NY Worker Barred From Future Benefits Even After Paying Comp Insurer $63K From Settlement Proceeds

Despite the fact that a workers’ compensation insurer was aware of an injured worker’s third-party action against the driver of a motor vehicle, and even received and accepted more than $63,000 in reimbursements for its outlay—up to that point—in the underlying workers’ compensation case, the worker was nevertheless required to get the insurer’s written consent to the third-party settlement under N.Y. Workers’ Comp. Law §29(5), held a state appellate court [Matter of DeGennaro v. H. Sand & Co., Inc., 2021 N.Y. App. Div. LEXIS 5495 (3d Dept. Oct. 7, 2021)]. Accordingly, since there was no such written consent, nor had the worker obtained a nunc pro tunc order from the trial court approving the settlement, the workers’ compensation carrier was relieved of the duty to provide additional workers’ compensation benefits to the injured worker.

Background

Claimant sustained work-related injuries to his back and knees in 2004 when he was struck by a vehicle insured by Travelers Insurance Company. In addition to the awards paid by the employer’s workers’ compensation carrier, claimant sought relief from the vehicle owner and ultimately obtained a settlement from Travelers totaling approximately $1.6 million. Travelers apprised claimant that the carrier had a lien against the settlement proceeds totaling approximately $95,000 and of claimant’s need to reimburse the carrier for two thirds of that sum. In response, claimant tendered a check to the workers’ compensation carrier in 2007 in the amount of $ 63,333, which the carrier cashed.

Contending that the workers’ compensation carrier had been overpaid, plaintiff (the claimant noted above) commenced an action against the carrier in 2013 seeking, among other things, reimbursement for the amount of the alleged overpayment. The carrier answered and denied the allegations set forth in the complaint, including claimant’s assertion that the carrier consented to the settlement of claimant’s third-party claim.

WCLJ: Carrier Actively Participated in Settlement

The WCLJ found that the carrier actively participated in the settlement negotiations of the third-party claim and, in turn, received a direct benefit in the form of repayment of its workers’ compensation lien.

Board Reverses

Upon administrative review, the Workers’ Compensation Board reversed, finding that claimant failed to obtain the carrier’s consent to the settlement as required by N.Y. Workers’ Comp. Law §29(5) and, therefore, claimant was barred from receiving further workers’ compensation benefits related to his claim. Claimant’s subsequent application for reconsideration and/or full Board review was denied, and claimant appealed.

Appellate Court: No Carrier Consent

The appellate court noted that N.Y. Workers’ Comp. Law §29(5) required either a written consent of the carrier to the settlement or a compromise order (nunc pro tunc) from the court. The court said that although there was no dispute that the carrier was aware of the settlement and that the check tendered by claimant satisfied the carrier’s then-existing lien, neither the documentary evidence contained in the record nor the testimony adduced at the hearing established that the carrier consented to the settlement of the third-party claim or that claimant obtained a nunc pro tunc order approving the settlement.

The court added that the record was devoid of proof that the carrier actively participated in the settlement negotiations. The mere fact that the carrier’s lien was satisfied was insufficient to waive the formal consent requirements. Substantial evidence supported the Board’s findings and the appellate court would not, therefore, disturb the Board’s order.