Opinion
# 2014-049-013 Claim No. 98546 Motion No. M-84167
03-05-2014
AMACIO v. THE STATE OF NEW YORK
Law Offices of Thomas Torto By: Thomas Torto, Esq. Jones, Hirsch, Connors, Miller & Bull, P.C. By: William E. Bell, Esq.
Synopsis
Claimant's application for nunc pro tunc approval of settlement pursuant to Workers Compensation Law § 29(5) denied.
Case information
| UID: | 2014-049-013 |
| Claimant(s): | DAVID AMACIO |
| Claimant short name: | AMACIO |
| Footnote (claimant name) : | |
| Defendant(s): | THE STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 98546 |
| Motion number(s): | M-84167 |
| Cross-motion number(s): | |
| Judge: | DAVID A. WEINSTEIN |
| Claimant's attorney: | Law Offices of Thomas Torto By: Thomas Torto, Esq. |
| Defendant's attorney: | Jones, Hirsch, Connors, Miller & Bull, P.C. By: William E. Bell, Esq. |
| Third-party defendant's attorney: | For Third Party PMA Management Corp. Bond, Schoeneck & King, PLLC By: J.P. Wright, Esq. |
| Signature date: | March 5, 2014 |
| City: | Albany |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
The claim at issue was terminated by a Stipulation of Discontinuance entered into by claimant David Amacio and defendant State of New York, and filed with the Court on July 20, 2000. Claimant now moves by Order to Show Cause for nunc pro tunc approval of the settlement, pursuant to Workers' Compensation Law ("WCL") § 29(5). For reasons set forth below, the application is denied.
Lisa Amacio was also a claimant in this action, but the settlement does not appear to have involved any payment to her. She is not named in the caption of the Order to Show Cause.
By claim filed June 29, 1998, Amacio alleged that on May 14 of that year he sustained injuries while working for Tully Construction Co., Inc. ("Tully") on a project for the State, when he was knocked down by a hose used in excavation work (Claim ¶ 5). He also applied for workers' compensation benefits, which were awarded him by decision of the Workers' Compensation Board ("WCB") on March 3, 1999 (Aff. in Supp. ¶ 4 & Ex. B). Reliance Insurance Co. ("Reliance") was Tully's workers' compensation carrier, and the benefits were provided through third-party administrator Crawford and Company ("Crawford") (id. ¶ 11).
A trial commenced on June 19, 2000. In the midst of trial, the parties agreed to settle the case for a payment of $800,000 to claimant "plus a waiver of the workman's compensation lien" (id. Ex. C at 5). On June 29, 2000, a hearing was conducted before the Court of Claims to put the settlement on the record. Claimant's attorney represented at the hearing that he had last spoken to Dennis Montalto of Crawford on November 17, 1999, and was told that as a result of the workers' compensation benefits that Amacio had received to that point, there was an outstanding lien of $71,000 on the settlement award (id.). He questioned Amacio as to his understanding of the settlement terms, including that the lien would be waived, and that Amacio would "stay on workers['] compensation." Amacio confirmed that understanding (id. at 7). Counsel for defendant also said that he was "on behalf of the defendants . . . authorized to state that Mr. Amacio is continued on workers['] compensation" (id. at 8).
Later in the hearing, claimant's counsel stated that it was "stipulated and agreed by and between the parties . . . . that the case is settled on the following terms: A waiver of the workers['] compensation lien. $800,000 settlement money. And that Mr. Amacio is to be continued on workers['] compensation" (id. at 11; see also id. at 12 [claimant and defendant stipulate that "the agreement is that Mr. Amacio will be continued on worker's compensation as if there had been no settlement of the case"]).
Neither the carrier (Reliance) nor the TPA (Crawford) were present at the hearing, and there is nothing in the record to indicate that they made any written submissions in regard to the proposed settlement. At a hearing on the present application, claimant's counsel represented that the workers' compensation carrier and the liability carrier for the State were the same entity, and thus it was fully aware of the proceedings and terms of the settlement. That representation receives some support from the Closing Statement filed after the settlement of the original action, which lists Crawford (identified at the Court conference as the representative of the workers' compensation carrier) as the carrier paying the $800,000 judgment. No other evidence in the record before me identifies the State's liability carrier.
