Liberty Mutual Insurance v. Rodriguez, 458 N.J. Super. 515 (App. Div. 2019). This short opinion by Judge Firko today involved how to calculate reimbursement to an insurer for its workers’ compensation benefits paid to an injured insured where the insured obtains a third-party recovery. The Appellate Division affirmed the ruling of the Law Division that reimbursement should be based on “the fee ratio calculated for the overall settlement and not the sliding scale set forth in Rule 1:21-7.”
The Law Division relied on Caputo v. Best Foods, Inc., 17 N.J. 259 (1955). That case, which preceded the 1972 adoption of Rule 1:21-7, stated that “[t]he fee ratio shall not exceed that actually borne by the injured workman.” Thus, that case, and two subsequent Supreme Court cases (one of which came after Rule 1:21-7) that followed the holding of Caputo, appeared to be right on point.
The insured here, however, relied on an Appellate Division case, McMullen v. Maryland Casualty Co., 127 N.J. Super. 231 (App. Div. 1974), which came after the Rule and reached a result contrary to the Supreme Court cases. The Law Division followed Caputo and its Supreme Court progeny instead of McMullen. On appeal, Judge Firko agreed with that decision, summarizing her conclusion in that regard in a single paragraph (citations omitted):
“We are not bound by our earlier decisions because we do not sit en banc. But our Supreme Court decisions, such as Caputo, bind us and all trial courts. Because we are an intermediate appellate court, we are bound to follow the law as it has been expressed by … our Supreme Court. We must adhere to Caputo notwithstanding the contrary conclusion reached in McMullen.”
This summary of a lower court’s duty is unquestionably correct. But if Rule 1:21-7 were intended to change the landscape, there would be a justification for a court (though perhaps only the Supreme Court itself) to disavow Caputo. Whether that Rule was so intended, or whether the Supreme Court would consider that question, is purely hypothetical at this point.