NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A

- 0112

- 17T4

LIBERTY MUTUAL INSURANCE o/b/o SABERT CORPORATION,
Plaintiff

- Respondent,

v. JOSE R. RODRIGUEZ,
Defendant

- Appellant.

__ __________________________

Argued January 15, 2019

– Decided April 2, 2019 Before Judges Fisher, Suter and Firko. On appeal from Superi or Court of New Jersey, Law Division, Middlesex County, Docket No. L

- 2564

- 17. David H. Lande argued the cause for appellant (Law Offices of Gill & Chamas, attorneys; David H. Lande, on the brief). Betsy G. Ramos argued the cause for respondent (Capehart & Scatchard, PA, attorneys; Betsy G. Ramos, of counsel and on the brief). James M. Clancy argued the cause for amicus curiae New Jersey Advisory Council on Safety and Health (Borbi, Clancy & Patrizi, attorneys; James M. Clancy, on the brief). APPROVED FOR PUBLICATION April 2, 2019
APPELLATE DIVISIONA

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- 17T4 2 The opinio n of the court was delivered by FIRKO, J.S.C. (temporarily assigned)

. Defendant Jose R. Rodriguez (Rodriguez) appeals from an order entered by the trial court granting plaintiff Liberty Mutual Insurance's (Liberty) application for reimbursement f or its wor kers' compensation benefits paid to Rodriguez from his third

- party recovery based on the fee ratio calculated for the overall settlement and not the sliding scale set forth in Rule 1:21

- 7. We
affirm.
The relevant fa cts are not disputed and the matter was ripe for disposition. See , e.g. , Brill v. Guardian Life Ins. Co. of Am. , 142 N.J. 520,
540 (1995) . Rodriguez was injured during the course of his employment at Sabert Corporation in 2012. Liberty was the workers' compensation carrier for
Sabert

. Rodri guez retained the Gill & Chama s law firm (law firm) to represent
him in his worker s ' compensation matter and the t hird

- party action against the
tortfeasor . Rodriguez entered int o an A greement to Provide Legal Services in
2002 that provided the law firm would receive a fee , under the 2012 version of
Rule 1:21

- 7(c) , as follows:

(1) 33[.33] % of the first $500,000 recovered ; (2) 30% on the next $500,000 recovered; (3) 25% on the next $500,000 recovered ;A

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- 17T4 3 (4) 20% on the next $500,000 recovered; and (5) on all amounts recovered in excess of the above by application for a reasonable fee in accordance with the provisions of paragraph (f) hereof

. [ 1 ]
A settlement was a ch iev ed on behalf of Rodriguez with the tortfeasor for $1.2 m illion dollars. The p arties stipulat e d that Rodriguez 's workers ' compensation benefits totaled $148,590.40. 2 Liberty asserted its rights to
reimbursement of its lien under N.J.S.A. 34:1 5

- 40(b) (Section 40) from the
third

- party s ettlement. Section 40 makes clear that the remedies provi ded the employee by the workers ' compensation laws do not preclude an employee from pursuing damages from a tortfeasor, referred to in Section 40 as the "third person":

In the event that the employee or his dependents shall recover and be pai d from the said third person or his insurance carrier, any sum in release or in judgment on account of his or its liability to the injured employee or his dependents, the liability of the employer under this statute thereupon shall be only such as is herei nafter in this section provided.

1 Rule 1:21

- 7(c) was amended in 2014 and the sliding scale now applies to the first $750,000 recovered

.
2 It is undisputed that $129,488.46 was paid on behalf of Rodriguez for medical expenses and $19,101.94 in indemnity for a total of $148,590.40.A

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- 17T4 4 In this statutory scheme, Section 40 then provides for reimbursement to the employer or its insurance carrier when an employee receives a recovery from the third person in the following way:

If the sum recovered by the em ployee 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 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 defin ed.
The law firm sent Liberty a check for $98,310.26 , net of its attorney's
fees , calculated at 33.33% and costs, denoting it as "payment in full. " The $98,310.26 check amounted to only 66.6 7% of the $148,590.40 in worker s ' compensation benefits, and not 69.44%

. Liberty disag reed with that
calculation , and asserted the law firm was onl y entitled to an attorney fee
calculated at 30.56% , or the sum of $102,431.17 , because the ove rall percentage paid by Rodriguez in fees was 3 0.56% , plus $750 for expenses of
suit

. 3

3 N.J.S.A. 34:15

- 40(e) provides:

As used in this section, "expenses of suit" shall mean such expe nses, but no t in excess of $750 and (continued)A

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- 17T4 5 In arriving at its calculation, Liberty argued that in the third

- party action,
th e law firm was entitled to 33.3 3% of the first $500,000 recovered, or $166,666.67; 30% of the next $500,000 recovered, or $150,000; a nd 25% of the remaining $200,000 recovered, or $50,000 , for a total fee of $366,666.67.
The third

- party counsel fee equaled 30.56% of Rodriguez's $1.2 million
settlement. Liberty filed an order to show cause and verified complaint on behalf of Sabert Cor poratio n seeking reim bursement of the difference, $4 120.91 , claiming that the percentage should be calculated based upon the actual fee paid and not the settlement recovered. Rodriguez opposed the application. 4 The trial judge determined that : [Rodriguez] paid $366,666.67 in attorney's fees, which constitutes 30.56[%] of his settlement. This 30.56[%] is less than the 33[.33] limit of the statute and (continued) "attorney's fee" shall mean such fee, but not in excess

of 33.3 3% of that part of the sum paid in release or in judgment to the injured employee or his dependents by such third person or his insurance carrier to which the employer o r his insurance carrier shall be entitled in reimbursement under the provisions of this section, but on all sums in excess thereof, this percentage shall not be binding.

