NEW JERSEY TRANSIT CORPORATION, a/s/o DAVID MERCOGLIANO, Plaintiff-Appellant,
SANDRA SANCHEZ and CHAD SMITH, Defendants-Respondents.
October 30, 2018
appeal from Superior Court of New Jersey, Law Division,
Bergen County, Docket No. L-8504-16.
C. Huber argued the cause for appellant (Brown & Connery,
LLP, attorneys; Shawn C. Huber, of counsel and on the briefs;
Benjamin S. Teris, on the brief).
V. Mallon argued the cause for respondents (Chasan Lamparello
Mallon & Cappuzzo, PC, attorneys; John V. Mallon, of
counsel and on the brief; Ryan J. Gaffney, on the brief).
Judges Hoffman, Geiger and Firko.
appeal, we consider whether a workers' compensation
carrier can obtain reimbursement of medical expenses and wage
loss benefits it paid from tortfeasors who negligently caused
injuries to an employee in a work-related motor vehicle
accident, if the employee would be barred from recovering
non-economic damages from the tortfeasors because he did not
suffer a permanent injury. Because we hold the workers'
compensation carrier can obtain reimbursement from the
tortfeasors in this subrogation action, we reverse.
New Jersey Transit Corporation (NJ Transit) appeals from the
grant of summary judgment dismissing its subrogation action
against defendants Sandra Sanchez and Chad Smith for
reimbursement of the workers' compensation benefits paid
to employee, David Mercogliano, for wage loss and medical
expenses resulting from a work-related automobile accident.
N.J. Transit alleges defendants negligently caused the
accident and are thereby liable for reimbursement of the
workers' compensation benefits pursuant to N.J.S.A.
34:15-40(f) (Section 40) of the Workers' Compensation Act
(WCA), N.J.S.A. 34:15-1 to -146. Defendants claim N.J.
Transit's claims are barred by the limitation on lawsuit
option (the verbal threshold), N.J.S.A. 39:6A-8(a), of the
Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A.
39:6A-1 to -35.
motion judge, relying primarily on Continental Insurance
Co. v. McClelland, 288 N.J.Super. 185 (App. Div. 1996),
held the verbal threshold barred N.J. Transit's
claims. We hold that in subrogation actions
against tortfeasors, the reimbursement rights of workers'
compensation carriers are governed by the WCA, not AICRA.
Therefore, the workers' compensation carrier is entitled
to reimbursement from the negligent tortfeasors, even though
the injured employee could not recover the medical expenses
and wage loss from his own automobile insurer or noneconomic
damages from the tortfeasors. Accordingly, we reverse and
remand for entry of partial summary judgment in favor of N.J.
facts relating to the cross-motions are not in dispute. On
December 2, 2014, Mercogliano was involved in a motor vehicle
collision during the course of his employment. The vehicle
driven by Mercogliano was owned by N.J. Transit. Sanchez was
the driver and Smith was the owner of the other vehicle
involved in the accident.
time of the collision, Mercogliano, Sanchez, and Smith
maintained personal automobile insurance policies compliant
with AICRA. Mercogliano's policy provided $250, 000 in
Personal Injury Protection (PIP) benefits and the verbal
threshold applied. The parties stipulate Mercogliano's
injuries do not vault the verbal threshold because he did not
sustain a permanent injury as defined by N.J.S.A.
direct result of Mercogliano's injuries and lost wages,
N.J. Transit's workers' compensation carrier paid him
$33, 625.70 in workers' compensation benefits, comprised
of $6694.04 in medical benefits, $3982.40 in temporary
indemnity benefits, and $22, 949.26 in permanent indemnity
benefits. Mercogliano did not sue defendants directly.
Instead, N.J. Transit has initiated this subrogation action
pursuant to Section 40, which gives workers' compensation
carriers the right to institute proceedings against
third-party tortfeasors for recovery of damages paid to
Transit and defendants filed cross-motions for summary
judgment on stipulated facts. The motion judge, relying
primarily on Continental and language in Lefkin
v. Venturini, 229 N.J.Super. 1 (App. Div. 1988), held
AICRA trumped the WCA, ruling that N.J.S.A. 39:6A-8(a) barred
N.J. Transit's claims because N.J. Transit, as subrogee,
stands in the shoes of the injured employee, and has no
rights superior to the injured employee under AICRA.
Mercogliano was fully compensated by the workers'
compensation carrier for his medical expenses and wage loss;
he suffered no uncompensated economic loss. The motion judge
held N.J. Transit's claim must be dismissed because AICRA
bars claims for compensated economic damages. In reaching
that conclusion, the judge quoted the following language from
N.J.S.A. 39:6A-6 places the primary obligation for the
payment of benefits covered both by workers compensation and
PIP on the employer rather than the PIP carrier. This policy
decision may be presumed to have been based on the
legislative perception that in terms of societal distribution
of the burden of loss resulting from automobile-accident
injury, the primary cost of work-related injuries should
continue to be borne by the ultimate consumers of the goods
and services in whose production they are incurred. Thus, the
automobile-owning public, whose insurance rates are
proportionally related to the PIP claims experience of the
insurance industry, is relieved of that portion of the
[229 N.J.Super. at 12.]
judge then noted "[d]efendant's liability is not
affected by the fortuitous circumstance that plaintiff was
entitled to workers' compensation benefits. The
compensation carrier's rights rise no higher than the
employee's rights to which it is subrogated."
Continental, 288 N.J.Super. at 190.
judge also attempted to reconcile the holdings in Lambert
v. Travelers Indemnity Co. of America, 447 N.J.Super. 61
(App. Div. 2016) and Continental. He distinguished
Lambert, determining those plaintiffs were not
subject to the verbal threshold or presumptively vaulted it;
thus, "each of the three plaintiffs could prove a viable
cause of action against the tortfeasor." Each of the
three plaintiffs in Lambert reached settlements with
the tortfeasors. Therefore, the judge deemed it
"appropriate that the lien on economic damages paid by
the workers' compensation carrier [was] satisfied"
by the plaintiffs' respective recoveries.
the judge concluded the workers' compensation carrier
does not have an independent right to subrogate against a
tortfeasor when the injured employee is unable to establish a
cause of action against the tortfeasor. Regarding the
interplay of the WCA and AICRA as to final responsibility for
medical expenses ...