NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-1073-14T3 A-3040-14T1 A-3107-14T1

JENNIFER LAMBERT and GARY LAMBERT, APPROVED FOR PUBLICATION Plaintiffs-Respondents, August 24, 2016

v. APPELLATE DIVISION

TRAVELERS INDEMNITY COMPANY OF AMERICA,

Defendant-Appellant. _______________________________

PAUL REED,

Plaintiff-Respondent,

v.

QUAL-LYNX and TOWNSHIP OF MARLBORO,

Defendants,

and

MONMOUTH MUNICIPAL JOINT INSURANCE FUND,1

Defendant-Appellant. _______________________________

1 This party was incorrectly designated as "Monmouth County Joint Insurance Fund" in both the Reed and Agar complaints. WILLIAM AGAR,

Plaintiff-Respondent,

v.

QUAL-LYNX and TOWNSHIP OF HAZLET,

Defendants,

and

MONMOUTH MUNICIPAL JOINT INSURANCE FUND,

Defendant-Appellant. _______________________________

Argued June 2, 2016 - Decided August 24, 2016

Before Judges Koblitz, Kennedy and Gilson.

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket Nos. L-2702-14, L-4610-14, and L-4911-14.

Jeffrey W. Mazzola argued the cause for appellant Travelers Indemnity Company of America (Law Offices of William E. Staehle, attorneys; Mr. Mazzola, on the brief).

Danielle Pantaleo argued the cause for appellant Monmouth Municipal Joint Insurance Fund (Cleary Giacobbe Alfieri Jacobs, LLC, attorneys; Ms. Pantaleo, on the brief).

Richard N. Schibell argued the cause for respondents Jennifer Lambert and Gary Lambert (Schibell Mennie & Kentos, LLC, attorneys; John G. Mennie, on the brief).

Michael J. Hanus argued the cause for respondents Paul Reed and William Agar (Mr.

2 A-1073-14T3 Hanus, attorney; Richard T. Smith, on the brief).

Daniel A. Levy argued the cause for amicus curiae New Jersey Association for Justice- New Jersey (Raff & Raff, LLP, attorneys; Mr. Levy, on the brief).

Gibson Kolb, attorneys for amicus curiae The National Association of Subrogation Professionals (Rachael E. Banks, of counsel and on the brief).

The opinion of the court was delivered by

GILSON, J.A.D.

These appeals2 present the same legal questions: Is a

worker, who is injured in a work-related motor vehicle accident,

permitted to recover medical expenses from a tortfeasor if those

medical expenses are paid by the workers' compensation insurer

as distinguished from personal injury protection (PIP) benefits

paid by the worker's automobile liability insurer? If so, is

the workers' compensation insurer entitled to recover the

medical expenses from the proceeds of any recovery the worker

obtains from the third-party tortfeasor?

The motion judge ruled that the workers' compensation

insurers were not entitled to recover the medical expenses

because the injured workers were not entitled to recover such

2 We write one opinion to dispose of both the consolidated appeal, A-3040-14 and A-3107-14, and the separate appeal, A- 1073-14.

3 A-1073-14T3 expenses from the tortfeasors under N.J.S.A. 39:6A-12, which

bars evidence in an action against the tortfeasor of amounts

"collectible or paid" under PIP coverage. Thus, the motion

judge reasoned that the injured workers were limited by the no-

fault system established by the Automobile Insurance Cost

Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35, that the

workers' compensation insurer effectively stepped into the shoes

of the automobile insurer, and that the normal recovery

provisions of the Workers' Compensation Act (WCA), N.J.S.A.

34:15-1 to -142, did not apply.

We reject that interpretation of the interplay between

AICRA and the WCA, and hold that when a worker is injured in the

course of his or her employment in a motor vehicle accident and

workers' compensation coverage is available, the right of the

injured worker to pursue claims against the third-party

tortfeasor and the right of the workers' compensation insurer to

be reimbursed are governed by the WCA and not AICRA.

Accordingly, the injured worker may recover medical expenses

from the third-party tortfeasor and N.J.S.A. 39:6A-12 does not

apply. The workers' compensation insurer, in turn, has a right

to be reimbursed for the appropriate portion of the medical

expenses it has already paid under N.J.S.A. 34:15-40 (Section

40).