The State appeared at the hearing by the same firm as had defended it in the initial action, but indicated that the attorney who was present at the settlement hearing had left the firm years ago. Following a December 23, 2013 hearing on the current application, the State was asked to produce such evidence as it had on this question, and all parties were given additional time to provide any further response to various questions raised at the hearing. The Court received no further submissions.
At the conclusion of the hearing, the Court asked claimant if he "fully [understood] what happened," and he answered in the affirmative. The Court then announced as follows:
"The stipulation as outlined by Mr. Jacobs and as agreed to by Mr. Rafter on behalf of their respective clients moments ago on this record is so ordered by myself. This matter is concluded."
The parties then submitted a stipulation to the Court, which provided that the matter was "discontinued as against the defendant, with prejudice . . . ." The stipulation was filed, but not signed by the Court.
The stipulation was not included in the parties' submissions, but was located in the Court files. At a hearing on November 13, 2013, I took judicial notice thereof, without objection by any party.
On August 16, 2000, a hearing was held before the WCB on Amacio's benefits claim. At that hearing, the carrier said that it had not consented to the settlement, and claimant was apparently directed to submit proof that the carrier had done so (Letter of Jason Levine to Court of December 11, 2013). A decision issued following that hearing directed the carrier to continue making weekly payments, but noted that the carrier had raised WCL § 29(5) (attachment to Letter of J.P. Wright to Court of December 11, 2013).
A WCB decision issued in February 2009, and discussed below, stated: "At the hearing [on August 16, 2000], the carrier promptly raised the issues of lack of consent under Workers' Compensation Law § 29(5)" (Aff. in Supp. Ex. G).
By letter dated October 7, 2000, claimant submitted to the WCB a transcript of the closing statements at trial, and the settlement colloquy described above. Claimant contended to the WCB that the latter transcript indicated that "the compensation carrier consented to the third party settlement and waived its rights to offset the compensation benefits despite the third party settlement."
On October 12, 2000, the WCB issued a Notice of Decision following a hearing, a copy of which was sent to Reliance. That decision found that claimant was "permanently partially disabled," and once again directed that claimant receive $400 per week. The decision made the following recitation regarding the settlement of Amacio's third-party action:
"Per closing statement, claimant's third party action was settled on 8/20/00 with a net of $511,822.10 to the claimant. Per court transcript, Carrier waived its lien. No further action is planned by the Board at this time" (Aff. in Supp. Ex. D).
Reliance subsequently went bankrupt. According to Amacio, he continued to receive benefits through Crawford acting on behalf of the State Liquidation Bureau, and no objection to such payment was made at hearings over the next several years (Amacio Aff. ¶¶ 11-12).
Crawford was then replaced by PMA Management Corp. ("PMA"), and on April 9, 2008, PMA moved before the WCB to offset claimant's workers' compensation benefits against the recovery Amacio obtained from the State in his action before the Court of Claims.
Following a hearing, a WCB administrative law judge issued a decision on June 4, 2008 again directing claimant to "produce proof that the compensation carrier waived its right to offset the claimant's net third party recovery against future awards of compensation" (Aff. in Supp. Ex. E). Although claimant's response is not contained in the present record, in a subsequent decision the administrative law judge found that "[t]he Carrier waived its right to offset the claimant's net third-party recovery against the continuing award," and directed the carrier to "continue payments at $400" (id. and Ex. F).
The decision was appealed to a WCB panel, before which PMA argued that the carrier was not represented at the settlement hearing before the Court of Claims, and Amacio had failed to produce evidence of its written consent to the settlement. The panel agreed, and rejected claimant's arguments that PMA's 2008 application was barred by laches, and that the settlement had been approved by the Court. It found that the WCB could not find a waiver by the carrier "without any direct acknowledgment and/or concession by the carrier itself," and that the Court's approval was "insufficient" because the carrier was not at the hearing and "there is no evidence that it was notified of the same and provided an opportunity to be heard" (id. and Ex. G at 3).
