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Morella v. Grand Union Co.

SUPREME COURT OF NEW JERSEY


January 30, 2008

PATRICIA MORELLA, PETITIONER-RESPONDENT,
v.
GRAND UNION COMPANY/NEW JERSEY SELF-INSURERS GUARANTY ASSOCIATION, RESPONDENT-APPELLANT.

On certification to the Superior Court, Appellate Division, whose opinion is reported at 391 N.J. Super. 231 (2007).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

(NOTE: This Court wrote no full opinion in this case. Rather, the Court's affirmance of the judgment of the Appellate Division is based substantially on the reasons expressed in Judge Gilroy's opinion below.)

On January 26, 1991, Patricia Morella injured herself while in the course and scope of her employment with Grand Union, a self-insured employer for workers' compensation claims. On August 4, 1992, Morella filed her claim petition alleging orthopedic, neurological, psychiatric and internal injuries. On June 30, 1997, Morella filed an amended petition to join the Second Injury Fund, pursuant to N.J.S.A. 34:15-95. After commencement of trial, Morella and Grand Union entered into a consent order approving settlement. Morella and the Second Injury Fund also entered into a consent order entitling Morella to Second Injury Fund benefits. On December 11, 1998, the Division of Workers' Compensation (Division) entered an order approving a settlement declaring Morella totally and permanently disabled and assessing 65% of her total disability against Grand Union. The order also determined Grand Union liable for $1,355.01 in prescription costs and for future monthly prescription costs of approximately $220 per month. On June 8, 1999, the Division entered a decision determining Morella eligible for Second Injury Fund benefits.

In the interim, on June 24, 1998, Grand Union filed a Chapter 11 bankruptcy petition. Petitioner never received notice of the need to file a proof of claim in the bankruptcy action, but was advised by Grand Union's attorney that it was not necessary. As such, the order approving the settlement was entered without petitioner seeking relief from the automatic stay of the bankruptcy court, and Grand Union continued making total disability payments until August 7, 1999. Following the filing of a second Chapter 11 bankruptcy petition and dismissal of the first, an order was entered in the bankruptcy action confirming Grand Union's Chapter 11 Plan of Liquidation.

In January 2004, the case was placed on the Division's list to be handled by the New Jersey Self-Insurers Guaranty Association (Association). On June 3, 2004, Morella filed a claim with the Association. On June 21, 2004, the Association denied the claim. Morella then moved to compel payment of her prescription costs. The Association opposed the motion, asserting that the Division lacked jurisdiction to adjudicate the claim, and in the alternative, that an employee injured prior to the employer's bankruptcy was required by N.J.S.A. 34:15-120.18a to file a proof of claim with the bankruptcy court as a condition precedent to receipt of compensation payments from the Association.

On July 20, 2005, Compensation Judge Karch entered a decision and order determining that Morella was entitled to payments for past and future prescription expenses relating to her accident. On August 24, 2005, Judge Karch entered an order staying her decision pending appeal.

On appeal, the Association argued: 1) the Division lacked subject matter jurisdiction to determine whether the Association had improperly denied payment under N.J.S.A. 34:15-120.18a; and 2) the Division erroneously interpreted the statute by not requiring Morella to have filed a proof of claim in the bankruptcy proceeding before receiving payments under the statute.

The Superior Court, Appellate Division, Gilroy, J.A.D., held that: 1) the Division has subject matter jurisdiction because in acting on claims from injured employees, the Association steps into the shoes of the insolvent employer, the party against whom the employee would normally file a direct claim in the Division; and 2) an employee whose injury occurs before the employer's insolvency is not required to file a proof of claim in the employer's bankruptcy proceeding before qualifying for compensation payments under N.J.S.A. 34:15-120.18a.

HELD: The judgment of the Appellate Division is AFFIRMED substantially for the reasons expressed in Judge Gilroy's opinion.

Per curiam.

Argued January 7, 2008

CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE, RIVERASOTO, and HOENS join in this opinion.

The judgment is affirmed, substantially for the reasons expressed in Judge Gilroy's opinion of the Appellate Division, reported at 391 N.J. Super. 231 (2007).

CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE, RIVERA-SOTO and HOENS join in this opinion.

Chief Justice Rabner PRESIDING

20080130

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