4 A-1073-14T3 I.

The three cases that give rise to these appeals all present

similar material facts. First, each plaintiff was injured in a

motor vehicle accident while working. Second, the applicable

automobile insurance provided PIP coverage. Third, the medical

expenses of each plaintiff were paid by his or her employer's

workers' compensation insurer. Plaintiffs were also paid

compensation benefits (also referred to as indemnity benefits)

for such things as lost wages. Fourth, plaintiffs all sued the

tortfeasors, and each of those suits was settled. In each case,

plaintiff's recovery from the tortfeasor exceeded the payments

he or she had received from the workers' compensation insurer.

The settlements, however, apparently did not disclose whether

the settlement payment included a payment for medical expenses.

Fifth, each plaintiff offered to reimburse the workers'

compensation insurer for the appropriate portion of the

compensation benefits, but refused to reimburse the workers'

compensation insurer for the medical expenses arguing he or she

had not recovered medical expenses from the tortfeasor.

To put these similar material facts in context, we

summarize the circumstances of the three plaintiffs involved in

these appeals.

5 A-1073-14T3 Plaintiff Jennifer Lambert worked for the Howell Township

Board of Education as a school bus aid. On August 6, 2010,

Lambert was injured when an automobile driven by Kaitlin

Antonaccio collided with the rear of the school bus in which

Lambert was working. The Travelers Indemnity Company of America

(Travelers) provided workers' compensation insurance to

Lambert's employer. As a result of her injuries, Lambert filed

a workers' compensation claim, and Travelers paid Lambert

$94,705.22 for medical expenses and $54,695.87 for compensation

benefits.

Thereafter, Lambert sued Antonaccio. Ultimately that

lawsuit settled, with Antonaccio paying Lambert $300,000.

Following the settlement, Lambert's counsel offered to pay

Travelers $35,713.91, which represented two-thirds of the

compensation benefits of $54,695.87, minus statutory costs of

$750. Counsel for Lambert, however, refused to pay any

reimbursement for medical expenses. Travelers rejected that

offer, and Lambert filed a complaint and an order to show cause

seeking to extinguish Travelers' lien for medical expenses.

Plaintiff Paul Reed worked for the Township of Marlboro as

a police officer. On August 19, 2011, Reed, while in the course

of his employment, was redirecting traffic when he was struck by

a car driven by Vladen Futernik. Marlboro has workers'

6 A-1073-14T3 compensation insurance through Monmouth Municipal Joint

Insurance Fund (MMJIF), which is a joint insurance fund for

municipalities of Monmouth County organized under N.J.S.A.

40A:10-36. Defendant Qual-Lynx is MMJIF's third-party

administrator for certain claims. Accordingly, Reed filed a

workers' compensation claim, and MMJIF paid him $60,430.48 for

medical expenses and $44,578.29 in compensation benefits.

Reed also filed a negligence action against Futernik, which

later settled for $100,000. Reed also brought an underinsured

motorist (UIM) claim against New Jersey Manufacturers Insurance

Company, and that suit settled for $199,000. Thus, Reed's total

recoveries against the third-party tortfeasor were $299,000.3

Counsel for Reed offered to reimburse MMJIF for its

proportional share of the compensation benefits, but refused to

reimburse any of the medical expenses. When MMJIF refused that

offer, Reed filed a complaint and an order to show cause seeking

to extinguish the medical portion of MMJIF's workers'

compensation lien.

Plaintiff William Agar worked as a police officer for the

Township of Hazlet. On June 26, 2011, Agar was sitting in his

3 A recovery from an insurer that provides UIM coverage is "the functional equivalent of a recovery from the actual third-party tortfeasor." Frazier v. N.J. Mfrs. Ins. Co.,

(1995).

7 A-1073-14T3 patrol car overseeing road construction when his vehicle was

rear-ended by a car driven by Ethel McCaffrey. MMJIF provides

insurance for Hazlet, including workers' compensation insurance.

Agar filed a claim for workers' compensation and was paid

$4331.02 for medical expenses and $15,693 in compensation

benefits.

Agar also filed a suit against McCaffrey and settled that

action for a payment of $60,000. MMJIF asserted a lien against

Agar's settlement and sought reimbursement for both the amounts

it paid for compensation benefits and medical expenses. Counsel

for Agar offered to reimburse MMJIF for the compensation

benefits, but refused to make any reimbursement for medical

expenses. When the parties could not reach an accord, Agar

filed a complaint and an order to show cause seeking to

extinguish the portion of the lien that sought to recover the

medical expenses.

