NJ Supreme Court Confirms Workers’ Compensation Subrogation Is Not Limited By No-Fault Laws

On May 12, 2020, the New Jersey Supreme Court answered a long-standing subrogation question regarding whether a workers’ compensation carrier is entitled to subrogation and/or reimbursement from a third-party tortfeasor who is covered by New Jersey no-fault insurance, even though the employee does not otherwise meet the verbal threshold allowing him or her to sue the tortfeasor.

The Supreme Court confirmed what we had long suspected the law to be—the subrogation rights of a workers’ compensation carrier are not affected by New Jersey’s no-fault and verbal threshold requirements, as has been suggested in at least two prior appellate decisions.

New Jersey workers’ compensation subrogation is governed by N.J.S.A. § 34:15-40 (2000).Known simply as “§ 40,” this statute allows an injured worker to simultaneously pursue a workers’ compensation claim under the New Jersey Act and a third-party action against any third party liable for the injuries he sustained.

New Jersey has a version of no-fault auto insurance laws. Every owner or registered owner of an auto registered or principally garaged in New Jersey must maintain either a standard or basic auto liability insurance policy with certain minimum limits of coverage insuring against bodily injury, death or property damage sustained by any person “arising out of the ownership, maintenance, operation or use of an automobile.”