Midland Ins. Co. v. Colatrella

• Decision Date: 28 March 1985
• Citation: 490 A.2d 366,200 N.J.Super. 101
• Parties: MIDLAND INSURANCE COMPANY, Plaintiff-Respondent, v. Anthony P. COLATRELLA and Travelers Insurance Company, Defendants-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 101

200 N.J.Super. 101

490 A.2d 366

MIDLAND INSURANCE COMPANY, Plaintiff-Respondent, v. Anthony P. COLATRELLA and Travelers Insurance Company Defendants-Appellant.

Superior Court of New Jersey Appellate Division.

Submitted March 12, 1985.

Decided March 28, 1985.

Giannone, Curreri & Caruso, East Orange, attys. for defendants-appellant Anthony P. Colatrella (Ernest N. Giannone, East Orange, and Barbara B. Comeford, on the brief).

Eak & Duchak, Brick, attys. for plaintiff-respondent (Joseph T. Duchak, Brick, on the brief).

Before Judges MICHELS and BAIME.

The opinion of the court was delivered by

BAIME, J.A.D.

Defendant Anthony P. Colatrella appeals from an order entered by the Superior Court, Law Division granting plaintiff's motion for summary judgment. The trial judge concluded that a workers' compensation carrier was entitled to reimbursement for benefits paid to an employee out of the proceeds of his uninsured motorist policy. We agree and affirm.

The salient facts are not in dispute. Defendant Colatrella sustained personal injuries as the result of an automobile accident with an unidentified hit and run driver. The accident occurred during the course of defendant's employment. Plaintiff, the employer's workers' compensation carrier, paid defendant $9,270.52 in benefits for medical expenses. In addition, defendant collected $27,500 under the uninsured motorist coverage of a personal automobile policy which he had purchased from Travelers Insurance Company. Plaintiff instituted this action seeking reimbursement of the compensation benefits paid to defendant. In their answers, both defendant and Travelers admitted payment of the $27,500, but asserted that plaintiff was not entitled to reimbursement of the compensation benefits from the proceeds of the uninsured motorist policy. Additionally, Travelers filed a cross-claim for indemnification against Colatrella. The matter was submitted to the trial judge on cross-motions for summary judgment. In a letter opinion, the court granted plaintiff's motion. Travelers' motion for indemnification was also granted. This appeal followed.

In Montedoro v. Asbury Park, 174 N.J.Super. 305, 416 A.2d 433 (App.Div.1980), we held that the workers' compensation lien provided by N.J.S.A. 34:15-40 attaches to the proceeds of an uninsured motorist policy. Defendant contends that Montedoro, supra, was incorrectly decided. Specifically, he argues that the compensation carrier's right to reimbursement pertains solely to recovery of damages from third-party tortfeasors. In contrast, the insured's legal entitlement to the proceeds of his uninsured motorist policy is predicated upon contractual principles. Defendant thus contends that he should be permitted to retain both the compensation benefits and the proceeds of the policy.

We reject defendant's argument and adhere to our holding in Montedoro, supra. We recognize that the issue has engendered a great deal of controversy throughout the country and that many jurisdictions have resolved the question in a contrary fashion. Compare Boehler v. Ins. Co. of North America, 290 F.Supp. 867, 871 (E.D.Ark.1968); Jones v. Morrison, 284 F.Supp. 1016, 1022 (W.D.Ark.1968); Ullman v. Wolverine Ins. Co., 48 Ill.2d 1, 269 N.E.2d 295, 299 (Sup.Ct.1970); Hackman v. American Mut. Liability Ins. Co., 110 N.H. 87, 261 A.2d 433, 438 (Sup.Ct.1970) with Knight v. Ins. Co. of North America, 647 F.2d 127, 128 (10 Cir.1981); Bogart v. Twin City Fire Ins. Co., 473 F.2d 619 (5 Cir.1973); State Farm Mut. Auto. Ins. Co. v. Cahoon, 287 Ala. 462, 252 So.2d 619, 621 (Sup.Ct.1971); State Farm Mut. Automobile Ins. Co. v. Karasek, 22 Ariz.App. 87, 523 P.2d 1324, 1326 (Ct.App.1974); Travelers Ins. Co. v. Nat'l Farmers Union Prop. & Cas. Co., 252 Ark. 624, 480 S.W.2d 585 (Sup.Ct.1972); State Comp. Ins. Fund v. Gulf Ins. Co., 628 P.2d 182, 184 (Colo.Ct.App.1981); State Farm Mut. Automobile Ins. Co. v. Univ. Sys. of Georgia Bd. of Regents, 226 Ga. 310, 174 S.E.2d 920, 921-922 (Sup.Ct.1970); Gentry v. Pugh, 362 So.2d 1154, 1156-1157 (La.Ct.App.1978); Janzen v. Land O'Lakes, Inc., 278 N.W.2d 67 (Minn.Sup.Ct.1979); Hartford Accident & Indemn. Co. v. Glickman, 84 Misc.2d 33, 374 N.Y.S.2d 566, 568-569 (Civ.Ct.1975); Southeast Furniture Co. v. Barrett, 24 Utah 2d 24, 465 P.2d 346, 347-348 (Sup.Ct.1970). Nevertheless, we remain convinced that the right to reimbursement and the carrier's lien established by N.J.S.A. 34:15-40 are fully applicable to the proceeds of the employee's uninsured motorist policy.