Claimant's application for review by the full WCB was subsequently denied (id. and Ex. H), and by memorandum and order dated March 10, 2011, the Appellate Division, Third Department affirmed the ruling of the WCB panel (see Matter of Amacio v Tully Constr., 82 AD3d 1371 [3d Dept 2011]). The Appellate Division agreed with the WCB that claimant could not invoke laches against the carrier's application, finding that the carrier first raised its lack of consent at the August 2000 WCB hearing, and that "claimant was directed to submit proof of such consent following that hearing, but failed to do so" (id. at 1372). The Court further held that claimant had not shown that it had been prejudiced by the carrier's delay in seeking to terminate Amacio's benefits. As to the proceeding before the Court of Claims, the Third Department found that neither the carrier nor employer were parties to that action or present at the hearing, nor was there evidence that they consented to the settlement.
The Third Department also indicated that there was no proof in the record that claimant "sought judicial approval of the settlement" (Matter of Amacio, 82 AD3d at 1373). As noted above, the record indicates that the Court of Claims judge presiding over the matter in fact approved the settlement, albeit without any formal application by claimant for such approval. The WCB had found, however, that since there was no evidence at the time the Court reached its decision that the carrier had received proper notice thereof, such approval was "insufficient" for purposes of section 29(5) (Aff. in Supp. Ex. G at 3).
On January 25, 2012, claimant filed a petition against Reliance and PMA in New York State Supreme Court, Kings County, seeking nunc pro tunc approval of the settlement. By order dated May 18, 2012, the Court denied the application, on the ground that the relief sought could only be obtained from "a justice of the court in which the third-party action was pending" (i.e., the Court of Claims) (Aff. in Supp. Ex. K [quoting Workers' Compensation Law § 29[5]). On October 17, 2013, this petition followed.
PMA responded by filing an attorney affirmation in opposition to the petition, arguing that there are various technical defects in claimant's submission, including the failure to include a petition, and the absence of a physician affidavit. Further, PMA contends that (1) the petition is untimely; (2) PMA would be prejudiced by nunc pro tunc approval in that "there is no guarantee that the settlement funds are still available to satisfy the carrier's lien" (Aff. in Opp. ¶ 17); and (3) the petition does not provide a basis for assessing the fairness of the settlement.
Claimant has submitted a reply affirmation contesting these arguments, and oral argument on the application took place on November 13, 2013. Following that proceeding various supplemental documents were submitted in response to a request by the Court for any evidence reflecting the August 2000 hearing and responses made by the parties thereto. These submissions included a copy of the Closing Statement references above, which detailed the disbursements made from the $800,000 settlement (see Claimant's Letter of December 11, 2013 Ex. A). A second hearing was then conducted on December 23, 2013.
Discussion
Under WCL § 29(1), an employee injured by "the negligence or wrong of another not in the same employ" may commence an action against that entity. If the employee receives workers' compensation benefits, the carrier liable for their payment "shall have a lien on the proceeds of any recovery." Such a lien "shift[s] the burden of paying compensation from the carrier or self-insured employer to the party actually responsible for . . . the same injury as the settlement of the third-party action" (Matter of Beth V. v New York State Off. of Children & Family Servs., 22 NY3d 80 [2013] [citation omitted]).
The process for settling a third-party action when the claimant is also seeking workers' compensation benefits is set forth in WCL § 29(5), which provides in pertinent part as follows:
"A compromise of any such cause of action [against a third party] 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, . . . [such] written approval . . . 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."
This section also sets forth the information to be included in the petition, discussed in more detail below.
The purpose of this provision is "to prevent imprudent settlements of [third-party] suits by the employee . . . to the prejudice of the employer's (or carrier's) subrogated rights" (Matter of Meachem v New York Cent. R. R. Co., 8 NY2d 293, 297 [1960]).
