Opinion
29583/03.
Decided June 22, 2004.
FACTUAL AND PROCEDURAL BACKGROUND
As alleged in his petition, petitioner, on or about March 7, 2000, commenced a lawsuit in this court to recover damages for injuries he sustained as a result of an accident that occurred on January 27, 2000. At that time, petitioner was employed as a security guard for "Daor Security", and alleges that during the course of his employment, he slipped and fell on a wet foreign substance on an interior staircase located at 505 LaGuardia Place in Manhattan, said premises being owned by the defendant named in the underlying lawsuit. As a result of the accident, petitioner sustained a comminuted bi-malleolar fracture of the left ankle with disrupted ankle mortise, and a displacement of the talus laterally and posteriorly; a fracture of the left distal fibula and tibia; limitation of motion of the left foot and ankle with swelling; and deformity of the left ankle. He was immediately treated for his injuries at Cabrini Medical Center, where he underwent an open reduction and internal fixation surgical procedure. He claims that he is totally disabled as a result of the accident.
On or about February 9, 2000, petitioner timely filed a claim for Workers' Compensation Benefits. He alleges that a number of insurance carriers denied coverage, claiming that they were not his employer's insurer. Consequently, a series of hearings were conducted and appeals were pursued by the various insurance companies. During this time, no benefits were paid to either petitioner or his physician.
On or about December 12, 2002, the underlying negligence action was settled with the defendant named therein. The settlement was purportedly reached on the eve of trial, and without the prior written consent of the Workers' Compensation carrier, the status of which remained unresolved until AIG's appeals before the WCB were resolved, as shall be more discussed below, in February, 2003.
In or about April, 2003, petitioner's Workers Compensation attorneys learned that the Workers' Compensation Board had, with finality, determined AIG to be petitioner's employer's Workers' Compensation carrier, whereupon petitioner's trial counsel forwarded correspondence to AIG, along with a copy of the Office of Court Administration closing statement of the negligence case, requesting that AIG approve the settlement. On June 13, 2003, AIG forwarded correspondence to petitioner's trial counsel denying any requests for payment of future medical treatment of petitioner' injuries and suspending his wage benefits, payment of which AIG had commenced after settlement of the negligence case was reached.
In his affirmation in support of the instant application which was interposed by order to show cause dated November 7, 2003, petitioner's counsel alleges that the settlement was reached prior to obtaining written consent from the Workers' Compensation carrier because no carrier had accepted responsibility for Sykes's Workers' Compensation claim, and that litigation regarding such responsibility was ongoing. He further asserts that the settlement was fair, reasonable, and in the best interests of the petitioner, because there was a serious question with respect to petitioner's ability to prove liability against the defendant. He also notes that at the time of the settlement the petitioner had no source of income and was not receiving Workers' Compensation benefits, and argues that the settlement was in no way prejudicial to the Workers' Compensation insurer since it avoided the risk of obtaining no funds if a verdict in favor of defendant were to be returned by a jury after trial.
In further support of his application, petitioner proffers the affirmation of Joseph D'Angelo, M.D., who sets forth the nature of the surgery he performed on petitioner on January 29, 2000, as well as the post-operative care that was rendered. Dr. D'Angelo notes that while the insurance carrier was previously informed of the need for removal of the syndesmotic screw on petitioner's visit of April 27, 2000, no such permission to remove the screw was forthcoming from the carrier prior to such visit or as of August 3, 2000, the date of petitioner's following medical visit. Indeed, Dr. D'Angelo alleges that letters were sent to the carrier on September 14, 2000, November 2, 2000 and March 1, 2001, with no response. He opines that the carrier's failure to provide authorization for the surgical procedure to remove the screw has resulted in petitioner remaining fully disabled; that the result may be permanent total disability and permanent loss of range of motion; that further surgery may be required in the event the screw breaks; and that petitioner cannot return to gainful employment until the screw is removed.
