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Action Against Broker for Failure to Procure Correct Coverage Should Not Have Been Dismissed/Question of Injured Worker’s Employment Status Must First Be Determined by the Workers’ Compensation Board

The Second Department determined that a cause of action alleging the insurance broker (Crystal) failed to purchase adequate insurance in response to a request from the insured (Mariani) should not have been dismissed.  The insured’s worker was injured on the job and the insurer disclaimed coverage because the policy did not cover subcontractors.  The Second Department also determined that it was up to the Workers’ Compensation Board to first determine the injured worker’s employment status and Supreme Court should not inject itself into that question until the Board acts:

“An insurance agent or broker . . . may be held liable under theories of breach of contract or negligence for failing to procure insurance . . . An insured must show that the agent or broker failed to discharge the duties imposed by the agreement to obtain insurance, either by proof that it breached the agreement or because it failed to exercise due care in the transaction” … . Crystal was not entitled to judgment as a matter of law because it failed to establish, prima facie, that it procured the adequate coverage that Mariani had engaged it to procure … . Siekkeli v Mark Mariani Inc, 2014 Slip Op 05319, 2nd Dept 7-16-14

 

Work-Related Call to Coworker Which Triggered Harassment by Coworker’s Husband Was Proper Basis for Workers’ Compensation Benefits

The Third Department determined the claimant was properly awarded workers’ compensation benefits for exacerbation of post traumatic stress disorder.  A work-related phone call made by the claimant to a coworker caused the coworker’s husband to suspect a romantic relationship between claimant and the coworker.  The coworker’s husband undertook a course of threatening conduct which culminated in an unsuccessful murder-for-hire plot:

Whether the injury producing event arose out of and in the course of claimant’s employment depends upon whether it “originated in work-related differences or purely from personal animosity” … . If there is “any nexus, however slender, between the motivation for the assault and employment,” an award of workers’ compensation benefits is appropriate … . Here, the work-related phone call from claimant to his coworker’s home was the basis for the subsequent harassment of claimant at his place of employment, the employer’s internal investigation and claimant’s request for a transfer — all of which exacerbated claimant’s preexisting stress disorder. As the record reveals no connection between claimant and the coworker’s husband outside of claimant’s work-related duties, the Board properly found the required nexus between the threatening conduct that exacerbated claimant’s preexisting condition and claimant’s employment …  Matter of Mosley v Hannaford Bros Co, 2014 NY Slip Op 04997, 3rd Dept 7-3-14

 

Psychological Injury Related to Threat of Violence Compensable

The Third Department determined psychological injury stemming from a surgeon’s threat of physical violence made to the claimant (a physician’s assistant) during a surgical procedure was a compensable injury:

“For a mental injury premised on work-related stress to be compensable, the stress must be greater than that which usually occurs in the normal work environment . . .[, which is] a factual question for the Board to resolve” … . Here, the employer argues that the surgeon’s verbal threat could not give rise to a compensable stress claim, noting mitigating factors such as the presence of others in the operating room and claimant’s familiarity with the surgeon’s “difficult” personality. However, in adopting the findings of the Workers’ Compensation Law Judge, the Board determined that claimant’s uncontroverted psychiatric diagnoses were caused by the incident, and that, under the circumstances here, threats of physical violence made by her supervisor constituted greater stress than that which normally occurs in similar work environments. Inasmuch as such determination is supported by substantial evidence and this Court cannot “reject the Board’s choice simply because a contrary determination would have been reasonable,” it must be upheld … . Matter of Lucke v Ellis Hosp, 2014 NY Slip Op 05009, 3rd Dept 7-3-14

 

Precedent Precluded Denial of Benefits

The Third Department, reversing the Workers’ Compensation Board, determined precedent required that benefits be afforded the claimant because his testimony he was engaged in a job search was deemed credible by the Board:

…”[E]ven though there is in the record substantial evidence to support the determination made,” the Board’s “failure to conform to [its] precedent will . . . require reversal on the law as arbitrary” if the Board has failed to explain the reason for its departure … . As relevant here, the Board has previously determined that a claimant remains attached to the labor market when he or she is actively participating in, among other things, a job-location service — such as One-Stop Career Centers — or Board-approved vocational rehabilitation, and that a claimant’s credible testimony regarding that participation is sufficient to establish attachment to the labor market (see Employer: Classic Bindery, Inc., 2011 WL 3612749, *2, 2011 NY Wrk Comp LEXIS 3997, *5-6 [WCB No. G021 5031, July 27, 2011]). The Board here expressly found claimant’s testimony that he was actively participating with One-Stop to be credible but, because claimant did not provide documentation of his participation, the Board concluded that he failed to adequately demonstrate attachment to the labor market. The Board purported to rely upon a prior decision, Employer: American Axle …, in determining that documentation was necessary but, while American Axle held that documentary evidence of active participation in One-Stop constitutes evidence of attachment to the labor market, it required documentary evidence only in connection with a claimant’s independent job search (id.). American Axle, therefore, does not provide an adequate basis for distinguishing Classic Bindery.  Matter of Winters v Advance Auto Parts, 2014 NY Slip Op 05005, 3rd Dept 7-3-14

