• Dean Smith

New Jersey Supreme Court Rules in Workers’ Compensation vs. Auto Insurance Case


According to Insurancefraud.org, the New Jersey Supreme Court ruled that an auto insurance statute does not prevent a workers’ compensation carrier from litigating to recover benefits that were paid to a worker who sustained injuries during a motor vehicle accident.

The lawsuit involved a motor vehicle crash between a New Jersey Transit vehicle driven by employee David Mercogliano, and a vehicle owned by Chad Smith that was driven by Sandra Sanchez. Mercogliano submitted a workers’ compensation claim, and did not seek any benefits, including PIP, from his own auto insurance company.

Key points from the ruling according to Insurancefraud.org:

  1. “The 3-3 ruling affirms an Appellate Division decision that said a subrogation action by New Jersey Transit can proceed because it arose from medical expenses and lost wages, and not from noneconomic loss. The Appellate Division overturned a decision by Superior Court Judge Robert Polifroni of Bergen County, who said the claim to recoup benefits was barred by New Jersey’s Auto Insurance Cost Reduction Act.”

  2. Justice Anne Patterson, Chief Justice Stuart Rabner, and Justice Faustino Fernandez-Vina concurred with the Appellate Division. Patterson stated, “We find no evidence that when the Legislature enacted AICRA, it intended to bar employers and insurers that have paid workers’ compensation benefits for economic loss from seeking reimbursement from third-party tortfeasors in cases such as this, in which the employee’s losses were covered by workers’ compensation benefits and he neither sought nor received PIP [Personal Injury Protection] benefits. We do not view New Jersey Transit’s subrogation action-limited to workers’ compensation benefits paid for economic losses-to contravene AICRA’s provisions or to undermine its goals.”

  3.  “Justice Barry Albin wrote the dissent, joined by Justices Jaynee LaVecchia and Lee Solomon.   Justice Walter Timpone did not participate. Albin wrote that when a driver is involved in a work-   related automobile accident and his economic costs are recoverable under his private auto   insurance carrier’s PIP policy or under his employer’s workers’ compensation scheme, New   Jersey’s auto insurance system makes the workers’ compensation carrier primarily   responsible for reimbursing those losses.”

“‘Despite the clear language and intent of the no-fault system, the concurring opinion allows the workers’ compensation carrier here to sue the tortfeasors or their automobile insurance carrier in a subrogation action, thus permitting the very outcome the Legislature intended to foreclose – more litigation and greater financial burdens on our automobile insurance system,’ Albin wrote.”

  1. “After New Jersey Transit sued Sanchez and Smith to recoup workers’ compensation benefits it paid to Mercogliano, they argued that AICRA barred the claim, and Polifroni agreed. He cited Continental Insurance v. McClelland, a 1986 Appellate Division case, in concluding that because New Jersey Transit’s workers’ compensation carrier paid benefits for all of Mercogliano’s medical expenses and lost income, he had no uncompensated loss of income or property, and thus sustained no economic loss for purposes of AICRA.”

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