New Jersey law has very strict procedures for workers' compensation carriers to follow in subrogation, and failure to comply with those strict rules can mean loss of subrogation rights, as noted in Pino v. Polanco and New Jersey Manufacturers, A-5027-15T4 (App. Div. November 22, 2017).
Ms. Pino was injured in a work-related car accident on May 20, 2011. Another vehicle driven by an uninsured driver, Polanco, struck Pino's vehicle. Pino had uninsured motorist coverage with NJM. Hartford paid workers' compensation benefits totaling $48,056.79 for medical and temporary disability benefits. The Hartford subrogation representative sent a letter to Pino's attorney dated December 5, 2011 advising counsel of its subrogation rights under N.J.S.A. 34:15-40. The letter asked that Pino notify Hartford if she was not going to proceed with a third-party claim.
In April 2013, Pino filed a personal injury action against Polanco and later amended the complaint to name NJM as a direct defendant under the uninsured motorist policy. The parties eventually decided to arbitrate their dispute and entered into a “Stipulation of Dismissal Without Prejudice Subject to Reinstatement” of the law suit. The arbitrators awarded Pino $65,000 subject to the workers' compensation medical lien. NJM rejected the arbitration and sought a jury trial, believing that Pino could not get past the verbal threshold and would likely lose.
Ultimately Pino chose not to reinstate the Law Division case, which meant no recovery at all. But The Hartford did not know this. There was a long gap in time between the arbitration in July 2015 and the point in time when The Hartford finally learned about the ultimate outcome of the UM matter on January 26, 2016. Once The Hartford found out, it quickly filed a motion days to set aside the dismissal without prejudice and reinstate its complaint against NJM. That motion was filed well past 90 days from the dismissal without prejudice in 2014 but within 90 days from when The Hartford found out about the dismissal and decision not to pursue the matter. The trial judge rejected The Hartford's motion based on an obscure provision contained in N.J.S.A. 34:15-40(f). That provision states:
Where an injured employee or his dependents have instituted proceedings for recovery of damages for his injuries and loss against a third person and such proceedings are dismissed for lack of prosecution, the employer or insurance carrier shall, upon application made within 90 days thereafter, be entitled to have such dismissal set aside, and to continue the prosecution of such proceedings in the name of the injured employee or dependents in accordance with the provisions of this section.
The Hartford appealed and argued that the 90 days should start from when the company learned that the UM matter had been dismissed. NJM argued that the statute says 90 days from the dismissal for lack of prosecution. The Appellate Division contemplated that one reason for the 90-day rule is undoubtedly to foster expeditious resolution of subrogation claims. There are no reported decisions on this particular issue, as noted by the Court.
The Appellate Division was not sure that a dismissal for “lack of prosecution” mentioned in the statute fit precisely the “dismissal without prejudice” in this matter, but it said that the statute says what it says, and it does not have a provision for a “knowledge requirement.” The Court explained, “We share the trial court's observation in its oral ruling that perhaps Pino or her attorney should have advised The Hartford of the June 2014 dismissal of the UM case sooner, consistent with the request that The Hartford had made in December 2011 to be kept advised of the matter's status. However, we are aware of no authority that imposes a legal duty upon an employee or her personal injury attorney to supply such notice.”
The Court went on to state that the record did not disclose proof that The Hartford regularly followed up with Pino or her counsel about the status of the third party recovery following the December 5, 2011 letter. The Court seemed to be laying some blame on The Hartford for not being more diligent. While this case involves a very rare problem in the law, it is interesting to read in that the Court favored a very technical study of the obligations under N.J.S.A. 34:15-40. It is precisely for situations like this that subrogation representatives must vigorously follow up on the status of third party law suits and arbitrations. There is never too much diligence in keeping tabs on third party law suits.
Thanks to Ron Siegel, Esq. for bringing another important case to our attention.
ABOUT THE AUTHOR
John H. Geaney, an executive committee member and shareholder with Capehart Scatchard, began an email newsletter entitled Currents in Workers' Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates. To visit his New Jersey Workers' Comp Blog, click here.
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