N.J. Transit Corp. v. Sanchez
| Decision Date | 12 May 2020 |
| Docket Number | 082292,A-68 September Term 2018 |
| Citation | 229 A.3d 1271 (Mem),242 N.J. 78 |
| Parties | NEW JERSEY TRANSIT CORPORATION, a/s/o David Mercogliano, Plaintiff-Respondent, v. Sandra SANCHEZ and Chad Smith, Defendants-Appellants. |
| Court | New Jersey Supreme Court |
John V. Mallon argued the cause for appellants (Chasan Lamparello Mallon & Cappuzzo, attorneys; John V. Mallon, of counsel and on the briefs, and Ryan J. Gaffney, Secaucus, on the briefs).
Shawn C. Huber argued the cause for respondent (Brown & Connery, attorneys; Shawn C. Huber, Westmont, on the brief).
Richard J. Albuquerque argued the cause for amicus curiae New Jersey Association for Justice (D'Arcy Johnson Day, attorneys; Richard J. Albuquerque and Dominic R. DePamphilis, Egg Harbor Township, on the brief).
The judgment of the Appellate Division is affirmed by an equally divided Court.
This appeal arises from an action brought by plaintiff New Jersey Transit Corporation (New Jersey Transit) pursuant to N.J.S.A. 34:15-40, a provision of the Workers' Compensation Act that authorizes employers and workers' compensation carriers that have paid workers' compensation benefits to injured employees to assert subrogation claims. New Jersey Transit sought to recover workers' compensation benefits paid to an employee, David Mercogliano, who sustained injuries in a work-related motor vehicle accident. It sued the individuals allegedly at fault in the accident, defendants Sandra Sanchez and Chad Smith.
Defendants argued that New Jersey Transit's subrogation action was barred by the Auto Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35. Defendants asserted that because Mercogliano had elected the limitation-on-lawsuit option permitted by N.J.S.A. 39:6A-8(a), and sustained no permanent injury, AICRA barred New Jersey Transit's claim.
The trial court granted summary judgment in favor of defendants and denied New Jersey Transit's cross-motion for partial summary judgment. It barred New Jersey Transit's subrogation action on the grounds that Mercogliano sustained no economic loss as defined in AICRA and that New Jersey Transit's subrogation claim would subvert AICRA's goals.
The Appellate Division agreed with New Jersey Transit that the workers' compensation benefits paid to Mercogliano related only to economic loss. N.J. Transit Corp. v. Sanchez, 457 N.J. Super. 98, 112, 197 A.3d 1158 (App. Div. 2018). It concluded that New Jersey Transit's subrogation action did not implicate the limitation-on-lawsuit threshold imposed by N.J.S.A. 39:6A-8(a). Ibid. The Appellate Division held that because Mercogliano's economic loss was covered by his workers' compensation benefits -- not by personal injury protection (PIP) benefits under his automobile insurance policy -- New Jersey Transit's subrogation action did not run afoul of AICRA. Id. at 113, 197 A.3d 1158. It reversed the trial court's judgment and remanded for further proceedings. Ibid.
We concur with the Appellate Division's determination. We view New Jersey Transit's subrogation action to comport with the objectives and terms of the Workers' Compensation Act. 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 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.
The accident that gave rise to this action occurred on December 2, 2014 in Cliffside Park. Mercogliano, acting in the course of his employment, was driving a vehicle owned by New Jersey Transit when his car was struck from the rear by a vehicle driven by defendant Sanchez and owned by defendant Smith. Mercogliano sustained injury to his "right upper extremity." His treating physician later diagnosed him with "cervical strain
and strain of the right trapezius." Mercogliano was treated for his injuries and was medically cleared to return to work without restriction approximately two months after the accident.
At the time of his accident, Mercogliano was insured under a standard automobile policy issued by New Jersey Manufacturers Insurance Company. Under that policy, Mercogliano was entitled to up to $250,000 in PIP benefits and $400 weekly income continuation benefits. Because he had elected the limitation-on-lawsuit option under N.J.S.A. 39:6A-8(a), Mercogliano was subject to that provision's threshold. It is undisputed that Mercogliano sustained no injury that would vault the limitation-on-lawsuit threshold.
