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Chubb Group on Behalf of Conrad v. Trenton Bd. of Educ.

August 7, 1997

CHUBB GROUP ON BEHALF OF GEORGE AND MARIE CONRAD, PETITIONER-APPELLANT,
v.
TRENTON BOARD OF EDUCATION, RESPONDENT-RESPONDENT.



On appeal from Division of Workers' Compensation.

Approved for Publication August 7, 1997.

Before Judges Kestin and Eichen. The opinion of the court was delivered by Eichen, J.A.D.

The opinion of the court was delivered by: Eichen

The opinion of the court was delivered by

EICHEN, J.A.D.

The question presented by this appeal is whether a personal injury protection (PIP) carrier's right to seek reimbursement in the Workers' Compensation Division for medical benefits paid for its minor insureds is extinguished by the minors' decision to file a common-law tort action for damages against their employer. We conclude the PIP carrier's right is not extinguished under such circumstances.

Petitioner Chubb Group (Chubb) appeals from the entry of an order by the Division of Workers' Compensation (the Division) denying its claim for reimbursement for PIP medical benefits in excess of $29,000. The benefits were paid on behalf of petitioner's insureds, minors Marie and George Conrad, Jr., on account of injuries they sustained in a single car accident on July 8, 1992 which occurred while they were acting within the scope of their employment for the respondent, the Trenton Board of Education. *fn1 The minors had PIP coverage under their parents' automobile policy.

On July 8, 1994, Chubb filed a claim petition with the Division seeking reimbursement for the medical expenses paid on behalf of the minors. Respondent denied liability because George and Marie, as minors, had chosen to exercise their statutory right of election and pursue a common-law tort action against respondent, N.J.S.A. 34:15-10 (preserving a minor's right "to recover damages in a common law or other appropriate action or proceeding for injuries received by reason of the negligence of his or her master"), rather than pursue a workers' compensation remedy.

The matter was heard by a workers' compensation Judge who, following oral argument, ruled in favor of respondent and dismissed the petition. The Judge determined that "where an employee ... affirmatively files in the Superior Court and invokes the jurisdiction of the Superior Court, there isn't any possible workers' compensation action that can be brought." The Judge also concluded that policy reasons and issues of fairness preclude the imposition of an unanticipated monetary burden upon workers' compensation carriers where injured employees are treated by medical providers who are not selected by the workers' compensation carrier. The Judge reasoned that neither the employer nor the workers' compensation carrier should have to absorb the cost of reimbursing the PIP carrier for unauthorized medical treatment, while facing the possibility of a substantial award in the personal injury action against the employer. Thus, the Judge concluded that permitting a PIP carrier to recover costs in the workers' compensation system "undermines the financial soundness of the ... system ... that results from control of the provision for treatment by employers and their carriers." Accordingly, the Judge concluded that he lacked jurisdiction over the petition. We disagree and reverse.

Although we afford substantial deference to an administrative agency's interpretation of a statute, we are not bound by that interpretation or the agency's determination of a strictly legal issue, which we conclude this case presents. Goodman v. Board of Review, 245 N.J. Super. 551, 556 (App. Div. 1991) (citing Mayflower Securities v. Bureau of Securities, 64 N.J. 85, 312 A.2d 497 (1973)). Construction of a statute is a judicial, not an executive function. Service Armament Co. v. Hyland, 70 N.J. 550, 561, 362 A.2d 13 (1976). And when the interpretation is clearly contrary to the plain meaning of the statute, we must override it. Philadelphia Outdoor v. New Jersey Expressway Authority, 221 N.J. Super. 207, 534 A.2d 77, appeal dismissed, 114 N.J. 470, 555 A.2d 598 (1987).

An insurer must make payment of PIP benefits to an eligible injured insured within sixty days of receipt of a written notice of loss. N.J.S.A. 39:6A-6. Indeed, even though the injured insured is also entitled to receive workers' compensation benefits because the injury arose out of a work-related, compensable accident, the PIP carrier is required to pay all reasonable and necessary benefits promptly when due, subject, however, to its right of reimbursement. Olivero by Olivero v. New Jersey Mfrs. Ins., Co., 199 N.J. Super. 191, 198, 488 A.2d 1071 (App. Div. 1985), certif. denied, 115 N.J. 76 (1989); Aetna Cas. & Sur. Co. v. Para Mfg. Co., 176 N.J. Super. 532, 535, 424 A.2d 423 (App. Div. 1980). That is, the PIP carrier has "a right to a deduction [of] benefits collectible under compensation" which means it has a right to be reimbursed by the employer for all reasonable and necessary medical expenses paid on behalf of its automobile insured. Solimano v. Consolidated Mutual Ins. Co., 146 N.J. Super. 393, 401, 369 A.2d 1003 (Law Div. 1977) (emphasis added), approved in Aetna, (supra) , 176 N.J. Super. at 535-37. See also Hetherington v. Briarwood Coachlight, 253 N.J. Super. 484, 487-88, 602 A.2d 292 (App. Div. 1992). This right of deduction emanates from N.J.S.A. 39:6A-6, which provides that PIP benefits

shall be payable as loss accrues, upon written notice of such loss and without regard to collateral sources, except that benefits, collectible under workers' compensation insurance... shall be deducted from the benefits collectible under section 4 [PIP coverage] and section 10 [additional PIP coverage ]. (emphasis added).

A PIP carrier's right of reimbursement is not dependent, however, on an injured worker's diligence in seeking compensation in the Division. Indeed, "where ... an [injured] employee does not elect to pursue the remedies available in the Compensation Division," the PIP carrier still has the right "as subrogee[] of the injured employee[]" to seek "a determination of ... the amount of 'benefits collectible under workers' compensation insurance' for the purpose of computing the deduction authorized by N.J.S.A. 39:6A-6." Aetna, (supra) , 176 N.J. Super. at 537. Thus, the Compensation Division possesses jurisdiction to make that determination. Ibid. This principle is codified in N.J.S.A. 39:6A-6, which was amended in 1983 to provide the following:

If an insurer has paid [benefits pursuant to N.J.S.A. 39:6A-4 and 10] and the insured is entitled to, but has failed to apply for, workers' compensation benefits or employees' temporary disability benefits, the insurer may immediately apply to the provider of workers' compensation benefits or of employees' temporary disability benefits for a ...


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