NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6278-11T4

KELLY GREENE,

Petitioner-Respondent,

v.

AIG CASUALTY COMPANY,

Respondent-Appellant.

__________________________________

Argued February 27, 2013 - Decided

Before Judges Grall, Koblitz and Accurso.

On appeal from the Department of Labor, 

Division of Workers' Compensation, 

Claim Petition No. 2009-24085.

John H. Geaney argued the cause for 

appellant (Capehart & Scatchard, P.A., 

attorneys; Mr. Geaney and Ian G. Zolty, 

on the briefs). 

John J. Jasieniecki argued the cause for 

respondent (Green, Jasieniecki & Riordan, 

LLC, attorneys; Mr. Jasieniecki, of counsel 

and on the brief). 

The opinion of the court was delivered by

ACCURSO, J.A.D.

The question presented by this appeal is whether respondent 

AIG Casualty Company (AIG), which paid workers' compensation

APPROVED FOR PUBLICATION

October 16, 2013

APPELLATE DIVISION

October 16, 2013
2 A-6278-11T4

benefits to petitioner Kelly Greene, is entitled to a lien 

against her settlement with a third-party tortfeasor pursuant to 

Section 40 of the Workers' Compensation Act, N.J.S.A. 34:15-40, 

even though her injury was ultimately noncompensable. The 

workers' compensation judge determined that Section 40 is 

inapplicable to a claim deemed not to be compensable. We 

disagree and reverse.

There are very few facts in the record. Petitioner was 

employed by AIG as an accountant analyst. She slipped in the 

lobby of the building where she worked, on a floor wet with 

rain, and sustained an injury to her knee. Petitioner

immediately reported the accident to AIG. AIG did not own the 

building where petitioner worked but only leased a portion of 

the premises. It initially denied the claim and advised 

petitioner to submit any bills to her health insurance carrier.1 

Nevertheless, and for reasons unclear on the record, within days 

of that letter AIG authorized treatment without prejudice 

pursuant to N.J.S.A. 34:15-15 (Section 15).

Ten weeks after the accident, the subrogation agent for 

AIG's workers' compensation carrier wrote to petitioner 

 

1 The letter to petitioner was sent by Chartis. In its reply 

brief, AIG advises that "NUFIC of Pittsburgh [AIG's workers' 

compensation carrier], AIG and Chartis are all the same company,

which [petitioner] was aware of as an employee of AIG." 
3 A-6278-11T4

asserting a lien against any financial recovery she might obtain 

from any third party. Petitioner subsequently filed a claim 

petition in the Division of Workers' Compensation against AIG 

and a third-party tort action.2 AIG filed an answer to the claim 

petition. In response to petitioner's assertion that her injury 

occurred in the course of her employment, AIG answered "UI," 

meaning the matter was "under investigation." AIG continued to 

pay medical and temporary disability benefits to petitioner

pursuant to Section 15. 

AIG subsequently filed an amended answer denying that 

petitioner's injury had occurred in the course of her employment

and a motion to dismiss petitioner's claim petition. Petitioner

opposed the motion and filed two additional motions of her own, 

one to compel AIG to provide additional medical treatment,3 and a 

second, months later, to bar any claim by AIG under Section 40. 

In the motion made pursuant to Section 40, counsel 

expressed petitioner's willingness to concede that the claim was 

not compensable in exchange for a waiver of AIG's statutory 

subrogation rights as against her third-party settlement. 

 

2 The tort action was presumably against the owner of the 

building. There is no information about this suit in the 

record. In its brief to this court, AIG asserts without 

contradiction that the suit was settled for $225,000. 

3 According to the parties, this motion was later abandoned.
4 A-6278-11T4

Counsel explained that "[i]t is Petitioner's position that 

either the Workers' Compensation Claim Statute applies in its 

entirety or if the accident is not compensable, no credit under 

N.J.S.A. 34:15-40 is due. As such, Respondent cannot pick and 

choose which provisions of N.J.S.A. 34:15-1 et seq. appl[y]."

AIG opposed the motion, noting that its motion to dismiss 

had not been heard and was still pending. AIG asserted that it 

provided petitioner medical treatment and disability payments

without prejudice pursuant to the express terms of Section 15, 

and thus was entitled to its lien pursuant to Section 40. 

Specifically, AIG contended that it paid $94,841.52 in medical 

benefits and $23,963.02 in indemnity for a total of $118,804.54, 

and was thus owed $79,203.03, two-thirds of the benefits paid, 

from petitioner's recovery of $225,000. Counsel contended that 

"[n]owhere does it state in [Section 40] that it is applicable 

only when there is a compensable lien." AIG claimed that 

petitioner's construction of the statute would allow her a 

"double recovery" not permitted under workers' compensation 

laws.