In the event a workers' compensation beneficiary settles a third-party action without a carrier's consent or court approval, that individual is barred from receiving future benefits under the WCL (see Matter of Johnson v Buffalo & Erie County Private Indus. Council, 84 NY2d 13, 19 [1994] [citations omitted]). A claimant who does not meet these requirements at the time of settlement may, however, make application at a later date for nunc pro tunc approval under WCL § 29(5), and thereby restore his or her entitlement to such benefits. Should the Court grant such approval, the claimant's right to benefits is restored, regardless of the carrier's objection (see Schnabel v Grimes, 31 AD2d 375 [2d Dept 1969]). The decision on whether to approve a settlement nunc pro tunc lies within the Court's "sound discretion" (Matter of Jackson v City of New York, 70 AD3d 694, 695 [2d Dept 2010]), subject to consideration of certain factors set forth below.
As an initial matter, as noted above PMA makes various procedural challenges to claimant's motion, all of which I find unavailing.
First, I reject PMA's assertion that claimant's application must fail because it is not styled as a "petition." Although the statute refers to a "petition," courts have nevertheless approved applications for nunc pro tunc approval brought via order to show cause (see Matter of Lautenschuetz v AP Greene Indus., Inc., 48 AD3d 948 [3d Dept 2008]; Beers v A.C. & S., Inc., 2011 NY Slip Op 32080[U] [Sup Ct, NY County 2011]). Moreover, the case that defendant relies upon for this argument - Matter of Gherghi v Hereford Ins. Co., (37 Misc 3d 1215[A] [Sup Ct, Queens County 2012]) - based its ruling on CPLR 304, which applies to commencement of new actions or special proceedings. But claimant's present application does not initiate a new matter; it asks the Court to retroactively approve a settlement in an action over which the Court had jurisdiction. And even if this application was appropriately brought as a separate, special proceeding, CPLR 403(d) specifically permits such a proceeding to be commenced via order to show cause (see Kilroy v A.C. & S. Inc., 2011 NY Slip Op 33501[U] [special proceeding for relief under section 29(5) may proceed via order to show cause]). Finally, technical defects in a section 29(5) application do not automatically require its rejection (see Matter of Spurling v Beach, 93 AD2d 306, 308 [3d Dept 1983] [waiving certain "technical errors" that rendered petition inconsistent with section 29(5)]), particularly where - as here - defendant has not articulated any prejudice it has suffered from the form of the present application.
As to the absence of a doctor's affidavit and other material set forth in section 29(5) from claimant's filing, claimant has presented sufficient medical records from which the nature of claimant's injuries and other requisite information can be ascertained (see Neblett v Davis, 260 AD2d 559, 560 [2d Dept 1999] [lack of physician affidavit not fatal to claim, when "most of the medical and treatment information required by [WCL] § 29[5]" set forth in other documents, such as medical records and reports]; Spurling, 93 AD2d at 308 [submission of only "unverified" physician statements does not require rejection of section 29(5) petition, where "most of the required information" is set forth in the petition, excepting the cost of treatment and method of physician's payment]; but see Kouadio v Hereford Ins. Co., 2012 NY Slip Op 30632 [U] [Sup Ct, New York County 2012] [medical records submitted by petitioner insufficient to establish whether settlement reasonable]). Those records identify Amacio's initial treating physician, and describe the nature of Amacio's injuries (painful disk degeneration) and his initial symptoms through July 30, 1999 (severe lower back pain and pain in his lower left leg when it bears weight). And while the claimant's submission does not specifically set forth the agreement on compensation between claimant and counsel, it provides both the total settlement ($800,000), and net settlement amount ($511,822) received by claimant (Aff. in Supp. ¶ 10). The Closing Statement appended to claimant's supplemental submission breaks this down even further (see Matter of Joslyn v State Ins. Fund, 156 Misc 2d 796, 799 [Sup Ct, Oneida County 1992] [defects in initial nunc pro tunc application may be remedied via later submission]), listing the attorneys' fees ($255,911.05) and other disbursements.
In light of the foregoing, I find that while Amacio's filing does not comply with the letter of the statute, it provides sufficient information to evaluate the application, in a manner permitted by caselaw (see Merrill v Moultrie, 166 AD2d 392, 392 [1st Dept 1990] [granting nunc pro tunc relief despite "certain technical omissions" in petitioner's papers]). I proceed, then, to consider whether claimant has shown that nunc pro tunc approval is warranted under the current record. And it is in this regard that claimant's application founders.
