On appeal from Superior Court of New Jersey, Law Division, Hudson County, L-1825-01.
Before Judges Stern, Coburn and Collester.
The opinion of the court was delivered by: Coburn, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This is a common law action by medical providers for the reasonable value of medical services that were at issue in a workers' compensation case. It also includes a cross-claim by the compensation petitioner against the compensation respondent for indemnification with respect to the medical bills and for counsel fees in defending against the medical providers' action.
The primary issue is whether the petitioner in a workers' compensation action, which was settled without providing for the payment of medical bills, may be held accountable thereafter at common law by medical providers who failed to intervene in the workers' compensation action despite having received timely notice of its pendency. The other substantive issues are: whether the respondent in that compensation action may be held liable to the unpaid medical providers based on respondent's agreement to hold petitioner harmless from liability for the medical bills; and whether the hold-harmless agreement requires the respondent to reimburse petitioner for his legal fees in defending against the common law action. These issues were presented to the trial court on defense motions for summary judgment. The trial court denied the motions, and we granted the unsuccessful parties leave to appeal. We conclude that the common law action against the workers' compensation petitioner is barred because of the medical providers' failure to intervene, or file their own claim, in a timely manner in the compensation action; that the hold-harmless agreement provides no basis for the medical provider's action against the compensation respondent and its insurance representatives; and that the petitioner is entitled to reimbursement from the compensation respondent for his legal fees in defending this action.
Plaintiffs, University of Massachusetts Memorial Medical Center, Inc., and University of Massachusetts Group Practice, provided over $700,000 in medical services to Mario S. Christodoulou ("Mario") for injuries he sustained in a motor vehicle accident. After Mario died as a result of those injuries, his father, defendant Steve Christodoulou ("Steve") filed two petitions with the Division of Workers' Compensation (the "Division"). One petition sought benefits for Mario's estate, and the other sought benefits for Steve and his wife, Despina, as Mario's dependents. Mario was an unmarried adult, had no children or other possible dependents, and lived with his parents. Plaintiffs received timely notice of the petitions, but failed to intervene in the proceedings or file their own claim petition. The respondent in both cases was Mario's employer, defendant Auto Auction Land, Inc. ("Auto Auction"). Defendant Granite State Insurance Company ("Granite State") was Auto Auction's compensation insurer, and defendant AIG Claim Services, Inc. ("AIG"), was Granite State's claims administrator.
Faced with difficult issues respecting the viability of both compensation claims, the parties resolved their dispute by a settlement that made no provision for payment of plaintiffs' medical bills. Pursuant to the agreement, which was approved by the judge of compensation under N.J.S.A. 34:15-20, respondent agreed to pay $50,000 in a lump sum payment and to indemnify petitioner with respect to any future claim for the medical bills. The terms of the indemnity agreement were set out in the following manner in the settlement proceeding. Petitioner's attorney asked petitioner this question: "As part of the settlement I've told you that should any doctor or hospital come against you or as a result of any of the injuries sustained by your son, the insurance company will protect you, do you understand that?" (Emphasis added). He replied, "I understand." Respondent's attorney then engaged in the following examination of Steve.
Q: Do you understand that by accepting this settlement that the case is closed forever and neither you nor anyone else from your family can come back into court to try to seek additional monies from Auto Auction Land?
Q: You also understand that in the event that there is a claim against you for hospital bills, the insurance company will protect you in this matter?
A: Yes I understand. [Emphasis added.]
This agreement was reflected in the order approving the settlement in the following manner: "Respondent will hold petitioner harmless for any medical or hospital bill arising out of the accident . . . ." Although Despina did not actively participate in the compensation proceedings, it was ...