Opinion
31729/07.
Decided January 30, 2009.
Levin Chetkof, LLP, Westbury, New York, Counsel for Petitioner.
Corporation Counsel, Brooklyn, New York, Counsel for Respondent.
Upon the foregoing papers, petitioner Cheryl Jackson (Jackson) moves by order to show cause for an order, pursuant to Workers' Compensation Law § 29(5), granting approval, nunc pro tunc, of a settlement reached in February, 2005 in an action against Mark B. Fleischer in Supreme Court, Kings County, Index No. 21629/04. The respondents are the City of New York (the City), the New York City Department of Education (DOE), and the New York City Board of Education (BOE). Notably, this is the second such application interposed by petitioner, the first having been denied without prejudice by Decision and Order dated November 19, 2007 of Justice Jack M. Battaglia ( Jackson v City of New York , 17 Misc 3d 1129[A] [2007]). In 2003, petitioner was employed by the Department of Education as a family assistant. On July 11, 2003 and August 1, 2003, she claims to have been subjected to sexual harassment and touching by Fleischer, the principal of the school and her supervisor. As a result, she suffered psychological injuries which permanently prevented her from working. She commenced treatment with Dr. Alexander Heisman which continued until November of 2007.
Petitioner did not return to work after the August 1, 2003 incident until September of 2004, and, after working until November of that year, has not worked since.
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." Also in 2003, petitioner retained a law firm to prosecute her claim for Workers' Compensation. A Workers' Compensation claim was filed on or about December 4, 2003.
On or about March 22, 2004, without having commenced an action, petitioner reached a settlement with respondents in the amount of $60,000.00, and executed a general release. Thereafter, on or about July 8, 2004, petitioner, after obtaining a "consent to sue" letter from the United States Department of Justice, commenced an action against Fleischer, alleging the same facts. On January 21, 2005, petitioner, without obtaining the consent of the Workers' Compensation carrier, reached a settlement with Fleischer in the amount of $20,000.00. Purportedly, she was advised by her Workers' Compensation attorney that under the circumstances, consent of the Workers' Compensation attorney was not required.
On March 3, 2006, the Workers' Compensation Law Judge, following a hearing, rendered a decision closing Jackson's claim, but permitting its reopening in the event of its receipt of nunc pro tunc consent to settle. Her attorney on the present application was advised by her Workers' Compensation attorney that he would be appealing said decision and that consent could not be requested of this Court until an appeal and a final determination was rendered at the Board. On or about October 11, 2006, petitioner's Workers' Compensation counsel advised her that her final appeal was decided, affirming the decision of the Workers' Compensation Law Judge. Accordingly, in August of 2007, petitioner filed an order to show cause and petition for the identical relief she seeks herein.
In his Decision and Order regarding that petition, Justice Battaglia found Jackson's petition deficient in its failure to set forth medical expenses incurred and the total amount of wages lost, and her physician's affidavit deficient in failing to include, among other things, the date of his last examination, and the cost of treatment. He, further, rejected counsels' assertion that the City's "reasonable" settlement with petitioner for $60,000 bars it from arguing that any other settlement increasing the base settlement with the City is not a reasonable settlement and found that a material change of circumstances between the two settlement dates precluded the use of the first settlement as a guideline.
Based upon the absence of any supporting proof in the petition, Justice Battaglia rejected the further argument that the $20,000 settlement was reasonable because of the difficulty of proving causation to a jury.
As stated in the Decision and Order, ". . . 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 both."
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). Judicial approval of a settlement is a statutory alternative to approval by the insurance carrier ( see Kusiak v Commercial Union Assur. Companies, 49 AD2d 122, 125). 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.
In Neblett v Davis, 260 AD2d 559, the Appellate Division found that "[a]lthough the plaintiff's treating physician did not submit an affidavit, the record contains a letter, as well as numerous reports and office records from him, containing most of the medical and treatment information required by Workers' Compensation Law § 29(5)."
In addition to providing a detailed account of Fleischer's tortious conduct and reason for the delay, petitioner avers that to date, she has not received any Workers' Compensation benefits for the subject incident, and alleges that Dr. Heisman has not received any payments from Workers' Compensation for medical services. Additionally, she sets forth the terms of the settlement reached with Fleischer, the terms of the retainer, and the amount of her recovery after payment of attorneys fees and disbursements. Petitioner states that she has received a check in the amount of $14,000, in full satisfaction of said amount.
