Appellate Division vacated and remanded a trial court order denying employer’s application for satisfaction of its workers’ compensation lien as premature after the third party settlement.

In October 2019, Darshelle Joseph was injured while working for NJ Transit and filed a workers’ compensation case and a third party case against the tortfeasor. In November 2019, NJ Transit sent Joseph a letter, requesting information on the third party case and notice of its right to recover for its lien. NJ Transit paid approximately $7,000 in workers’ compensation benefits. In December 2021, Joseph settled with his uninsured motorist (UM) carrier for $14,000, and his counsel disbursed the entire amount, minus fees and costs, to Joseph. The workers’ compensation case was still pending.

In September 2022, NJ Transit filed a verified complaint and order to show cause, seeking reimbursement of its lien. The trial court granted the order. After submitting letter-briefs, the trial court denied NJ Transit’s application as premature, without hearing oral arguments. NJ Transit appealed, and the Appellate Division reviewed de novo.

NJ Transit argued Joseph has to reimburse its statutory lien under N.J.S.A. 34:15-40 immediately after settling with his UM carrier. The Appellate Division reviewed the statute and case law, noting there was no mention of the timeline for satisfying an unperfected lien. For a perfected lien, if the workers’ compensation carrier or employer notified the tortfeasor or their carrier of the lien, then the duty would fall on them to ensure the lien was repaid. However, the Appellate Division noted there was no requirement that a lien had to be paid immediately following settlement with a third party tortfeasor; instead, it could not be fully satisfied until the workers’ compensation case was finalized and the employer’s liability determined. 

The Appellate Division did stress the employer’s right to reimbursement was provided with considerable protection. However, in this case, NJ Transit’s lien was not protected, and as such, it could unfairly pressure NJ Transit to resolve the workers’ compensation case for an amount equal to the lien or risk an uncollectable judgment. As such, the Appellate Division remanded to the trial court to ensure the lien was protected until the workers’ compensation case was resolved. 

_{What’s Hot in Workers’ Comp, Vol. 28, No. 5, May 2024, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}