Court Opinion

ID: 9699385
Source: CourtListenerOpinion
Date Created: 2023-08-25 20:21:50.625644+00
Date Added: 2024-06-11T18:20:49.581052
License: Public Domain

Schreiber, J.,
dissenting. An employee is not entitled to receive more from his employer or its insurance carrier (hereafter collectively referred to as “employer”) than his compensation award under the Worker’s Compensation Act, N. J. S. A. 34:15-1 et seq. Yet the majority attains this result by distorting the legislative scheme under which the em*590ployer is responsible for its share of attorney’s fees with respect to the employee’s recovery against a third-party tortfeasor.
To comprehend the legislative duty imposed on the employer to pay the employee a pro rata share of the attorney’s fees charged for the recovery against a third-party tortfeasor, it is necessary to understand some basic principles of the Worker’s Compensation Act. Under the Act, compensation, whether temporary or permanent, is to be paid to the employee on a weekly basis, N. J. S. A. 34:15-12, after an initial waiting period of seven days following the accident. N. J. S. A. 34:15-14. The employer is not required to pay the entire award in one lump sum. Its obligation is to pay a sum certain each week for a definite number of weeks. Correspondingly, the employee is entitled to a sum certain per week over the course of a specific number of weeks. If an employee dies before all the weekly payments have been made and he is not survived by any dependents as defined in N. J. S. A. 34:15-13, then the employer is obligated to pay future weekly payments only in an amount not to exceed $750 (which sum is to be used for funeral expenses), N. J. S. A. 34.Y5-12(e). Por example, an employee might obtain a compensation award for permanent disability of $145 per week for 450 weeks and die as a result of a noncompensable cause after 10 weeks of payments had been due and paid. The employer’s responsibility would then be limited to $750 and it would not be obligated to pay $145 per week for the remaining 440 weeks.
Reference to the liability of a third party for the employee’s injury did not appear in the original act, L. 1911, c. 95, and whether the employee could obtain a double recovery (the compensation award plus monetary damages from the third person) was unclear. Feinsod v. L. & F. Constr. Co., 17 N. J. Misc. 65 (C.P. 1939). An amendment in 1913, L. 1913, c. 174, § 8, approved an employee’s action against a third party provided that the employer be released from any *591compensation obligation if the worker’s recovery were equal to or in excess of the total compensation payments due. If recovery were less than that total, then the employer would be liable only for the difference between the total compensation award and the third-party recovery. The amendment also provided that if notice of the employer’s lien claim had been given to the third party, then upon settlement or judgment the third party would pay the employer “a sum equivalent to the amount of compensation payments which the employer ha[d] theretofore paid to the injured employee or his dependents * * Id. The employee was given no credit for the attorney’s fee which he had paid to obtain the recovery. Deuchar v. Standard Accident Ins. Co., 117 N. J. L. 375 (E. & A. 1937).
In 1936 the Legislature addressed itself to the inequity of having the employee assume the entire cost of the recovery against the tortfeasor and amended the Act so that the third-party recovery was deemed to be the net after deduction of the employee’s expenses and attorney’s fees. L. 1936, c. 162, § 1. Under this provision, however, the employer would not necessarily pay its proportionate share of the attorney’s fees with respect to that part of the recovery to which it was entitled to reimbursement. Savitt v. L. & F. Constr. Co., 123 N. J. L. 149 (Sup. Ct. 1939); McClare v. Tasty Baking Co., 127 N. J. L. 492 (Sup. Ct. 1941), aff’d 129 N. J. L. 98 (E. & A. 1942); Fireman’s Fund Indemn. Co. v. Batts, 11 N. J. Super. 242 (App. Div. 1951). To remedy that situation the law was amended in 1951, L. 1951, c. 169.
The new statutory formula, which remains in effect, provides that if the third-party recovery is greater than or equal to the compensation award, the employer is released from having to pay the award but is required to pay the employee a fair share of the employee’s attorney’s fees, not to exceed 33-1/3% of the compensation award. If the third-party recovery is less than the compensation award, the employer is required to pay the difference plus the fair share of the at*592torney’s fees, not to exceed 33-1/3% of the third-party recovery. N. J. S. A. 34:15-40(b), ,(c), and (e). The attorney’s fee is calculated on that part of the sum paid by the tortfeasor “to which the employer * * * shall be entitled [in] reimbursement.” N. J. S. A. 34:15-40(e) (emphasis supplied). Reimbursement means repayment. The Legislature unquestionably contemplated that the employer had made the compensation payment and the employer was to pay an attorney’s fee for the actual recovery. This has been the established administrative practice of the Division. The attorney was not to be paid a fee for relieving the employer from a possible .future liability.
