Fid. & Guar. Ins. Co. v DiGiacomo, 18236/10, 2015 WL 447572 [2d Dept Feb. 4, 2015]
Montfort, Healy, McGuire & Salley LLP recently secured another victory in Appellate Division, Second Department. The case concerned an appeal from an order of the Supreme Court, Suffolk County, which denied a workers’ compensation carrier’s motion for summary judgment awarding it the sum of $123, 442.47, the net lien on benefits paid to a claimant.
The claimant, an employee of a home furnishing and appliance store, was injured on the job while loading merchandise into a freight elevator. His employer’s compensation carrier paid more than $189,000 in benefits.
In 2005, claimant commenced a third-party action to recover damages for injuries incurred from the accident. In response, carrier asserted a continuing lien on any recovery received from the third-party action. In 2009, the action was settled for $2,050,000. The claimant notified the carrier of the settlement and requested a copy of the workers’ compensation lien in writing. The carrier responded to the letter 5 months later, demanding full payment of the $123, 442.47 lien. In 2010, carrier commenced an action to recover the lien. The carrier argued that Workers’ Compensation Law Section 29(5) required the claimant to obtain its consent to or judicial approval of the settlement. In response, the claimant argued that the carrier unreasonably refused to consent to the settlement.
Appellate Division, Second Department Decision
The carrier moved for summary judgment, seeking an award of the net amount of the lien, $123,442.47. The claimant cross-moved for judicial approval of the settlement, arguing that judicial approval was not required because the settlement greatly exceeded the Workers’ Compensation benefits paid. The claimant also argued that the delay resulted from an earlier unopposed grant of approval, which was later vacated, and the Workers’ Compensation carrier was not prejudiced by the delay. Counsel for the claimant argued further that the claimant could not receive a permanent partial disability (PPD) classification from the Workers’ Compensation Board until the settlement was approved, and summary judgment with regard to the lien was premature because a PPD classification would affect the amount of the lien.
The Appellate Division, Second Department, observed that section 29(5) was enacted to protect a compensation carrier from paying a deficiency between the amount of a settlement and benefits paid to an injured party. The Court determined that, although section 29(5) required consent from the insurance carrier, that provision was later amended to allow for judicial approval where consent could not be obtained.
With regard to the claimant’s contention that section 29(5) approval was not required where the amount of Workers’ Compensation benefits received is less than the amount of the settlement, the Court determined that where the settlement constitutes 100% of the policy limits, approval pursuant to section 29(5) is required in order for the claimant to continue to receive Workers’ compensation benefits in the future. The Court further stated, “Any settlement is potentially less than the benefits provided by the Workers’ Compensation Law, especially where the claimant is seeking a [PPD] classification from the Workers’ Compensation Board, which could mean that [claimant] would be entitled to benefits indefinitely.”
The Court found that a judicial order may be obtained nunc pro tunc (retroactively), if three conditions are met: First, the amount of the settlement is reasonable; Second, the delay in seeking the judicial approval was not caused by the claimant’s own fault; and Third, the insurance carrier was not prejudiced by the delay. The Court found that the settlement was reasonable; found no indication of prejudice to the carrier; and determined that the delay was adequately explained. The Court further found that the lower court properly exercised its discretion when it granted the approval of the settlement.
However, the Court also determined that compensation carrier was entitled to summary judgment in the amount of $123, 442. 47 because it established its entitlement to judgment as a matter of law. The Court also determined that the claim of future PPD benefits was speculative and did not affect compensation carrier’s ability to recover the lien amount.
Click here to read the court’s full decision.