Acknowledging the delay in commencing the instant proceeding, petitioner explains that her husband passed away on October 22, 2007, following a one-year period of chronic illness where petitioner was his primary and constant caregiver. Following his death, she avers that she went into a deep depression which reduced her ability to function, and caused her to lose contact with everyone, including her attorney. In his affirmation, petitioner's attorney provides a history of his involvement with the matter. On August 13, 2003 petitioner retained The Law Offices of Irwin R. Kaplan (the Kaplan firm), in which he was an associate. Subsequently, that firm referred petitioner to the law firm of Severance, Burke Spalter, P.C. to prosecute her claim for Workers' Compensation. When petitioner's attorney left the employ of the Kaplan firm, petitioner, on January 19, 2004, retained him to substitute for the Kaplan firm as her attorney, on the same terms as agreed to with the Kaplan firm.
Counsel filed a Closing Statement with the Judicial Conference, but realized, when petitioner's Workers' Compensation attorney requested a copy of said Closing Statement, that an amended closing statement was necessary. On October 11, 2005, counsel filed an amended closing statement.
Counsel goes on to restate many of the contents of his affirmation in the proceeding before Justice Battaglia, asserting that the settlement with Fleischer was reasonable in that the $60,000 settlement alone was, in and of itself, reasonable, and precludes the respondent here, who negotiated said settlement, from arguing that any other settlement increasing that base settlement is not a reasonable one. In addition, he asserts that in light of the manner by which Ms. Jackson sustained her damages, it would be very difficult to prove to a jury that her psychological injuries, diagnosed as post-traumatic stress, were caused by two occurrences with Fleischer. Counsel cites the fact that there were no physical injuries or independent witnesses, that Jackson continued to work, the lack of documented prior occurrences, the allegation that the occurrences were consensual, the fact that the incidents were not immediately reported, the lack of medical documentation, and other factors which counsel, to avoid undermining his client's Worker's Compensation case, deems more appropriate for an in-camera discussion. He attributes the original delay in moving to obtain consent was not due to petitioner's fault or neglect, but was due to the fact that the issue was being litigated at the Workers' Compensation Board, and as a result of the advise provided by petitioner's Workers' Compensation attorney that consent was not necessary under the circumstances. It was not until October 11, 2006, upon receiving word from said counsel that the Workers' Compensation Board affirmed the decision of the Workers' Compensation Law Judge, that a motion to obtain nunc pro tunc consent could be made.
Counsel states that in March of 2006, upon receipt of the Board's decision staying Ms. Jackson's claim pending receipt of nunc pro tunc consent to settle, his offices contacted her Workers' Compensation attorney, who advised that until a decision on his appeal of that determination was rendered, no such motion should be made because the same matter could not be litigated in two separate courts simultaneously.
After reiterating the various difficulties encountered in obtaining medical documents, counsel (1) supports petitioner's allegation that after her husband's passing, she failed to maintain contact with his office; and (2) alleges that because he had not been paid for his services, Dr. Heisman became uncooperative, and after several months, only agreed to cooperate if petitioner executed a lien which was co-signed by counsel's office.
Finally, as before, counsel maintains that respondent has not been prejudiced by the delay. No monies have been paid out for petitioner's medical treatment, the Workers' Compensation proceedings remain stayed, and respondent still retains the right to offset any future compensation benefits by the net amount recovered from Fleischer.
In his affirmation dated August 6, 2008, Dr. Heisman states that the last time Ms. Jackson came under his care was November 14, 2007; she was being treated with antidepressant medications and psychotherapy; and she has had periods where she is "doing well" and periods of relapse. He further reports that in May of 2004, she appeared to be recovering well and was in stable condition, at which time he recommended that she return to work, although not at the same location. He states that subsequent to her return to work, Ms. Jackson began to exhibit signes of post-traumatic stress disorder, and, as a result of returning to work, she relapsed and again became disabled. In conclusion, he states that he is unable, at the present time, to make a determination as to her disability because he has not seen her for treatment since November 14, 2007. However, at that time she was still partially disabled and would have great difficulty returning to the job/job environment in which she had been working.
Dr. Heisman states that his bills for medical treatment, none of which have been paid, total $8,750.00. In his estimation, the cost of future treatment should be "minimal".
