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Daniel Kudelka v. City of South Amboy


February 16, 2011


On appeal from the Division of Workers' Compensation, Department of Labor, Claim Petition No. 2007-31650.

Per curiam.


Argued January 26, 2011 - Decided Before Judges Lihotz and J. N. Harris.

This workers' compensation appeal pits an employee's personal injury protection (PIP) insurer against his employer in a dispute over which of the two is obliged to pay for certain medical treatments provided to the injured worker. The Judge of Compensation (JOC) resolved the dispute on stipulated facts in favor of the PIP insurer. We affirm.

On April 21, 2007, Daniel Kudelka was involved in a motor vehicle accident while in the performance of his duties as a police officer for the City of South Amboy (South Amboy). Kudelka received medical treatment, arranged through South Amboy's workers' compensation insurer. He also applied to his private PIP insurer, Encompass Insurance Company of New Jersey (Encompass), for PIP benefits. Encompass paid $17,367.47 for chiropractic treatment and epidural injections on Kudelka's behalf from December 24, 2007 through May 14, 2008. South Amboy was neither made aware of, nor was it consulted about, such procedures. It never consented to such treatment on behalf of its injured employee.

On November 19, 2007, Kudelka filed a petition with the Division of Workers Compensation (the Division) against South Amboy. The parties disputed the nature and extent of Kudelka's permanent injuries as well as the obligations for payment. Ultimately, that case was settled between Kudelka and South Amboy on June 18, 2010, the terms of which are not relevant to the pending controversy.

Meanwhile, Encompass had filed a motion in the Division seeking to intervene in order to obtain reimbursement from South Amboy for the PIP benefits made on behalf of Kudelka pursuant N.J.S.A. 39:6A-6 and N.J.S.A. 34:15-15.1. The motion was granted in November 2008.

One year later, South Amboy filed a motion seeking a declaration that Encompass was not entitled to reimbursement for the PIP benefits. Encompass cross-moved for a reciprocal declaration. After hearing argument, the JOC granted Encompass's motion and denied South Amboy's, thereby declaring that Encompass was entitled to be reimbursed by South Amboy. This appeal ensued.

South Amboy advances two arguments in support of its appeal that the JOC erred in ordering reimbursement. First, it contends that because neither Kudelka nor Encompass first made a demand upon South Amboy for the PIP-sponsored treatment, reimbursement of PIP benefits must be denied. See Andrejcak v. Elmora Bake Shop, 182 N.J. Super. 567, 574 (App. Div. 1982); Benson v. Coca Cola Co., 120 N.J. Super. 60, 64-65 (App. Div. 1972). Its second argument is based on the theory that as a public entity, South Amboy is protected from reimbursement by the anti-subrogation provisions of the New Jersey Tort Claims Act (NJTCA), N.J.S.A. 59:1-1 to 12-3, specifically N.J.S.A. 59:9-2(e). We find no foundation in the law for either of South Amboy's arguments and reject them.

It is settled law that the availability or acceptance of workers' compensation funds does not foreclose application for PIP benefits. N.J. Mfrs. Ins. Co. v. Hardy, 178 N.J. 327, 339 (2004) ("The availability of workers' compensation does not preclude an insured (or his assignee) from seeking the range of remedies available pursuant to PIP."); Cont'l Ins. Co. v. McClelland, 288 N.J. Super. 185, 188-91 (App. Div. 1996) (holding that an insurer may bring a subrogation action against a tortfeasor even where the plaintiff received workers' compensation benefits, so long as plaintiff is entitled to receive PIP benefits); Olivero v. N.J. Mfrs. Ins. Co., 199 N.J. Super. 191, 200-01 (App. Div. 1985) (holding that availability of workers' compensation benefits to an injured person does not preclude the injured person from seeking PIP benefits).

In Lefkin v. Venturini, 229 N.J. Super. 1, 8-9 (App. Div. 1988), we determined that "[w]here only workers' compensation benefits and PIP benefits are available, the primary burden is placed on workers' compensation as a matter of legislative policy by way of the collateral source rule of N.J.S.A. 39:6A-6." Additionally, "[c]learly, a PIP carrier may seek reimbursement from the workers' compensation provider, N.J.S.A. 39:6A-6, and even may be the initiator of a workers' compensation proceeding if the injured person has not filed for such benefits." Hardy, supra, 178 N.J. at 339.

We find nothing in the legislative scheme that requires the vetting of PIP-related medical services as a predicate for reimbursement. South Amboy does not assert that the medical treatment received by Kudelka, and paid for by Encompass, was superfluous or unnecessary. Instead, it claims the unsubstantiated right to be the sole gatekeeper for the medical treatment of its worker. In light of the salutary purposes of New Jersey law that assures persons injured in motor vehicle accidents the ready availability of medical treatment and fosters prompt payment of medical expenses, South Amboy's effort to impart an additional level of scrutiny upon the process lacks support. See Beaugard v. Johnson, 281 N.J. Super. 162, 170(App. Div. 1995).

South Amboy also argues that N.J.S.A. 59:9-2(e) bars reimbursement. In pertinent part, N.J.S.A. 59:9-2(e) provides, "[n]o insurer or other person shall be entitled to bring an action under a subrogation provision in an insurance contract against a public entity or public employee." We find the statute inapposite, and trumped by the plain meaning of N.J.S.A. 39:6A-6.

As a starting point, South Amboy has not demonstrated that Encompass is proceeding according to a subrogation provision of its insurance contract with Kudelka. More importantly, we are satisfied that Encompass's right to reimbursement does not derive from its insured; instead it emerges directly from N.J.S.A. 39:6A-6, which provides:

If an insurer has paid [PIP] benefits 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 reimbursement of any benefits pursuant to sections 4 and 10 of P.L. 1972, c. 70 (C. 39:6A-4 and 39:6A-10), medical expense benefits pursuant to section 4 of P.L. 1998, c. 21 (C. 39:6A-3.1) or benefits pursuant to section 45 of P.L. 2003, c. 89

(C. 39:6A-3.3) it has paid. [N.J.S.A. 39:6A-6.]

This right is primary, and not linked to any purported subrogation rights of the beneficiary of the PIP benefits. Cf. Aetna Ins. Co. v. Gilchrist Bros., Inc., 85 N.J. 550, 567 (1981); Sherman v. Garcia Constr., Inc., 251 N.J. Super. 352, 356 (App. Div. 1991). Accordingly, because the legislative scheme is unmistakable, South Amboy does not enjoy protection from Encompass's PIP claims by dint of the NJTCA.



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