Mager v. United Hospitals of Newark

• Decision Date: 16 July 1965
• Docket Number: No. A--567,A--567
• Citation: 88 N.J.Super. 421,212 A.2d 664
• Parties: Rose MAGER, as General Administratrix and as Administratrix ad prosequendum of the estate of Frank Mager, deceased, Plaintiff-Appellant, v. UNITED HOSPITALS OF NEWARK, Defendant, and New Jersey Manufacturers Casualty Insurance Company, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 421

88 N.J.Super. 421

212 A.2d 664

Rose MAGER, as General Administratrix and as Administratrix ad prosequendum of the estate of Frank Mager deceased, Plaintiff-Appellant, v. UNITED HOSPITALS OF NEWARK, Defendant and New Jersey Manufacturers Casualty Insurance Company Defendant-Respondent.

No. A--567.

Superior Court of New Jersey Appellate Division.

Argued April 12, 1965.

Additional Memoranda Submitted April 20 and May 14, 1965.

Decided July 16, 1965.

Jerome S. Lieb, East Orange, for appellant (Harkavy & Lieb, East Orange, attorneys).

Edward V. Ryan, Newark, for respondent (John M. McCue, Newark, on the brief).

Before Judges GOLDMANN, SULLIVAN and LABRECQUE.

The opinion of the court was delivered by

GOLDMANN, S.J.A.D.

The question here is whether an insurance company which maintains and operates its own clinic for the treatment of injured workmen, and which is alleged to have negligently caused serious injury and death to a workman in the course of treating him for injuries, is immune from an action at law for damages because it was also the workmen's compensation insurance carrier of his employer. The trial court held that it was and entered summary judgment in favor of the insurance company. Mager v. United Hospitals of Newark, 81 N.J.Super. 585, 196 A.2d 282 (Law Div.1963).

The issue is a novel one in this State. It was projected and argued in Viducich v. Greater New York Mutual Ins. Co., 80 N.J.Super. 15, 192 A.2d 596 (App.Div.1963), certification denied 41 N.J. 129, 195 A.2d 21 (1963), as an inspection of the Appellate Division briefs shows. Vol. 1920, Superior Court Briefs (State Law Library). However, the issue was not resolved, the decision resting on other grounds.

Plaintiff, as administratrix and administratrix Ad prosequendum, brought an action against New Jersey Manufacturers Casualty Insurance Company (Manufacturers) and United Hospitals of Newark, alleging that their joint and several negligence made necessary the amputation of decedent Frank Mager's right leg and ultimately caused his death. Her amended complaint alleged that Mager, who had a prior diabetic and circulatory condition, fractured three right metatarsals in an accident arising out of and in the course of his employment with American Window Cleaning Co. on May 12, 1960; that pursuant to his employer's instructions he was taken to Manufacturers' industrial clinic and thereafter to the Crippled Children's Hospital, owned and operated by the United Hospitals of Newark, and that at both institutions defendants, through their agents and employees, were informed of decedent's pre-existing condition. She charged that defendants negligently rendered surgical and medical treatment, failed to exercise the required skill, and used defective medical appliances and instruments, with the result that decedent's leg had to be amputated and he eventually died. Plaintiff demanded judgment against defendants jointly and severally.

In its answer Manufacturers denied negligence and, by way of separate defense, stated that it was the workmen's compensation carrier for decedent's employer; that any services it had rendered decedent were pursuant to its compensation policy and the New Jersey Workmen's Compensation Act; that its obligation was limited to payment of the benefits prescribed by the act, and it was not liable to plaintiff or her decedent in a third-party action brought pursuant to section 40 of the act (N.J.S.A. 34:15--40). Manufacturers then moved for summary judgment against plaintiff and its co- defendant United Hospitals, which had filed a crossclaim for indemnification and contribution.

Finding no controlling New Jersey cases, the trial judge turned to out-of-state decisions holding that an action would not lie against the compensation insurance carrier, relying mainly on Flood v. Merchants Mutual Ins. Co., 230 Md. 373, 187 A.2d 320 (Ct.App.1963), and Schulz v. Standard Accident Ins. Co., 125 F.Supp. 411 (D.C.E.D.Wash.1954). He then reviewed various sections of our Workmen's Compensation Act and concluded that the statute revealed a pattern of equating the compensation carrier with the employer, particularly under N.J.S.A. 34:15--40, the section dealing with third-party actions. He pointed out that under sub-section (f) of that provision, if the injured employee did not effect a settlement with or institute proceedings against the third person or his insurance carrier within one year of the accident, the employer or his carrier might do so. The statute, he said, did not envision that the compensation insurance carrier would be a third party, or that it could, as subrogee, sue itself. Summary judgment was then entered in favor of Manufacturers against plaintiff and co-defendant United Hospitals. The latter does not join in plaintiff's appeal.

When Manufacturers moved for summary judgment plaintiff was, of course, entitled to have the allegations of her complaint, including the charge of negligence, taken as true. Accordingly, the sole question before the trial court was a legal one--whether Manufacturers was immune from liability for its alleged negligence in the care and treatment of decedent, merely because it was also the employer's compensation insurance carrier. The issue is essentially one of statutory construction.

The trial judge in effect placed the compensation insurance carrier in the shoes of the employer, referring to various sections of the Workmen's Compensation Act to support his equating of the two. He cited N.J.S.A. 34:15--15 (obligation to provide medical and surgical treatment), 34:15--33 (notice of occupational disease), 34:15--34 (carrier's payment or agreement to pay for occupational disease), and 34:15--40(f). Manufacturers' brief notes other sections which refer to 'the employer or his insurance carrier': 34:15--12(d) (liability where there was a prior compensable accident); 34:15--22 (agreement between employee and employer or compensation carrier, no bar to formal determination); 34:15--50 (approval and filing of settlement agreement); 34:15--82, 86 (liability for injury or death); 34:15--85 (employer's notice or knowledge of injury deemed carrier's); 34:15--100, 101 (filing of medical reports, penalty for non-compliance).

We have examined these sections, and others that might be mentioned, and conclude that they cannot be considered as equating the carrier with the employer. Their purpose is either procedural or for the purpose of defining primary and secondary liability. Mays v. Liberty Mutual Ins. Co., 323 F.2d 174 (3 Cir. 1963).

There is no statutory prohibition against an injured employee bringing a common-law action, except as may be provided in the Workmen's Compensation Act, R.S. 34:15--1 et seq., as amended. N.J.S.A. R.S. 34:15--7, N.J.S.A., the heart of the elective compensation article, provides that the employer shall pay his injured employee according to the schedules set out in sections 34:15--12 and 13 when they have by agreement, either express or implied, accepted the provisions of the article. Such an agreement is deemed a surrender by the parties of their rights to any other method, form or amount of compensation or determination thereof. R.S. 34:15--8, N.J.S.A. Prior to 1961 the employee was free to pursue his common-law remedy against any party other than his employer. L.1961, c. 2, amended R.S. 34:15--8, N.J.S.A., to eliminate the bringing of such an action against a fellow employee, except for his intentional wrong.

An injured employee's common-law right of action against a third party has been preserved in R.S. 34:15--40, as amended, N.J.S.A.:

'Where a third person is liable to the employee or his dependents for an injury or death, the existence of a right of compensation from the employer or insurance carrier under this statute shall not operate as a bar to the action of the employee or his dependents, nor be regarded as establishing a measure of damage therein. * * *'

Although section 40 provides for various contingencies in the exercise of such third-party right of action, nowhere does it, either expressly or...