Jackson v City of New York

[*1] Jackson v City of New York 2007 NY Slip Op 52189(U) [17 Misc 3d 1129(A)] Decided on November 19, 2007 Supreme Court, Kings County Battaglia, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 19, 2007
Supreme Court, Kings County

Cheryl Jackson, Petitioner,

against

The City of New York, the New York City Department of Education and The Board Of Education, Respondents.



31729/07



Petitioner was represented by Howard A. Chetkof, Esq. of Levin & Chetkof, LLP. Respondents were represented by Elisabeth Sawyer, Esq. of the Corporation Counsel of the City of New York.

Jack M. Battaglia, J.

With this petition, Cheryl Jackson seeks a compromise order pursuant to Workers' Compensation Law § 29 (5), approving nunc pro tunc a settlement reached in February 2005 inan action commenced by Ms. Jackson against Mark B. Fleischer in Supreme Court, KingsCounty, Index No. 21629/04. The Respondents are the City of New York, the New York CityDepartment of Education and the Board of Education.

In a notice of claim served on September 17, 2003, Petitioner alleged claims for "sexual assault and battery, intentional infliction of emotional distress, false imprisonment and loss of income and loss of promotion caused by" Respondents "in the negligent hiring and retention of Principal Mark B. Fleischer." Specifically, Petitioner alleged that, on July 11, 2003 and August 1, 2003, while working as a Family Assistant at P.S. 253 "under the direction of school Principal Mark B. Fleischer," he made "improper sexual comments and verbal assaults," "physically restrained . . . and . . . assaulted and battered her," "verbally sexually harassed" her, and "attempted to rape" her. As a result, she further alleged, she "suffered acute severe emotional distress and has been under intensive psychiatric care and had to forgo [a] promotion."

To the extent that the notice of claim alleged negligence by the City, workers' compensation was Ms. Jackson's exclusive remedy. (See Workers' Compensation Law §11; Sormani v Orange County Community College, 240 AD2d 724, 724 [2d Dept 1997].) Ms. Jackson applied for workers' compensation benefits in December 2003. The record on this Petition is scant on documents or information about the workers' compensation claim. Neither [*2]party says in its papers whether any benefits have been paid to Ms. Jackson. The City is self-insured for workers' compensation liability. (See Workers' Compensation Law § 50 [4], [5].)

To the extent that Ms. Jackson's notice of claim alleged claims for sexual harassment as a form of sex discrimination prohibited by either Federal (see 42 USC § 2000e et seq), State (see Executive Law § 296), or City law (see Administrative Code of the City of New York § 8-107), the claims were not barred by the Workers' Compensation Law. (See Sormani v Orange County Community College, 240 AD2d at 724-25.) The notice of claim does not expressly allege any statutory violation, but in October 2003, Ms. Jackson asked the Equal Employment Opportunity Commission for a "Right to Sue Letter," alleging charges of "unlawful discrimination, sexual harassment and sexual assault against Mark B. Fleischer, The City of New York and the Department of Education of the City of New York." The EEOC complied in May 2004.

No action was commenced against the City; however, in March 2004 the City paid Ms. Jackson $60,000 in exchange for a general release. If there was a separate settlement agreement, it has not been provided to the Court, and neither party provides any information concerning the claims that were being settled or the loss or damages for which Ms. Jackson was being compensated. A fair inference, however, is that the settlement related to claims asserted by Ms. Jackson that were not barred by the workers' compensation scheme, namely, statutory claims for sexual harassment. The exclusivity provisions of the Workers' Compensation Law would also not apply to any claim that the City had "instigated or authorized" intentional tortious conduct of Mr. Fleischer (see Randall v Tod-Nik Audiology, Inc., 270 AD2d 38, 39 [1st Dept 2000]); no such allegations appear in Ms. Jackson's notice of claim.

In July 2004, Ms. Jackson commenced her action against Mr. Fleischer, alleging essentially the same facts that she alleged in her notice of claim against the City. A First Cause of Action alleged sexual harassment, but did not expressly allege any statutory violation, and a Second Cause of Action alleged battery. The Verified Complaint sought damages for serious and permanent mental and emotional injuries, past and future medical expenses, and past and future loss of earnings. Ms. Jackson's claims for Mr. Fleischer's intentional conduct were not barred by the exclusivity provisions of the Workers' Compensation Law. (See Hanford v Plaza Packaging Corp., 2 NY3d 348, 351 [2004].)

