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}SECTION 29 LIENS: CRITICAL DRAFTING OF CONSENT LETTERS, BURNS ISSUES and LOSS TRANSFER }Presented by } }F. Daniel Bowers, Esq. }SECTION 29
Section 29 of WCL permits an injured worker to collect WC benefits and sue a negligent 3rd party.
Claimant must obtain your consent prior to settling, compromising or discontinuing a third party action, unless the settlement amount exceeds the potential amount of the WC benefits over a claimant’s lifetime.
∙Consent is required even if you don’t have a current lien or right of offset.
Obtain SFCC consent in established 15-8 and 14(6) claims.
Matter of Catapano v. Jow, Inc., 91 A.D.3d 1018 (3d Dept. 2012).
∙ If claimant fails to obtain your prior consent or obtain a judicial compromise order, claimant is barred from further benefits pursuant to Section 29(5) of WCL.
1) Settlement amount is greater than WCL provides
2) Nunc pro tunc order is granted by the trial court.}
Section 29 grants the employer/carrier a lien for all payments of medical and indemnity in connection with the WC claim, subject to certain limitations.
1. Medical malpractice: Lien and credit only apply to increased liability caused by the malpractice}
2. Motor Vehicle Accidents
No lien for payments made in lieu of “first party benefits” when the MVA involves a covered person vs. covered person. (Section 5102 of the New York Insurance Law)
a. First party benefits under Insurance Law Section 5102(B) are defined as payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle, less 20% of lost earnings, amounts recovered under workers’ compensation and amounts deductible under the applicable insurance policy.●}
b. Basic economic loss has a ceiling of up to $50,000 per person and generally includes:
(1) medical expenses without limitation as to time, provided that within one year after the date of accident it is ascertainable that further expenses may be incurred, and
(2) lost wages up to $2,000 per month for not more than three years from the date of accident causing the injury. (N.Y. Ins. Law Section 5102(a)(2).
Note: Keep in mind that even though an employer/carrier has not paid out more than $50,000 in benefits, there is a valid lien if you pay for lost time occurring more than three years after the original date of injury or lost wages in excess of $2,000 per month.}
c. Payments deemed outside First Party Benefits
∙ It is generally accepted that carriers have valid liens and rights of offset against recoveries pursuant to Section 5104(a) for:
1. Medical expenses after the first anniversary date where it was not ascertainable that ongoing medical care would be required. (Rarely applies)
2. Loss of earnings beyond the third anniversary date of the accident.
3. Any indemnity compensation benefits in excess of $2,000 per month for actual lost time occurring within three years from the date of accident.}
4. Payment in excess of the $50,000 combined medical and loss of earnings ceiling.
Note: Must add up workers’ compensation indemnity + no-fault+medical payments to determine when you hit $50,000. Workers’ compensation does not always have to pay the full $50,000 before first party benefits are exceeded. Add no-fault payments to WC indemnity payments.
5. Payments made on account of death under the Workers’ Compensation Law above the amount of $2,000.● }
Note: When a workers’ compensation carrier has paid out benefits in lieu of first party benefits, it does not have a lien against the third party proceeds for such payments. Instead, the compensation carrier only has a lien for payments that are made in excess of first party benefits.
In the situation where the carrier does not have a lien for payments made in lieu of first party benefits, it may be able to recover those benefits in a claim for LOSS TRANSFER pursuant to Section 5105 of the Insurance Law.}
3. Immediate Lien & Offset Rights
a. A compensation carrier may claim a lien for all benefits paid when one of the parties isnot a covered person as defined under Section 5102(j) of the Insurance Law. Covered persons include pedestrians injured through the use of a motor vehicle or any owner, operator or occupant of a motor vehicle that has in effect the financial security required by the New York Vehicle & Traffic Law.} }
Keep in mind that when a municipality is sued and the municipality was not an owner of a vehicle, the municipality is not covered by no-fault and, therefore, the compensation carrier can claim a lien for all benefits paid. There is no carve out for first party benefits in this situation, since the municipality is not a “covered person.”Stedman v. City of New York, 107 A.D.2d 600 (1st Dept. 1985). The city was sued because a traffic light malfunctioned resulting in accident.}
b. A compensation carrier may claim a lien for all benefits paid when the accident giving rise to the injuryoccurred outside of New York. McHenry v. State Ins. Fund, 236 A.D.2d 89 (3d Dept. 1997).} }
4. Uninsured/Underinsured motorist provision.
No consent, lien or credit rights. The recovery is not against a 3d party so no rights.
