Tag Archives: expenses of suit

Properly Calculating Your Section 40 Reimbursement in New Jersey

N.J.S.A. 34:15-40 (“Section 40”) grants a right of reimbursement to workers’ compensation carriers. This reimbursement is to the extent of benefits paid to an injured worker should that injured worker file a third-party civil suit against the responsible tortfeasor. See N.J.S.A. 34:15-40. The limitations on this recovery are set forth in subsections (b) and (c) of Section 40, which both provide that any third-party recovery is reduced by the employee’s “expenses of suit” and the attorney’s fee. Subsection (e) goes on to define “expenses of suit” as an amount not to exceed $750.00 and the attorney’s fee as an amount not to exceed 1/3rd of the ultimate settlement proceeds.

While the language of the statute is plain on its face, there is confusion regarding the precise application of the aforementioned reductions. For instance, it is common knowledge that, in a typical civil suit settlement, disbursements come “off the top” of the settlement proceeds. Disbursements are, by their very nature, not part of the amount to be divided amongst the intended recipients. By way of illustration, assume a civil case settles for $100,000.00 and there are exactly $10,000.00 in disbursements. Under such a structure, the plaintiff’s attorney would receive $30,000.00 as their fee and the plaintiff would receive the remaining $60,000.00.  Continue reading Properly Calculating Your Section 40 Reimbursement in New Jersey