A determination as to whether nunc pro tunc approval is warranted under WCL § 29(5) turns on three elements: whether there was any delay by claimant in seeking such relief, except where such delay was not due to claimant's fault or neglect; whether there was prejudice to the carrier from any delay; and whether the settlement was reasonable (Medina v Phillips, 88 AD3d 524, 525 [1st Dept 2011]; Scannell v Karlin, 252 AD2d 552, 554 [2d Dept 1998]).
In regard to delay, the parties disagree as to the date on which it became incumbent on claimant to bring the present application. Defendant would have the delay counted from August 2000, since the Third Department found that at that time claimant was placed "on notice" that the carrier objected to the settlement and claimant therefore "bore the burden of establishing [the carrier's] consent," and "failed to do so" (Matter of Amacio, 82 AD3d at 1372). The documents submitted to this Court, however, make clear that upon claimant's submission of the transcript of the settlement colloquy, the WCB judge found in its October 12, 2000 decision that such evidence was sufficient to establish compliance with section 29(5), and the carrier did not at that time appeal or otherwise challenge that ruling (see supra p 4). Under these circumstances, claimant could not have sought "nunc pro tunc" approval of a settlement that had already been approved by the Court, and to which the carrier's challenge had been rejected. Rather, claimant was entitled to rely on the decision of the WCB until it was overturned (see Shumski v Loya, 55 AD3d 716, 717 [2d Dept 2008] [delay excused due to plaintiff's "good faith, reasonable belief" that carrier's consent had been obtained or "was unnecessary under the circumstances"]; Matter of McCaffrey v James L. Lewis, Inc., 225 AD2d 981, 982 [3d Dept 1996] [initial decision of WCB judge that "carrier consent was not required remained the law of the case until it was overturned by the Board," and delay pending full Board decision was "not the result of petitioner's neglect"]; Kilroy, supra at *6 [there was "no reason to bring . . . application" for nunc pro tunc approval until WCB decided whether self-insured employer had settled civil action]). Nor can claimant be faulted for pursuing his challenge to the 2008 WCB panel decision to the full Board and the Third Department, as he simply availed himself of the appellate procedures provided by statute (see WCL § 23).
Nonetheless, even if the clock began to run - as I find it did - from the issuance of the Appellate Division's decision on March 10, 2011, an extensive delay ensued between that event and the filing of the present motion. The initial Supreme Court petition was not filed for more than ten months after the Third Department ruling, and after the Supreme Court's denial of claimant's petition on May 18, 2012, with specific instructions that claimant should bring an action in this Court, claimant tarried over sixteen months more, until the present proceeding was commenced on October 17, 2013. Altogether, more than twenty-eight months passed between the Third Department's decision and the filing of the Order to Show Cause, exempting the time the application was pending in Supreme Court. Claimant has not presented any valid explanation for this delay.
At the November 13 hearing, claimant's counsel stated that the delay following the Third Department's decision was based on claimant's effort "to determine what his options were," and the delay after the Supreme Court ruling was due to the busy calendar of the small firm representing claimant.
Defendant maintains that claimant must prove that all three section 29(5) factors weigh in his favor to obtain nunc pro tunc relief, and unexcused delay is alone sufficient grounds to compel denial of the application. A number of appellate decisions appear to support this view (see Scannell, 252 AD2d at 554 [plaintiff failed to make "necessary showing" of all three elements of test for such relief due to 17-month delay; grant of nunc pro tunc approval reversed]; Matter of Wilbur v Utica Mut. Co., 228 AD2d 928, 929 [3d Dept 1996] [denying motion for nunc pro tunc approval on grounds of unexplained delay in seeking settlement approval of "at least 11 months after being aware of the carrier's lack of consent"]; Matter of Rifenburgh v James, 297 AD2d 901, 903 [3d Dept 2002] [petitioner's failure to seek judicial approval for at least two years after settlement and 16 months after becoming aware of carrier's lack of consent defense compelled reversal of nunc pro tunc approval]; Kouadio, supra [denying motion where petitioner "provides no satisfactory explanation for why he waited two years after the Workers' Compensation Board closed his case . . . to bring this motion"]). There is also caselaw, on the other hand, that indicates that without a showing of prejudice by the carrier, mere delay does not compel dismissal (see Buchanan v Scoville, 241 AD2d 965, 966 [4th Dept 1997] [delay by petitioner "does not by itself require dismissal" of petition, unless defendant was prejudiced, which "turns largely on whether the settlement terms were reasonable"]; Matter of Dauenhauer v Continental Cas. Ins. Co., 217 AD2d 943, 944 [4th Dept 1995] ["dismissal of the petition was not required solely because of petitioner's delay"]). Under these rulings, timeliness is a "relevant factor" in determining whether relief is appropriate, not a mandatory element of the application (see Dennison v Pinke, 211 AD2d 853, 854 [3d Dept 1995]).
