On appeal from the Board of Trustees of the State Police Retirement System, SPRS #8-10-3436.
The opinion of the court was delivered by: Newman, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Ashrafi and Newman.
The opinion of the court was delivered by NEWMAN, J.A.D. (retired and temporarily assigned on recall)
Petitioner James Baracia appeals from the final decision of the respondent Board of Trustees of the State Police Retirement System (the Board) issued on March 23, 2010. That decision held that N.J.S.A. 53:5A-38.1(b) required a dollar-for-dollar offset from petitioner's accidental disability retirement allowance of the amount of $27,482.70, the net award petitioner received by order of the Workers Compensation Court dated June 9, 2009.
Petitioner contends that the net award does not qualify as a payment of compensation on account of petitioner's disabilities or injuries, but constitutes the employer's pro rata share of the attorney's fees it owed petitioner under N.J.S.A. 34:15-40(b). We agree with petitioner's position and reverse, requiring that the Board reimburse any monies previously deducted from petitioner's disability retirement allowance.
The facts are not in dispute. Petitioner was a New Jersey State trooper, who was seriously injured while on duty in an automobile accident. He was awarded workers' compensation benefits. He brought a third-party action, which resulted in a settlement of $355,000, less reimbursements for filing fees and other costs in the amount of $2,037.49, for a balance of $352,962.51. The attorney's fees totaled one-third of that amount in the sum of $117,654.05. The workers' compensation lien was in the amount of $68,844.08, which was satisfied from these proceeds, leaving an amount due petitioner of $166,464.38. Because of the third-party award, the employer obtained a reimbursement of its statutory workers' compensation lien and was relieved of its future workers' compensation liability.
Under N.J.S.A. 34:15-40(b), the employer was required to pay a pro rata share of petitioner's attorney's fees incurred in the prosecution of the third-party action. Here, the workers' compensation judge found the employer's pro rata share of attorney's fees was $27,482.70 and awarded petitioner that amount. In so concluding, the court stated that amount "does not constitute a payment of compensation, but in fact, a credit toward the payment of Petitioner's counsel fees."*fn1
In reducing petitioner's retirement allowance by $27,482.70, the Board relied upon the provisions of N.J.S.A. 53:5A-38.1(b). As a consequence, petitioner's monthly retirement allowance was $1,997.65 less than his monthly disability retirement payment of $5,320.10. This amount was to be deducted for 13.75 months until the sum of $27,482.780 was fully paid.
On appeal, petitioner argues that the employer was required to pay its pro rata share of counsel fees incurred by the employee pursuant to N.J.S.A. 34:15-40(b) in a third-party tort action that resulted in a recovery in reimbursement of the workers' compensation lien and future benefits to the employer. Petitioner further maintains that N.J.S.A. 53:5A-38.1(b) does not permit a reduction in petitioner's accidental disability retirement allowance because the award to petitioner was not compensation or periodic benefits, but a credit for the employer's portion of the attorney's fee in the third-party recovery action. We agree with petitioner's contention.
N.J.S.A. 34:15-40(b) provides:
If the sum recovered by the employee or his dependents from the third person or his insurance carrier is equivalent to or greater than the liability of the employer or his insurance carrier under this statute, the employer or his insurance carrier shall be released from such liability and shall be entitled to be reimbursed, as hereinafter provided, for the medical expenses incurred and compensation payments theretofore paid to the ...