In February 2005, Ms. Jackson and Mr. Fleischer settled the action upon payment to Ms. Jackson of $20,000. The Settlement Agreement dated as of February 14, 2005 does not describe the loss or damages for which the payment was intended to compensate Ms. Jackson, except that it expressly included any claim for attorneys' fees. Ms. Jackson does not otherwise provide that information in her Petition, which is for approval of the settlement nunc pro tunc, now two and a half years later.

Meanwhile, either Ms. Jackson's December 2003 claim for workers' compensation was still pending, or a new application filed. "[T]he same event may be accidental' from the employer's point of view (thus justifying a workers' compensation award) and intentional from [*3]the point of view of the perpetrator." (See Hanford v Plaza Packaging Corp., 2 NY3d at 351.) In any event, at a hearing held on February 27, 2006, a Workers' Compensation Law Judge "closed" Ms. Jackson's claim for benefits, but provided that the claim could be "reopened upon obtaining consent/nunc pro tunc." (See Notice of Decision filed March 3, 2006.) Although not specified, the "consent" required was for the settlement of the action against Mr. Fleischer.

Ms. Jackson appealed the decision of the Workers' Compensation Law Judge, and, in October 2006, the decision was affirmed by a panel of the Worker's Compensation Board. (See Memorandum of Board Panel Decision filed October 5, 2006.) On the appeal, Ms. Jackson and the City agreed that Ms. Jackson was not barred by the workers' compensation scheme from instituting her action against Mr. Fleischer, but they disagreed on whether the settlement of that action required the City's prior consent or a compromise order nunc pro tunc. (See Workers' Compensation Law § 29 [5].) Relying upon Hanford v Plaza Packaging Corp. (2 NY3d 348), the Board agreed with the City: "While the claimant may sue a co-employee for intentional tort and collect compensation benefit from the employer, any settlement of a third-party action that involves the same injuries which the claimant may recover for in compensation is subject to the rights of the employer or carrier pursuant to WCL § 29, including the WCL § 29 (5) requirement that the claimant secure the written consent of the employer or compensation carrier to the compromise and settlement of the third party action." (Memorandum of Board Panel Decision filed October 5, 2006.)

No judicial review was sought of the Board Panel Decision, and on this Petition Ms. Jackson in effect concedes that the recoupment provisions of Workers' Compensation Law § 29 apply to any future workers' compensation benefits she may receive. (See Affirmation in Support, ¶ ¶ 30-31; see also Hanford v Plaza Packaging Corp., 2 NY3d at 351 n 3.) On the other hand, it would appear that in asserting its interest and rights pursuant to Workers' Compensation Law § 29 before the Board and this Court, the City acknowledges that the nature of the claims and damages Ms. Jackson asserted against Mr. Fleischer in the Supreme Court action, and recovered through the February 2005 settlement, are also compensable under the workers' compensation scheme. The Board Panel Decision also assumes as much; if there is no viable workers' compensation claim, there is no interest or right that can be asserted against the settlement with Mr. Fleischer.

The only question before this Court, therefore, is whether a compromise order nunc pro tunc pursuant to Workers' Compensation Law § 29 (5) should issue with respect to the $20,000 settlement with Mr. Fleischer. To provide some immediate context for consideration of that question, it should be noted that Ms. Jackson did not return to work after the August 1, 2003 incident until September 2004, and that, after working only until November of that year, has not worked since, allegedly as a result of the harassment and other tortious conduct of Mr. Fleischer. Ms. Jackson contends, supported by a psychiatrist, that she suffers from Post-Traumatic Stress Disorder and Major Depressive Disorder; is "totally disabled," and has been since November 2004. (See Physician's Affirmation, Exhibit M to Affirmation in Support; Attending Doctor's Report and Carrier/ Employer Billing Form, Exhibit 1 to Affirmation in Opposition.) As noted [*4]above, there is no indication as to whether Ms. Jackson received any workers' compensation benefits before her claim was "closed" in March 2006.

"Section 29 . . . reveals a legislative design to provide for reimbursement of the compensation carrier whenever a recovery is obtained in tort for the same injury that was a predicate for the payment of compensation benefits." (See Matter of Patterson v Daystrom Corp., 17 NY2d 32, 39 [1966] [emphasis added]; see also Matter of Granger v Urda, 44 NY2d 91, 96 [1998]; Scannell v Karlin, 252 AD2d 552, 553 [2d Dept 1998].) Because Petitioner has not raised a question about it, the Court will assume that the $20,000 settlement with Mr. Fleischer was intended to compensate Petitioner for the "same injury" for which she seeks compensation benefits, even to the extent, if at all, the settlement was intended to compensate her for sex discrimination prohibited by statute. Similarly, neither party has addressed the significance, if any, to the City's lien and offset rights of its $60,000 settlement of Petitioner's direct claim, and the Court will not either.