This apparent contradiction in the caselaw can be resolved as follows: while timeliness is only one factor in determining whether relief is appropriate, a delay of sufficient magnitude may, by itself, compel denial of the petition. In the cases cited above, delays of between 11 months and two years were found to cross that threshold. And while the caselaw is not always consistent in this regard, I am unable to find any decision - and claimant does not point me to one - where nunc pro tunc approval was allowed following a delay of 26 months or more, like the one in the present case. There are, to the contrary, numerous decisions in addition to those cited above that indicate nunc pro tunc approval in these circumstances would be improper, regardless of the other factors (see Matter of Bernthon v Utica Mut. Ins. Co., 279 AD2d 728, 728-729 [3d Dept 2001] [passage of one year following settlement "require[d]" plaintiff to show, inter alia, "that the delay . . . was not the result of the employee's own neglect or fault"; application denied when plaintiff failed to make that showing]; Baiano v Squires, 113 AD2d 732, 734 [2d Dept 1985] [following delay of "several months," it was "incumbent upon [petitioners] to furnish a reasonable excuse for the delay," and trial court "erred in granting the application" when they failed to do so]).
Claimant relies on a number of cases outside the workers' compensation context (see e.g. Matter of Comor v New York State Div. of Human Rights, 231 AD2d 715, 715 [2d Dept 1996] [finding, in upholding finding of discrimination claim, that "delay of approximately four years from the time of the hearing to the final determination of the DHR was not substantially prejudicial as a matter of law"]). Given the extensive caselaw surrounding the specific statutory requirements of section 29(5), I see no reason to rely on such decisions.
Faced with an unjustified delay of over two years, I must decline to approve the settlement nunc pro tunc.
In reaching this conclusion, I do not deny the troubling nature of this proceeding. At a settlement hearing in this case, claimant was repeatedly reassured on the record by both his counsel and counsel for defendant State of New York that the settlement into which he was entering would in no way impair his receipt of workers' compensation benefits. Moreover, after the lack of consent was raised by the carrier, a WCB judge found in October 2000 that the carrier had waived its lien, and the carrier made no effort to challenge that ruling for eight years. Nonetheless, the Appellate Division has already concluded that the delay on the carrier's part was not its fault, and did not trigger the laches doctrine - and I am bound by that ruling. Indeed, in light of the Third Department's ruling, even if I were to grant claimant's application the carrier would retain its lien against any benefits claimant received. Finally, whatever injustice was suffered by claimant does not explain his failure to proceed promptly with the present motion. In light of the caselaw cited above and claimant's unexplained delay in seeking this relief, I am compelled to deny claimant's application.
Accordingly, it is ordered that motion No. M-84167 be denied.
March 5, 2014
Albany, New York
DAVID A. WEINSTEIN
Judge of the Court of Claims
Papers Considered:
1. Claimant's Order to Show Cause, Affidavit in Support, and annexed exhibits.
2. Third party defendant's Attorney Affidavit, and annexed exhibits.
3. Claimant's Reply Affirmation.
4. This party defendant's Letter with attachment dated December 11, 2013.
5. Claimant's Letter dated December 11, 2013, and annexed exhibit.
6. Stipulation of Discontinuance dated June 29, 2000.