A Capehart Scatchard Blog

Liens and Subrogation – Errickson v. Supermarkets General Corp.

By on July 7, 2008 in Controlling Costs with 0 Comments

New Jersey has a powerful subrogation provision under N.J.S.A. 34:15-40.  Respondent is entitled to two thirds of its payment if the recovery exceeds the total workers’ compensation expenses.  The employer must properly reserve lien rights.

The case of Errickson v. Supermarkets General Corp., 246 N.J. Super. 457 (App. Div. 1991) points out how failure to follow the rules can cause the loss of lien rights.

In Errickson, the accident happened on July 14, 1986. Cigna, the compensation carrier, paid compensation benefits and filed a suit in the name of Errickson on July 24, 1987. Cigna settled with the attorney for the third-party defendant and sent the release to Errickson, who refused to sign it. Errickson successfully argued that Cigna had not provided a written demand letter to him, and therefore the settlement Cigna had effected was invalidated. The court reviewed the proper procedure as follows:

  1. The compensation carrier or employer must wait one year;
  2. Then the carrier must make a written 10-day demand on employee to either effect settlement or institute a proceeding against the third-party defendant;
  3. The carrier must then wait the 10 days and can file suit if the employee fails to settle or institute proceedings.

It is important to bear in mind that if a carrier or employer files suit in the name of the injured worker against a third-party defendant, the rights of the carrier derive from the worker. Therefore, any money recovered in excess of the amount respondent has paid in compensation payments goes to the injured employee.

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John H. Geaney

About the Author

About the Author:

John H. Geaney, a shareholder and co-chair of Capehart Scatchard's Workers' Compensation department, began an email newsletter entitled Currents in Workers’ Compensation, ADA and FMLA in 2001 in order to keep clients and readers informed on leading developments in these three areas of law. Since that time he has written over 500 newsletter updates.

Mr. Geaney is the author of Geaney’s New Jersey Workers’ Compensation Manual for Practitioners, Adjusters & Employers. The manual is distributed by the New Jersey Institute for Continuing Legal Education (NJICLE). He also authored an ADA and FMLA manual as distributed by NJICLE. If you are interested in purchasing the manual, please contact NJICLE at 732-214-8500 or visit their website at www.njicle.com.

Mr. Geaney represents employers in the defense of workers’ compensation, ADA and FMLA matters. He is a Fellow of the College of Workers’ Compensation Lawyers of the American Bar Association and is certified by the Supreme Court of New Jersey as a workers’ compensation law attorney. He is one of two firm representatives to the National Workers’ Compensation Defense Network. He has served on the Executive Committee of Capehart Scatchard for over ten (10) years.

A graduate of Holy Cross College summa cum laude, Mr. Geaney obtained his law degree from Boston College Law School. He has been named a “Super Lawyer” by his peers and Law and Politics. He serves as Vice President of the Friends of MEND, the fundraising arm of a local charitable organization devoted to promoting affordable housing.

Capehart Scatchard is a full service law firm with offices in Mt. Laurel and Trenton, New Jersey. The firm represents employers and businesses in a wide variety of areas, including workers’ compensation, civil litigation, labor, environmental, business, estates and governmental affairs.

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