"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 the written consent of the compensation carrier before the compromise, or judicial approval of the compromise within three months after it." (Furtado v Mario's Bakery, 17 AD3d 527, 527-28 [2d Dept 2005].) "[A] party may seek judicial approval of the compromise beyond the three-month period upon demonstrating that the compromise is reasonable, the delay in seeking approval was not attributable to the party's fault or neglect, and the workers' compensation carrier was not prejudiced by the delay." (Id., at 528; see also Matter of Consolazio [Merchants Mut. Ins. Co.], 272 AD2d 614, 615 [2d Dept 2000]; Balkam v Miesemer, 74 AD2d 629, 629 [2d Dept 1980].)

The statute itself prescribes the contents of a petition for judicial approval of a compromise, as well as a required affidavit of the attorney retained by the petitioner to prosecute the third-party claim, and a required affidavit of the petitioner's physician. As the City appropriately notes, Ms. Jackson's Petition does not include "the medical expenses [she] incurred" nor "the total amount of wages lost," and her physician's affidavit fails to include, among other things, "the date of his last examination" and "the cost of the treatment." (See Workers' Compensation Law § 29 [5].) To a degree, the deficiencies are cured by the City's papers, as will appear, and, given the Court's ultimate disposition of the Petition, the Court need not determine whether the remaining deficiencies would, in themselves, require denial of the Petition.

And so, the City asserts - - without documentary evidence or other evidentiary foundation, but without contradiction or challenge - - that "Petitioner is claiming wages from October of 2003 to September of 2004 and from November 2004 onward," and that "she is totally disabled and therefore entitled to workers' compensation benefits at the maximum allowable rate as well as medical treatment." (Respondent's Memorandum of Law, at 2-3.) The City computes its "potential liability . . . for monetary benefits alone," exclusive of cost of [*5]treatment, at approximately $384,000. (Affirmation in Opposition, ¶ 7.) There is no indication as to whether Ms. Jackson has received any "monetary benefits" to date.

Similarly, the City provides (without rendering the document admissible) a copy of an Attending Doctor's Report and Carrier/Employer Billing Form purportedly submitted by Dr. Alexander Heisman for payment of charges for "psychotherapy & psychopharmeotherapy." The document is dated March 15, 2005, and covers treatment during the period January 6 to February 16, 2005. Dr. Heisman provides a diagnosis of "MJR DEPRESS D/O RECUR EPIS SEVER," and indicates that Ms. Jackson was totally disabled, that her condition "may" become permanent, and that her "occupational history" was the "competent producing cause." (Attending Doctor's Report and Carrier/Employer Billing Form, Exhibit 1 to Affirmation in Opposition.) The City does not say whether Dr. Heisman was paid for this, or any other, treatment of Ms. Jackson.

Dr. Heisman's Physician's Affirmation dated August 8, 2007 is consistent with the report and billing form submitted for payment. He states a diagnosis of "Post Traumatic Stress Disorder and Major Depressive Disorder as a result of incidents that occurred on July 11, 2003 and August 1, 2003"; that Ms. Jackson "is treating with our office on a monthly basis"; and that, since November 2004, Ms. Jackson "has been totally disabled." (Physician's Affirmation, Exhibit M to Affirmation in Support, ¶ ¶ 1, 4.) Dr. Heisman does not state whether he has been paid by anyone for his treatment of Ms. Jackson.

For purposes of this Petition, the information provided by the City gives necessary context to the Court's assessment of the reasonableness of the settlement with Mr. Fleischer and whether Petitioner has established sufficient excuse for her delay in seeking judicial approval. The juxtaposition of the $20,000 amount of the settlement with the City's estimate of its "potential liability" for "monetary benefits alone" of $384,000 is, of course, attention-getting. But the Court notes that the City's estimate assumes both total and permanent disability, requiring benefits for the remainder of Ms. Jackson's life, "expected" to be approximately 31 years. (See Affirmation in Opposition, ¶ 7.) The only "evidence" of permanency is Dr. Heisman's affirmative answer to a question on the form submitted in March 2005, "May the injury result in permanent restriction, total or partial loss of function of a part or member, or permanent facial, head or neck disfigurement?"

