Source: http://www.garyrosenberg-law.com/blog/2012/july/child-injured-when-vehicle-she-was-learning-to-d/
Timestamp: 2019-04-19 18:53:39+00:00

Document:
Plaintiffs were represented by Paul K. Isaac, Esq. of Precision Resolution, LLC and David A. Roth, Esq. The Commissioner of the Department of Social Services of the City of New York was represented by Robert W. Hambrecht, Esq.
In the afternoon of July 25, 2001, at Pier 4 of the Brooklyn Army Terminal, plaintiff Shlomit Fried, then 16 years old, was operating a Chevrolet Astro minivan owned by the father of a male friend, Nir Yadgar, 19 years old, who was apparently teaching her to drive, when, for reason or reasons unknown, the van left the Pier, and entered Gowanus Bay. Mr. Yadgar was killed; Ms. Fried suffered catastrophic injuries.
Plaintiff Iris Fried, mother and natural guardian of Shlomit Fried, commenced this action in 2002 on behalf of her infant daughter and on her own behalf. When Shlomit Fried became of age, Iris Fried was appointed her incapacitated daughter's guardian ad litem (see CPLR 1201 et seq.), and has since been appointed her guardian pursuant to Article 81 of the Mental Hygiene Law. Shlomit Fried's father, Uri Fried, is also a plaintiff. By order dated June 17, 2011, Robert Kruger, Esq. was appointed Special Guardian for plaintiff Shlomit Fried.
Plaintiffs' Second Amended Complaint purported to name 36 different defendants. By the time of trial, the defendants were City of New York (the "City"), New York City Economic Development Corporation ("EDC"); Signe Nielsen Landscape Architect, PC ("Nielsen"); Han-Padron Associates, LLP, Han-Padron Associates, LLC, Han-Padron Associates Consulting Engineers, PLLC, and Padron Associates, Inc. ("Han-Padron" or the "Han-Padron Defendants"); and Iffland Havanagh Waterbury, PLLC, Iffland Kavanaugh & Waterbury PC, Iffland Kavanaugh & Waterbury PC, Inc., and Iffland Kavanaugh Waterbury, PLLC (the "Iffland Kavanagh Defendants"), with the Iffland Kavanaugh Defendants only subject to claims asserted by the City and EDC.
On the record on the eighth day of trial, April 25, 2011, Plaintiffs settled their claims against the City and EDC for $8.25 million, and the City and EDC settled their claims against the Iffland Kavanaugh Defendants on the latters' contribution to the settlement with Plaintiffs. The attorneys for the City and EDC did not participate in the balance of the trial, although the fault of the City and EDC would still be in issue at least for purposes of General Obligations Law Sec. 15-108. The settlement has since been approved in this Court's Order Approving Settlement, Counsel Fees and Disbursements dated September 13, 2011 ("the Infant Compromise Order").
Responding to verdict sheet interrogatories, the jury determined that Pier 4 was negligently designed in that vehicle‑resistant barriers were not included at the perimeter, and that Han-Padron and EDC were each negligent in not including vehicle‑resistant barriers in the design for Pier 4, but that Nielsen was not negligent. The jury also determined that Shlomit Fried was negligent in the operation of the vehicle on Pier 4, and that her negligence was a substantial factor in allowing the vehicle to leave the Pier and enter the water. The City did not appear on the Verdict Sheet, and was not addressed in the charge, as all agreed, at least for these purposes, that the City would be vicariously liable for any negligence by EDC.
The jury also made two allocations of fault, with and without consideration of the fault of Ms. Fried. The jury first determined that EDC was 75% at fault, Ms. Fried 20%, and Han-Padron 5%; and then determined that as between the defendants, EDC was 90% at fault and Han-Padron 10%. Asking the jury to allocate twice was precautionary given the open questions concerning the application of General Obligations Law Sec. 15-108 and CPLR Article 16.
With a Decision and Order dated January 19, 2012, this Court granted the motion of the Han-Padron Defendants only the extent of granting them leave to amend their Answer to the Second Amended Complaint, and denied Plaintiffs' motion, in effect upholding the jury's verdict as to liability and allocation of fault. (See 34 Misc.3d 1212(A), 2012 N.Y. Slip Op. 50062[U], 2012 WL 163832.) A schedule was set between the Court and counsel for a damages trial and pre‑trial in limine motions. The Court has since been advised that the action has been settled between Plaintiffs and the Han-Padron Defendants, but an application for a compromise order has not yet been submitted to the Court.