After hearing argument, the workers' compensation judge 

granted petitioner's motion. Characterizing the issue as 

whether "AIG is entitled to reimbursement from a third party 

recovery under [Section] 40 without accepting the claim as 
5 A-6278-11T4

compensable," the judge wrote that AIG "wishes to escape the 

obligations of a workers' compensable judgment for additional 

money for permanency and that allows petitioner to reopen the 

matter for further treatment or additional disability and 

requires it to shoulder a greater part of the expenses of 

medical examinations and attorney's fees." The judge concluded:

Section 40 is a part of the Workers' 

Compensation statutes. It is applicable in 

situations involving workers' compensation 

claims and cannot be taken out of context to 

apply generally. If the claim is determined 

not to be compensable, the section is 

inapplicable. If it is compensable, the 

section applies. Either we try the matter 

of compensability or respondent relinquishes 

its lien.

Respondent asserts that the section 

denies a double recovery. One could argue 

that the outcome it desires would result in 

something of a double recovery for it, 

rather than for the injured worker. 

The judge subsequently signed an order of dismissal on consent 

of the parties, which included a provision that the funds 

recovered in the third-party action be held in escrow for fortyfive days in anticipation of an appeal to this court.

In a supplemental letter issued pursuant to R. 2:5-1(b), 

the judge noted that 

[a]t the time of the accident, petitioner

was covered by both health care benefits and 

workers' compensation insurance. Whether 

the matter was compensable or not, she had 

medical coverage and would not have had to 
6 A-6278-11T4

bear the brunt of the expenses. If there 

remains an ancillary issue regarding such 

coverage, that carrier should have been 

joined in that action. The Division of 

Workers' Compensation is a statutory court 

limited to workers' compensation injuries 

and does not have authority to modify a 

judgment of Superior Court.

The judge further stated that once the parties agreed to dismiss 

the workers' compensation claim, she was without "jurisdiction 

to order anything further."4

Our review of a judge of compensation's conclusions of law 

is de novo. Sentinel Ins. Co. v. Earthworks Landscape Constr., 

L.L.C., 421 N.J. Super. 480, 486 (App. Div. 2011). In 

determining the meaning of a statute, as we are required to do 

here, the first step is always to consider its plain language. 

Oberhand v. Dir., Div. of Taxation, 193 N.J. 558, 568 (2008). 

We construe that language in light of the entire statute and the 

overall statutory scheme. Cnty. of Bergen Emp. Benefit Plan v. 

Horizon Blue Cross Blue Shield of N.J., 412 N.J. Super. 126, 132

(App. Div. 2010). "When the language in a statute 'is clear and 

 

4 To the extent the judge was of the view that petitioner's 

concession that her claim was not compensable deprived the court 

of jurisdiction to resolve the dispute over the Section 40 lien, 

we disagree. See N.J. Mfrs. Ins. Co. v. Blau, 194 N.J. Super.

27, 31 (App. Div. 1984) (holding that the original exclusive 

jurisdiction of the Workers' Compensation Division over all 

claims for workers' compensation benefits, includes a claim by a 

compensation carrier to recover benefits allegedly improperly 

received). 
7 A-6278-11T4

unambiguous, and susceptible to only one interpretation,' we 

presume the Legislature meant what it said and that the plain 

meaning governs." Ibid. (quoting Burnett v. Cnty. of Bergen, 

198 N.J. 408, 421 (2009)).

Section 15 of the Workers' Compensation Act, N.J.S.A.

34:15-1 to -142 (the Act), requires that an employer "shall 

furnish to the injured worker such medical, surgical and other 

treatment, and hospital service as shall be necessary to cure 

and relieve the worker of the effects of the injury" but that 

"[t]he mere furnishing of medical treatment or the payment 

thereof by the employer shall not be construed to be an 

admission of liability." N.J.S.A. 34:15-15. Section 40 of the 

Act addresses situations in which a third person is liable to 

the employee for an injury. While permitting an injured worker 

to both collect compensation benefits and pursue a third-party 

tortfeasor, Section 40 requires an employee to reimburse the 

employer from the proceeds of any recovery. N.J.S.A. 34:15-40; 

Pool v. Morristown Mem'l Hosp., 400 N.J. Super. 572, 575-76 

(App. Div. 2008). In situations, as here, in which the recovery 

exceeds payments made by the employer, the statute provides:

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 
8 A-6278-11T4

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.

[N.J.S.A. 34:15-40b.]