RESPONDENT'S CROSS-MOTION AND OPPOSITION
AIG's cross-motion incorporates by reference its previously interposed opposition to the motion. Although it disputes the decisions of the Workers Compensation Law Judges (WCLJ), rendered on or about September 14, 2000 and November 29, 2000, holding that AIG was the carrier responsible for paying the petitioner's benefits, it alleges that pursuant to a hearing conducted by the Workers' Compensation Board (WCB) and a decision rendered by the WCLJ on or about June 6, 2001, AIG was directed to pay the petitioner the total sum of $9,984.87, which covered the period from the date of the accident to the date of the hearing. AIG further notes that on or about May 10, 2002, the full board denied AIG's application for full board review and affirmed the Board Panel's decision that AIG is the carrier responsible for payment of petitioner's benefits. Payment of the $9,984.87 was made to petitioner on February 19, 2003 following the Board Panel's issuance, on February 3, 2003, of its decision upholding the WCLJ's award which directed AIG to pay same.
AIG alleges that at some point in time, it had issued an insurance policy to Daor Security that may have covered workers involved in accidents at certain school sites, but which did not include the site where petitioner's accident occurred. It further asserts that petitioner himself identified Wausau Insurance as the carrier that covered the petitioner's claim.
AIG further alleges that on or about April 14, 2003, another hearing was held before the WCB. It contends that at that time, for the first time, petitioner advised AIG that he had settled this third-party lawsuit. Accordingly, the WCB, by Notice of Decision dated April 24, 2003, closed petitioner's workers compensation case pending production of written consent to the settlement of the third-party lawsuit. Asserting that lack of timely notice made it impossible for AIG to evaluate the propriety and/or sufficiency of the settlement or to obtain credit for petitioner's net recovery under § 29 of the Workers' Compensation Law, AIG contends that the petition should be denied in its entirety.
The WCB also directed AIG to pay an additional sum of $14,140.42 to the petitioner to cover a subsequent time period.
DISCUSSION
Workers' Compensation Law § 29(5) requires an employee to obtain the consent of the carrier at the time of settlement or, within three months after settlement, to obtain an order of the court on notice to the carrier approving a settlement for less than the compensation provided by law. Should a claimant fail to do so, the result is the loss of future workers' compensation benefits ( see Workers' Compensation Law § 29; see also Stiffen v. CNA Ins. Cos., 282 AD2d 991; Wright v. Golden Arrow Line, 206 AD2d 759, 760; Matter of Daly v. Michael Daly Constr. Corp., 136 AD2d 798, lv. denied 72 NY2d 807). A judicial order may be obtained nunc pro tunc approving of a previously agreed upon settlement, even in cases where the approval is sought more than three months after the date of the settlement, provided that the petitioner can establish that: (1) the amount of the settlement is reasonable; (2) the delay in applying for a judicial order of approval was not caused by the petitioner's fault or neglect; and (3) the carrier was not prejudiced by the delay ( Stiffen, 282 AD2d at 992, citing Matter of Wilbur v. Utica Mut. Co., 228 AD2d 928; see also Matter of Rifenburgh v. James, 297 AD2d 901, 902; Matter of Bernthon v. Utica Mut. Ins. Co., 279 AD2d 728, 728-729, Matter of Consolazio [ Merchants Mut. Ins. Co.], 272 AD2d 614, 614-615; Harosh v. Diaz, 253 AD2d 850, 851; Matter of Gilson v. National Union Fire Ins. Co., 246 AD2d 897, 897). Resolution of an application for judicial approval of a settlement pursuant to Workers' Compensation Law § 29(5) is committed to the discretion of the court ( see Hargrove v. Becom Real, Inc., 287 AD2d 598). The timeliness of the application is a relevant and significant factor to be considered by the court in making its determination of whether to grant approval of the settlement ( Matter of Rifenburgh, 297 AD2d at 902; Matter of Gilson, 246 AD2d at 898).
Workers' Compensation Law § 29(5) provides, in relevant part, "[a] compromise of any such cause of action by the employee or his dependents at an amount less than the compensation provided for by this chapter shall be made only with the written approval . . . of the person, association, corporation, or insurance carrier liable to pay the same. However, written approval of the commissioners of the state insurance fund or such officer thereof designated by them or written approval of the person, association, corporation, or the insurance carrier need not be obtained if the employee or his dependents obtain a compromise order from a justice of the court in which the third-party action was pending. The papers upon an application to compromise and settle such a claim shall consist of the petition, the affidavit of the attorney, and the affidavit of one or more physicians. . . ."