Fundamentally, both as her showing on the reasonableness of the settlement and as an excuse for her delay in seeking judicial approval sooner, Petitioner asserts her reliance on the professional judgment of her attorneys. As is not unusual, Ms. Jackson has been represented by two unaffiliated attorneys in prosecuting claims arising out of the events of July 11 and August 1, 2003. Attorney Howard A. Chetkof, Esq. has represented Ms. Jackson in pursuing her direct claims against the City and Mr. Fleischer, initially as an associate with The Law Offices of Irwin R. Kaplan, Esq., and later as a member of Levin & Chetkof, LLP. With respect to her workers' compensation claim, Ms. Jackson has been represented by attorney Daniel S. Kramer, Esq. of the Law Offices of Daniel S. Kramer, PLLC. (Apparently, Ms. Jackson was initially referred for this [*6]purpose to Severance, Burko & Spalter, P.C., see Affirmation in Support ¶ 6.)

As to the reasonableness of the settlement, Mr. Chetkof asserts in the first instance that, because the $60,000 settlement with the City was a reasonable settlement, the City "should be precluded from arguing that any other settlement increasing the base settlement with the [City] is not a reasonable settlement." (Affirmation in Support,¶ 25.) He then states that, "[i]n light of the manner that [Ms. Jackson] sustained her injuries, it would be very difficult to prove to a jury that [her] psychological injuries were caused by the above referenced two (2) occurrences." (Id.)

There is some superficial persuasiveness to the suggestion that a settlement with an employer should be presumed reasonable when the employer challenges a subsequent settlement with a third party for the same injury. The persuasiveness evaporates in the absence of any demonstration that the liability of the employer and the liability of the third party are essentially the same, as where the employer is liable on a theory of respondeat superior, and in the absence of any showing that both settlements compensate the claimant for the same loss and damages.

More particularly, here the March 2004 settlement with the City was made approximately one year before the February 2005 settlement with Mr. Fleischer. In the interim, Ms. Jackson attempted to return to work but failed, and was diagnosed as totally disabled by Dr. Heisman. In short, what may have been a reasonable settlement in March 2004 in light of the circumstances then known is not necessarily a reasonable settlement in February 2005 when the circumstances had changed. That Ms. Jackson may have "forgot[ten]" to tell Mr. Chetkof of the change in circumstances because of her "medical condition/state" (Petition, ¶ 8) is immaterial.

Mr. Chetkof's further contention that the $20,000 settlement is reasonable because of the difficulty in proving causation to a jury is not itself sufficient to make it so. He is certainly correct that difficulties in proving elements of liability or damages in the action against the third party, including a difficulty in proving causation, would be highly significant in an assessment of the reasonableness of a settlement of the action. (See Snyder v CNA Ins. Cos., 25 AD3d 1055, 1056 [3d Dept 2006]; Neblett v Davis, 260 AD2d 559, 560 [2d Dept 1999]; Matter of McCafffrey v James L. Lewis, Inc., 225 AD2d 981, 983 [3d Dept 1996]; Matter of Anzalone v Traveler's Ins. Co., 150 AD2d 567, 567-68 [2d Dept 1989]; Callahan v Image Bank, 2007 U.S. Dist. LEXIS 7407, * 18- * 20 [SDNY].) But, while a good faith and reasonable judgment of counsel might well establish the reasonableness of a settlement on grounds of difficulties of proof, the petition as a whole should, at the least, provide evidence to support that judgment.

Here, even recognizing counsel's understandable reluctance to undermine his client's still-pending claim for workers' compensation benefits, there is no attempt to deal with the facts that, virtually contemporaneous with the settlement, Ms. Jackson's physician was asserting her total disability as a result of the workplace incidents, after she had been away from work approximately 15 of the previous 18 months. It is also not entirely clear whether the difficulty in proving causation related to whether Mr. Fleischer's conduct caused Ms. Jackson's mental and emotional state, or whether her mental and emotional state precluded her returning to work, or [*7]both.

New York courts have upheld substantial awards for emotional distress with evidence of post-traumatic stress disorder (see Blakesley v State of New York, 289 AD2d 979 [4th Dept 2001] [$200,000]; McKay v Ciani, 288 AD2d 587 [3d Dept 2001] [$375,000]), and, when the evidence warrants it, will sustain an award for future lost earnings (see id., at 591.) Clearly, this caselaw does not require a conclusion that counsel's concerns about the difficulty in proving causation in Ms. Jackson's action against Mr. Fleischer were unreasonable or not honestly held, but it does suggest the need for explanation that is not satisfied by the submissions on this Petition.

