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Liberty Mutual Insurance Co. v. Cipriano

December 10, 2008


On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-1574-07.

Per curiam.


Argued October 7, 2008

Before Judges Yannotti and LeWinn.

Dennis A. Cipriano and Brenda Brown appeal from an order entered by the trial court on October 1, 2007, which declared that Liberty Mutual Insurance Company (Liberty Mutual) has a workers' compensation lien on certain monies Brown obtained in a personal injury law suit. For the reasons that follow, we affirm.

The pertinent factual background may be summarized as follows.

On January 16, 2004, in the course of her employment with the corporate offices of Linens 'N Things in Clifton, New Jersey, Brown was injured when she slipped and fell on the offices' premises. Brown informed her supervisor of the incident. Subsequently, Liberty Mutual, the workers' compensation insurer of Linens 'N Things, paid benefits to and on behalf of Brown totaling $68,278.18. Brown claimed that she never filed an application for workers' compensation benefits.

Cipriano thereafter represented Brown in a personal injury lawsuit against the owners of the premises. In her deposition, Brown testified that her employer at the time of the accident was Linens 'N Things. The personal injury lawsuit settled in early 2007 for $120,000.

Liberty Mutual informed Cipriano that it would seek a lien upon the settlement proceeds pursuant to N.J.S.A. 34:15-40, based upon the $68,278.18 it previously paid out. By letter dated February 1, 2007, Cipriano informed Liberty Mutual that he had "ascertained that Ms. Brown was employed by LNT Services, Inc., a Delaware corporation, and was not employed by your customer or any entity insured by Liberty Mutual. LNT Services, Inc., was not insured by Liberty Mutual." Therefore, Cipriano stated, "Liberty Mutual is not entitled, [to] and shall not be paid, any amount out of the settlement proceeds due to Ms. Brown."

Liberty Mutual thereupon filed suit on April 9, 2007, to establish its reimbursement lien. On April 30, 2007, Liberty Mutual filed a motion to compel reimbursement of its lien, in the amount of $44,768.79, representing two-thirds of the total amount of benefits paid, less $750.*fn1 On May 25, 2007, the trial court entered an order compelling Cipriano and Brown to "turn over to Liberty Mutual . . . the sum of $44,313.60*fn2 from the third party recovery obtained in this case, within 21 days . . . , in full satisfaction of Liberty Mutual['s] . . . lien arising out of the workers' compensation benefits it paid to and on behalf of . . . Brenda Brown . . . ."

On May 30, 2007, Cipriano filed a "cross-motion" seeking authorization to disburse the $120,000 in settlement proceeds, which he held in his attorney trust account. In support of this application, Brown certified that when she was deposed during the personal injury litigation, she "did not realize that [her] employer was LNT Services, Inc., until . . . [she] was asked by [her] attorney to provide copies of [her] pay stubs." On June 8, 2007, the trial court entered an order denying the cross-motion as untimely and improper.

On July 20, 2007, Cipriano filed a motion to vacate the two prior orders of the court and to authorize disbursement of the settlement proceeds. At oral argument, the trial court ordered counsel for Liberty Mutual to "submit a letter that will become part of the record as to what the relationship is between LNT Services, Inc., and Linens-N-Things." On September 16, 2007, counsel submitted a "flow chart showing the current corporate structure for Linens-N-Things." Based on the flow chart, counsel advised the court that "'LNT Services, Inc.' is the corporation for the home office and distribution centers for whom the injured employee worked."

On October 1, 2007, the trial court entered an order vacating its previous two orders and declaring that Liberty Mutual had a lien against the $120,000 in settlement proceeds pursuant to its complaint filed in April. The order barred disbursement of those settlement proceeds pending resolution of the lien.

On appeal, Cipriano and Brown contend that Liberty Mutual has no lien "because a workers' compensation lien must arise from an employer-employee relationship, and Brown had no such relationship with Linens 'N Things." They further argue that "[v]oluntary payments erroneously made cannot be recovered without evidence of fraud on the part of the recipient." Having reviewed these contentions in light of the record and the applicable law, we find them to be without merit and affirm.

Where, as here, an employee receives workers' compensation benefits for a work-related injury, and also recovers monetary damages for that injury in a third-party lawsuit, the workers' compensation insurance carrier has a statutory right to reimbursement. N.J.S.A. 34:15-40(b) entitles the carrier to repayment "of medical expenses incurred and compensation payments theretofore paid to the injured employee . . . less [the] employee's expenses of suit and attorney's fee . . . ." The statute further provides that the carrier is entitled to receive repayment prior to disbursement of the proceeds of the third-party litigation. N.J.S.A. 34:15-40(d).

We note at the outset that from the date of her accident through her discovery deposition in the personal injury litigation, Brown regarded herself as an employee of Linens 'N Things. In her interrogatory answers, Brown described herself as a "Human Resource Clerk" at Linens 'N Things in Clifton, New Jersey. She described the accident as follows: "On January 16, 2004[,] at about 7:45 a.m. I was in route to my place of employment at Linens [']N Things, 6 Brighton Road, Clifton, New Jersey." She stated further than she "ha[d] received workers' compensation benefits."

Brown's deposition contains the follow exchange:

Q: Where did the accident happen?

A: In the parking lot of . . . Linens 'N Things.

Q: Were you employed by Linens 'N Things ...

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