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Time Constraints, In Workers’ Compensation Law 25, for Seeking Reimbursement for Compensation Paid by Self-Insured Employer Applied to Workers’ Compensation Law 30 As Well

The Third Department determined the self-insured employer waived its right to reimbursement for compensation payments made to its employee because it failed to make a timely claim under Workers’ Compensation Law 25(4)(a).  The court concluded that the wording of Workers’ Compensation Law 30 did not require a different result.  Section 30 was interpreted to include the time constraints imposed by section 25:

Here, the Board correctly determined that the employer was required to file timely requests for reimbursement, but did not do so. Workers’ Compensation Law § 25 (4) (a) provides that “[i]f the employer has made advance payments of compensation, or has made payments to an employee in like manner as wages during any period of disability, [the employer] shall be entitled to be reimbursed out of an unpaid instalment or instalments of compensation due, provided [the employer’s] claim for reimbursement is filed before award of compensation is made.” If this statute alone is applied here, the employer is precluded from recovering the full wages paid to claimant pursuant to General Municipal Law § 207-c because the employer did not file requests for reimbursement prior to the initial awards of compensation benefits for the relevant time periods … .

The employer contends that Workers’ Compensation Law § 30 applies instead. That statute provides that “any salary or wages paid to . . . [a claimant] under and pursuant to [General Municipal Law § 207-c] shall be credited against any award of compensation . . . under this chapter” (Workers’ Compensation Law § 30 [3]). To analyze these provisions, “the text of a statute is the best evidence of legislative intent and, where the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used” … . Because these two provisions are related statutes in the Workers’ Compensation Law, they “must be construed together unless a contrary legislative intent is expressed, and courts must harmonize the related provisions in a way that renders them compatible” … . Workers’ Compensation Law §§ 25 and 30 both provide a right to reimbursement out of future benefits, with section 30 being more specific regarding the statutory basis for the wage replacement payments sought to be reimbursed. Workers’ Compensation Law § 25 (4) (a) additionally provides that the employer will waive that right if it fails to timely submit a claim for reimbursement. “If by any fair construction, a reasonable field of operation can be found for [both of these related] statutes, that construction should be adopted” … . A reasonable construction of these two statutes is to read them together and conclude that the right of reimbursement granted by both statutes will be waived if the employer fails to submit a timely request for reimbursement. Matter of O’Brien v Albany County Sheriff’s Dept., 2015 NY Slip Op 01842, 3rd Dept 3-5-15

 

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Re: Breach of Fiduciary Duty and Fraud Causes of Action—Application of the “Repudiation Rule” and the “Discovery Rule” to the Statute of Limitations Explained

Plaintiff (a governmental agency charged with administering the workers’ compensation system) brought this action against workers’ compensation trusts alleging the trusts became insolvent because of defendants’ misconduct. Plaintiff alleged breach of fiduciary duty, fraud, breach of contract and sought common law indemnification. The bulk of the decision is devoted to determining the timeliness of the actions. The decision addressed the “repudiation rule” and the “discovery rule” in fraud actions, as well as many other issues not summarized here:

…[T]he repudiation rule, which provides that “the applicable statutory period . . . does not begin to run until the fiduciary has openly repudiated his or her obligation or the relationship has been otherwise terminated” … . The Court of Appeals has instructed that, under the repudiation rule, “the time starts running when a successor [fiduciary] is put in place” … . After the fiduciary “has yielded . . . to a successor, . . . [t]he running of the statute [of limitations] then begins, and only actual or intentional fraud will be effective to suspend it” … . * * * … [T]he repudiation rule acts as a toll of the limitations period for all misconduct committed by the fiduciary prior to repudiation of its obligation or termination of the relationship. In other words, all of the alleged misconduct prior to the severance date is included in the actionable portion of the claim. * * *

…[A] portion of plaintiff’s breach of fiduciary duty claim is grounded in its allegations that the … defendants breached their fiduciary duties to the trusts by fraudulently concealing or misrepresenting the financial condition of the trusts, the danger of operating deficits and issues associated with underwriting deficiencies, and that [defendants] did so as part of a scheme to increase membership and thereby increase its own commissions. These are fraud allegations, and they are essential to this portion of the fiduciary duty claim. That is, the relevant portion of the claim is “based on fraud” and “there would be no injury but for the fraud” … . As such, that portion of the fiduciary duty claim is subject to a six-year limitations period … . * * *