In this motion, Plaintiffs seek to declare null and void, vacate or invalidate "any claimed subrogation right, lien, or other reimbursement claims alleged to exist in favor of New York City Human Resources Administration, against any settlement proceeds received or to be received by the Plaintiff." (See Notice of Motion.) At the time this motion was served, there was no settlement between Plaintiffs and the Han-Padron Defendants. As such, this motion relates solely to the validity of a purported Medicaid lien upon settlement proceeds from the settlement between Plaintiffs and the City and EDC. For purposes of this motion and the settlement, the parties make no distinction between the City and EDC, and the Court will not make any such distinction.
Similarly, neither Plaintiffs nor the New York City Department of Social Services addresses whether the validity and enforceability of a Medicaid lien may properly be determined by motion in this action, and neither will the Court, other than to note that the Department is an agency of defendant City of New York, as is the Human Resources Administration.
In their motion, Plaintiffs first contend that no valid lien or claim against the settlement proceeds exist due to the failure to follow strict statutory guidelines of Social Services Law Sec. 104-b.
In support, Plaintiffs point to and submit only a copy of a letter, dated June 6, 2011, from Amy Wheeler of the Division of Liens and Recovery, in which the New York City Department of Social Services ("DSS") claims "a right of recovery against the proceeds from the personal injury lawsuit/claim of the above‑named plaintiff", and that the "Medicaid lien is for the amount of $1,332,770 covering the period from September 17, 2001 through May 13, 2011."
As such, since Plaintiffs fail to submit all of the documentation that they received from the Department with respect to the purported lien, nor any documents received by defendants EDC, City, or Han-Padron, they fail to establish prima facie that said documentation did not comply with statutory guidelines.
Here, it is undisputed that plaintiff Shlomit Fried is a "recipient of public assistance and care", and that she brought the instant action against Defendants on account of her personal injuries. As such, on its face, Social Services Law Sec. 104-b provides that the public welfare district, i.e., DSS, "shall have a lien". Plaintiffs do not attach any notice served upon DSS notifying them of the commencement of the action against Defendants, but it is clear through the correspondence submitted in support and opposition to the instant motion that DSS had notice of the litigation.
"No such lien shall be effective, however, unless a written notice containing the name and address of the injured recipient, the date and place of the accident, and the name of the person, firm or corporation alleged to be liable to the injured party for such injuries, together with a brief statement of the nature of the lien, the amount claimed and that a lien is claimed upon the said right of action, suit, claim, counterclaim or demand by the public welfare official be served prior to the payment of any moneys to such injured party, by certified with return receipt or registered mail upon such person, firm or corporation, and his or her, its or their attorney, if known, and upon any insurance carrier which has insured such person, firm, or corporation against such liability. A copy of the notice of lien shall be mailed to such carrier at least twenty days prior to the date on which such carrier makes a payment to the injured party. Except as against such carrier, the effectiveness of the lien against any other party shall not be impaired by the failure to mail the required notice to such carrier. In addition, a true copy of such notice shall be served by regular mail to the welfare recipient and to his or her attorney, if known. Such mailing shall be deemed to be effective, notwithstanding any inaccuracy or omission, if the information contained therein shall be sufficient to enable those to whom the notice is given to identify the injured recipient and the occurrence upon which his or her claim for damages is based."
Again, to support this contention, Plaintiffs only submit a copy of the DSS letter dated June 6, 2011. Presumably, this letter was sent to Plaintiffs' counsel in compliance with Social Services Law Sec. 104-b(2) requiring that "a true copy of such notice shall be served by regular mail to the welfare recipient and to his or her attorney". The letter indicates, among other things, that DSS has "a right of recovery against the proceeds from the personal injury lawsuit/claim" of plaintiff Shlomit Fried and lists, among other things, the date of the accident, and Ms. Fried's date of birth and social security number. It further indicates that "the Medicaid lien is for the amount of $1,332,770.00 covering the period from September 17, 2001 through May 13, 2011." Notably, the letter also states that "[y]ou must contact our office at the time a settlement is being considered so that the Department may provide an updated lien amount and participate in negotiations", and "[s]hould you distribute lawsuit proceeds in disregard of our lien, the Department has the right to proceed directly against you in subrogation."