The purpose of the 1951 amendment was to make an equitable apportionment “as between the employer and the employee of the burden attending the realization of the benefits had by each as well as to insure the essential purpose of fulfillment of the employer’s obligation under the Compensation Act.” Caputo v. The Best Foods, Inc., 17 N. J. 259, 267 (1955) (emphasis supplied). As Justice Heher wrote in Dante v. Gotelli, 17 N. J. 254, 258 (1955), the employer was to be assessed its pro rata share of the attorney’s fee “measured by the benefit thereby accruing to the employer.” Cf. 2A Larson, The Law of Workmen's Compensation, § 74.16 at 14-186 (1976) (commenting that a salutary objective of a third-party recovery statute is “the employer and carrier ‘coming out even’ by being reimbursed for their compensation expenditure”).
The Appellate Division has honored this purpose of interpreting the reimbursement section of the Act so that employers are assessed for attorney’s fees on the basis of worker’s compensation payments as they become due. Pagan v. Hillside Metal Products, Inc., 140 N. J. Super. 154 (App. Div. 1976); Burpee v. Princeton Mun. Imp. Co., 88 N. J. Super. 552 (App. Div 1965). In Burpee Judge E. Gaulkin wrote:
*593The employer’s obligation is to pay compensation at the rate- of $26 per week. It is not required to commute or accelerate payments. Under certain circumstances, such as if Burpee should die without dependents within the 450 weeks; the employer’s obligation to pay compensation may cease. In short, the employer benefits from the third-party recovery only at the rate of $26 per week. It follows that it is obliged to pay its pro- rata, share of the fee only on what it receives, and only as it receives it. [Id. at 559]
In Pagan Judge BischofE reasoned:
The obligation of the carrier to pay to petitioner a pro rata share of the attorney’s fee only arises when a weekly payment otherwise due need not be paid due to the third-party recovery. There is no statutory basis for compelling the carrier to make payments to petitioner which it might not be required to make should the petitioner suffer an untimely demise and leave no dependents surviving. N. J. S. A. 34:15-12(e). [140 N. J. Super. at 160]
To hold that an employer must pay an attorney’s fee for recovery of monies which it has not as yet paid and may never be obliged to pay causes incongruous results. Assume a third-party recovery of $100,000 and a legal fee of $25,000. The employee has received $75,000 and his attorney has been paid. The employee has obtained a compensation award of 450 weeks at $145 per w;eek, or $65,250, of which $5,250 had been paid when the third-party recovery was obtained. The majority would have the employer pay the employee an additional $15,000 —• the attorney’s fee which might be due when, as and if the employer might pay the $60,000 balance. But if the employee dies of natural causes leaving no dependents as defined in the statute, the employer would be compelled to pay $15,000 toward an attorney’s fee for services rendered only to the employee. The employee’s estate would be unduly enriched by $15,000 under these circumstances.
Since the attorney’s fee is keyed to the employer’s reimbursement, the employer should not be forced to pay that fee until he makes the weekly payments or they are due. Obviously the receipt of the entire gross amount of the *594attorney’s fee before the weekly amounts have become due results in the receipt of a sum greater in value than that which would have been received if the entire attorney’s fee had been spread evenly and proportionately over the life of the weekly payments. Requiring the employer to pay an attorney’s fee for reimbursement of compensation payments which have not been due and paid and possibly compelling the employer to pay more than the compensation award are contrary to the statutory language, intent and scheme. It is not a proper judicial function to add, under the guise of interpreting the Worker’s Compensation Act, another unwarranted imposition on the consuming public.
I would reverse.
Justice Clifford joins in this opinion.
For affirmance — Justices Sullivan, P ashman and Handler and Judge Oonfokd — 4.
For reversal — Justices Clifford and Schreiber — 2.