In opposing the petitioner's application, the City argues that the new papers fail to cure the deficiencies cited by Justice Battaglia in his Decision and Order, that it fails to meet the requirements of Workers' Compensation Law § 29(5), does not show that the delay was not due to petitioner's own fault or neglect, and fails to show that the City was not prejudiced. In particular, respondent points to the absence of an affidavit from petitioner's Workers' Compensation attorney explaining the basis for his advice.
The City further avers that it is not estopped from opposing the claim, arguing that the case against Fleischer was a completely separate claim from that where the City and its related entities were parties, and did not provide contribution to the settlement, which was paid in its entirety by Fleischer.
Under New York law, the reason for the delay, rather than its length, determines the timeliness of a motion for a nunc pro tunc compromise ( Amsili v Boozoglou, 203 AD2d 137; Balkam v Meisemer, 74 AD2d 629; Ikewood v Aetna Life and Cas. of Hartford, 108 Misc 2d 943). In the instant matter, petitioner furnishes an acceptable excuse for a significant portion of the delay in that she relied on the advice of her Workers' Compensation counsel that consent was unnecessary, requiring no further inquiry into the matter ( see Oga v Loh, 603 F Supp 1354 [DCNY SD 1985] ["plaintiff's neglect, if any, is excusable, since it was based on expert advice which on its face the plaintiff had reason to rely on"]). Similarly, the court accepts petitioner's inability to obtain the cooperation of Dr. Heisman, as well as the aftermath of her husband's death, as reasonable explanations for delay. The court thus finds that delay was not as a result of any fault or neglect on the part of petitioner. Although there is controlling authority supporting the exercise of judicial discretion allowing a plaintiff to settle a third-party action "where such settlement was reasonable in view of the low probability that the plaintiff would be able to convince a jury that her alleged disability had been caused by the [alleged incident]" ( Neblett v Davis, 260 AD2d 559; see also Matter of McCaffrey v James L. Lewis, Inc., 225 AD2d 981, 983; Matter of Volpe v Fireman's Fund Ins. Co., 54 Misc 2d 212), equally powerful authority requires that the court, in evaluating the reasonableness of any third-party settlement, give adequate consideration to the potential liability of the Workers' Compensation carrier resulting from the compromise order ( see Sacca v Press, 70 AD2d 615). In Sacca, the plaintiff claimed that a psychiatric condition arose from, or was aggravated by, his involvement in a relatively minor vehicular accident which occurred during the course of employment. In reversing the order of the trial court and remanding the matter for a hearing, the Appellate Division, noting that because "the grant of a compromise order preserves for the plaintiff a right to future compensation from the carrier based upon the alleged permanence of plaintiff's psychiatric disturbance", full consideration of the legal consequences to the carrier of plaintiff's potential exercise of this right must be given when determining a motion to compel the giving of consent to settle nunc pro tunc ( Sacca, 70 AD2d at 616). Here, petitioner relies on Neblett in contending that the settlement with Fleischer was reasonable, given the difficulty in proving to a jury that petitioner's psychological injuries were caused by the actions of that defendant. She is silent with respect to the City's opposition, which is based on the assertion that respondent's potential liability could amount to almost $384,000, exclusive of medical expenses. However, respondent fails to support, in admissible form, such assertions ( see Sykes v AIG Claim Services, Inc., 4 Misc 3d 1012 [A] [2004]). Moreover, respondent's contention that petitioner has not set forth the basis for the amount of the settlement is clearly irrelevant and illogical. The uncertainty of proof is, and has always been, a significant if not controlling factor in guiding settlement negotiations. The amount to which petitioner agreed is clearly set forth by counsel as a reasonable amount in view of his evaluation of the strengths and weaknesses of petitioners' claim, which is an accepted basis for nunc pro tunc approval of a third-party settlement, whether prospective ( see McCaffrey, 225 AD2d at 983 ["(a)s Supreme Court pointed out, the Board's 1994 decision indicated that there was a question as to whether petitioner was exposed to asbestos at prior job sites with previous employers. This also, supports petitioner's claim that he will not be able to meet his burden of proof against the peripheral manufacturers with whom he wishes to settle"], or retrospective ( see Cosgrove v County of Ulster , 51 AD3d 1326, 1327 ["in light of respondent's viable defense to the tort action, the settlement was reasonable"]).
Finally, respondent fails to demonstrate prejudice from the delay, since it retains the right to offset any future compensation benefits by the amount of petitioner's net recovery ( Cosgrove, 51 AD3d at 1327; Neblett, 260 AD2d at 560).
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 appropriate determination. This constitutes the decision, order and judgment of the court.