Shutter v. Philips Display Components Co., 90 N.Y.2d 703 (1997)} }
You have an offset for the net settlement proceeds from third party actions. Also known as a “holiday or credit”. If the claimant proves the offset is exhausted, he/she can claim entitlement to future medical and indemnity benefits. (Deficiency compensation)
The failure to expressly reserve your right to a credit/offset in writing at the time you grant written consent results in a waiver of your right of credit offset. Robinette v. Arnold Meyer Sign Co., 43 A.D.2d 458 (3d Dept. 1974).}Carrier’s Obligation
1. Contribution to attorney’s fees●
A. Kelly v. State Insurance Fund, 60 N.Y.2d 131 (1983)
In order to receive lien and credit/offset benefits, carrier must pay its share of attorney’s costs and fees for receiving each benefit.
∙ It is now well settled that the Kelly case applies only to permanent total classifications, schedule loss of use and death benefits.} Considerations
1. If your lien amount is higher than your share of the cost of litigation, you receive a portion of your lien back under theKelly case.●
2. If your lien was smaller than your share of the cost of litigation (COL), you owe money. This is called “fresh money”.}
B. Burns v. Varriale, 9 N.Y.3d 207 (2007)
“Pay as you go”}
∙ Pursuant to Burns, future indemnity benefits are speculative.
∙ Your lien is reduced by the cost of litigation percentage, approximately 33-1/3% off the top.
∙ There is no further reduction of your lien beyond the approximate 1/3 off the top.
∙ Future medical is speculative. Bissell v. Town of Amherst, 18 N.Y.3d 697 (2012).}
∙ As a carrier utilizes its right of offset against further indemnity and medical payments, it is responsible to pay its share of the cost of litigation for using its offset.
∙ No more lien reduction beyond the initial 1/3.
∙ No more “fresh money” on PPD cases.
∙ Pay roughly 1/3 of ongoing indemnity awards.
∙ Pay roughly 1/3 of ongoing medical.}
C. Consent Letter Controls
∙ WCB has the authority to determine Burns payments.
∙ A carrier must “plainly and unambiguously express” its intent or the WCB will imposeBurns payments. Stenson v. N.Y.S. Dept of Transp., 96 A.D.3d 1125 (3d Dept. 2012)
∙ Any ambiguity will be resolved against the carrier. A carrier needs to draft the consent letterexpressly waiving Burns in the letter if that was the intention of the parties. Richter v. Ramistain, Sys., 57 A.D.3d 1186 (3d Dept. 2008)}
∙ Where a consent letter clearly stated that the lien reduction was in full satisfaction ofKelly obligation and that there would be no additional attorney fees paid, a statement thatBurns is reserved was found meaningless. MATSOS CONTRACTING CORP., 2013 WL 5670364
∙ Pursuant to Burns, a carrier was directed to pay 37% of an ongoing award and to reimburse a claimant for 37% of medical bills that werepaid directly by the claimant. DeFOE-RICE JOINT VENTURE, 2013 WL 4497417}
∙ Carrier had a lien of $193,946.38. The consent letter stated that employer would accept $100,000.00 in full satisfaction of its lien and that it would be “entitled to offset any compensation due, or which becomes due, against claimant’s net recovery, prior to the resumption of any indemnity and/or medical payments.” Despite reducing its lien beyond the initial 1/3 amount perBurns, the Board stated that the employer did not “plainly and unambiguously” release it from paying any further litigation expenses soBurns applies. EMPLOYER: DEPT. OF HOMELESS, 2014 WL 344825.}
∙ Employer reduced its entire lien of $13,179.29 to $0. Consent letter stated “said amount represents amount paid less equitable apportionment pursuant to Section 29, subd. 1, (WCL) and will not be further reduced.” The Board stated that this letter unambiguously set forth the carrier’s intent that it would not make any further contribution.” Burns did not apply while using offset. EMPLOYER: NYS POLICE, 2014 WL 628768.}
∙ A WCB decision that stated a carrier should resume payments on a certain date was found to be a guideline only. There is no automatic resumption of benefits until entitlement is determined. The carrier raised VRLM and the case was continued to develop the record on that issue. JANON GENERAL CONTRACTING, 2013 WL 1942749.}Considerations 1.Consent letters can no longer be a form letter. 2.Consent letters must be carefully and explicitly prepared on a case by case basis. 3.Consent letter can address timing and form of payment. Ongoing? Periodic? 4.Negotiate Section 32 resolution at time of consent and resolve case with a global settlement. 5.Demand 2/3 reimbursement to leverage settlement. 6.Raise attachment to the labor market during period of offset and compile evidence supporting the defense. } 6.Do not agree to voluntarily resume payments. 7.Agree that payments can be suspended upon date of consent letter or disbursement date of proceeds with the filing of a C-8 and detail whenBurns payments will be made. 8.Only reimburse for medical when claimant shows proof of payment out of pocket. Offset is not utilized when another insurance carrier pays the medical bills. 9.If consent letter is silent onBurns or ambiguous, Burns will most likely apply. ●
● } }LOSS TRANSFER
Section 5105 of the NY Insurance Law allows for recovery of First Party Benefits from the negligent party’s automobile insurer if one of the vehicles weighsmore than 6,500 pounds unloaded or is primarily used for transportation of persons or property for hire. (taxis, buses and other delivery vehicles)}LOSS TRANSFER RIGHTS UNDER SECTION 5105
∙ An employer/carrier’s right of lien in auto accident cases is separate and distinctfrom its claim for loss transfer under Section 5105 of the Insurance Law.