The orders to show cause filed by the three plaintiffs were

all heard by the same motion judge. In all three matters, the

judge entered orders granting plaintiffs' applications to

extinguish the portion of the workers' compensation lien seeking

reimbursement of the medical expenses, relying on an unpublished

8 A-1073-14T3 case.4 The judge reasoned that when a worker is injured in a

motor vehicle accident during the course of employment, the

worker is treated as a no-fault insured and, therefore, under

N.J.S.A. 39:6A-12, any recovery from the tortfeasor cannot

include medical expenses that had been paid by an insurer. The

judge also reasoned that since the injured worker had no right

to recover paid medical expenses from the tortfeasor, the

workers' compensation insurer could not seek reimbursement of

those medical expenses under Section 40 of the WCA.

The workers' compensation insurers (Travelers and MMJIF)

appeal the orders that extinguished the medical expense portion

of their liens under Section 40 of the WCA. Amicus curiae

National Association of Subrogation Professionals filed a brief

in support of the position of the workers' compensation

insurers. Amicus Curiae New Jersey Association for Justice-New

Jersey filed a brief in support of plaintiffs' position. We

granted MMJIF's motion to consolidate the appeals filed in the

Reed and Agar cases. We denied a motion to consolidate the

Lambert appeal because that appeal had already been fully

briefed when the motion was filed. We now issue this

4 As the judge acknowledged, Rule 1:36-3 provides that, except for reasons which do not apply here, "no unpublished opinion shall be cited by any court."

9 A-1073-14T3 consolidated opinion to address the legal issues raised in all

three appeals.

II.

The issues raised by these appeals concern the

interpretation of the interplay between AICRA and the WCA.

Therefore, we review these issues of law de novo. Farmers Mut.

Fire Ins. Co. of Salem v. N.J. Prop.-Liab. Ins. Guar. Ass'n,

(2013).

We hold that because workers' compensation benefits are the

primary source of recovery for injuries suffered by employees in

a work-related automobile accident, and PIP insurers are

relieved from the obligation to pay medical expenses under

N.J.S.A 39:6A-6, any recovery obtained by employees from third-

party tortfeasors, whether through settlement, trial or

otherwise, is subject to Section 40 liens under the WCA. We

further hold that in any action by such employees against third-

party tortfeasors, the evidential bar of N.J.S.A. 39:6A-12 does

not apply.

The statutes and case law support this holding. We

therefore examine AICRA, the WCA, and the interplay between

those two statutes. We also review the existing case law.

10 A-1073-14T3 A. AICRA

Since 1972, New Jersey has made "legislative efforts to

control the rising cost of automobile insurance by placing

restrictions on an accident victim's right to sue for

noneconomic damages." DiProspero v. Penn,

(2005). In 1998, the Legislature enacted AICRA "with a multi-

pronged approach aimed at achieving the goals of containing

[automobile insurance] costs."

. The goal of AICRA

was to reduce the cost of automobile insurance by reducing the

number of litigated claims. See James v. Torres,

(App. Div. 2002), certif. denied,

(2003). AICRA expanded New Jersey's no-fault automobile

insurance system by, among other things, requiring every

automobile insurance policy to provide PIP benefits, "which

guarantee 'without regard to fault,' medical expense coverage

for the named insured" who suffers bodily injury in an

automobile accident. Perrelli v. Pastorelle,

(2011) (quoting Caviglia v. Royal Tours of Am.,

(2004)). AICRA accordingly prohibits an injured person from

seeking to recover from a tortfeasor medical expenses already

paid under PIP coverage from the injured person's own automobile

insurer. N.J.S.A. 39:6A-12; see Bardis v. First Trenton Ins.

Co.,

(2009) (stating that the "injured person

11 A-1073-14T3 who was the beneficiary of the PIP payments could not and should

not recover from the tortfeasor the medical, hospital and other

losses for which he [or she] had already been reimbursed"

(quoting Cirelli v. Ohio Cas. Ins. Co.,

(1977))). Thus, N.J.S.A. 39:6A-12, which pre-dated AICRA,

continues to preclude the introduction of "evidence of the

amounts collectible or paid" by an automobile insurer under PIP

coverage. In other words, N.J.S.A. 39:6A-12 precludes a

plaintiff from recovering medical expenses already paid by a PIP

insurer.

B. The WCA

The WCA provides a "system of compensation for workers"

injured in the course of their employment. Estate of Kotsovska

ex rel. Kotsovska v. Liebman,

(2015)

(quoting Fitzgerald v. Tom Coddington Stables,

(2006)). The WCA represents a "historic 'trade-off' whereby

employees relinquish their right to pursue common-law remedies

[against their employers] in exchange for prompt and automatic

entitlement to benefits for work-related injuries." Laidlow v.

