In the Matter of Joseph A. Terranova, Jr., Appellant,v.Lehr Construction Co. et al., Respondents. Workers' Compensation Board, Respondent.BriefN.Y.November 15, 2017APL-2016-00180 TO BE ARGUED BY: PATRICK WOODS TIME REQUESTED: 10 MINUTES APP. DIV. THIRD DEPARTMENT NO. 521991 Court of Appeals of the State of New York JOSEPH TERRANOVA, Claimant-Appellant, -AGAINST- LEHR CONSTRUCTION CO., Employer-Respondent, -AND- NEW HAMPSHIRE INSURANCE CO., Carrier-Respondent, -AND- NEW YORK STATE WORKERS’ COMPENSATION BOARD, Respondent. BRIEF FOR RESPONDENT BARBARA D. UNDERWOOD Solicitor General ANDREA OSER Deputy Solicitor General PATRICK WOODS Assistant Solicitor General of Counsel ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Respondent The Capitol Albany, New York 12224 (518) 776-2020 (telephone) (518) 915-7223 (facsimile) Dated: January 31, 2017 Reproduced on Recycled Paper i TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES ................................................................................ ii PRELIMINARY STATEMENT ............................................................................1 QUESTION PRESENTED ...................................................................................3 STATUTORY BACKGROUND ............................................................................3 A. General Provisions ............................................................................3 B. The Lien and Credit Provisions of the Workers’ Compensation Law ...........................................................................5 C. This Court’s Decision Implementing these Provisions ...................8 STATEMENT OF THE CASE .......................................................................... 11 ARGUMENT THE WORKERS’ COMPENSATION BOARD ADHERED TO GUIDENCE IN BURNS, KELLY, AND STENSON ............................. 16 CONCLUSION ................................................................................................... 23 ii TABLE OF AUTHORITIES CASES PAGE Burns v. Varriale, 9 N.Y.3d 207 (2007) .......................................................................... passim Estate of Kelly, In re., 110 Misc. 2d 356 (N.Y. Sur. Ct. 1981), aff’d sub nom, 94 A.D.2d 609 (1st Dep’t 1983), .................................... 16n Kelly v. State Ins. Fund, 60 N.Y.2d 131 (1983) ........................................................................ passim Landgrebe, Matter of v. County of Westchester, 57 N.Y.2d 1 (1982) ......................................................................................4 Raynor, Matter of v. Landmark Chrysler, 18 N.Y.3d 48 (2011) ....................................................................................4 Stenson v. New York State Dept. of Transp., 96 A.D.3d 1125 (3d Dep’t), lv. denied, 19 N.Y.3d 815 (2012) ................................................. 15, 18, 21 Zamora, Matter of v. New York Neurologic Ass’n., 19 N.Y.3d 186 (2012) ..................................................................................5 STATE STATUTES Workers’ Compensation Law § 10(1) ..........................................................................................................3 § 13 ...............................................................................................................4 § 15 ...............................................................................................................4 § 15(3)(a)-(u) ........................................................................................... 4, 5 § 15(3)(w) .....................................................................................................5 § 15(6) ..........................................................................................................5 § 16 ...............................................................................................................4 § 25(1)(b) ......................................................................................................5 § 29 .......................................................................................................... 1, 6 iii TABLE OF AUTHORITIES PAGE STATE STATUTES (cont’d) § 29(1) ........................................................................................... 6, 7, 8, 12 § 29(ii) ..........................................................................................................6 § 29(3) ..................................................................................................... 13n § 29(4) ................................................................................................... 6, 12 § 29(5) ..........................................................................................................8 2009 N.Y. Laws, Ch. 351 ......................................................................................5 MISCELLANEOUS Justin Teff, After Burns v. Varriale: Essential Lessons for Workers’ Compensation Third-Party Action Attorneys, N.Y. St. B. J. 48, 49 (2011) ....................................................................... 