As for the reasons for the delay in seeking approval of the settlement, Mr. Chetkof states that, at the time of the settlement, he did not seek the City's consent "because [Mr. Kramer] advised that, under this set of circumstances, the consent of the workers' compensation carrier would not be required and . . . [he] believed that there was no further pending claim with the Workers (sic) Compensation Board" for Ms. Jackson. (Affirmation in Support, ¶ 15.) He explains his belief about the absence of a pending claim for benefits by his understanding that Ms. Jackson had returned to work the previous September. (Id., ¶ ¶ 16-17.)

Although the March 2006 Notice of Decision of the Workers' Compensation Law Judge indicated that Mr. Kramer's advice might be incorrect, Mr. Chetkof did not then seek judicial approval of the settlement nunc pro tunc because "Mr. Kramer advised that he would be appealing said decision and we could not move for consent until his appeal had been heard and there is a final determination from the Worker's (sic) Compensation Board as the same matter cannot be litigated in two separate courts at the same time." (Id., ¶ 28.)

"[T]he reason for petitioner's delay rather than its length determines the timeliness of a motion pursuant to Workers' Compensation Law § 29 (5) for a nunc pro tunc compromiseorder." (Amsili v Boozoglou, 203 AD2d 137, 137 [1st Dept 1994].) Although "misconstruction of the applicable law does not constitute a reasonable excuse for the . . . delay in applying for judicial approval of the settlement" (see Matter of Gilson v National Union Fire Ins. Co., 246 AD2d 897, 898 [3d Dept 1998]), a "well justified belief . . . that [the carrier] had no lien against the third-party recovery," when "the need for consent was . . . uncertain," could constitute a sufficient reason for the delay (see DeRosa v Petrylak, 290 AD2d 596, 598-99 [3d Dept 2002].)

Here, the major portion of the delay from the February 2005 settlement and the filing of this Petition in August 2007 is explained by Mr. Chetkof's stated reliance on the advice of Mr. Kramer, whom he believed expert in the specialized area of workers' compensation law. For a year and eight months, from February 2005 until the Workers' Compensation Board decision in October 2006, Mr. Chetkof relied on advice that, for purposes of this Petition, he does not assert was correct. (An additional seven months is attributed to difficulties in obtaining the required physician's affidavit from Dr. Heisman, see Affirmation in Support, ¶ 29.)

The question, however, does not appear to be whether Mr. Chetkof acted reasonably and in good faith in relying on Mr. Kramer's advice, but whether Mr. Kramer's advice was reasonable [*8]and the product of good faith judgment. We have nothing in the record on this Petition to support any such conclusions. We have no affirmation from Mr. Kramer explaining his advice - - in particular, explaining why the Court of Appeals decision in Hanford v Plaza Packaging Corp. (2 NY3d 348), decided in May 2004, did not require that the February 2005 settlement with Mr. Fleischer be approved.

Although it is clear that the Petition cannot be granted on this record, it cannot be said that Petitioner will not be able to cure the deficiencies in its showings as to the reasonableness of the settlement with Mr. Fleischer and excuse for the delay in seeking judicial approval. (See Matter of Wilbur v Utica Mutual Co., 228 AD2d 928, 930 [3d Dept 1996].) The Court will not lightly assume that Mr. Chetkof's judgment about the difficulty in proving the claim against Mr. Fleischer; or that Mr. Kramer's judgment that approval of the settlement was not required, and, in any event, could not be sought pending resolution of the appeal before the Workers' Compensation Board; was unreasonable or made in bad faith. The question is, how best to proceed.

There is authority that would allow the Court to withhold determination of the Petition pending further proceedings, perhaps including a hearing. (See Matter of Snyder v CNA Ins. Co., 306 AD2d 677, 678-79 [3d Dept 2003]; Buchanan v Scoville, 241 AD2d 965, 966 [4th Dept 1997]); Matter of Wilbur v Utica Mutual Co., 228 AD2d at 930; Amrili v Boozoglou, 203 AD2d at 138.) Even though, however, it cannot be said that Petitioner will not be able to make the requisite showing, a probability that she will is not apparent. Because, at the end of the day, the unanswered questions can be resolved only with an examination of the exercise of professional judgment by counsel, the better course would appear to allow counsel to assess their next steps. Incentive to do so expeditiously exists in the danger of further delay for Petitioner's showing, and in the Board's denial of workers' compensation benefits until a satisfactory showing is made.

The Petition is denied and dismissed, without prejudice, and judgment shall enter accordingly.

November 19, 2007____________________

Jack M. Battaglia

Justice, Supreme Court