New Jersey Weekly Case Law Update


Category: New Jersey


Greene v. AIG Casualty Company, (N.J. Superior Court, App. Div. 2013; Decided 10/16/2013).


The issue presented in this case is whether the respondent, AIG, who paid  workers’ compensation benefits to the petitioner, Kelly Greene, was entitled to  subrogation lien reimbursement pursuant to Section 40 of the New Jersey Act  despite the fact that the injury was ultimately denied as non-compensable by  AIG.  The Workers’ Compensation Judge ruled that the Section 40 Lien was  inapplicable to a claim that the carrier deemed to be non-compensable.   The Appellate Division disagreed and reversed  applying the Section 40 Lien.


The facts of the claim reveal that on June 5, 2009, Ms. Greene, an account  analyst for AIG, slipped in the lobby of the building where she worked because  the floor was wet from rain.  Ms. Greene immediately reported the  claim.  Since AIG did not own the building where petitioner worked but  only leased a portion of the premises, AIG initially denied the claim and  advised the petitioner to submit any bills to her health insurance  carrier.  Nevertheless, within days of that denial letter, AIG did  authorize treatment without prejudice pursuant to N.J.S.A. 34: 15-15 of the  Act. 


Ten weeks after the accident, AIG’s carrier wrote to the petitioner placing  her on notice of the carrier’s intention to pursue Section 40 Lien  Rights.  The petitioner did subsequently file a Claim Petition in the  Division of Workers’ Compensation against AIG as well as a third-party tort  action presumably against the building’s landlord.  AIG answered the claim  indicating that the determination of whether petitioner’s injuries were  compensable was still under investigation.  Nevertheless, AIG continued to  pay not only medical benefits but also temporary disability benefits pursuant  to Section 15, i.e., without prejudice, to subsequently deny the claim.   AIG did subsequently file an Amended Answer denying that petitioner’s injuries  arose out of and during the course of employment. 


Petitioner filed two motions in order to compel AIG to provide medical  treatment under the Workers’ Compensation policy and another motion to bar any  claim by AIG for Section 40 Lien reimbursement for payments made.


Petitioner received a settlement in the amount of $225,000.00 relative to  the third-party claim.  She also received workers’ compensation benefits  from AIG totaling approximately $119,000.00. 


Despite the payment of benefits, the Workers’ Compensation Judge ruled that  AIG was not entitled to subrogation lien reimbursement since they had intended  to escape the obligation and ultimate conclusion that petitioner’s injuries  were compensable by denying the claim.  The Judge concluded that Section  40 Lien Rights only apply if the claim is determined to be compensable.


The Appellate Division noted that payments can be made pursuant to Section  15 of the statute without admitting liability.  The Court reviewed the  provisions of Section 40 and noted the clear intention to prevent an injured  employee from recovering and retaining workers’ compensation benefits while at  the same time recovering and retaining full damages from a third-party law suit.   The Court noted that nothing in either Section 15 or Section 40 required an  ultimate conclusion that benefits provided were ultimately owed in order for  reimbursement to apply.  Allowing the reimbursement encourages the  employer to provide prompt voluntary payments (even if under Section 15)  thereby providing the employee with needed funds for medical treatment and, in  this case, also wage replacement.


It is surprising that the  petitioner/plaintiff felt justified in arguing that despite the fact that AIG  provided $119,000.00 in benefits they were not entitled to any reimbursement  out of the third-party funds simply because those benefits were paid “without  prejudice”. The Judge’s  decision was equally perplexing. The benefits for medical and temporary  total disability benefits were, in fact, paid to the petitioner and would  clearly have represented a double recovery had AIG been unable to assert  reimbursement rights.  It was interesting that there was no case on point.


Chalmers v.  Swartz, No. A-1472-12T4


The Appellate Division was faced with determining whether a plaintiff was a  joint employee of the defendant whom she was  suing for personal injuries as owner and operator of the medical facility where  she was injured. Her boss (the son of the defendant) was not named in  lawsuit.   In the case of joint employment, the indicia of employment  must be evaluated in order to determine liability for workers’ compensation  benefits.  Of all inquiries considered, of most importance is the  determination of “whose interest the employee was furthering at the time of  accident.” 


The plaintiff was employed to clean the medical facility. She injured herself when she tripped on a piece of  pipe while taking out the trash.   The facility was owned by  defendant, who also maintained a medical practice at the facility with his son,  who the plaintiff identified as her boss. Both doctors submitted  that they were engaged in a joint medical practice.  The plaintiff was  paid from a joint checking account, covered by a workers’ compensation policy  which listed both doctors as her employers, and serviced both doctors’ interest  in cleaning the medical facility. The court found the undisputed facts yielded  the conclusion that the plaintiff was an employee of both doctors and,  therefore, her civil suit could not proceed as both doctors were immune from  suit as her employers.


The plaintiff, made an application that the matter be transferred to the  Division of Workers’ Compensation pursuant to Rule 1:13-4(a) and same was  granted.  The court found that notice had been provided to the workers’  compensation carrier within the two year statute of limitation for filing a  claim and as such, in the interest of justice, the case should be transferred  to the Division of Workers’ Compensation.   

For more  information regarding Greene v. AIG Casualty Company, please contact Jeffrey Newby at or 856.667.5804.

Media Contacts

Jennifer R. Williams 

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