Case Name: In the Matter of the Claim of Roosevelt T. Johnson, Respondent, v. Buffalo & Erie County Private Industry Council et al., Appellants. Workers' Compensation Board, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1994-06-21
Citations: 84 N.Y.2d 13
Docket Number: 
Parties: In the Matter of the Claim of Roosevelt T. Johnson, Respondent, v Buffalo & Erie County Private Industry Council et al., Appellants. Workers’ Compensation Board, Respondent.
Judges: 
Reporter: New York Reports
Volume: 84
Pages: 13–20

Head Matter:
[636 NE2d 1394, 613 NYS2d 861]
In the Matter of the Claim of Roosevelt T. Johnson, Respondent, v Buffalo & Erie County Private Industry Council et al., Appellants. Workers’ Compensation Board, Respondent.
Argued May 4, 1994;
decided June 21, 1994
POINTS OF COUNSEL
Carl D. Copps, Albany, and Raymond C. Green, New York City, for appellants.
I. The Court below erred in holding that workers’ compensation payments for permanent partial disability beyond three years postaccident are with "basic economic loss” and thus not subject to a compensation carrier’s lien or credit (offset) rights under Workers’ Compensation Law § 29. In so holding, the Court below erred in its reading of the Court of Appeals decision in Dietrick v Kemper Ins. Co. (76 NY2d 248); in failing to adhere to its own precedent in Matter of Fellner v Country Wide Ins. (95 AD2d 106) and Matter of Simmons v St. Lawrence County CDP (147 AD2d 323); and in its interpretation of Insurance Law §§ 5102, 5104 and Workers’ Compensation Law § 29 (1-a). In essence, the Court below has usurped the authority of the Legislature and judicially redefined "basic economic loss.” (Montgomery v Daniels, 38 NY2d 41; Pascente v Stoyle, 116 Misc 2d 641; Hughes v Ryder Truck Rental, 125 AD2d 177; Tortorello v Landi, 136 AD2d 545; Rulison v Zanella, 119 AD2d 957; Watkins v Bank of Castile, 172 AD2d 1061; Matter of Granger v Urda, 44 NY2d 91.) II. The Court below erred in holding that claimant’s third-party settlement without the carrier’s consent did not bar claimant from receiving further compensation payments for permanent partial disability. Said holding announced without rationale and without citation to authority, is in direct conflict with the relevant statutory and decisional law. (Matter of Daly v Daly Constr. Corp., 136 AD2d 798, 72 NY2d 807; Matter of Durham v Barker Chem. Corp., 151 AD2d 887; Matter of Parmelee v International Paper Co., 157 AD2d 878; Matter of Simmons v St. Lawrence County CDP, 147 AD2d 323; Matter of Fellner v Country Wide Ins., 95 AD2d 106; Scarpelli v Marshall, 92 Misc 2d 244; Pascente v Stoyle, 116 Misc 2d 641; Marc-Charles v Krug, 93 Misc 2d 603; Montgomery v Daniels, 38 NY2d 41; Hughes v Ryder Truck Rental, 125 AD2d 177.)
Paul Shatkin, Buffalo, for Roosevelt T. Johnson, respondent.
The Court below did not err in its application of Dietrick v Kemper Ins. Co. (76 NY2d 248) to the facts of this case and should in all respects be affirmed. (Harris v Channel Master, 59 AD2d 903; Matter of Parmelee v International Paper Co., 157 AD2d 878; Matter of Granger v Urda, 44 NY2d 91; Matter of Simmons v St. Lawrence County CDP, 147 AD2d 323.)
Paul A. Crotty, Corporation Counsel of New York City, Brooklyn (Larry A. Sonnenshein, Steven M. Scotti and John Sweeney of counsel), for City of New York, amicus curiae.
I. The Court below erred as a matter of law in determining that compensation payments for lost time from work more than three years from the date of accident represent payments for basic economic loss because Insurance Law § 5102 (a) (2) limits "basic economic loss” wage loss to a period of three years from the date of accident. Accordingly, pursuant to Workers’ Compensation Law §29 (1) and (1-a), the carrier has a lien for payments made for lost time from work more than three years postaccident. (Dietrick v Kemper Ins. Co., 76 NY2d 248; Matter of Simmons v St. Lawrence County CDP, 147 AD2d 323; Matter of Fellner v Country Wide Ins., 95 AD2d 106.) II. The claimant failed to obtain the workers’ compensation carrier’s consent to his third-party settlement and failed to obtain a compromise order pursuant to Workers’ Compensation Law §29 (5). Because the carrier’s lien may encompass payments for medical and other services as well as compensation, failure to obtain consent bars further compensation payments whether or not they represent first-party benefits for basic economic loss. (Matter of Parmelee v International Paper Co., 157 AD2d 878; Matter of Durham v Barker Chem. Corp., 151 AD2d 887; Matter of King v New York City Bd. of Educ., 132 AD2d 742.)