Hariton Mach. Co.,

(quoting Millison v. E.I.

du Pont de Nemours & Co.,

(1985)); see Tlumac

v. High Bridge Stone,

(2006) (explaining that

the WCA's "remedial purpose" is "to make benefits readily and

12 A-1073-14T3 broadly available to injured workers through a non-complicated

process"). While the WCA limits injured workers from suing

their employers, it does not preclude suits against third-

persons responsible for their injuries. See N.J.S.A. 34:15-40;

Danesi v. Am. Mfrs. Mut. Ins. Co.,

(App. Div.), certif. denied,

(1983).

N.J.S.A. 34:15-40 was enacted as a means of "regulating and

marshaling the rights and responsibilities of the several

parties concerned in compensation payments where" a worker's

injuries are caused by a third-party. U.S. Cas. Co. v. Hercules

Powder Co.,

(1950). To overcome the inequity of

a double recovery, the WCA provides that a workers' compensation

insurer is entitled 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." N.J.S.A. 34:15-40(b); see also

. N.J.S.A. 34:15-40(b) "imposes a lien in favor

of the workers compensation carrier against the proceeds of a

third-party recovery obtained by an injured worker." Raso v.

Ross Steel Erectors, Inc.,

(App. Div.),

certif. denied,

(1999). "The compensation lien is

statutorily created and generally attaches to 'any sum'

recovered by the injured worker from a third-party, without

13 A-1073-14T3 regard to such equitable considerations as whether the worker

has been fully compensated." Primus v. Alfred Sanzari Enters.,

(App. Div. 2004), certif. denied,

(2005).

C. The Interplay between AICRA and the WCA

When a worker suffers a work-related injury in a motor

vehicle accident, workers' compensation coverage is the primary

source of insurance under the collateral source rule. See

N.J.S.A. 39:6A-6. N.J.S.A. 39:6A-6 provides that "medical

expense benefits . . . shall be payable as loss accrues, upon

written notice of such loss and without regard to collateral

sources, except that benefits, collectible under workers'

compensation insurance . . . shall be deducted from the benefits

collectible under [PIP]." N.J.S.A. 39:6A-6 "relieves the PIP

carrier from the obligation of making payments for expenses

incurred by the insured[, including medical expenses] which are

covered by workers' compensation benefits." Lefkin v.

Venturini,

(App. Div. 1988).

The issues on these appeals turn on the interpretation of

the interplay between AICRA and WCA. The question is: Did the

Legislature intend N.J.S.A. 39:6A-6 to treat workers'

compensation insurance like PIP automobile insurance or, did the

Legislature intend that a worker injured in an automobile

14 A-1073-14T3 accident be covered under the workers' compensation system

without regard to the no-fault provisions of AICRA? Given the

language used in AICRA we conclude that AICRA did not displace

the workers' compensation system.

The collateral source rule does not make workers'

compensation insurance part of the PIP no-fault system; rather

it shifts the burden of providing insurance from the automobile

insurance system to the workers' compensation system. Thus, the

collateral source rule states that "benefits[] collectible under

workers' compensation insurance . . . shall be deducted from the

benefits collectible under [N.J.S.A. 39:6A-4 and 39:6A-10], the

medical expense benefits provided in [N.J.S.A. 39:6A-3.1] and

the benefits provided in [N.J.S.A. 39:6A-3.3]." N.J.S.A. 39:6A-

6. Nothing in that language suggests that the Legislature

intended to treat a worker injured in an automobile accident in

a different manner than a worker injured in a non-automobile

work-related accident. Just as important, nothing in that

statutory language suggests that the Legislature intended to

treat a workers' compensation insurer as if it were an

automobile insurer.

Indeed, the statutory words "deducted from" are most

clearly understood as shifting the insurance coverage from

automobile insurance to workers' compensation insurance.

15 A-1073-14T3 Moreover, such statutory language reflects "a legislative policy

determination that losses resulting from work-related automobile

accidents should be borne by the 'ultimate consumers of the

goods and services in whose production they are incurred.'"

Portnoff v. N.J. Mfrs. Ins. Co.,

(App.

Div.) (quoting

), certif.

denied,

(2007).

In addition, nothing in the legislative history of AICRA

suggests the Legislature meant to treat workers, who are injured

in a work-related automobile accident, as if they were limited

by AICRA's no-fault system. Nor is there any suggestion that

the Legislature intended to treat workers' compensation insurers

as if they were PIP insurers. Indeed, there is simply no

discussion of such an incorporation. It is fair to assume that

had the Legislature intended to effectuate such a major change,

it would have used express language in the statute and discussed

that incorporation in AICRA's legislative history.

