NOT FOR PUBLICATION WITHOUT THE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 Superior 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 DIVISION
A-0112-17T4 2

The opinion 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 for its workers' 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 facts 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. Rodriguez retained the Gill & Chamas law firm (law firm) to represent 

him in his workers' compensation matter and the third-party action against the 

tortfeasor. Rodriguez entered into an Agreement 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-0112-17T4 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 achieved on behalf of Rodriguez with the tortfeasor for 

$1.2 million dollars. The parties stipulated 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. 34:15-40(b) (Section 40) from the 

third-party settlement. Section 40 makes clear that the remedies provided 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 paid 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 hereinafter 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-0112-17T4 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 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 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.

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 66.67% of the $148,590.40 in workers'

compensation benefits, and not 69.44%. Liberty disagreed with that

calculation, and asserted the law firm was only entitled to an attorney fee 

calculated at 30.56%, or the sum of $102,431.17, because the overall 

percentage paid by Rodriguez in fees was 30.56%, 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 expenses, but not in excess of $750 and 

(continued)
A-0112-17T4 5

In arriving at its calculation, Liberty argued that in the third-party action, 

the law firm was entitled to 33.33% of the first $500,000 recovered, or 

$166,666.67; 30% of the next $500,000 recovered, or $150,000; and 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 Corporation seeking reimbursement of the difference, 

$4120.91, 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 33.33% 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 or 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-0112-17T4 6

therefore represents the percentage of attorney's fees 

that [Rodriguez] is responsible for. Caputo 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 

reimbursement 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 assessed 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 account the three leading cases construing 

N.J.S.A. 34:15-40 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 involved tort recoveries obtained before Rule

1:21-7 became effective, the following is clear. 

Where the fee arrangement between plaintiff 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 a 
A-0112-17T4 7

lesser percentage of his lien as 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 not 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 rather than the 

sliding scale basis set forth in Rule 1:21-7 and the Agreement to Provide Legal 

Services. Because Section 40 was enacted prior 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-0112-17T4 8

scale rate of 33.33% 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 convinced that the arguments raised 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 subdivision (e) . . . . [Therefore] 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

Court 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 $8509.11 towards the counsel fee in the third-party action.
A-0112-17T4 9

Rodriguez argues that 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 Emps. Ins. Co., 360 N.J. Super. 127, 142 (App. 

Div. 2003).

Affirmed.