As originally enacted in 1911, the Workers' Compensation Act made no provision for the reimbursement of the employer or his carrier out of the proceeds of any recovery from the third party responsible for the employee's injury or death. See United States Cas. Co. v. Hercules Powder Co., 4 N.J. 157, 163, 72 A.2d 190 (1950); Henry Steers, Inc. v. Turner, etc., Co., 104 N.J.L. 189, 193, 139 A. 42 (E. & A.1927). N.J.S.A. 34:15-40 was enacted to eradicate the inequity of multiple recoveries. See Danesi v. American Mfrs. Mut. Ins. Co., 189 N.J.Super. 160, 162-163, 459 A.2d 686 (App.Div.1983), certif. den. 94 N.J. 544, 468 A.2d 194 (1983). The pertinent provisions of that statute provide:

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. In the event that the employee or his dependents shall recover and be paid from the said third person or his insurance carrier, any sum in release or in judgment on account of his or its liability to the injured employee or his dependents, the liability of the employer under this statute thereupon shall be only such as is hereinafter in this section provided.

(a) The obligation of the employer or his insurance carrier under this statute to make compensation payments shall continue until the payment, if any, by such third person or his insurance carrier is made.

(b) If the sum recovered by the employee or his dependents from the third person or his insurance carrier is equivalent to or greater than the liability of the employer or his insurance carrier under this statute, the employer or his insurance carrier shall be released from such liability and shall be entitled to be reimbursed, as hereinafter provided, for the medical expenses incurred and compensation payments theretofore paid to the injured employee or his dependents less employee's expenses of suit and attorney's fee as hereinafter defined.

(c) If the sum recovered by the employee or his dependents as aforesaid is less than the liability of the employer or his insurance carrier under this statute, the employer or his insurance carrier shall be liable for the difference, plus the employee's expenses of suit and attorney's fee as hereinafter defined, and shall be entitled to be reimbursed, as hereinafter provided for so much of the medical expenses incurred and compensation payments theretofore paid to the injured employee or his dependents as exceeds the amount of such difference plus such employee's expenses of suit and attorney's fee.

(d) If at any time prior to the payment by the third person or his insurance carrier to the injured employee or his dependents, the employer or his insurance carrier shall serve notice, as hereinafter provided, upon such third person or his insurance carrier that compensation has been applied for by the injured employee or his dependents it shall thereupon become the duty of such third person or his insurance carrier, before making payment to the injured employee or his dependents, to inquire from such employer or his insurance carrier the amount of medical expenses incurred and compensation theretofore paid to the injured employee or to his dependents. Where such notice shall have been served, it shall further become the duty of such third person or his insurance carrier, before making any payment as aforesaid, to inquire from such injured employee or his dependents the amount of the expenses of suit and attorney's fee, or either of them in the action or settlement of the claim against such third person or his insurance carrier. Thereafter, out of that part of any amount about to be paid in release or in judgment by such third person or his insurance carrier on account of his or its liability to the injured employee or his dependents, the employer or his insurance carrier shall be entitled to receive from such third person or his insurance carrier so much thereof as may be due the employer or insurance carrier pursuant to subparagraph (b) or (c) of this section. Such sum shall be deducted by such third person or his insurance carrier from the sum to be paid in release or in judgment to the injured employee or his dependents and shall be paid by such third person or his insurance carrier to the employer or his insurance carrier. Service of notice, hereinbefore required to be made by the employer or his insurance carrier upon such third person or his insurance carrier, shall be by registered mail, return receipt and in cases other than an individual shall be mailed to the registered office of such other third person of his insurance carrier.

Thus, presently, an employee injured in a work related automobile accident may not retain both compensation benefits and the fruits of his common law action against the insured third-party tortfeasor.

In our view, these statutory provisions apply here. As noted in Montedoro v. Asbury Park, supra, 174 N.J.Super. at 308, 416 A.2d 433, we are "unable to conceive of any reason why the Legislature would have intended an employee-accident victim of an uninsured driver to fare better" than the victim of an insured tortfeasor. Cf. Garcia v. Snedeker, Dir. of Motor Vehicles, 199 N.J.Super. 254, 489 A.2d 175, 178 (App.Div.1985). As we...