The “discovery rule” is found in CPLR 213 (8), which provides that claims based on fraud “must be commenced [within] the greater of six years from the date the cause of action accrued or two years from the time [a] plaintiff . . . discovered the fraud, or could with reasonable diligence have discovered it.” It is settled that “[t]he inquiry as to whether a plaintiff could, with reasonable diligence, have discovered the fraud turns on whether the plaintiff was possessed of knowledge of facts from which [the fraud] could be reasonably inferred” … . New York State Workers’ Compensation Bd v Consolidated Risk Servs Inc, 2015 NY Slip Op 01699, 3rd Dept 2-26-15

 

Re: a Third-Party Settlement, Consent of Special Fund Required Before Carrier Entitled to Reimbursement from Special Fund

The First Department determined an employee must obtain the consent of the Special Fund (or judicial approval) before accepting a third-party settlement:

Workers’ Compensation Law § 29(5) permits an employee to settle a lawsuit arising out of the same accident as gave rise to his workers’ compensation claim for less than the amount of the compensation he has received only if the employee has obtained written consent to the settlement from the carrier or, in the alternative, judicial approval. We find that, just as the employee is required to obtain the carrier’s consent prior to settlement, the carrier is required to obtain the Special Funds Conservation Committee’s consent prior to the settlement where it is entitled to reimbursement by the Committee pursuant to Workers’ Compensation Law § 15(8)(d) … . Ace Fire Underwriters Inc Co v Special Funds Conservation Comm, 2015 NY Slip Op 01574, 1st Dept 2-24-15

 

 

Supreme Court Has Power to Issue Judicial Consent to Settlement Nunc Pro Tunc Where Workers’ Compensation Carrier Failed to Timely Seek Consent to a Third-Party Settlement from the Special Funds Conservation Commission

The Second Department determined Supreme Court erred when it held that it not have the power to provide judicial consent to a third-party settlement nunc pro tunc.  The Second Department explained the requirements for consent to a third-party settlement where the Special Fund will reimburse the carrier:

The Workers’ Compensation Board has previously determined that where, as here, a carrier failed to timely obtain consent of the Special Funds Conservation Committee to settlement of a personal injury action, the carrier may still obtain reimbursement from the Special Disability Fund, but only if it obtains a nunc pro tunc order from a court directing the Special Funds Conservation Committee to consent … . A request to compel nunc pro tunc consent to a settlement is addressed to the discretion of the Supreme Court … . In seeking a discretionary nunc pro tunc order from a court directing consent to settlement, a petitioner must first establish that (1) the delay in seeking judicial relief was not caused by the petitioner’s fault or neglect; (2) the amount of the settlement was reasonable; and (3) the party whose consent is sought was not prejudiced by the delay … .

Here, because the Supreme Court erroneously believed that it had no power to issue a nunc pro tunc order directing the Special Funds Conservation Committee to consent to settlement, it did not exercise its discretion. Accordingly, we remit the matter to the Supreme Court … . Matter of Empire State Transp Workers’ Compensation Trust v Special Funds Conservation Comm, 2015 NY Slip Op 01635, 2nd Dept 2-15-15

 

Workers’ Compensation Carrier Has an Automatic Lien Re: Recovery by Injured Worker Against Third-Parties

The Fourth Department noted that a workers’ compensation carrier has a lien against any settlement the worker reaches with a third-party:

Where an individual receiving workers’ compensation benefits commences a civil action against a tortfeasor “not in the same employ who caused the injuries giving rise to such benefits . .. , an automatic lien attaches to the proceeds of any recovery, in favor of the [worker’s compensation carrier], for any amounts that the [carrier] has paid in compensation benefits, less litigation costs and amounts received in lieu of first[-]party benefits under the no-fault law” … . Klem v Special Response Corp, 2015 NY Slip Op 01368, 4th Dept 2-13-15

 

 

Claimant Demonstrated His Partial Disability Prevented Him from Finding Work

The Third Department affirmed the Appeal Board's finding that claimant had demonstrated he was unable to find work due to his partial disability and was therefore entitled to benefits:

“Where a claimant has a permanent partial disability but there has been no finding of involuntary retirement, the claimant has an obligation to demonstrate attachment to the labor market with evidence of a search for employment within medical restrictions,” and the Board's determination in that regard will be upheld if supported by substantial evidence … . Here, the Board concluded that claimant credibly testified and provided corroborating documentary evidence that he actively participated in a job location service and engaged in an independent job search within his medical restrictions, thereby demonstrating attachment to the labor market … . The Board noted that, although jobs were available, when claimant advised prospective employers of his disability, he was told that no positions were available that would accommodate his medical restrictions … . Contrary to the employer's argument, the fact that claimant limited that search to jobs within the field that he had worked for nearly 50 years provides no basis to disturb the Board's decision … . Matter of Cole v Consolidated Edison Co of NY Inc, 2015 NY Slip Op 01220, 3rd Dept 2-11-15

