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Portnoff v. New Jersey Manufacturers Insurance Co.

April 25, 2007


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, L-4684-03.

The opinion of the court was delivered by: Lisa, J.A.D.



Argued December 5, 2006

Before Judges Skillman, Lisa and Holston, Jr.

This appeal requires our determination of whether the collateral source rule, N.J.S.A. 39:6A-6, in the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35, authorizes a setoff against income continuation benefits, see N.J.S.A. 39:6A-4b, for workers' compensation total permanent disability benefits, see N.J.S.A. 34:15-12b. The trial judge found no right to the setoff and granted summary judgment in plaintiff's favor against his auto insurance carrier, New Jersey Manufacturers Insurance Company (NJM). We disagree and reverse.

The facts are undisputed. While in the course of his employment, plaintiff, an attorney earning more than $1,400 per week, was injured in an automobile accident. Plaintiff's injuries caused him to be totally and permanently disabled, and have prevented him from working since the accident. Plaintiff maintained an automobile insurance policy with NJM at the time of the accident. The policy provided for additional personal injury protection (PIP) benefits, see N.J.S.A. 39:6A-10, including income continuation benefits of $700 per week for unlimited weeks. Plaintiff initiated a workers' compensation action. He was awarded twenty-six weeks of temporary disability benefits at the rate of $568 per week, and, because he was found totally and permanently disabled, he was awarded 450 weeks of total permanent disability benefits at the rate of $568 per week, commencing immediately upon conclusion of the twenty-six week temporary disability award.*fn1

Plaintiff was receiving his workers' compensation benefits. However, NJM refused to pay any income continuation benefits, prompting plaintiff's filing of this suit to collect those benefits. The parties filed cross-motions for summary judgment. Plaintiff demanded payment of the $700 per week benefit from the time of the accident.

Plaintiff conceded that NJM was entitled to a setoff of $568 per week for the twenty-six weeks he received temporary disability compensation benefits. Plaintiff thus acknowledged that the two benefits represented compensation for the same loss, namely current wage loss, triggering the applicability of the collateral source rule with respect to temporary disability compensation benefits. The judge agreed and allowed the setoff, ordering NJM to pay plaintiff $132 per week for the first twenty-six weeks following the accident, plus interest.

With respect to plaintiff's total permanent disability compensation award, however, the judge agreed with plaintiff and found no right to a setoff. The judge relied on our statement in Olivero v. New Jersey Manufacturers Insurance Company, 227 N.J. Super. 367, 381 (App. Div. 1988), certif. denied, 115 N.J. 76 (1989), that "[t]here is no doubt that an award for permanent disability under the Workers' Compensation Act represents compensation for the employee's physical impairment to carry on the ordinary pursuits of life and not loss of income[.]" The panel cited as authority for that proposition Perez v. Pantasote, Inc., 95 N.J. 105, 111 (1984). Ibid. As we will discuss, the cited proposition traces its lineage to cases dealing with partial, not total, permanent compensation disability benefits. Applying that principle in this case, the judge reasoned that the collateral source rule did not apply because "income continuation benefits versus an award of permanent disability are two separate[,] discrete and disparate remedies."

The judge ordered NJM to pay the full $700 per week beginning with the twenty-seventh week after the accident. He ordered NJM to pay the accrued income continuation benefits with interest, and to continue paying plaintiff $700 per week without setoff for workers' compensation benefits until the parties otherwise agreed or the court otherwise ordered. The judge also awarded counsel fees to plaintiff's attorney.

NJM appeals, arguing that the total permanent disability compensation benefits plaintiff is receiving are coextensive with income continuation benefits, and the trial judge erred in refusing to apply the collateral source rule and grant NJM a setoff.*fn2 We agree with NJM.

Basic income continuation benefits under PIP are defined as follows:

The payment of the loss of income of an income producer as a result of bodily injury disability, subject to a maximum weekly payment of $100. Such sum shall be payable during the life of the injured person and shall be subject to an amount or limit of $5,200, on account of injury to any one person in any one accident, except that in no case shall income continuation benefits exceed the ...

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