New Jersey law, in particular, New Jersey Statute NJSA 39:15-40 provides that an injured worker who recovers monies from a Third Party must reimburse the Workers Compensation carrier monies paid by the carrier including temporary disability benefits, medical bill payments, and permanent disability benefits.
The law was written to prevent an injured worker from recovering twice for the same injury. The reality, however, is that the current version of the law which was recently upheld in an unpublished decision, Greater New York Insurance Company v. Calgano & Associates and John Phillips, New Jersey Superior Court, Appellate Division, Docket No: A-0900-11T4, gives money to insurance carriers that is not justly their money. In the Greater New York case, the Attorney representing the injured worker paid back money to in the insurance carrier but the carrier contended that it had not been paid back the correct amount due it under the New Jersey Third Party Lien law (NJSA 34:15-40). The dispute centered around whether the injured work could deduct the actual costs incurred in pursuing the Third Party or whether the worker was only entitled to deduct a maximum of $750.00 as set forth in the statute. A two-judge panel in the New Jersey Appellate Division found that the maximum amount of actual costs that could be deducted from the repayment of the lien is what was set forth in the statute — $750.00. The injured worker’s attorney had spent $12,767.23 in actual costs in pursuing and settling an action against a negligent party who had caused the injured workers accident (called a Third Party).
It is clear that under the current law, the New Jersey Appellate Division reached the correct decision. The Appellate Division decision points out a flaw in the Third Party Lien Statute. The provision in the law that limits the costs in a Third Party case to $750.00 is dated and does not take into account the reality of actual costs necessary to bring a successful Third Party case. In the Greater New York case, the attorney advanced $12,767.23 in expenses before he was able to resolve the injured worker’s case. The insurance carrier received reimbursement of two-thirds of the actual money paid to the injured worker in the settlement. The insurance carrier was not satisfied with that recovery but wanted the Third Party Lien Statute enforced strictly and limit the expenses to $750.00. The difference between the actual expenses of $12,767.23 and the statutory maximum of $750.00 in expenses is $12,017.23. The Third Party attorney invested a significant amount of money to obtain a recovery for his client. The insurance carrier did not invest any time or money into obtaining a recovery for the injured worker. Why should the insurance carrier obtain a windfall from money the injured worker did not receive?
The New Jersey Legislature should change the Third Party Lien law to reflect that the injured workers can deduct the actual costs needed to recover from a negligent Third Party. The current law is outdated. It does not reflect the reality of the increased costs incurred in successfully recovering money from a negligent Third Party.