 

Claimant Entitled to Partial Disability Benefits for a Back Injury Until the Relationship Between the Back Injury and Claimant’s Inability to Work Was Raised for the First Time at the Hearing—Claimant Had Stopped Working After an Unrelated Knee Injury

The Third Department determined the claimant was entitled to benefits re: his partial disability (for a back injury) up until the time the Special Fund raised, at the hearing, the requirement that claimant demonstrate his attachment to the labor market, i.e., the requirement that claimant demonstrate his inability to work was the result of the back injury.  Claimant had stopped working because of an unrelated injury to his knee and the Special Fund argued he was not entitled to any benefits for the back injury:

… [A]bsent a finding of involuntary retirement, claimants with a partial disability have “an obligation to demonstrate attachment to the labor market with evidence of a search for employment within medical restrictions” … . As the Special Fund concedes, however, the Board has previously held that awards should be continued until the carrier has raised the issue of labor market attachment, thereby allowing for development of the record on the issue … . The Special Fund does not challenge the principle set forth in the Board's prior decisions, but argues that they are distinguishable. We disagree. The award sought herein was for lost time prior to the date of the hearing, when the Special Fund raised the issue of attachment to the labor market for the first time. The award of benefits for that period was therefore entirely consistent with the Board's prior precedent. Matter of Scott v Rochester City Sch Dist, 2015 NY Slip Op 01219, 3rd Dept 2-11-15

 

Late Motion for Judicial Approval of a Settlement Properly Denied—Delay In Seeking Approval Was Due to Plaintiff’s Own Fault or Neglect

The Second Department determined plaintiff's late motion for judicial approval of a settlement was properly denied because the delay in making the motion was due to the plaintiff's own fault or neglect:

“Pursuant to Workers' Compensation Law § 29(5), an employee who is the recipient of workers' compensation benefits may compromise a third-party claim arising out of the same accident without prejudice to the continued payment of benefits upon obtaining either the written consent of the compensation carrier before the compromise, or judicial approval of the compromise within three months after it” … . “However, a judicial order may be obtained nunc pro tunc approving a previously agreed-upon settlement, even where the application for approval is sought more than three months after the date of settlement, provided that the employee can establish that (1) the amount of the settlement is reasonable, (2) the delay in applying for a judicial order of approval was not caused by the employee's fault or neglect, and (3) the insurance carrier was not prejudiced by the delay” … .

A proceeding for approval, nunc pro tunc, of the settlement of a third-party action pursuant to Workers' Compensation Law § 29(5) is directed to the discretion of the court … . Here, the delay in seeking judicial approval was due to the plaintiff's own fault or neglect. Under these circumstances, the Supreme Court providently exercised its discretion in denying the plaintiff's motion … . Lobban v Brown, 2015 NY Slip Op 00850, 2nd Dept 2-4-15


Judicial Approval of a Settlement with Third Parties Was Properly Granted After the Expiration of the Statutory Period (Nunc Pro Tunc)—Delay In Seeking Approval Was Not Due to Injured Worker’s Fault or Neglect/Workers’ Compensation Carrier’s Consent to a Settlement Is Required Even Where the Settlement Is Greater than the Amount of the Benefits Received/Absent the Consent of the Carrier, Judicial Approval Is Required

The Second Department determined judicial approval of a settlement with third parties after the statutory period had passed was properly granted nunc pro tunc.  The injured worker received about $189,000 in workers' compensation benefits and eventually settled with third parties for $2,000,000. The workers' compensation carrier sued to collect on its lien.  The court noted that, despite the language of Workers' Compensation Law 29(5), the workers' compensation carrier's consent to a settlement is required even if the amount of the settlement is more than the amount of the benefits. In the absence of such consent (absent here), judicial approval is required (properly granted here):

Workers Compensation Law § 29(5) provides, in pertinent part:

“A compromise of any such cause of action by the employee or his dependents at an amount less than the compensation provided for by this chapter shall be made only with the written approval of . . . the person, association, corporation, or insurance carrier liable to pay the same. However, written approval . . . need not be obtained if the employee or his dependents obtain a compromise order from a justice of the court in which the third-party action was pending. …

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“If the third-party action is on trial at the time the offer of settlement which is acceptable to the plaintiff, is made and either such written approval or order as provided in this subdivision is required, the action may be marked settled subject to the securing of such written approval or such order. If such written approval or such order is not subsequently secured within three months the action shall be restored to the head of the trial day calendar” (emphasis added).