4 The record indicates that no adjudication of permanency had been made at the time the order to show cause and verified complaint were filed. This was confirmed by counsel at the time of oral argument.A

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- 17T4 6 therefore represents the percentage of attorney's fees that [Rodriguez] is responsible for. Cap uto v. Best Foods, Inc. , 17 N.J. 259 [ , 268 (1955)]

. The fee ratio shall not exceed that actually borne by the insured. Accordingly, the [c]ourt finds that [Rodriguez] is to reimburse $102,431.17 for the worker [s'] compensation benefits to [Liberty] based upon a rei mbursement rate of 69.44[%] and subtracting $750 of court expenses. As [Rodriguez] has already reimbursed [Liberty] in the amount of $98,310.26, the [c]ourt orders [Rodriguez] to reimburse [Liberty] the outstanding $4120.91. Rodriguez was asse ssed a 69.44% credit against future workers' compensation benefits paid on his behalf. The trial judge found that Rodriguez's reliance on McMullen v. Maryland Casualty Company , 127 N.J. Super. 231 (App. Div. 1974) was "misplaced" because:

Taking into accou nt the three leading cases construing N.J.S.A. 3 4 :15

- 40 of Teller v. Major Sales Inc. , 64 N.J. 143 (1974); Caputo [] , 17 N.J. 259 [] ; and Dante v. Gotelli , 17 N.J. 254 (1955), the [A]ppellate [D] ivision in McMullen noted that although these cases all invol ved tort recoveries obtained before Rule 1:21

- 7 became effective, the following is clear. Where the fee arrangement between p laintiff and his attorney is for a fee whether contingent or on a fee for service basis which equals a percentage of less than one
- third of the recovery, the carrier would pay only aA

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- 17T4 7 lesser percentage of his lien a s a fee [

. ] McMullen , 127 N.J. Super. at 235. And calculating the employer's pro rata shares of attorney's fees, the [A] ppellate [D] ivision in McMullen found the lien or share to be 33 [.33%] of the employee's total compensation exposure. Recognizing that the McMullen court concluded that "it is not evident
that Rule 1:21

- 7 was intended to modify the statute, the statute should control
and the lienor should n ot be made to pay more than 33 and a third of the lien or any portion thereof as a fee," the trial judge disavowed that holding and relied
upon Caputo

. In his appeal, Rodriguez argues that the trial judge erred in ruling that the pro rata share of attorney 's fees should be determined using a gross average of the sliding scale attorney's fees paid in the third

- party case rath er than the sliding scale basis set forth in Rule 1:21

- 7 and the A greement to Provide L egal
S ervices. Because Section 40 was enacted p rior to the implementation of the sliding scale contingent fee, Rule 1:21

- 7 (c) , Rodriguez argues that case law is precedential on this issue. 5 Liberty argues that Rodriguez ignores the fact that the total percentage of fees paid equaled 30.56% of the $1.2 million settlement ($1,200,000 divided by $366,666.67 equals 30. 56 %), and not at the sliding

5 Rule 1:21

- 7(c) became effective January 31, 1972.A

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- 17T4 8 scale rate of 33.3 3% applicable to the first level of the sliding scale of Rule
1:21

- 7, which is the first $500,000 recovered , relying upon McMullen

. We are co nvinced that the arguments ra ised on appeal lack merit. Our Supreme Court in Caputo held:

subdivision (b) obviously has reference to reimbursement for the payments actually made, and not to the base for the assessment of the attorney' s fee provided by sub division (e) . . . . [T herefore] the fee ratio shall not exceed that actually borne by the injured workman. [17 N.J. at 267 (emphasis added). ]
In Teller v. Major Sales , Inc. , 64 N.J. 143 , 148 (1974) our Supreme
C ourt cited Caputo with approval. The defendant (employer) paid the plaintiff (employee) $30,238.50 in workers' compensation benefits in Teller , and $75,000 was recovered in a third

- party action. Id. at 144. Applying Rule
1:21

- 7(c) yielded a $21,111.09 contingent fee, or 28.14% of the $ 75,000

amount. Id. at 144

- 45. Our Supreme Court held that pursuant to N.J.S.A.
34:15

- 40(b), the defendant

- employer 's pro rata share was 28.14% of the $30,238.50 "to which the attorney's fee in the third

- party settlement actually
worked out." Id. at 148. 6

6 The net effect was the defendant

- employer (or its workers ' compensation carrier) paid $8 509.11 towards the counsel fee in the third

- party action.A

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- 17T4 9 Rodriguez argues t hat our decision in McMullen , decided two months
after Teller , should apply here. The trial judge held

— and we agree

— that Caputo is the controlling authority in deciding that the fee should be 30.56% for recovery of Liberty's lien. We are mindful that the McMullen court took a
different view. We are not bound by our earlier decisions because we do not sit en banc. Pressler and Verniero, Current N.J. Court Rules , cmt. 3.3 on R. 1:36

- 3 (2019)

. But our Supreme Court decisions, such as Caputo , bind us and all trial courts. "Because we are an intermediate appellate court, we are bound to follow the law as it has been expressed by . . . our Supreme Court." Lake Valley Assocs., LLC v. Twp. of Pemberton , 411 N.J. Super. 501, 507 (App. Div. 2010). We
must adhere to Caputo notwithstanding the contrary conclusion reached in
McMullen

. See David v. Gov' t Emp s
. Ins. Co. , 360 N.J. Super. 127, 142 (App. Div. 2003).
Affirm ed

.