 

Workers’ Compensation Carrier Not Liable After Liability Has Shifted to Special Fund—Board Overruled Precedent Holding Otherwise When the Carrier is Responsible for Delay Until the Special Fund Is Available to Assume Liability

The Third Department upheld the Workers’ Compensation Board’s determination that the workers’ compensation carrier is not liable for medical expenses after liability has been shifted to the Special Fund. The Board had the power to overrule prior precedent which allowed the carrier to remain liable if it was attempting to delay providing benefits in order to have liability shifted to the Special Fund:

Workers’ Compensation Law § 25-a (1) provides that, where seven years have passed from the date of claimant’s injury and three years have passed from the date of the last payment of compensation, “if an award is made it shall be against the [S]pecial [F]und” (emphasis added). Both of those time periods have undoubtedly been met in this case. The Board has previously observed, however, that a carrier with a pending application to shift liability may be tempted to delay in approving necessary medical expenses in order to avoid the complications of paying for them and later seeking reimbursement from the Special Fund. In an effort to address that concern, the Board had held that, in certain instances, a carrier would be held liable for medical expenses that would otherwise be the responsibility of the Special Fund if it “had attempted to delay payment for the surgery until after a determination was made regarding the applicability of [Workers’ Compensation Law] § 25-a, and not based . . . on a good faith objection to the surgery” … .

In the decision at issue here, the Board discussed that precedent at length and overruled it, which it was free to do given that it “set forth its reasons for doing so” and considered appropriate statutory and judicial authorities … . * * *

“The purpose of [Workers’ Compensation Law § ] 25-a is to save employers and insurance carriers from liability . . . for stale claims of injured employees” … . Workers’ Compensation Law § 25-a (1) furthers that purpose by requiring that any award “shall be [made] against the [S]pecial [F]und” if the requisite time periods have elapsed (emphasis added). As both the language and purpose of the statute demonstrate, the carrier “has no further interest in [the] payment of the claim” once liability has shifted to the Special Fund … , and “the Board ha[s] no power to direct that the award be paid by the [carrier] instead of out of the [S]pecial [F]und” under those circumstances … . Thus, the Board properly concluded that the statute does not permit a carrier to be held liable for medical expenses incurred after liability has been shifted to the Special Fund. Matter of Ercole v New York State Police, 2014 NY Slip Op 04550, 3rd Dept 6-19-14

 

Employer Must Show Workers’ Compensation Board Approved a Settlement with the Plaintiff In Order to Be Entitled to Summary Judgment Dismissing Plaintiff ‘s Subsequent Damages Suit (Plaintiff-Employee Is Not Entitled to Both Workers’ Compensation Benefits and Damages But an Unapproved Settlement Is Not Binding)

The Second Department determined defendant employer’s motion for summary judgment dismissing the plaintiff-employee’s personal injury complaint was properly denied.  Although the defendant and the employer had reached a settlement, the Workers’ Compensation Board never approved the settlement.  Without demonstrating the board approved the settlement, the employer was not entitled to summary judgment. An unapproved settlement is not binding on the parties:

Workers’ Compensation Law §§ 11 and 29(6) provide that an employee who elects to receive compensation benefits may not sue his or her employer in an action at law for the injuries sustained” … . A defendant moving for summary judgment based on the exclusivity defense of the Workers’ Compensation Law must demonstrate, prima facie, the applicability of the exclusivity provisions of the Workers’ Compensation Law … . Workers’ Compensation Law § 32 provides, in relevant part, that once a claim has been filed, the claimant, the employer and its carrier may enter into “an agreement settling upon and determining the compensation and other benefits due to the claimant” (Workers’ Compensation Law § 32[a]). However, that statute also provides that the “agreement shall not bind the parties to it, unless it is approved by the board” (Workers’ Compensation Law § 32[a]). While a plaintiff cannot receive both the benefits of Workers’ Compensation and damages in an action at law …, here, the defendant failed to establish that a settlement agreement reached by the parties was approved by the Workers’ Compensation Board. Smith-Lerner v Art Students League of NY, 2014 NY Slip Op 04476, 2nd Dept 6-18-14

 

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Workers’ Compensation Carrier Which Consents to Settlement of Third Party Action Is Entitled to Exercise Its Credit Against the Settlement-Recovery Upon Its Consent

The Third Department determined, where the workers’ compensation carrier has consented to claimant’s settlement in a third-party action, the carrier is entitled to exercise its credit against the recovery when the consent is given:

When a workers’ compensation carrier consents to the settlement of a claimant’s third-party action, the carrier shall have a lien on the proceeds of the recovery equal to the amount of benefits already paid, and may also assert the right to offset future compensation benefits paid until the proceeds of the recovery are exhausted (see Workers’ Compensation Law § 29 [1], [4]…). The issue before us again on this appeal is the point at which a carrier is entitled to exercise its credit. As we observed previously in this matter, “there is no reference in the statute as to when the credit shall commence” (104 AD3d at 1014; see Workers’ Compensation Law § 29 [4]). Cognizant of the fact that the statute in question was enacted in substantial part to prevent a claimant from receiving a double recovery …, we agree with the carrier that its right to exercise its credit must be available, if provided for in the consent letter, at the point at which the carrier provides its consent. To hold otherwise would result in payments made by the carrier that are not subject to either lien or credit rights, i.e., those payments made between the date of consent — at which point the amount of the carrier’s lien is fixed — and the date of actual settlement. This resulting double payment to the claimant would be contrary to the intent of the statute.  Matter of Williams v Lloyd Gunther El Serv Inc, 2014 NY Slip Op 03740, 3rd Dept 5-22-14

 

Vocational Factors Not Considered Re: “Temporary Marked Partial Disability Rate”

The Third Department determined the Workers’ Compensation Board applied the correct standards when determining a claimant’s temporary marked partial disability rate.  The claimant argued that the Board should have considered “vocational factors” in determining the compensation rate, i.e., claimant’s level of education and her ability to find other work.  The Third Department, in a detailed analysis of the language of the applicable statutes, disagreed:

As pertinent here, the compensation rate for temporary partial disability resulting in reduced earning capacity is based upon the difference between the claimant’s pre-injury average wages “and his [or her] wage earning capacity after the accident in the same or other employment” (Workers’ Compensation Law § 15 [5]…). In almost identical language, the compensation rate for permanent partial disabilities that are not amenable to schedule awards is based upon the difference between the claimant’s previous wages “and his or her wage-earning capacity thereafter in the same employment or otherwise” (Workers’ Compensation Law § 15 [3] [w]…)). For both temporary and permanent partial disabilities, the “wage earning capacity” of a claimant with no actual earnings is to be set by the Board at a reasonable level not greater than 75% of the claimant’s previous full-time earnings, “having due regard to the nature of his [or her] injury and his [or her] physical impairment” (Workers’ Compensation Law § 15 [5-a]…)). These provisions include no reference to vocational factors. However, when determining a claimant’s “loss of wage-earning capacity” in order to set the duration of permanent partial disability benefits following classification (Workers’ Compensation Law § 15 [3] [w] …), the Board considers not just the nature and degree of the injury, but also “work restrictions, [the] claimant’s age, and any other relevant factors, with the [claimant’s] ‘wage earning capacity’ as its inverse” …).

We reject claimant’s contention that this analysis should be applied to the determination of “wage earning capacity” as the term is used in Workers’ Compensation Law § 15 (5-a). Matter of Canales v Pinnacle Foods Group LLC, 2014 NY
Slip Op 03576, 3rd Dept 5-15-14

 

Slip and Fall On Sidewalk Near Place of Employment Was Not a Work-Related Accident

The Third Department determined a slip and fall on a sidewalk near claimant’s place of employment did not, under the facts, constitute a work-related accident:

Inasmuch as the accident here occurred near claimant’s place of employment, his claim falls within “a gray area where the risks of street travel merge with the risks attendant with employment and where the mere fact that the accident took place on a public road or sidewalk may not ipso facto negate the right to compensation” … . In order for an incident to be compensable under those circumstances, “there must be (1) a special hazard at the particular off-premises point and (2) a close association of the access route with the premises, so far as going and coming are concerned” … .While the public sidewalk here was near the government center, it was open to the public and there was no showing that it was “otherwise controlled by the employer, that workers were encouraged to use it or that it existed solely to provide access to the” workplace … . The ice on the sidewalk, moreover, constituted “a danger that existed to any passerby traveling along the [sidewalk] in that location” and bore no relation to claimant’s employment… . Matter of Trotman v New York State Cts, 2014 NY Slip Op 03002, 3rd Dept 5-1-14

 

Detention by Immigration Officials Did Not Disqualify Claimant from Receiving Workers’ Compensation Benefits

The Third Department determined detention by immigration officials did not disqualify claimant from receiving Workers’ Compensation benefits.  Claimant had been convicted of a felony sex offense, but was sentenced to probation, not incarceration:

We cannot agree with the employer’s argument that claimant’s detention by immigration officials amounts to incarceration “upon conviction of a felony,” thereby rendering him ineligible to receive benefits pursuant to Workers’ Compensation Law § 10 (4). That statutory language was enacted in 2007 to codify existing case law (see L 2007, ch 6, § 37; Governor’s Program Bill Memo, Bill Jacket, L 2007, ch 6…). In our view, giving plain meaning to each of the words used, the statute reflects an intent that benefits should not be paid if a sentence of incarceration is imposed as punishment for a felony conviction. While claimant was convicted of a felony, his punishment did not include incarceration. Rather, he was sentenced to 10 years of probation. His confinement for immigration purposes, on the other hand, was civil and nonpunitive in nature, and its purpose was to determine whether he should be deported (see 8 USC § 1226…). Accordingly, we are unpersuaded that claimant was “incarcerated upon conviction of a felony” as that phrase is used in the statute. Matter of Islam v BD Constr & Bldg, 2014 NY Slip Op 02474, 3rd Dept 4-10-14

 

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