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Section 40 of New Jersey Worker’s Compensation Act As Related to Other Personal Injury Claims

By: Attorney Edward Slaughter, Jr

Section 40 of the New Jersey Workers’ Compensation Act provides that an employer, or its Workers’ Compensation insurance company, will be reimbursed if an injured worker also collects from a person unrelated to the employment (a third party) for the same personal injury. The reason for this is to prevent a worker from collecting twice for the same injury. While this sounds good on the surface, it is not always fair.

I’ll give you an example.

Suppose a worker gets seriously hurt as he/she is operating a machine. The reason for the accident was the fault of the employer who removed a guard from the machine. If the guard were present it would have prevented the accident. Without it, the work could be done faster and the employer could make more profit.

Workers’ Compensation benefits had to be paid to the worker because the worker was injured at work. These monies were paid by the employer or, more typically, by his workers’ compensation insurance company.

The worker went to a personal injury lawyer who advised that under the New Jersey Products Liability Act the worker had a right to make a claim against the machine manufacturer. Suit was brought against the machine manufacturer.

The law of New Jersey says that a manufacturer of a machine has an obligation to prevent a machine he makes and sells from injuring any likely user of the machine. By designing the machine in a way that allowed the machine to be run without guards, the manufacturer violated the products liability act. A judgment was entered against the manufacturer.

By law, the employer’s conduct was not considered even though his conduct caused the accident. This is so because the law does not allow a jury to consider the acts of the employer even though he may have been cited by the OSHA for his conduct.

So, under Section 40 of the New Jersey Workers’ Compensation Act, he or his workers’ compensation insurance company gets back most that it has paid in workers’ compensation benefits, even though the accident was the employer’s fault. This seems unfair.

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