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Terrence Johnson v. State of New Jersey

June 28, 2011


On appeal from the Division of Workers' Compensation, Department of Labor and Workforce Development, Claim Petition No. 2004-29233.

Per curiam.


Submitted: June 8, 2011 - : Before Judges Axelrad, R. B. Coleman, and Lihotz.

This case returns following a remand to the judge of workers' compensation. We affirm.

We incorporate by reference rather than reciting at length the facts and procedural history of this case contained in our prior opinion. Johnson v. State, No. A-3202-07T3 (App. Div. Nov. 20, 2009). We recite only the salient facts.

On August 30, 2004, petitioner Terrence Johnson, a New Jersey Department of Corrections employee, was injured in the course of his employment in Ewing Township, New Jersey. Petitioner, who was driving a State-owned work vehicle, was struck by an uninsured motorist. At the time, petitioner was a Pennsylvania resident and owned a personal vehicle covered by a Pennsylvania automobile policy with State Farm Insurance Company.

Petitioner received workers' compensation benefits through the State of New Jersey and filed an uninsured motorist (UM) claim with State Farm. New Jersey asserted a subrogation lien against petitioner's UM claim, seeking to recover the $26,769.99 it paid in temporary compensation benefits and medical expenses. Petitioner argued that Pennsylvania law applied to the proceeds of his Pennsylvania UM claim and, therefore, prevented New Jersey from being reimbursed through subrogation. In September 2007, the State filed a motion in the New Jersey workers' compensation court to set the lien, arguing that petitioner was bound by New Jersey workers' compensation law. The workers' compensation judge ruled that New Jersey law should apply, giving petitioner's employer a right of subrogation against the proceeds. Petitioner appealed, and in an unpublished opinion we reversed that determination, concluding the court had failed to perform a conflict of laws analysis to discern which state's law should apply when the two are in conflict.*fn1 Johnson v. State, supra, slip op. at 8.

We remanded for a determination of the second prong of the governmental-interest analysis to determine the interest each state has in resolving the issue in dispute, with consideration of the policies that underlie the respective state statutes that are in conflict in this case. Id. at 7-9. See Gantes v. Kason Corp., 145 N.J. 478, 485 (1996); Veazey v. Doremus, 103 N.J. 244, 248 (1986).

We noted that on February 8, 2007, State Farm's representative had sent a letter to petitioner's attorney regarding petitioner's UM claim, stating, in pertinent part:

Your correspondence also indicates a workers' compensation lien of $12,628.20. As I'm sure you are aware, the carrier has no right to assert a lien in a UM claim; however, you should also be aware that your client has a right to prove, plead and recover the amount of their payment. In this case, my file reflects a total WC payment of approximately $27,000, which has already been factored into my evaluation of the claim. . . .

With regard to your demand for the policy limits, at present I do not think the information in my file warrants that type of value; however, I am certainly willing to consider any new information that is available. . . .

Incidentally, since it appears we will not be able to settle the claim for my initial offer amount of $52,000, I will be forwarding that amount to you under separate cover in the near future. It is State Farm's procedure to do this as we believe that is the minimum amount your client will be entitled to receive. The claim will of course remain open and we are not asking Mr. Johnson to sign any sort of Release. [Emphasis added.]

Moreover, petitioner's counsel had forwarded this letter to the State representative, advising that State Farm had sent a $52,000 check to petitioner to avoid any claim of bad faith under the policy and the matter would proceed to arbitration.

The judge of compensation had summarily concluded that "[c]learly, in this matter, to deny [the State's] motion would, in fact permit such a double recovery" by petitioner in contravention of the legislative intent of N.J.S.A. 34:15-40 as articulated by our Supreme Court in Midland Insurance Co. v. Colatrella, 102 N.J. 612 (1986). We were concerned that ifPennsylvania law were applied and the State was not permitted to assert a compensation lien against petitioner's UM proceeds, he would, in fact, receive a "double recovery." In remanding the matter, we noted, for example, that the record was unclear as to the extent to which the workers' compensation payments were "factored in" to the UM settlement and whether petitioner ultimately resolved his UM claim for more than the initial offer of $52,000. ...

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