Workers' Compensation Law § 29 (5) requires that the papers submitted upon such an application to the court to approve the settlement of a third-party claim "consist of the petition, the affidavit of the attorney, and the affidavit of one or more physicians." Such section further requires the petition, the attorney's affidavit, and the physician's affidavit to contain certain enumerated and specified information (as shall be discussed more fully below).
Respondent attacks the petition on multiple grounds. Initially, it challenges the sufficiency of the petitioner's application, contending that: (1) the petitioner's affidavit does not include any reference to the total amount of wages the claimant claims to have lost nor the claimant's present physical condition; (2) the "retainer" does not indicate the identity of the attorneys representing the petitioner; (3) the attorney's affirmation omits certain required statements; and (4) the physician's affirmation is defective in that it is undated and fails to state either the cost of treatment, or whether the physician expects to be paid or has been paid by anyone acting on the petitioner's behalf.
Respondent goes on to oppose the petition on grounds of timeliness, noting that nearly a year had elapsed between the date of settlement of the underlying personal injury lawsuit and the date petitioner brought the instant application. It further argues that the petitioner has failed to demonstrate that the settlement was reasonable; failed to disclose the applicable policy limits; failed to demonstrate that the delay in applying for a judicial order of approval was not caused by petitioner's fault or neglect; and failed to show that respondent has not been prejudiced by the delay. Indeed, respondent notes that it made payments to petitioner in the absence of notification or knowledge that the underlying personal injury lawsuit had been settled.
Respondent/cross-movant's objections to the petition based upon its alleged facial insufficiency is devoid of merit. Workers' Compensation Law § 29(5)(b) requires that the petition set forth a general description of the accident. It further requires that the petition state "[t]he nature and extent of the damages sustained, including the name of the physician or physicians attending or consulting in the treatment and the medical expenses incurred, the period of disability resulting from the accident, the total amount of wages lost thereby, and the present physical condition [of petitioner]" (Workers' Compensation Law § 29 [c]). Additionally, the petition must contain "[t]he terms of the attorney's retainer and of the proposed settlement and petitioner's approval thereof" (Workers' Compensation Law § 29 [d]).
Here, petitioner has provided, inter alia, a detailed account of the accident; an affirmative statement that he retained counsel herein on a 33-1/3% contingency basis on February 9, 2000; a full description of his medical treatment which included surgery performed by Dr. D'Angelo; and a statement that neither he nor Dr. D'Angelo were receiving Workers' Compensation proceeds during the protracted period where coverage was disputed and appealed by a number of insurance carriers, including AIG. Petitioner and his counsel contend that the settlement with defendant in the underlying tort action was fair, reasonable, and, given the questionable liability against said defendant, substantial ( see Neblett v. Davis, 260 AD2d 559). Finally, petitioner sets forth the monies he received following payment of the enumerated attorney's fees, and he states that he has been totally disabled since the date of the accident. The court thus finds that the petition is sufficient to satisfy the requirements of Workers' Compensation Law § 29(5) ( see Matter of McCaffrey v. James L. Lewis, Inc., 225 AD2d 981, 982; Matter of Dauenhauer v. Continental Cas. Ins. Co., 217 AD2d 943, 944).
Respondent/cross-movant's remaining arguments are similarly unpersuasive. As noted, AIG continuously denied and litigated the question of coverage at the administrative level, and the WCB did not issue a final determination concluding that AIG was the carrier responsible for providing coverage until February 3, 2003. During the pendency of these administrative proceedings, AIG contemporaneously refused to provide coverage even as to a medical procedure determined to be necessary by petitioner's surgeon ( see Amsili v. Boozoglou, 203 AD2d 137 ["(i)n view of the peculiar circumstances in which, at the time of the petitioner's settlement of his third-party action, INA and UEF were both endeavoring to avoid coverage and petitioner had not been paid any compensation benefits . . ., his failure to request the consent of either or both of these entities is understandable"]). Moreover, in his reply affirmation, petitioner's counsel alleges that he was not informed of said final resolution until April, 2003.