Although this letter does not contain all of the elements required for the written notice pursuant Social Services Law Sec. 104-b(2), it contains information "sufficient to enable those to whom the notice is given to identify the injured recipient and the occurrence upon which his or her claim for damages is based". (See Social Services Law Sec. 104-b.) Indeed, neither Plaintiffs nor Defendants claim any prejudice as a result of any of the missing items in the written notice.
It should be noted that Plaintiffs refer to, but do not otherwise address, the filing requirement of Social Services Sec. 104-b(3), which provides that upon serving the notice of lien, "the local public welfare official shall file a true copy thereof in the office of the clerk of the county in which his office is located, and, thereupon the lien of the public welfare official in the amount therein stated shall attach ... to the proceeds of any settlement of any claim or demand respecting such injuries prior to suit or action." Further, Social Services Law Sec. 104-(7) provides that "[t]he aforesaid lien shall be valid and effective, when the notice thereof and the statement are served and filed as aforesaid, and shall continue until released and discharged by the local public welfare official by an instrument in writing and filed in said county clerk's office, and no release, payment discharge or satisfaction of any such claim, demand, right of action, suit or counterclaim shall be valid or effective against such lien." Indeed, Social Services Law Sec. 104-b(8) provides that the county clerk maintain a "suitable book with proper index, to be called the public welfare lien docket." Here, neither Plaintiffs nor the Department addresses whether the lien was filed in the public welfare lien docket. As such, Plaintiffs make no contention that the lien is not valid and effective based upon the Department's failure to file the lien, and the Court need not further address the issue.
Plaintiffs next contend that "even if it were determined that the lien complied with statutory requirements, no recovery can be enforced against the Plaintiff's settlement proceeds here." In this regard, Plaintiffs argue that the lien may only be enforced by an action pursuant to Social Services Law Sec. 104-b(6), which provides that "[s]uch lien may be enforced by action against those alleged to be liable for such injuries, as aforesaid, by the local public welfare official in any court of appropriate jurisdiction." Plaintiffs also point to Social Services Law Sec. 367-a(2), which provides that "upon furnishing assistance under this title to any applicant or recipient of medical assistance, the local social services district or the department shall be subrogated, to the extent of the expenditures by such district or department for medical care furnished, to any rights such person may have to medical support or reimbursement from liable third parties."
In opposition to Plaintiffs' contention that the Department may not enforce the lien against Plaintiffs and may only proceed against liable third parties, the Department contends that "it has long been settled law in New York that a recovery under SSL Sec. 104- is NOT a recovery from proceeds belonging to the plaintiff but from the third party tortfessor [sic]".
Contrary to Plaintiffs' contentions, in Matter of Homan v. County of Cattaraugus Department of Social Services (74 A.D.3d 1754, 905 N.Y.S.2d 387 [4th Dept 2010]), the Fourth Department, although not specifically addressing the statutory language of the Social Services Law, rejected the contention "that DSS has only a right of subrogation against the tortfeasor, not a right to a lien against the settlement proceeds" (see id. at 1755, 905 N.Y.S.2d 387.).
Based upon the language of the Infant Compromise Order, the payment of funds to Mr. Kruger as Special Guardian "is not payment to plaintiff", since Mr. Kruger also serves as an escrow agent who is "duty‑bound not to deliver the escrow to anyone except upon strict compliance with the conditions imposed." (See Iannizzi v. Seckin, 5 A.D.3d 555, 556, 772 N.Y.S.2d 838 [2d Dept 2004].) In short, the Infant Compromise Order provides that the funds are to be held by Mr. Kruger to satisfy any Medicaid lien. Plaintiffs do not seek to modify or to vacate the Infant Compromise Order, or to set aside the settlement.
On this contention, Plaintiffs do not point to any authority other than this Court's decision in D.C. v. City of New York, which did not expressly adopt a broad rule barring DSS, a City agency, from enforcing a lien against proceeds offered by the City in settlement of a tort claim against the City, but which was decided instead upon a finding that the settlement in that case did not include compensation for medical expenses.
Neither Sullivan v. County of Suffolk, 1 F.Supp.2d 186 [E.D.N.Y.1998]) nor Smith v. Little Flower Children's Services of New York are binding on this court since the issue of the validity and extent of state liens is generally a determination involving state law (see In re Zyprexa Products Liability Litigation, 451 F.Supp.2d at 477), nor are the opinions particularly persuasive. Both opinions acknowledged that the social services department was a City or county agency, but, without any citation to authority, and without pointing to any evidence in the record, held in conclusory fashion that DSS was "distinct" from the county or City, respectively, and, therefore, could enforce a lien on proceeds offered by the county or City in settlement of a lawsuit.
