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Lump Sum Settlement with Third Party Barred Transfer of Employer’s Liability for Future Medical Payments to the Special Fund

The Third Department, in a full-fledged opinion by Justice Stein, determined that a lump sum payment from a third party, to which the employer agreed in return for the worker’s forebearance re: future indemnity payments by the employer, barred the transfer of the employer’s liability for future medical payments to the Special Fund:

Pursuant to Workers’ Compensation Law § 25-a, liability for a claim will be transferred to the Special Fund when an application is made to reopen a closed case after a lapse of seven years from the date of the injury and three years from the date of the last payment of compensation … . The issue here distills to when the last payment of compensation was made in light of the settlement agreement between claimant and the employer. …

Pursuant to Workers’ Compensation Law § 25-a (7), where a case is “disposed of by the payment of a lump sum,” the date of the last payment of compensation is established by calculating the date to which the amount paid in the settlement would have extended had the award of indemnity benefits been made at the maximum compensation rate warranted on the date the lump-sum payment was approved … . Here, the employer entered into an agreement with claimant on December 30, 2008 that permitted claimant to retain the proceeds of the third-party action in exchange for, among other things, his forebearance of future indemnity benefits. In our view, these proceeds constituted a lump-sum payment for purposes of the statute. Contrary to the employer’s contention that the statute only applies where the employer itself makes a lump-sum payment to the claimant, we note that the plain language of the statute indicates that it applies “where the case is disposed of by the payment of a lump sum,” without reference to the source of such payment (Workers’ Compensation Law § 25-a [7]). Thus, because the settlement agreement effectively “disposed” of the employer’s obligation to pay future indemnity benefits in exchange for claimant’s retention of a lump-sum payment from the third-party action, application of the statute is appropriate to bar transfer of liability for future medical benefits to the Special Fund. Matter of Nicpon v Zelasko Constr Inc, 2014 NY Slip Op 04102, 3rd Dept 6-5-14

 

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