∙ Under Section 5105, the carrier can look to the auto carrier of a negligent party for recovery of benefits that are considered within the definition of first party benefits.}
∙ Can only recover from an insurer that would have been liable to pay damages in an action at law.}
● This section of the law affords relief to the employer who has paid workers' compensation benefits in lieu of first party benefits which another covered person would have been liable to pay in an action at law. Accordingly, we can recover first party benefits from the automobile insurer for a negligent party.
We can determine the weight of the vehicle from the VIN information from DMV.}
∙ Loss transfer can apply even though there is only one motor vehicle involved. This is because a pedestrian is considered a covered person.}Condition Precedent
When an employer/carrier wishes to pursue Section 5105 loss transfer, it must first try to amicably negotiate its loss transfer claim against the other party and utilize the intercompany reimbursement notification forms. This is a condition precedent to the commencement of formal arbitration.}Arbitration
∙ Arbitrations Forums, Inc. is the entity that arranges for the arbitration.
∙ Formal application
∙ Evidence is submitted with the application and hearings are held before an arbitrator.
∙ There are no formal rules of evidence.
∙ Hearings are similar to workers' compensation hearings.
∙ Prior to the arbitration, all evidence must be submitted electronically to Arbitration Forums, Inc. on its website, www.arbfile.org.
∙ There is a contentions sheet that must be completed. It must detail all evidence and the theory of the case.}Statute of Limitations
The statute of limitations for commencement of the arbitration for loss transfer is limited to the same statute that would apply to the claimant's underlying third party action. The statute of limitations for tort actions is generally 3 years, though there is a 2 ½ year statute of limitations for claims against the Thruway Authority. Since payments are often ongoing in the workers' compensation setting, the three year statute of limitations, applies from the dateeach payment is made. In Re Arbitration Between Liberty Mutual Ins. Co. and Hanover Ins. Co., 307 A.D.2d 40 (4th Dept. 2003).}Liability
The success or failure of the compensation carrier in a claim for loss transfer is contingent upon the issue of the liability of the other covered person. New York is a comparative negligence state. Therefore, the recovery of payments made in lieu of first party benefits may be reduced if there is comparative negligence on the part of the requestor’s insured.}
A claimant who settles his/her liability claim against the tortfeasor cannot waive the workers' compensation carrier’s loss transfer rights.}
Tortfeasor’s liability limit is $100,000.00. The liability carrier pays the claimant the policy limit. The workers' compensation carrier can still pursue its loss transfer claim against the $50,000.00 no-fault provision of the tortfeasor’s insurance policy.}Best Evidence & Practice
∙ Police Reports
∙ Statements of both drivers/witnesses and photos of damage to both vehicles
∙ 3d party pleadings
∙ Deposition transcripts
∙ We must prove the weight of the vehicle. This can be done by running a Vehicle license Plate or Vehicle Registration search. Vehicle Registration will also show if the vehicle is registered as a Livery vehicle. Most private investigators have the ability to search this information. Cost is about $30.
∙ The arbitration hearing is the best way to ensure that your evidence is fully reviewed and considered.
∙ Phone Hearings – recent development allows us to handle cases all across New York State.}