September 11 Digital Archive: XML Document

Email Text:
Tuesday, November 27, 2001 8:32 AM
New York Workers' Compensation offset

To: Kenneth L. Zwick:
I am the president of the Injured Workers' Bar Association, an
organization of New York lawyers that represent claimants in
propceedings before the NY Workers' Compensation Board. We are
concerned about the question of whether payments from the Victim
Compensation Fund will be considered third-party settlements under the
provisions of Section 29 of the New York Workers' Compensation Law. As
the attached analysis shows under current law we believe such payments
would be considered third-party settlements subject to advance approval
by the WC insurance carrier. I strongly believe that when regulations
are drafted for the Victim Compensation Fund this issue be considered,
and appropriate action taken to protect the victims rights to payments
from NYS Workers' Compensation carriers. Thank you.

Individual Comment

Attachment 1:

Third Party Consent and the Workers' Compensation Claims Arising out of the September 11 Terrorist Attacks

Shortly after the attacks on the World Trade Center and the Pentagon the Congress passed federal legislation to address concerns about the economic impact of possible personal injury litigation arising out of the attack. Signed into law on September 22, 2001 the September 11 Victims Compensation Fund [Title IV of the Air Transportation System Stabilization Act, H.R. 29826] allows the persons who were injured in the attacks or the survivors of those killed to waive their right to file a personal injury lawsuit and in return receive a lump sum payment from the federal government. Review of the Act and such analysis as has been published so far reveals that no one has clearly addressed the possible legal effect of such a waiver on a New York State (or other state) workers' compensation claim.

The American Trial Lawyers Association and the New York State Trial Lawyers Association have announced a laudable pro bono effort to assist anyone filing a claim under the federal law. A new association called Trial Lawyers Care, Inc. has been formed for this express purpose. In our view it is critical, however, that any attorney who represents or assists a person filing such a claim first investigate fully whether a workers' compensation claim has been filed or may be filed, and if so whether the workers' compensation insurance carrier will consent to the waiver of the right to sue. Regardless of whether the federal waiver program accounts for the existence of an actual or potential workers' compensation benefit by an offset or other non-duplication of benefits language, in our opinion in New York the insurance carrier's statutory rights to approve a third party settlement and recover their possible lien will be unaffected.

Under §29 of the New York State Workers' Compensation Law, the workers' compensation carrier has an absolute lien on any benefits obtained in a third party action up to the limit of their liability for both indemnity and medical benefits paid. If a claimant with an actual or potential third party action seeks to settle that action by compromising their claim, they must obtain the consent of the workers' compensation carrier to do so. Should the claimant fail to obtain the carrier's consent to settle, they will be absolutely barred from receipt of any and all further workers' compensation benefits.

In our view by executing the waiver of a possible third party claim, a claimant may be found to have prejudiced the lien rights of the workers' compensation carrier and may in consequence lose many thousands of dollars of workers' compensation payments over the rest of their lives. The acceptance of the waiver in this situation is basically the same as settling a regular personal injury case arising out of a compensable accident. The mere fact that the injury or death occurred from the attack at the World Trade Center or Pentagon should not change any of the obligations of the attorney representing a claimant or the rights of the workers' compensation carrier.

Please note further that under Section 29 of the Workers' Compensation Law when a claimant chooses not to sue a tortfeasor, the workers' compensation carrier has a right of subrogation. This factor makes the argument all the more compelling that a claimant must obtain the consent of the compensation carrier before waiving the right to bring a lawsuit because such waiver compromises the carrier's right of subrogation.

If the requirements of §29 are not complied with the consequences to the injured worker can be devastating. A surviving spouse and children could receive as much as $400 per week. In the case of a 32-year-old widow who lives another 50 years, the failure of that widow's counsel to obtain the consent of the workers' compensation carrier to the waiver can result in loss of more than $1,000,000.00 over the rest of her lifetime.

We realize that some practitioners might takes the position that waiving one's right to sue to receive the federal payment is not the equivalent of settling a third party action as contemplated in §29 of the Workers' Compensation Law. Of course it is possible that in the future a court may rule that accepting the waiver was not the same as settling a person injury lawsuit, but we advise our members not to take this risk without first thoroughly protecting their client's interest.

If any attorney wants to pursue the position that money paid out under a federal victims program is not the equivalent of settling a third party action, the attorney could do so by first getting the consent of the carrier to the waiver and paying or putting in trust any money that the workers' compensation carrier claims as a lien. As part of that consent agreement the attorney should include language in the consent letter that it is the attorney's position that consent does not have to be obtained and that he will litigate the matter before the Workers' Compensation Board and/or in the courts. The attorney should also obtain in the consent letter a guarantee that the carrier will pay back any lien taken as part of the consent and that the carrier will reinstate any benefits not paid because they were taking "credit against a third party recovery". This method will protect both the claimant and the attorney should a court eventually rule that the monies paid out under the federal program were not the equivalent of a third party action.

It should go without saying that if someone proceeds with a regular lawsuit as a result of the September 11 attack then the provisions of §29 of the Workers' Compensation Law must be complied with prior to any settlement. Clients should be advised that the workers' compensation carrier may assert a lien against the proceeds of the Federal recovery and reserve the right to take an offset for the claimant's net recovery against any future claim for compensation benefits. If this is the case, then it may not be worthwhile for the claimant to give up his/her right to sue, because no benefit would actually accrue to the claimant since the Federal recovery would simply become an advance payment of compensation--deferring the carrier's obligation to make payments to the claimant for a period of several years.

Unfortunately, the federal legislation establishing the September 11 Victims Compensation Fund did not explicitly deal with the issue of workers' compensation carrier liens. The legislation does contain offset language that appears to discount any federal award by actual or potential workers' compensation indemnity benefits. This is not enough, in our view, to overcome the lien rights under §29 since they attach to medical as well as indemnity benefits. Perhaps Congress will deal with this issue at some future time but for now, as attorneys advise victims or survivors, a foremost concern should be determining and properly protecting the workers' compensation benefits of the victims.

For more information or to locate a qualified workers' compensation attorney from any part of New York State visit our web site at .

Article researched and written by members and .

Individual Comment

Email Date:2001-11-27

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