants themselves would not matter. The order of September 4, 1984 and this appeal followed.

We are required on this appeal to harmonize N.J.S.A. 34:15-40, a provision of the workers' compensation act, and N.J.S.A. 59:9-2(e), a provision of the tort claims act. Each of these sections seeks to shift the burden of loss compensable under the liability plan established in the respective acts to other parties. N.J.S.A. 34:15-40 provides that a third party shall not be relieved of liability to an injured employee or his dependents because the employee or his dependents have a right to compensation under the workers' compensation act. However, subject to provisions for division of the expenses of the third-party action, the employer or its insurance carrier is to obtain the benefit of the third-party recovery to the extent that it has paid or is liable for compensation payments. See Rivera v. Metropolitan Maintenance Co., 197 N.J. Super. 629, 636 (App.Div.1984). Thus a loss which would in the absence of a liability claim be allocated to an employer is shifted to a third party.

N.J.S.A. 59:9-2(e) provides as follows:

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