Maynard v First Cardinal Corp.
Annotate this CaseDecided on March 28, 2012
Supreme Court, Queens County
Dorothy Maynard, Petitioner,
against
First Cardinal Corporation, Respondent.
21390/2011
Robert J. McDonald, J.
The following papers numbered 1 to 13 were read on this petition which seeks an order directing respondent, First Cardinal Corporation, to issue the necessary consent letter in order to preserve the petitioner's entitlement to any future Worker's Compensation benefits:
Papers Numbered
Petition-Affidavits-Exhibits.........................1 - 4
Affirmation in Opposition-Affidavits-Exhibits........5 - 10
Reply affirmation...................................11 - 13
_________________________________________________________________
Petitioner, Dorothy Maynard, was injured in an automobile accident which occurred on January 24, 2005 in Queens County on the Grand Central Parkway near the Jewel Avenue exit. At the time of the accident, petitioner was a passenger in a bus, owned by Little Richie Bus Service, Inc., which was struck in the rear by a hit and run driver. As a result of the impact, the bus was pushed into a third vehicle in front of it. The petitioner was a [*2]bus matron employed by Jo-Lo Bus, Inc. and was working at the time of the accident. The respondent herein, First Cardinal Corporation, is the Workers' Compensation carrier for her employer.
The petitioner filed a Workers' Compensation claim based upon the injuries she sustained to her neck, right shoulder and back. The Workers' Compensation Board rendered a decision in June 2008, awarding plaintiff benefits commencing as of the date of the accident. Petitioner was paid a total of $18,354 in Workers' Compensation from the date of the accident through October 28, 2008 when her benefits were suspended.
As the owner and operator of the vehicle at fault in the accident was unknown, the petitioner commenced an uninsured motorist claim against the insurer of her employer's vehicle, the Illinois National Insurance Company. The mandatory arbitration hearing, at which the Insurance Company did not appear, was held on January 30, 2008. The issue at the hearing was whether the petitioner's injuries met the threshold of "serious injury" as defined by Insurance Law § 5102(d). In a decision dated April 14, 2008, Arbitrator Alan Krystal, after reviewing the petitioner's medical records, awarded petitioner a total of $25,000.
In October 2008, subsequent to the arbitration award, petitioner appeared at another Workers' Compensation Board hearing, after which the Board determined that further payments would be suspended pending proof of carrier consent permitting the petitioner to accept third-party benefits. In April 2009, the Board again took no action, finding that the uninsured motorist arbitration is a form of resolution adjudication which required proof of carrier consent in order to obtain continued Workers' Compensation benefits.
The petitioner appealed the determination of the Workers' Compensation Law Judge to a three-judge panel. The issue for determination before the panel was whether the petitioner must provide proof of consent in reference to her third-party resolution, namely the uninsured motorist arbitration. The carrier contended that Worker's Compensation Law § 29 requires written consent of the carrier prior to any settlement of a third-party action notwithstanding that it was accomplished through arbitration (citing Northrop v Thorson, 46 AD3d 780 [2d Dept. 2007]). The petitioner contended that consent was not necessary as the third-party action was not resolved via a settlement but rather by mandatory arbitration. The panel found that where a claimant fails to obtain proper consent pursuant to WCL § 29(5) it will result in a disqualification of indemnity and [*3]medical benefits from the carrier subsequent to the third-party settlement including an award given after arbitration (citing Matter of Johnson v Buffalo & Erie County Private Industry Council, 84 NY2d 13 [1994]). The Appeals Board held in its decision filed on August 27, 2009, that, "although consent was not coveted nor received, this matter can be rectified by applying for a nunc pro tunc consent. Therefore, payments will not be reinstated pending proof of carrier consent or a nunc pro tunc order." Accordingly, the Board directed the claimant to provide proof of consent of her third-party resolution.
As a result of that decision and the fact that the petitioner still has an open Workers' Compensation matter, petitioner now moves for a nunc pro tunc order requiring the respondent carrier to consent to the award. Counsel states that he contacted the carrier requesting a consent letter to preserve petitioner's entitlement to any future Workers' Compensation benefits, but the carrier refused to issue the necessary consent. Counsel states that a request for consent was not requested initially inasmuch as the case was not settled but rather was the result of an arbitration award. Counsel submits that an award as a result of compelled arbitration for an uninsured motorist claim does not require consent as it is not a settlement. Counsel contends that the uninsured motorist arbitration, which is mandated by statute, is analogous to a judgment awarded by a court which does not require the consent of the Board.