It has long been understood that the clear intent of 

Section 40, which was not a part of the Act's original 

provisions in 1911, is to prevent an injured employee from 

recovering and retaining workers' compensation payments, while 

at the same time recovering and retaining the full damages 

resulting from a third-party tort suit. See United States 

Casualty Co. v. Hercules Powder Co., 4 N.J. 157, 163-65 (1950) 

(noting the purpose of the "amendatory legislation" was to 

retain for the injured employee the benefit of a potentially 

greater recovery from a third-party tortfeasor than that allowed 

under the Act, while at the same time obviating "the evil of the 

old law" by providing for the reimbursement of the employer or 

its insurance carrier out of the proceeds of any third-party 

recovery). 

Contrary to petitioner's argument, nothing in either 

Section 15 or Section 40 conditions reimbursement of the claim 

from a third-party settlement on whether the benefits the 
9 A-6278-11T4

employer paid were owed in the first place.5 Section 15 

expressly provides that any payments the employer makes are 

without prejudice to a defense of noncompensability, and Section 

40b allows the employer reimbursement from the third-party 

recovery if the sum recovered by the employee is "equivalent to 

or greater than the liability of the employer." N.J.S.A. 34:15-

40b.6 Here, as petitioner concedes that AIG has no liability 

under the premises rule,

7 the sum she recovered in settlement of

her third-party claim must be greater than AIG's liability, 

 

5 Petitioner points to the first line of Section 40 which 

provides that "[w]here 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," N.J.S.A. 34:15-40 (emphasis 

added), as evidencing the Legislature's intent "that the 

liability of a third-party is not triggered absent an employee's 

right to receive benefits under N.J.S.A. 34:15-1 et seq." 

Petitioner's reading would bar her from receiving payments under 

the Act and from suing a third-party tortfeasor for negligence, 

a nonsensical result utterly at odds with the statute's express 

terms.

 

6 A recent amendment to N.J.S.A. 34:15-15 makes clear that AIG 

could not recover directly from petitioner any fees it paid for 

treatments or medical services. See L. 2012, c. 67, § 1. This 

amendment, however, is not implicated here as AIG seeks 

reimbursement only from petitioner's third-party recovery as 

expressly allowed by Section 40. 

7 See Acikgoz v. N.J. Tpk. Auth., 398 N.J. Super. 79, 88-89 (App. 

Div. 2008) (explaining that under the premises rule an employee 

must show that the employer had control of the property on which 

the accident occurred in order to demonstrate that the accident 

occurred in the course of employment). 
10 A-6278-11T4

because the injury was noncompensable and AIG's liability 

therefore nonexistent. Accordingly, AIG is entitled to recover 

from petitioner's third-party settlement all of its payments to 

her, less her expenses of suit and attorney's fee in accordance 

with Section 40.

Our conclusion that Section 40 applies regardless of a 

claim's compensability furthers the Act's remedial purpose of 

"mak[ing] benefits readily and broadly available to injured 

workers through a non-complicated process." Tlumac v. High 

Bridge Stone, 187 N.J. 567, 573 (2006). Allowing third-party 

reimbursement under Section 40 without regard to compensability 

encourages the employer to make prompt voluntary payments,

thereby affording the employee needed funds for medical 

treatment and the replacement of lost wages. The Act encourages 

the same result through the express assurance of Section 15 that 

the voluntary payment of benefits will not constitute an 

admission of liability, as well as through N.J.S.A. 34:15-64c, 

the Act's attorney fee provision, which allows an employer to 

reduce its exposure to payment of the petitioner's fees by 

making a timely good faith tender of compensation. Menichetti 

v. Palermo Supply Co., 396 N.J. Super. 118, 123-24 (App. Div.

2007) (noting that the purpose of the Act's fee provision is to 

encourage the employer to offer a settlement and start paying 
11 A-6278-11T4

the employee at an early date). Other courts have similarly 

permitted third-party reimbursement for voluntary payments 

without a compensability determination to further the policy of 

encouraging employers to make prompt payments to injured 

workers. See Struhs v. Prot. Techs., Inc., 992 P.2d 164, 167-68 

(Idaho 1999) (subrogation permitted pursuant to statute even 

though benefits had been voluntarily paid rather than the 

subject of a formal award); see also Olson v. Blesener, 633 

N.W.2d 544, 546-47 (Minn. Ct. App. 2001) (employer who 

voluntarily paid key employee lost wages could seek 

reimbursement from third-party recovery through subrogation, 

albeit not by statute, because employee was never required to be 

covered by workers' compensation).

In addition, permitting AIG a lien against petitioner's 

settlement with a third-party tortfeasor pursuant to Section 40, 

even though her injury was ultimately noncompensable, furthers 

the legislative policy of integrating the sources of recovery so 

as to prevent double recoveries. Midland Ins. Co. v. 

