The Appellate Division affirms its decision to include attorneys’ fees and costs in a workers’ compensation claim in a Section 40 lien.

The Appellate Division reviewed a remanded case for reconsideration by the Supreme Court after its decision in Richter v. Oakland Bd. of Educ., 246 N.J. 507 (2021). The case involved a petitioner who was injured in a motor vehicle accident while working and filed both a workers’ compensation claim and a tort action against the driver of the vehicle that injured him. He settled his workers’ compensation case, in which his gross permanency benefit was $20,883.10, including $2,368 for attorneys’ fees and costs. He also resolved his tort action for $99,000, reduced by $5,000 for his ex-wife’s per quod claim and $30,696 in counsel fees and $1,919.82 for expenses.

The Allentown Police Department asserted a lien under N.J.S.A. 34:15-40 (Section 40). The petitioner argued the $2,368 in attorneys’ fees and costs should not be included in the lien, and the workers’ compensation judge disagreed. The Appellate Division affirmed.

Then, in Richter, the Supreme Court discussed a claimant’s recovery from an employer under the New Jersey Law Against Discrimination (LAD) and whether this was barred by the exclusivity provision of the Worker’s Compensation Act (WCA). The relevant portion of that opinion addressed the Section 40 lien and how it would operate if the claimant’s LAD claim was successful. The specific language at issue dealt with the intent of Section 40 to bar duplicate damages, but “[t]hat does not mean that her employer is entitled to be reimbursed for fees plaintiff had to pay counsel out of her compensation award.” Richter, 459 N.J. Super. at 425-26.

Following the remand, the petitioner argued this language would exclude the $2,368 from the Section 40 lien. The employer countered that Richter was not a case involving a permanency award and that applying Richter would cause inconsistencies. Although the Appellate Division acknowledged that the express language precluded fees from a Section 40 lien, it also noted not every word in a Supreme Court opinion was binding precedent. Instead, the Appellate Division found that the 2-3 and 1-3 split only applied to Richter’s potential LAD award, not the workers’ compensation award. The Appellate Division also reiterated that the legislative history of Section 40 limited “expense of suit” and “attorney’s fee” for third-party actions and that it was silent on attorneys’ fees and costs in a workers’ compensation claim.

As such, the Appellate Division again affirmed its decision, noting there was no binding precedent holding that attorneys’ fees and costs in a worker’s compensation claim should be excluded from a Section 40 lien.

_{What’s Hot in Workers’ Comp, Vol. 26, No. 10, October 2022 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 © 2022 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.}