Opinion:
OPINION OF THE COURT
Smith, J.
In this proceeding the issues are (1) whether workers' compensation benefits paid to a claimant beyond three years may properly be construed as payment for "basic economic loss" under this Court's decision in Dietrick v Kemper Ins. Co. (76 NY2d 248), and thus not subject to a compensation carrier's Workers' Compensation Law §29 lien and (2) whether a claimant may continue to receive compensation payments for permanent partial disability where the carrier's consent was not obtained prior to the claimant's settlement of a third-party action. Because payment of workers' compensation benefits for more than three years may not be considered as payment for basic economic loss and a carrier's consent is required prior to the settlement of a claimant's third-party action, we reverse the order of the Appellate Division.
The facts are not disputed. Claimant Johnson, employed by appellant Buffalo and Erie County Private Industry Council, sustained compensable injuries during a September 11, 1986 car accident. Claimant filed for workers' compensation benefits and also commenced a civil suit against the driver. Without the compensation carrier's consent, however, claimant settled the civil suit for $10,000 — the full amount of the driver's insurance policy, netting $6,666.67 after attorney's fees.
Claimant was examined by a State Medical Examiner employed by the Workers' Compensation Board who concluded that claimant had a permanent partial disability. The Workers' Compensation Law (WCL) Judge adopted that determination in his decision following a hearing held on August 16, 1988 to determine claimant's payments. Claimant's compensation rate was set at $82.97 per week.
On March 28, 1989 at a hearing before the Board, in response to the Judge's question whether the third-party action was pending, defendant's counsel indicated that the matter had been settled and that the carrier's consent was not necessary. At a hearing held January 23, 1990, the WCL Judge found that the claim came within the purview of Workers' Compensation Law § 15 (8) (d) which provides a Special Injury Disability Fund allowing reimbursement to employers or carriers for all awards for permanent disability where the claimant's injuries meet specified criteria (see, Minkowitz, Practice Commentaries, McKinney's Cons Laws of NY, Book 64, Workers' Compensation Law § 15, at 31).
By decision dated May 1, 1990, the State Insurance Fund, the insurance carrier, suspended claimant's payments in light of his settlement of the third-party action without its consent. The carrier also requested that the Board formally close claimant's file.
After a hearing to determine the implications of claimant's third-party settlement, the WCL Judge held that the settlement was for pain and suffering and directed the carrier to continue the payments at the previous rate of $82.97 per week. The carrier and the Special Funds Conservation Committee appealed the WCL Judge's decision to the Board. The Special Funds Conservation Committee's standing in this case was based upon its requirement, pursuant to Workers' Compensation Law § 15 (8) (d), to reimburse the carrier.
By a decision filed on September 18, 1991, the Board modified the WCL Judge's decision, holding that as a result of claimant's settlement of the third-party action without the carrier's consent, claimant was precluded from receiving further compensation benefits subsequent to April 23, 1990. The Board also noted that "a carrier's lien attaches to any recovery other than first party benefits under the Insurance Law."
The Appellate Division reversed the Board's determination (192 AD2d 763). Disagreeing with the Board that the carrier had a lien on claimant's third-party action, that Court found no distinction between the disability award in Dietrick and the weekly award paid to claimant here for purposes of "basic economic loss" as defined in Insurance Law § 5102 (id., at 764). The Appellate Division further stated that both awards, "by their nature, extend beyond the three-year period for payment for loss of wages set by Insurance Law § 5102 (a) (2)" (id., at 764).
Here, the carrier argues that the Appellate Division erred by holding that claimant's payments, which extend beyond three years, may constitute "basic economic loss" and by concluding that the carrier's consent was unnecessary in the third-party action. Claimant contends that the Appellate Division correctly applied Dietrick to the facts of this case and that because his compensation payments constitute payment for economic loss, no lien may properly attach. This Court granted leave to appeal.