Section 29(5) was enacted to protect an insurance carrier from paying a deficiency between the settlement and the amount paid to the injured party … . As originally enacted, the provision required the consent of the insurance carrier. However, “in many instances, the carrier arbitrarily refused to give its consent to a proposed settlement regardless of how fair or generous the proposal might have been,” prompting the Legislature to amend the provision to provide that consent need not be obtained where there is judicial approval of the settlement … .

Although there is case law which indicates that approval pursuant to Workers' Compensation Law § 29(5) is not required if the amount of Workers' Compensation benefits received is less than the amount of the settlement …, the Court of Appeals has held that even where the settlement constitutes 100% of the policy limits, approval pursuant to Workers' Compensation Law § 29(5) is required in order for the claimant to continue to receive Workers' Compensation benefits in the future …. Any settlement is potentially less than the benefits provided by the Workers' Compensation Law (see 1-7 New York Workers' Compensation Handbook § 7.01[5] [2014]), especially where, as here, the claimant is seeking a permanent partial disability classification from the Workers' Compensation Board, which could mean that he would be entitled to benefits indefinitely.

“[A] judicial order may be obtained nunc pro tunc approving a previously agreed-upon settlement, even where the application for approval is sought more than three months after the date of settlement, provided that the employee can establish that (1) the amount of the settlement is reasonable, (2) the delay in applying for a judicial order of approval was not caused by the employee's fault or neglect, and (3) the insurance carrier was not prejudiced by the delay” … . Fidelity & Guar Ins Co v Digiacomo, 2015 NY Slip OP 00842, 2nd Dept 2-2-15


Employer’s Claim for Reimbursement from the Special Disability Fund for Death Benefits Paid Re: an Employee Who Died from Dust Disease Time-Barred—Even Though the Injury to the Employee Predated the Last Date for Such Claims, the Death Occurred After the Statutory Cut-Off Date

The Third Department determined the employer’s claim for reimbursement for death benefits paid on behalf of an employee who died from dust disease was time-barred.  Pursuant to Workers’ Compensation Law 15, new claims for reimbursement from the Special Disability Fund can not be made after July 1, 2010.  Even though the injury to the employee predated 2010, his death in 2011 required the filing of a “new” claim re: the death benefits (which cannot accrue until death):

Where, as here, an employee is disabled due to a dust disease, Workers’ Compensation Law § 15 (8) (ee) provides that an “employer . . . or carrier shall . . . be reimbursed from the special disability fund . . . for all compensation and medical benefits subsequent to those payable for the first . . . [260] weeks of disability for claims where the date of accident or date of disablement occurred on or after August [1, 1994].” Likewise, if an employee has died due to a dust disease, the statute provides that an “employer or . . . carrier shall be reimbursed from the special disability fund . . . for all death benefits payable in excess of . . . [260] weeks for claims where the date of accident or date of disablement occurred on or after August [1, 1994]” (Workers’ Compensation Law § 15 [8] [ee]). Such reimbursement is expressly subject to the limitations contained in Workers’ Compensation Law § 15 (8) (h) (2) (A), which “bars claims based upon dates of disablement or accident after July 1, 2007” … . That subdivision further expressly provides, as here dispositive, that “[n]o carrier or employer . . . may file a claim for reimbursement from the special disability fund after July [1, 2010] and no written submission or evidence in support of such a claim may be submitted after that date”… . Given the “clear and unambiguous” terms of the reimbursement limitations provision of section 15 (8) (h) (2) (A), this Court has given effect to the plain meaning of the language employed … by recognizing that the provision bars “all new claims after July 1, 2010” … .

We reject the employer’s argument that its claimed entitlement to reimbursement from the Special Disability Fund is not a “new” claim, on the premise that it relates back to the original disablement in 1999 thereby establishing its right to reimbursement for a death occurring after July 1, 2010. In this regard, a claim for reimbursement for death benefits is “separate and distinct” from the original claim for reimbursement for disability benefits … . That is, “[t]he right to death benefits does not accrue prior to death” and death, while not a new injury or accident, results in a “new claim” for purposes of death benefits reimbursement… . Matter of Connolly v Consolidated Edison, 2015 NY Slip Op 00673, 3rd Dept 1-29-14

 

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