Discontinuing workers’ compensation benefits

Discontinuing workers’ compensation benefits
Waters v City of New York, 256 AD2d 680

Sometimes an individual who is receiving workers’ compensation benefits will seek damages from a third party alleged to have caused his or her injury while on the job.

However, an “unauthorized settlement” could jeopardize an employer’s right to recoup benefit payments for which it is, or may become, liable. Therefore, the employer or its insurer must consent to any third party settlement. The failure of the employee to obtain this consent generally results in his or her workers’ compensation benefits being discontinued. However, there may be exceptions to this general rule, as the Waters case demonstrates.

Mary Waters was injured in an automobile accident in the course of her employment. She applied for, and was granted, workers’ compensation benefits based on a finding that she had suffered “a 10% schedule loss of the use of her left leg.”

Waters subsequently “commenced a third party action” against the owner/driver of the automobile and obtained a $5,000 settlement. However, because Waters had not obtained the city’s consent [New York City self-insures itself for workers’ compensation] the Workers’ Compensation Board affirmed the discontinuation of her “scheduled loss award.”

The Appellate Division was troubled by this result, however, commenting that in deciding a nearly identical case, the board had applied an exception to this rule.

In UHS Home Attendants, WCB 08916873, the board held that a claimant who was granted a scheduled award of 30% permanent loss of the use of her left leg “was not precluded from continuing to receive benefits even though she failed to obtain the consent of [UHS Home Attendants’] compensation insurance carrier to her settlement of her third-party action in which she had received $6,010.”

The court ruled that “given the factual similarities in the current case” to those present in the UHS Home case, it was incumbent on the board to either (1) follow the precedent established by its decision in UHS Home Attendants or “provide an explanation for its failure to do so.” Accordingly, the Appellate Division remanded [returned] the case to the board for its further consideration.
NYPPL