Moreover, both Sullivan v. County of Suffolk and Smith v. Little Flower Children's Services of New York were decided prior to Ahlborn. Prior to Ahlborn, New York State and Federal courts adopted a "full‑reimbursement approach", requiring that Medicaid liens be paid in full from available settlement proceeds irrespective of the portion of the settlement representing past medical expenses. (See In re Zyprexa Products Liability Litigation, 451 F.Supp.2d at 469.) Under the full‑reimbursement approach, DSS had less incentive to be involved in settlement negotiations since it could be assured of full reimbursement of its Medicaid lien as long as the settlement amount exceeded the amount of the lien. (Id.) After Ahlborn, DSS has greater incentive to be involved in the settlement negotiations to ensure that any settlement includes the costs of medical expenses, and to avoid the uncertainty that may arise by an allocation hearing.
In cases where DSS is not involved in the settlement negotiations, and, therefore, it is not clear as to what portion of the settlement represents medical expenses for purposes of satisfying any lien, the court must hold an allocation hearing to determine what portion of the settlement proceeds represent past medical expenses. (See Matter of Homan v. County of Cattaraugus Department of Social Services, 74 A.D.3d at 1755, 905 N.Y.S.2d 387; Chamorro v. Cole, 2010 N.Y. Slip Op. 32641[U], *4-*5, 2010 WL 3800691 [Sup. Ct., Bronx County 2010]; Harris v. City of New York, 16 Misc.3d at 679_80, 837 N.Y.S.2d 486; Lugo v. Beth Israel Medical Center, 13 Misc.3d at 688-89, 819 N.Y.S.2d 892.) In that situation, even though the parties have settled the case, they may not know the true amount of the settlement, i.e., how much money the plaintiff will be receiving after satisfaction of the Medicaid lien, until after the allocation hearing, and, therefore, may not have had a true meeting of the minds as to the settlement itself.
It is clearly a preferred practice for the parties to include DSS in any settlement negotiations in lieu of settling a case and then holding an allocation hearing. Indeed, the DSS letter dated June 6, 2011, as well all of the letters included with DSS's opposition papers as Exhibit F and Exhibit G, state, "You must contact our office at the time a settlement is being considered so that the Department may provide an updated lien amount and participate in negotiations." The Notice of Lien dated February 22, 2011, provides that "it is recommended that responsible third parties itemize in any settlement agreement the full amount of the lien or amended lien as a distinct component of the Recipient's recovery and that the Department be included as an interested party in settlement negotiations." Among those "allegedly liable for injuries", the Notice of Lien lists "NYC Economic Development Corporation", and on the same date DSS wrote to the lawyers representing the City and EDC in this action, advising of the lien. Indeed, it is reasonable to assume that the City as the settling party would adhere to policies regarding settlement instituted by DSS, another City agency.
DSS points to no statutory requirement that a Medicaid recipient notify DSS of its intention to settle a claim for personal injury that might implicate the Medicaid lien. Here, both the record of the settlement on April 25, 2011 and the Infant Compromise Order explicitly referred to the possibility of a Medicaid lien, but, for whatever reason, the City did not allocate any portion of the settlement proceeds to past medical expenses.
In circumstances as here, where the City is the settling defendant and where DSS is a City agency, there is no risk that counsel for the City would not include DSS as part of the settlement negotiations in order to deprive DSS of enforcement of its lien. As this Court stated, "One would expect ... that where the City intended to reduce the amount provided to compensate the plaintiff for the injury it caused by the amount of expenses incurred in treating the injury, the City would have expressly qualified its offer." (See D.C. v. City of New York, 18 Misc.3d 1116[A], 2008 N.Y. Slip Op. 50037[U], at *4, 2008 WL 131965.) Here, the City did not expressly so qualify its offer.
Accordingly, Plaintiffs' motion is granted in accordance with this Decision and Order to the extent that any settlement proceeds covered by the Infant Compromise Order are determined not to include compensation for past medical expenses to which any Medicaid lien could attach. The Court expresses no opinion with respect to any lien on Plaintiffs' settlement with the Han-Padron Defendants.

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