Geaney: No Part 40 Lien Deduction for Petitioner’s Share of Counsel Charges| Staff Compensation Information

By John H. Geaney

Tuesday, March 9, 2021 | 60 | 0 | min read

We all know that certain events are going to happen every year: Alabama is going to play for the national soccer championship, your property taxes are sure to go up, Tom Brady will be in the Super Bowl, and most likely someone is going to challenge the way Section 40 Real Estate Liens in New Jersey be calculated.

John H. Geaney

This year, the lien lawsuit in Panckeri against Allentown Police Dept.

Police officer Daniel Panckeri was injured on April 15, 2012 while providing assistance at the scene of a motor vehicle accident. Panckeri sustained injuries to his left foot while attempting to stop one of the cars rolling into oncoming traffic, resulting in a permanent disability of 33.3%. Two years later, he reopened the case and received an elevation to 40% of the foot.

Panckeri has also settled a third party lawsuit for $ 99,000, and the respondent has exercised his full lien on the gross amount of employee compensation: $ 16,547.13 for temporary disability benefits, $ 16,287.05 for medical benefits, 16,560 $ .01 for permanent benefits for the initial settlement and $ 4,323.09 for the reopening settlement.

This meant the community was entitled to reimbursement of two-thirds of all payments minus $ 750 in expenses, as the third party settlement was greater than the total amount of employee compensation.

This case concerned the fees the petitioner had paid his lawyer and whether they should be included in the lien. In the original employee compensation case. The judge assessed against the petitioner $ 1,524 for Panckeri’s portion of attorney’s fees and expenses and an additional $ 844 for Panckeri’s portion of attorney’s fees and expenses for the reopening claim.

Panckeri argued that the workers’ compensation lien should not apply to the payment of legal fees and expenses in either case, as he never received those funds. He argued that they should be withdrawn before the respondent calculates his lien.

Compensation Judge Christopher B. Leitner ruled in favor of the Allentown Police Dept. and believed that the two attorney fees and expenses found against the petitioner should not be reduced by $ 2,368 as New Jersey law does not provide for such an exception.

The judge ruled that the law is designed to avoid duplicate clawbacks and the only allowance allowed by law is $ 750. Judge Leitner also stated that the law was “silent” on the costs incurred by the petitioner in the employee compensation matter.

Eventually, Judge Leitner noted that lawmakers amended NJSA 34: 15-40 in 2007 to increase the flat fee from $ 250 to $ 750, specifically “reviewing exempt fees and charges” by “reviewing only the deductible Amount increased ”and“ not taken into account ”have every new interpretation. “

On appeal, Panckeri alleged that the legal fees and fees he paid in the case of employee compensation were not paid for his “benefit or pleasure” and therefore were not paid as “compensation”.

The Appeals Department disagreed: “We reiterate this essentially for the reasons that Compensation Judge Christopher B. Leitner set out in his thoughtful and thorough written decision.”

The appeals department found that the case cited by Panckeri, Kuhnel v CNA Insurance Cos., Is not really accurate. In this case, it was found that a Section 40 lien in most cases does not include rehabilitation care services and neither the respondent’s share of the petitioner’s legal fees nor the expert fees for defense IMEs.

The court concluded that Kuhnel had not addressed at all whether the petitioner could deduct his part of the fees and costs paid in the employee compensation case.

Eventually, the court said lawmakers could have amended Section 40 in 2007 to make such an adjustment, but decided against it.

John H. Geaney is an attorney, executive committee member, and shareholder in Capehart Scatchard, a defense law firm in New Jersey. This post is published with permission from Geaney’s New Jersey Workers’ Comp Blog.