Worker's Compensation Subrogation Claim Not Subject to Verbal Threshold Defense:

Legal Victory for Law Offices of Jan Meyer

By: Noah Gradofsky, Law Offices of Jan Meyer and Associates, P.C., April 30, 2018

Star Insurance v. Magee, BER-L-7185-17 (Sup. Ct. Law Div. April 27, 2018)
Decision available here.

In certain situations, New Jersey's Verbal Threshold, N.J.S.A. 39:6A-8 et. seq. limits recovery of noneconomic damages (i.e. pain and suffering) unless the injured party demonstrates that the injured party has sustained certain injuries. See our discussion of the verbal threshold here.

In Cont'l Ins. Co. v. McClelland, 288 N.J. Super. 185, (App. Div. 1996), the New Jersey Appellate Division issued a decision that seemed to imply that a worker’s compensation subrogation claim can be subject to verbal threshold (and indeed, the court at one point says that its decision turns on whether or not the subrogation claim is subject to verbal threshold). Law Offices of Jan Meyer and Associates, P.C. has long argued that this understanding of McClelland is difficult, since worker's compensation benefits by definition cover economic, rather than noneconomic damages, and McClelland never explains why verbal threshold should apply to such damages. In 2012, we published an article in Subrogator Magazine on this topic (the text of which appears below) titled "Subrogating New Jersey Workers' Compensatin in Motor Vehicle Accidents: The Interplay of the PIP and Verbal Threshold Schemes." In that article, we argued that McClelland stood for the proposition that where an injured worker would have been eligible for PIP benefits (but for the fact that worker's compensation is primary over PIP), N.J.S.A. 39:6A-12, which prevents admission into evidence of amounts paid or payable under PIP, prevents subrogation of worker's compensation claims.

However, the more recent case of Lambert v. Travelers Indem. Co. of Am., 447 N.J. Super. 61 (App. Div. 2016) clearly held that worker's compensation claims were not limited by N.J.S.A. 39:6A-12 and furthermore was emphatic that:

In addition, Cynthia M. Craig & Daniel J. Pomeroy, New Jersey Auto Insurance Law, §12:3 at 244-245 and §15:3-2 at 290-291 (2018) notes that the McClelland decision is at odds with Lambert and other cases.

In Star Insurance v. Magee, BER-L-7185-17 (Sup. Ct. Law Div. April 27, 2018), the Defendant moved for summary judgment dismissing Star's worker's compensation subrogation claim on the basis that Star could not prove that its insured's injuries met verbal threshold. Law Offices of Jan Meyer, representing Star, responded with several arguments:

Judge Charles E. Powers, Jr., J.S.C., denied Defendant's summary judgment motion and indicated that he agreed with all three of LOJM's arguments, writing that: The opinion is an unpublished and therefore non-precedential opinion. However, it indicates that worker's compensation carriers should be more aggressive in subrogation efforts even where verbal threshold may not be met, and in particular in the many cases where the injured employee is occupying a vehicle that is not part of the PIP scheme.


Subrogating New Jersey Worker’s Compensation In Motor Vehicle Accidents:

The Interplay of the PIP and Verbal Threshold Schemes

By: Noah Gradofsky, Law Offices of Jan Meyer and Associates, P.C.

This article appeared in the Spring/Summer 2012 Issue of Subrogator Magazine, page 97.

New Jersey’s verbal threshold statute, N.J.S.A. 39:6A-8 states that those who elect to be subject to the verbal threshold (VT) (and thus qualify for lower automobile insurance rates) must meet the VT before recovering for “noneconomic loss” from a motor vehicle that is subject to the NJ PIP requirement. “Noneconomic loss” is defined as “pain, suffering and inconvenience.” N.J.S.A. 39:6A-2.

At first blush, VT should have nothing to do with worker’s compensation subrogation, since worker’s compensation covers economic losses, and excludes pain and suffering. However, many carriers involved in asserting or defending against WC subrogation have been lead astray by a misunderstanding of Continental Ins. Co. v. McClelland, 288 N.J. Super. 185 (App.Div. 1996) and conclude that where VT applies, WC subrogation will only be possible where VT is met.

Continental says nothing of the sort. The court indeed spends a good deal of time establishing that VT applies to a work-related MVA, and states that despite the WC statute’s broad authority for subrogation, MVA tortfeasors should be no more liable for their torts by the happenstance that the injured party was in the course of work at the time of the accident. However, the court notes that “[t]here is merit to” the WC carrier’s argument that its loss was entirely economic and therefore not subject to VT.

In fact, Continental turns on a second statute, N.J.S.A. 39:6A-12, which prohibits recovery of amounts covered by NJ PIP. The court noted that if this were not a work-related accident, the injured party (who was occupying a private passenger vehicle) would have been entitled to PIP benefits (WC is primary over PIP per N.J.S.A. 39:6A-6, and therefore the WC carrier paid in this accident), and the cost of those benefits could not have been recovered from the tortfeasor. As noted previously in the case, the court believed the happenstance that WC was applicable should not increase the tortfeasor’s liability. Finally, the court noted that any losses not covered by PIP would be recoverable by the injured party pursuant to N.J.S.A. 39:6A-12, and that the compensation carrier would be subrogated to those recovery rights.

Thus, the true holding in Continental is not that VT applies to WC subrogation, but that the WC carrier may not recover for claims that could otherwise have been paid by PIP. In this regard it is worth noting that the majority of WC claims arising out of MVAs in NJ will not be subject to PIP, because commercial vehicles (other than private passenger vehicles not used as taxis and charter/route buses) do not require PIP. Second, although not explicitly provided by the statute, a WC carrier would likely have recovery rights for claims that would have been covered under PIP if a PIP carrier would have recovery rights under N.J.S.A. 39:6A-9.1 (i.e. where the tortfeasor was not required to, or did not, carry PIP).

Please visit our Guide to Recovery of PIP in New Jersey for the text of the key New Jersey statutes regarding PIP recovery, together with an outline of those statutes, hyperlinks to definitions of key terms, discussions of key provisions of each statute, relevant case law, and other selected issues of New Jersey subrogation.

Please note that the information included herein is solely the product of Law Offices of Jan Meyer and Associates, P.C., and does not constitute legal advice. For legal advice kindly contact our office.