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Hayes v. Pittsgrove Township Board of Education

Decided: January 4, 1994.

WALTER HAYES AND INEZ WEST INDIVIDUALLY, AND AS NATURAL GUARDIANS FOR ANGIE HAYES, A MINOR, PLAINTIFFS-RESPONDENTS,
v.
PITTSGROVE TOWNSHIP BOARD OF EDUCATION, DEFENDANT-RESPONDENT, AND DURAND GLASS MANUFACTURING CO., INC., DEFENDANT-APPELLANT



On appeal from the Superior Court of New Jersey, Law Division, Salem County.

Skillman, Bilder and Wefing. The opinion of the court was delivered by Wefing, J.s.c. (temporarily assigned).

Wefing

Is an employee's private health insurance plan entitled to seek reimbursement for the sums it expended for the medical care and treatment of an employee's minor daughter, when the reimbursement is sought from the settlement proceeds for that daughter's claim against a public entity for her injury? We are satisfied that it is not. We are further satisfied that in the context of this case that it may not seek such reimbursement directly from the employee. We thus affirm the result below.

Durand Glass Manufacturing Company, Inc. (Durand) appeals to this court from a declaratory judgment entered on November 6, 1992 in favor of the plaintiffs and the defendant Pittsgrove Township Board of Education (Board), which concluded that Durand had no right of subrogation in this matter.

Plaintiff Walter Hayes is an employee of Durand which maintains for its employees the Durand Glass Health and Welfare Plan (Plan). Walter Hayes's daughter Angie was injured in an accident on property owned by defendant Board. Walter Hayes and Inez West, his former wife, commenced this lawsuit to recover damages, suing the Board both individually, as Angie's parents, and as natural guardians for her benefit.

Angie Hayes required various forms of medical treatment for the injuries she received in the accident, and the Plan provided coverage to her father Walter Hayes for those medical expenses he incurred as a result. Thereafter, the Plan asserted a right to recoup the sums it had advanced for Angie's medical care and

treatment. It premised this alleged right on two theories: (1) that it had a claim of subrogation against the alleged tort feasor Board, and (2) that it had a contract with Walter Hayes for such reimbursement. The trial court concluded that the Plan was not entitled to be reimbursed for the payments it had made, either by way of subrogation or directly from Walter Hayes, and this appeal resulted.

The plaintiffs' claims against the Board of Education have been settled in the amount of $350,000 and a "friendly" has been held pursuant to R. 4:44-3 to approve the terms of that settlement. That judicial approval is reflected in an order dated December 18, 1992. The terms of the settlement are, however, specifically contingent upon the results of the instant appeal and the order of December 18, 1992 reflects that contingency.

Because the defendant Board is a public entity, the Plan's entitlement to pursue a claim of subrogation must be measured under the Tort Claims Act. N.J.S.A. 59:1-1 et seq. N.J.S.A. 59:9-2(e) provides:

If a claimant receives or is entitled to receive benefits for the injuries allegedly incurred from a policy or policies of insurance or any other source other than a joint tortfeasor, such benefits shall be disclosed to the court and the amount thereof which duplicates any benefit contained in the award shall be deducted from any award against a public entity or public employee recovered by such claimant; provided, however, that nothing in this provision shall be construed to limit the rights of a beneficiary under a life insurance policy. No insurer or other person shall be entitled to bring an action under a subrogation provision in an insurance contract against a public entity or public employee. (emphasis added)

Durand advances several arguments on this appeal. It goes to great lengths to argue that the Plan is not an insurance company, but rather a non-profit employee benefit plan. It contends that to bar the Plan from recovery in this instance would not advance the policies behind N.J.S.A. 59:9-2(e), since the public entity is, in fact, insured by a commercial insurance company. It further argues that the statute bars subrogation in an "insurance contract," and that the Plan is not an insurance contract but rather a ...


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