The legislative history of Workers' Compensation Law § 29 (1-a) indicates the remedial nature of the statute (see, News Mem of State Exec Dept. 1978 McKinney's Session Laws of NY, at 1748). Prior to the enactment of that subdivision, our 1978 decision in Matter of Granger v Urda (44 NY2d 91) recognized the clash of the provisions of Workers' Compensation Law § 29 (1) and Insurance Law § 671 (2) (b) (former no-fault automobile insurance law) which resulted in (1) the no-fault scheme allowing the no-fault insurer to deduct from its payments to an insured the amounts the insured recovered or could recover under workers' compensation and (2) continuing the Workers' Compensation Law § 29 (1) lien upon any recovery by the claimant in a third-party action. The Granger Court was constrained to implement the "harsh, unintended result" of the simultaneous application of those statutes (see, id., at 99). Thus, injured employees became "self-insurer[s]" for at least part of their basic economic loss (id., at 99; Dietrick v Kemper Ins. Co., 76 NY2d 248, 253, supra; see also, Grello v Daszykowski, 44 NY2d 894, 895; see, News Mem of State Exec Dept, 1978 McKinney's Session Laws of NY, at 1748). The Granger Court further urged that "corrective legislative action is advisable, if not imperative" (Granger, supra, at 99).
The Legislature responded to Granger, enacting Workers' Compensation Law § 29 (1-a). The relevant portion of that subdivision precludes the compensation carrier from imposing a lien "for compensation and/or medical benefits paid which were in lieu of first party benefits which another insurer would have otherwise been obligated to pay under [the no-fault provisions] of the insurance law" (see, Matter of Simmons v St. Lawrence County GDP, 147 AD2d 323, 324-325; Matter of Fellner v Country Wide Ins., 95 AD2d 106).
The No-Fault Automobile Insurance Law defines "first party benefits" 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" (Insurance Law § 5102 [b]). Pivotal for resolution of this case is whether claimant's compensation fits within the term "basic economic loss" as delineated by the statute. Insurance Law § 5102 (a) (2) limits the definition of "basic economic loss" to "[l]ass of earnings from work which the person would have performed had he not been injured up to one thousand dollars per month for not more than three years from the date of the accident causing the injury." Here, it is uncontested that payments to claimant continued far beyond three years from the date of the accident. Thus, at least a portion of claimant's payments may not be properly characterized as for "basic economic loss" and the Workers' Compensation Law §29 (1-a) lien restrictions should not have been applied to the carrier.
Claimant relies on this Court's decision in Dietrick v Kemper Ins. Co. (76 NY2d 248, supra) to support his position that the Workers' Compensation Law § 29 (1-a) lien restriction is applicable here. First, Dietrick makes clear that compensation for permanent partial disability or facial disfigurement may be deemed compensation in lieu of first-party benefits because it often relates to a claimant's basic economic loss, as in lost earnings, "whether actual or presumed" (see, id., at 252). This Court's holding in Dietrick, however, was to establish facial disfigurement as an injury which requires acknowledgement of its often income-impairing characteristics, and, thus, awards for such injuries may often be deemed "compensation 'in lieu of first party benefits' " (id., at 252, quoting Workers' Compensation Law § 29 [1-a]; see, Dietrick v Kemper Ins. Co., 145 AD2d 8 [indicates that issue at Appellate Division was whether compensation for facial disfigurement constituted first-party benefits]). Dietrick did not effect a change in the statutory requirement that compensation for "basic economic loss" be limited to three years (see, Insurance Law § 5102 [a] [2]). Additionally, there is no showing that the award in Dietrick fell outside the parameters of Insurance Law § 5102 (a) (2) requiring that monthly compensation not exceed $1,000 and that the award not exceed three years from the date of injury.
Claimant's contention that the carrier's consent was unnecessary in this case is meritless. Workers' Compensation Law § 29 (5) requires either the carrier's consent or a compromise order from the court in which a third-party action is pending for a claimant to settle a third-party action and continue receiving compensation benefits (see, Matter of Parmelee v International Paper Co., 157 AD2d 878 [claimant precluded from receiving further compensation benefits where he settled the third-party negligence action without the consent of self-insured employer]; Matter of Durham v Barker Chem. Corp., 151 AD2d 887; see also, Matter of Vincent v Geneva Pizza, 196 AD2d 917).
Further, claimant mistakenly assumes that a third-party settlement that constitutes 100% of a liability policy obviates the need for an insurance carrier's consent. Nothing in Workers' Compensation Law §29 so states, and decisional law of this State has held to the contrary (see, Matter of Daly v Daly Constr. Corp., 136 AD2d 798, lv denied 72 NY2d 807 [claimant barred from further compensation even where settlement for full policy limits, absent carrier's consent]). Claimant's remaining contentions concerning consent, supported essentially by claimant's interpretation of the application of Dietrick to the facts of this case, are without merit.
Accordingly, the order of the Appellate Division should be reversed, with costs, and the decision of the Workers' Compensation Board reinstated.
Chief Judge Kaye and Judges Simons, Titone, Bellacosa and Ciparick concur; Judge Levine taking no part.
Order reversed, etc.
The statute was amended in 1991 raising the monthly compensation limit to $2,000 (see, L 1991, ch 320, § 1). The new limit is not applicable to this case.