Colatrella, 102 N.J. 612, 618 (1986). Our Supreme Court has

broadly construed Section 40 by holding that "any proceeds" 

whether recovered directly from the third-party tortfeasor or 

from a functionally equivalent source, such as uninsured 

motorist insurance or legal malpractice proceeds, are subject to 
12 A-6278-11T4

Section 40 liens, and that the same "no double recovery rule" 

applies to both types of recoveries, even when the employee is 

not fully compensated. Frazier v. N.J. Mfrs. Ins. Co., 142 N.J.

590, 602 (1995) (explaining that Section 40 prevents "double 

recovery," which "occurs when the employee keeps any workers' 

compensation benefits that have been matched by recovery against 

the liable third person, even if the two combined would leave 

the employee less than fully compensated"). Likewise, we have 

held that where multiple sources of recovery present themselves,

workers' compensation benefits, personal injury protection 

benefits, and recovery from the tortfeasor, the interplay of the 

controlling statutes reflects a legislative intention to assure 

but a single recovery to the injured worker. Lefkin v. 

Venturini, 229 N.J. Super. 1, 8-9 (App. Div. 1988). 

Petitioner and the workers' compensation judge suggest that 

petitioner has been penalized by AIG's payment of benefits under 

Section 15, as she would otherwise have had her medical expenses 

paid by her health insurer.8 But that ignores the effect of the 

 

8 We reject petitioner's contention that AIG's voluntary payment 

of benefits under the circumstances of this case implicates the 

Sheffield Doctrine, Sheffield v. Schering Plough Corp., 146 N.J.

442, 460 (1996) (holding that "when an employer undertakes to 

advise an injured employee to apply for certain disability or 

medical benefits that are authorized by the employer, the 

employer necessarily assumes a further obligation not to divert 

the employee from the remedies available under the Act"). 

(continued)
13 A-6278-11T4

collateral source rule, N.J.S.A. 2A:15-97. Under our collateral 

source rule, petitioner would have been obliged to disclose to 

the court any amounts she received from her health insurer and 

they would have been deducted from any tort judgment.9 Perreira 

v. Rediger, 169 N.J. 399, 409 (2001). Accordingly, had 

petitioner's health insurer paid her medical expenses instead of 

AIG, the benefit would have accrued to the third-party 

tortfeasor, not to petitioner. Id. at 410-414 (explaining that 

the two-fold purpose of N.J.S.A. 2A:15-97 was to eliminate the 

double recovery to plaintiffs that flowed from operation of the 

common-law rule and to allocate the benefit of that change to 

liability carriers, thus leaving health insurers in the same 

position as they were at common law with no right of equitable 

subrogation).

 

(continued)

Sheffield was directed at an employer's efforts to divert an 

employee from availing herself of the benefits of the Act. 

Here, AIG promptly made benefits available to petitioner. 

Moreover, petitioner filed her claim petition through counsel 

after AIG initially denied the claim, reversed course and began 

to voluntarily pay benefits, and after the subrogation agent for 

AIG's workers' compensation carrier wrote to petitioner 

asserting a lien against any financial recovery she might obtain 

from any third party. These circumstances and the lack of any 

prejudice to petitioner from the ordinary operation of Section 

40 render Sheffield inapplicable here. 

9 That petitioner settled her claim does not change the calculus. 

See Lefkin, supra, 229 N.J. Super. at 5, 8-9. 
14 A-6278-11T4

Thus, we perceive no disadvantage to petitioner in allowing 

a Section 40 lien against her third-party recovery regardless of 

the compensability of her claim. Because our collateral source 

rule, N.J.S.A. 2A:15-97, expressly excludes workers' 

compensation benefits, however, not allowing a lien in this 

circumstance would undoubtedly result in a double recovery to 

petitioner, a result certainly not intended by the Legislature 

under Section 40 or the collateral source rule. See Frazier v. 

New Jersey Mfrs. Ins., 276 N.J. Super. 84, 90 (App. Div. 1994)

(noting that because the Legislature specifically protected the 

funds necessary to satisfy a Section 40 lien by excepting 

workers' compensation benefits from the ambit of the collateral 

source rule, if repayment of the workers' compensation carrier 

from the third-party recovery were not required, the workers' 

compensation exclusion would result in a double recovery to the 

plaintiff in contravention of clear legislative policy against 

duplication of awards), aff'd, 142 N.J. 590 (1995). 

Read in conjunction, Section 40 and our collateral source 

statute plainly require that a third-party tortfeasor be held to 

the full extent of its liability for a workplace injury, that 

the employer or compensation carrier be repaid for benefits paid 

to the injured worker pursuant to the Act without regard to the 
15 A-6278-11T4

compensability of the claim, and that the employee not obtain a 

double recovery. 

Reversed.