D. The Case Law

Our holding is also consistent with existing case law. Two

opinions have addressed these issues. See

; Talmadge v. Burn, ___ N.J. Super. ___, ___

(App. Div. 2016) (slip op. at 1).

16 A-1073-14T3 In Lefkin, this court found no bar against a worker,

injured in an automobile accident, from recovering from a third-

party tortfeasor medical expenses collected in workers'

compensation.

. We

explained that "PIP benefits are not available to an insured if

workers' compensation benefits are also available to him [or

her]."

We also noted that the recovery of the medical

expenses from the third-party tortfeasor would be subject to

reimbursement to the workers' compensation insurer under the

"compensation lien."

Lefkin involved a claim by a worker injured in a work-

related automobile accident.

. The worker's medical

expenses were paid by the workers' compensation insurer and,

thus, the PIP automobile insurer did not pay those medical

expenses.

. The worker sued his PIP automobile

insurer, Aetna Insurance Company, and the tortfeasors who caused

the automobile accident.

. The claims against the

tortfeasors were settled and the worker sought to have Aetna pay

the portion of his workers' compensation lien related to medical

expenses.

. In that regard, the worker argued that,

because such a recovery was barred by N.J.S.A. 39:6A-12, his

settlement with the tortfeasors could not have included his

17 A-1073-14T3 medical expenses. This court rejected that argument.

.

We explained that there are "three potential sources of

reimbursement of [the worker's] medical expenses . . . :

workers' compensation benefits, PIP benefits, and recovery from

the tortfeasor."

. When all three potential payment

sources "conjoin," the worker can recover his medical expenses

from the tortfeasor. The workers' compensation insurer, in

turn, is entitled to reimbursement for the medical expenses

previously paid, less attorney's fees and costs of suit.

.

While Lefkin, which was issued in 1988, pre-dated AICRA,

which was enacted in 1998, see L. 1998, c. 21, nothing in AICRA

changed the statutory provisions on which Lefkin relied.

Importantly, both N.J.S.A. 39:6A-12 and N.J.S.A. 39:6A-6 pre-

dated AICRA and neither of those provisions were substantively

changed by AICRA so as to require a result different from the

conclusion reached in Lefkin.

In Talmadge, this court recently reached a conclusion

consistent with Lefkin. Talmadge, supra, slip op. at 6. We

held that a workers' compensation insurer was entitled to be

reimbursed for medical expenses when a worker, injured in an

automobile accident, made a subsequent recovery from the third-

18 A-1073-14T3 party tortfeasor. Ibid. The plaintiff in Talmadge was injured

while driving her personal car on work-related business. Id. at

2. Her employer's workers' compensation insurer, The Hartford,

paid over $127,000 in medical expenses and compensation

benefits. Ibid. The plaintiff then sued the driver of the car

that caused the accident and that case settled with the

plaintiff receiving $250,000. Ibid.

The Hartford asserted a workers' compensation lien of

$84,510.78 against that third-party recovery. Ibid. The

plaintiff moved to reduce the workers' compensation lien to

exclude the medical expenses. Ibid. The Law Division denied

that motion, and we affirmed. In affirming, we explained that

"[t]he [Workers' Compensation Act] clearly permits an employee

who received workers' compensation benefits to seek recovery

against the third-party for those benefits, including paid

medical expenses. The statute also expressly entitles the

workers' compensation carrier to repayment of all benefits paid

to the employee." Id. at 6-7 (citing Greene v. AIG Cas. Co.,

(App. Div. 2013)).

The motion judge here relied on the "rationale" of an

unpublished opinion and ruled that workers' compensation

insurers were not entitled to recover medical expenses they paid

because injured workers were not entitled to recover such

19 A-1073-14T3 expenses from the tortfeasor under AICRA. We reject such an

interpretation of AICRA. For the reasons we have already

explained, we hold that when a worker is injured in the course

of his or her employment in a motor vehicle accident and

workers' compensation benefits have been paid or are payable on

behalf of the worker, the right of the injured worker to pursue

claims against the tortfeasor and the right of the workers'

compensation insurer to be reimbursed are governed by the WCA

and not AICRA.

Accordingly, the orders extinguishing the portion of the

workers' compensation liens related to medical expenses are

reversed in all three cases on appeal. All three matters are

remanded for entry of appropriate orders enforcing the workers'

compensation liens.

Reversed and remanded. We do not retain jurisdiction.

20 A-1073-14T3