As further alleged by counsel, AIG requested a copy of the settlement statement and indicated that they would consider approving the third-party settlement agreement; accordingly, on or about May 6, 2003, he forwarded correspondence to AIG requesting its consent to the settlement. Thereafter, on or about June 13, 2003, he received notification from AIG denying this request and advising of the suspension of the petitioner's benefits. Following his procurement of, inter alia, the affirmation from Dr. D'Angelo, counsel avers that he filed the instant petition on October 14, 2003. Thus, petitioner has demonstrated that any delay was not the result of any reliance upon AIG's inaction ( see Bernthon v. Utica Mut. Ins. Co., 279 AD2d 728), but rather was caused by AIG's own actions. Accordingly, the court finds that the delay in filing this petition was neither inordinate nor solely attributable to petitioner ( see Zamfino v. Furman, 1 AD3d 591; Hargrove v. Becom Real, Inc., 287 AD2d 598; Stiffin, 282 AD2d at 993; DeRosa v. Petrylak, 290 AD2d 596).
Respondent also argues that it has been prejudiced by the settlement of the third-party personal injury action without its consent. It asserts that as a practical matter, the carrier possesses the right to assess whether the contemplated settlement is sufficient to cover the amounts that the workers' compensation carrier has paid and/or faces paying in the future. It claims that petitioner's failure to seek AIG's consent to the settlement prejudiced the insurer because AIG did not have the opportunity to evaluate the sufficiency of the settlement.
The court rejects respondent's argument. "A court may approve a compromise order between a claimant for Workers' Compensation benefits and a defendant in a related action before the Workers' Compensation Board has determined the carrier's potential compensation liability" ( Neblett, 260 AD2d at 560). Moreover, there are no evidentiary facts or any factual basis to support respondent's mere conclusory, speculative and unsubstantiated allegation that petitioner's future claim would result in a total compensation claim exceeding the amount recovered by the petitioner pursuant to the settlement.
Contrary to respondent's arguments, there is also no prejudice to respondent due to petitioner's delay in seeking court approval of the settlement ( see Severino v. Liberty Mut. Ins. Co., 238 AD2d 837, 838; Matter of McCaffrey v. James L. Lewis, Inc., 225 AD2d at 982; Borrowman v. Insurance Co. of N. Am., 198 AD2d 891). Respondent retains the right to offset any future compensation benefits by the amount of petitioner's net recovery ( see Neblett, 260 AD2d at 560). Additionally, there is no prejudice to respondent resulting from the settlement itself ( see Matter of Gregory v. Aetna Ins. Co., 231 AD2d 906; Matter of Kusiak v. Commercial Union Assur. Cos., 49 AD2d 122, 126). "That issue turns largely on whether the settlement terms were reasonable" ( Buchanan v. Scoville, 241 AD2d 965, 966). Here, the court finds that the terms of the settlement of the personal injury action were reasonable in light of the circumstances herein presented and the problems associated with petitioner's ability to prove that the defendant had prior notice of the dangerous and transitory condition upon which petitioner fell ( see Neblett, 260 AD2d at 560; Matter of Gregory v. Aetna Ins. Co., 231 AD2d at 906-907; Matter of McCaffrey v. James L. Lewis, Inc., 225 AD2d at 983).
Accordingly, petitioner's application, pursuant to Workers' Compensation Law § 29(5), for approval, nunc pro tunc, of the personal injury settlement, is granted, and this matter is remanded to the Workers' Compensation Board for a hearing to determine: (1) the amount of petitioner's future Workers' Compensation benefits; (2) petitioner's application for payment for surgical removal of the syndesmotic screw from petitioner's ankle; and (3) the amount, if any, by which AIG may offset any future benefits to which petitioner may be entitled ( see Shutter v. Philips Display Components Co., 90 NY2d 703). The cross-motion requesting, inter alia, an order directing petitioner to pay AIG the statutory lien as claimed, is in all respects denied.
This constitutes the decision, order, and judgment of the court.