In opposition, the respondent asserts that Workers' Compensation Law § 29(5) permits an employee to settle a law suit arising out of the same accident as a Workers' Compensation claim for less than the statutory amount of Workers' Compensation benefits only if the employee receives written consent to the settlement from the Workers' Compensation carrier or alternatively obtains judicial approval of the settlement within three months of the settlement. Counsel claims that the petitioner's application should be denied as she did not move to obtain judicial consent for over two years from the time of the Board's determination without providing an explanation for the delay. Counsel also claims that the carrier has been prejudiced by the unexcused delay.
The respondent's counsel also claims that contrary to the petitioner's contention, consent to settle the action was required from the carrier or by court issued compromise order despite the fact that the uninsured motorist award was obtained through binding arbitration (citing Northrup v Thorsen, 46 AD3d 780 [2d Dept. 2007]).
[*4]
Upon review and consideration of the petition, respondent's application in opposition and petitioner's response thereto, this court finds that the petition for an order directing the First Cardinal Corporation to issue the necessary consent letter is denied as academic on the ground that carrier consent is not required under the circumstances of this case.
Worker's Compensation Law §29(5) permits an employee to settle a lawsuit arising out of the same accident as his Worker s Compensation claim for less than the amount of the compensation he or she has received only if the employee has obtained written consent to the settlement from the carrier, or in the alternative, judicial approval within three months after the case has been settled (see Hargrove v. Becom Real, Inc., 287 AD2d 598 [2d Dept. 2001). Moreover, a party may seek judicial approval of the settlement after the three month period has expired, but only upon demonstration that the settlement or compromise was reasonable, the delay was not attributable to the party's fault or neglect and the worker's compensation carrier was not prejudiced by the delay (see Matter of Jackson v City of New York, 70 AD3d 694 [2d Dept 2010]; Furtado v Mario's Bakery, 17 AD3d 527 [2d Dept. 2005]).
Workers' Compensation Law § 29 was enacted to provide for reimbursement of the compensation carrier whenever a recovery is obtained from a third-party for the same injury that was a predicate for the payment of compensation benefits (see Matter of Hiser v. Richmor Aviation, Inc., 72 AD3d 142 [3d Dept. 2010]). However, such reimbursement "may be applied only against recoveries from third-party tortfeasors who are responsible for claimant's injuries" (Matter of Shutter v Philips Display Components Co., 90 NY2d 703 [1997]).
In Shutter, supra., as the driver of the negligent vehicle was uninsured, the plaintiff filed a claim under the uninsured motorist provisions of her own automobile insurance policy and, after arbitration, recovered an award from her insurance company. The Workers Compensation Board sought to apply an offset for future compensation payments in the amount that the claimant recovered in uninsured motorist benefits under her own insurance policy. The Court of Appeals held that "the Workers' Compensation Law does not broadly authorize liens and offsets to be applied against "all" or "any" recoveries from others without regard for their source" (Shutter, supra., at 708). The Court stated that "the lien and offset tools may be applied only against recoveries from the third-party tortfeasors who are responsible for the claimant's injuries." The Court further stated that "the funds claimant recovered from her own insurance carrier under the uninsured motorist benefits endorsement were not recovered from [*5]the third-party tortfeasor." The Court held that the compensation carrier was not entitled to a lien under Workers' Compensation Law § 29 on the award claimant received under his employer's underinsurance coverage (also see Musgrove v. American Protection Ins. Co., 32 AD3d 916 [2d Dept. 2006]). Thus, the lien and offset provisions of WCL § 29 can only be applied against recoveries from third-party tortfeasors who were responsible for the claimant's injuries and not from recoveries from underinsurance coverage.
Therefore, as the petitioner herein was unable to commence an action against a third-party tortfeasor, the Workers Compensation carrier is not entitled to a lien or offset for the arbitration award the petitioner obtained from the uninsured motorist claim against the Illinois National Insurance Company. Accordingly, this court finds that as the consent to settle provision of WCL 29(5) is limited to settlements or arbitration involving a third-party tortfeasor and as the award in question was obtained through uninsured motorist provisions, there was no need for the claimant to obtain consent prior to arbitrating her claim for uninsured motorist benefits. Contrary to the Board's directive, the petitioner was not required to obtain nunc pro tunc consent from the Workers' Compensation carrier.
Thus, as consent to settle is not required herein, the petitioner may take whatever steps she deems necessary in order to obtain reinstatement of her Workers' Compensation benefits.
Dated: March 28, 2012
Long Island City, NY
______________________________
ROBERT J. MCDONALD
J.S.C.
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