New Jersey Transit's workers' compensation carrier paid Mercogliano $33,625.70 in workers' compensation benefits, consisting of $6694.04 in medical benefits, $3982.40 in temporary indemnity benefits, and $22,949.26 in "permanent indemnity benefits" characterized by New Jersey Transit as relating to "lost wages." The record does not identify the specific losses for which those benefits were paid.
With his losses covered by workers' compensation benefits, Mercogliano neither sought nor received PIP benefits under his personal automobile insurance policy in connection with his accident.
In its capacity as Mercogliano's employer and subrogee, New Jersey Transit filed a complaint seeking to "recoup workers' compensation benefits pursuant to N.J.S.A. 34:15-40(f)." New Jersey Transit alleged that Mercogliano's injuries resulted from the negligence of Sanchez in the accident. It also asserted a vicarious liability claim against Smith as Sanchez's employer and the owner of the vehicle Sanchez was driving when the accident occurred. Defendants pled as an affirmative defense that New Jersey's no-fault insurance statutory scheme barred New Jersey Transit's subrogation claim.
Pursuant to Rule 4:46-2, defendants moved for summary judgment dismissing New Jersey Transit's complaint. They claimed that New Jersey Transit could not assert a subrogation claim because AICRA prevented Mercogliano from pursuing a third-party action against defendants, given his election of the limitation-on-lawsuit option in his personal insurance policy.
New Jersey Transit cross-moved for partial summary judgment. It sought a declaration that defendants' affirmative defense based on the limitation-on-lawsuit threshold would not bar the subrogation claim. New Jersey Transit conceded that it could bring no subrogation claim based on noneconomic losses in light of Mercogliano's inability to vault N.J.S.A. 39:6A-8(a)'s limitation-on-lawsuit threshold. It argued, however, that because its subrogation claim was based entirely on workers' compensation benefits paid for economic losses, and Mercogliano received no PIP benefits, the Workers' Compensation Act -- not AICRA -- governed the action.
The trial court ruled that New Jersey Transit could not assert a claim based on economic loss. It noted that N.J.S.A. 39:6A-2(k) defines economic loss for purposes of AICRA to mean "uncompensated loss of income or property, or other uncompensated expenses, including, but not limited to, medical expenses." In the trial court's view, Mercogliano could not have sued defendants for economic loss. The court concluded 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. Relying on Continental Insurance Co. v. McClelland, 288 N.J. Super. 185, 672 A.2d 194 (App. Div. 1996), the trial court ruled that New Jersey Transit was barred from asserting a claim against defendants for the benefits that it had paid.
The trial court expressed concern about a scenario distinct from the case before it, in which an automobile insurer pays PIP benefits to an injured worker, the employer or workers' compensation carrier reimburses the automobile insurer, and the employer or workers' compensation carrier then pursues a subrogation claim under N.J.S.A. 34:15-40. In the trial court's view, such a result would undermine the legislative policies expressed in AICRA. The trial court also cautioned that if New Jersey Transit prevailed, employers and workers' compensation carriers might seek to recover in subrogation actions against defendants shielded from direct claims by statutes such as the Tort Claims Act, N.J.S.A. 59:8-1 to 12-3, or the Charitable Immunity Act, N.J.S.A. 2A:53A-7 to -11.
Accordingly, the trial court granted defendants' motion for summary judgment and denied New Jersey Transit's cross-motion for partial summary judgment.
New Jersey Transit appealed the trial court's judgment. In a thoughtful opinion by Judge Geiger, the Appellate Division reversed that judgment. Sanchez, 457 N.J. Super. at 113, 197 A.3d 1158.
The Appellate Division agreed with New Jersey Transit that its subrogation action arose entirely from "economic loss comprised of medical expenses and wage loss, not noneconomic loss." Id. at 112, 197 A.3d 1158. However, it rejected the trial court's view that an employer or workers' compensation carrier's subrogation claim based on benefits paid for economic loss contravenes AICRA's legislative intent. Id. at 107-12, 197 A.3d 1158. The Appellate Division noted that in the Workers' Compensation Act, the Legislature imposed on an employer the obligation to pay workers' compensation benefits for an accident arising from an injured workers' employment, and that N.J.S.A. 34:15-40 "gives the workers' compensation carrier an absolute right to seek reimbursement from the tortfeasor for the benefits it has paid to the injured employee." Id. at 107, 197 A.3d 1158.
The Appellate Division acknowledged that N.J.S.A. 39:6A-6's...
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