History Lesson: N.J. PIP & Workers’ Compensation Benefits

New Brunswick, NJ (WorkersCompensation.com) -- Workers' compensation cases often raises issues related to insurance coverage and insurance law.

Such was the case in Aetna Casualty & Surety Company v. Para Manufacturing Company, 176 N.J. Super. 532 (N.J. Super. Ct. App. Div. 1980), in which a New Jersey court addressed the question of whether a personal injury protection carrier could institute a workers' compensation proceeding as a way to enforce its statutory right to deduct collectible workers' compensation benefits from PIP benefits.

What Happened?

While on the job, a worker was injured in an automobile accident. She filed a claim for PIP benefits but didn't file a petition for workers' compensation benefits. The insurer paid the PIP benefits, and the insure then filed a workers' compensation petition.

The judge of compensation dismissed the case, concluding that the Division of Workers' Compensation didn't embrace claims by PIP carriers. That prompted the insurer to appeal.

Legal Standard

At the time, the law in effect stated that PIP benefits were to be deducted from "benefits collectible," including workers' compensation and "other enumerated collateral sources."

That seems plain enough, but a precedent case held that a PIP carrier could not just make a unilateral decision that a claim was entitled to collect workers' compensation benefits but instead had to institute a workers' compensation proceeding in its own name.

However, when this case reached the judge's desk, he found that there was conflict in precedent decisions in which New Jersey Supreme Court rulings indicated that the dispute could be resolved only as part of a proceeding instituted by an injured worker.

What the Court Decided

The court explained that if an employee doesn't elect to pursue the remedies available under workers' compensation law, it's up to the Compensation Division to determine what -- if any -- collectible benefits exist.

In the case, the court held that reimbursement could be ordered because the Division had jurisdiction over claim petitions filed by PIP carriers as subrogees of injured employees.

"A contrary holding would thwart the legislative plan that the primary source for the payment of PIP benefits should be 'benefits collectible under Workers' Compensation Insurance,'" the court wrote.

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