Matter of the Claim of Sally Rorapaugh v. New Penn Motor Express LLC et al.
Attorneys and Parties
Brief Summary
Workers' compensation — need for carrier consent to third-party settlements and jurisdiction to apportion litigation expenses and lien credits.
The Workers' Compensation Board held carrier consent to the settlement was unnecessary and calculated the carrier’s lien reduction and litigation expense share, awarding claimant $113,631.55 in fresh money.
The Board’s apportionment of litigation expenses and award of $113,631.55 in fresh money.
Under Workers' Compensation Law § 29 (1) [equitable apportionment of reasonable and necessary litigation expenditures is made by the court in which the third-party action was instituted], the Board lacked jurisdiction to apportion costs; such apportionment must be sought in the District Court. The no-consent ruling was affirmed because, under Workers' Compensation Law § 29 (5) [carrier consent to settlement required only if settlement is for less than the statutory amount of compensation benefits], the settlement far exceeded claimant’s lifetime compensation benefits.
Background
Decedent was killed in a work-related motor vehicle accident in July 2019. Claimant filed for workers' compensation benefits (August 2019) and brought a third-party action in the U.S. District Court for the Northern District of New York (July 2020). The parties stipulated to dismiss the federal action in February 2021, after which claimant settled for $9 million (net recovery about $5.9 million). Claimant’s later request for a federal compromise order was rejected because the case had already been dismissed. The carrier asserted claimant settled without its consent and sought to discontinue and bar benefits under Workers' Compensation Law (WCL) § 29. A Workers' Compensation Law Judge (WCLJ) held consent was unnecessary since the settlement exceeded the total compensation benefits due. On administrative appeal, the Board agreed consent was unnecessary, calculated the carrier's lien at $109,402.81, its equitable share of litigation expenses at $223,934.36, and awarded claimant $113,631.55 in fresh money, while rescinding the temporary total disability classification but continuing weekly benefits subject to the carrier’s credit.
Lower Court Decision
The Workers' Compensation Board affirmed that carrier consent to the settlement was not required, determined the carrier’s lien and its share of litigation expenses, and awarded claimant $113,631.55 in fresh money, while continuing benefits subject to the carrier’s credit and rescinding the WCLJ’s temporary total disability classification.
Appellate Division Reversal
The Appellate Division affirmed that carrier consent was not required under WCL § 29 (5) because claimant’s net recovery (~$5.9 million) greatly exceeded the estimated lifetime benefits (~$1.2 million). However, it reversed the Board’s apportionment of litigation expenses and the $113,631.55 fresh-money award, holding that, under WCL § 29 (1), only the court in which the third-party action was instituted (the federal District Court) may equitably apportion legal expenses. The matter was remitted to the Board for further proceedings consistent with this ruling.
Legal Significance
Clarifies that: (1) Under WCL § 29 (5) [carrier consent to settlement required only if settlement is for less than the statutory amount of compensation benefits], no consent is needed when the third-party settlement exceeds the total compensation benefits; and (2) under WCL § 29 (1) [equitable apportionment of reasonable and necessary litigation expenditures is made by the court in which the third-party action was instituted], the Workers' Compensation Board lacks jurisdiction to apportion litigation expenses or award fresh money; that authority lies with the court where the third-party action was brought.
When a third-party settlement vastly exceeds projected workers’ compensation benefits, carrier consent is unnecessary under WCL § 29 (5); but only the court that heard the third-party action—not the Workers’ Compensation Board—may apportion litigation expenses and determine any fresh-money obligations under WCL § 29 (1).