N.J. Transit Corp. v. Sanchez, 197 A.3d 1158

Background

On December 2, 2014, NJ Transit employee David Mercogliano was injured in a work-related vehicle collision; NJ Transit (employer) paid $33,625.70 in workers' compensation (medical and wage loss).
Mercogliano carried AICRA-compliant personal auto insurance and did not meet AICRA's "verbal threshold" for noneconomic damages because he suffered no permanent injury. He did not sue the tortfeasors.
NJ Transit (through its workers' compensation carrier) sued the negligent third-party tortfeasors (Sanchez and Smith) under N.J.S.A. 34:15-40(f) to recover the benefits it paid (subrogation/reimbursement).
Defendants moved to dismiss on summary judgment, arguing AICRA's verbal threshold and related provisions bar NJ Transit’s subrogation claim because the injured employee could not recover noneconomic damages or PIP medical payments from the tortfeasors.
The trial court relied on Continental and Lefkin, granted summary judgment to defendants, and dismissed NJ Transit’s claim; NJ Transit appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a workers' compensation carrier can subrogate against tortfeasors for economic losses (medical expenses and wage loss) paid under WCA when the injured employee is subject to AICRA's verbal threshold	WCA (Section 40) governs subrogation; carrier has an independent right to reimbursement regardless of employee's inability to recover noneconomic damages under AICRA	AICRA's verbal threshold and collateral source scheme limit recovery; as subrogee the carrier "stands in the shoes" of the employee and is subject to the same defenses	Reversed: WCA governs subrogation; carrier may recover economic losses from tortfeasors despite employee not vaulting verbal threshold
Whether AICRA (including N.J.S.A. 39:6A-6 and -12) displaces or limits WCA reimbursement rights in work-related auto accidents	AICRA does not displace WCA rights; nothing in AICRA indicates intent to treat wage/medical claims of work-injured employees as limited by auto no-fault	AICRA's no-fault scheme would be undermined if carriers could not enforce their liens; prior cases (e.g., Continental) suggest limits	Held that AICRA does not govern the workers' compensation carrier’s reimbursement right; WCA controls
Whether worker's lack of PIP recovery or settlement with tortfeasor affects carrier's lien	Carrier need not show employee sought or obtained third-party recovery; lien attaches to third-party recovery and carrier has independent statutory claim	Defendants: absence of employee recovery and verbal threshold bar carrier from pursuing tortfeasor	Court: carrier may sue tortfeasor; absence of PIP payments by employee's insurer is irrelevant to carrier's Section 40 right
Precedent conflict: Continental (limiting carrier) vs. Lefkin/Lambert (favoring carrier) — which controls	NJ Transit relies on Lambert and Lefkin reasoning that WCA governs and carriers can recover medical/economic losses from tortfeasors	Defendants rely chiefly on Continental to argue carrier is limited by employee's AICRA constraints	Court sides with Lefkin/Lambert line and rejects application of Continental here; reverses trial court

Key Cases Cited

Continental Ins. Co. v. McClelland, 288 N.J. Super. 185 (App. Div.) (court held employee's verbal-threshold status can limit carrier recovery)
Lefkin v. Venturini, 229 N.J. Super. 1 (App. Div.) (held workers' comp medical expenses may be recovered from tortfeasor despite PIP nonpayment)
Lambert v. Travelers Indem. Co. of Am., 447 N.J. Super. 61 (App. Div.) (held WCA governs worker/tortfeasor rights and carrier reimbursement; AICRA does not bar recovery)
Utica Mut. Ins. Co. v. Maran & Maran, 142 N.J. 609 (Sup. Ct.) (Section 40 entitles carrier to reimbursement whether or not employee is fully compensated)
Primus v. Alfred Sanzari Enters., 372 N.J. Super. 392 (App. Div.) (compensation lien attaches to all sources of third-party recovery)