8 PRELIMINARY STATEMENT This case asks the Court to resolve an ambiguity in its current jurisprudence regarding the lien and credit provisions of Workers’ Compensation Law § 29. The subject provisions come into play when a workers’ compensation claimant receives an award in a third-party action; the provisions give the workers’ compensation insurance carrier a lien against any such award for workers’ compensation payments already made and also a credit against future workers’ compensation payments otherwise owed. The provisions also contemplate an equitable apportionment between claimant and carrier of litigation costs incurred to obtain the third-party recovery. When that equitable apportionment may be made is the central issue before the Court. This Court held in Burns v. Varriale, 9 N.Y.3d 207 (2007), that full equitable apportionment of litigation costs (applied to both lien and credit) can take place at the time of a third-party settlement only if the present value of future workers’ compensation payments due from the carrier is not too speculative to permit a reasonable estimate at that time. Burns identified three kinds of workers’ compensation awards for which, based on the nature of the kind of award, full equitable apportionment at 2 the time of third-party settlement is appropriate: death, total disability, and schedule loss of use. For all others, full equitable apportionment can only be done on a case by case basis as future payments are made. With his carrier’s consent, claimant in this case settled his third- party action before obtaining a schedule loss of use award. The consent agreement between the carrier and the claimant calculated an offset to the carrier’s lien to reflect an equitable sharing of litigation costs. This appeal requires the Court to resolve whether it would have been proper to offset the carrier’s credit by its equitable share of claimant’s litigation costs at the time of the third-party recovery, even though claimant’s schedule loss of use award had not yet been finalized by the Workers’ Compensation Board. The Workers’ Compensation Board held that no post-settlement offset to the carrier’s credit should be made. It reasoned that claimant’s award was for schedule loss of use; that this Court had explained in Burns that, for such awards, a carrier’s full equitable share of litigation costs can be determined at the time of a third-party settlement; and that the carrier’s consent agreement thus fully resolved the equitable- apportionment issue. The Third Department affirmed. The Board urges 3 the Court to clarify that its holding in Burns allows for a more flexible approach. QUESTION PRESENTED Where a claimant incurs a schedule loss of use injury, its workers’ compensation carrier consents to a third-party settlement that includes an offset for equitable apportionment, and claimant’s workers’ compensation award is thereafter finalized by the Workers’ Compensation Board, do this Court’s decisions foreclose additional apportionment of litigation costs pursuant to Workers’ Compensation Law § 29? STATUTORY BACKGROUND A. General Provisions The Workers’ Compensation Law (“WCL”) requires an employer to “secure compensation to his employees and pay or provide compensation for their disability or death from injury arising out of and in the course of the employment without regard to fault as a cause of the injury.” WCL § 10(1). “An employer must secure the compensation for his employees by obtaining coverage from the New York State Insurance Fund, purchasing coverage from an approved private insurance carrier or 4 obtaining approval from the Board to self-insure.” Matter of Raynor v. Landmark Chrysler, 18 N.Y.3d 48, 53 (2011) (citing WCL § 50). Benefits available under the WCL include medical benefits, see WCL § 13, wage- related compensation benefits, see id. § 15, and in the case of death, funeral expenses and death benefits payable to the employee’s survivors, see id. § 16. The calculation of wage-based compensation benefits depends on the duration and nature of the disability. As the Court explained in Matter of Landgrebe v. County of Westchester, 57 N.Y.2d 1 (1982), the WCL establishes four classifications of disability: (1) permanent total disability, (2) temporary total disability, (3) permanent partial disability, and (4) temporary partial disability. Id. at 5. Moreover, there are two kinds of permanent partial disabilities. An employee who suffers the permanent loss or loss of use of a bodily member or sense set forth in WCL § 15(3)(a)-(u) is entitled to receive what is known as a “schedule loss of use award.” This kind of award is calculated by multiplying two thirds of the employee’s average weekly wages (subject to maximum and minimum compensation rates) by the number of weeks specified in the statutory schedule for the particular 5 bodily member or sense disabled. WCL §§ 15(3)(a)-(u); 15(6). And since 2009, the Board has been required to direct the payment of such an award up front as a lump sum upon the injured employee’s request. See 2009 N.Y. Laws, ch. 351 (codified at WCL §§ 15(3)(u); 25(1)(b)). For all other permanent partial disabilities, an injured employee is generally entitled to receive two thirds of the difference between the employee’s average weekly wages before the disability and the employee’s wage earning capacity thereafter in the same or other employment, subject to the statutory maximum and minimum weekly compensation rates. See WCL §§ 15(3)(w); 15(6); 15-5(5-a). Such awards are, however, subject to future modification on a finding that something other than the disability, such a voluntary withdrawal from the labor market, is the sole cause of the employee’s reduced earning capacity. See Matter of Zamora v. New York Neurologic Ass’n, 19 N.Y.3d 186, 191 (2012); see also Burns, 9 N.Y.3d at 217 (explaining this framework). B. The Lien and Credit Provisions of the Workers’ Compensation Law While compensation under the WCL is generally intended to replace tort recovery, WCL § 29(1) expressly permits a workers’ 6 compensation claimant to seek both workers’ compensation payments and also a civil recovery, if the employee’s injury or death is attributable to someone other than the employer or any coworkers, i.e., a third party. The law does not, however, permit an injured employee to obtain a double recovery. When a workers’ compensation claimant obtains a recovery in a third-party action, WCL § 29 gives the compensation carrier two things: (i) a lien against the recovery to offset workers’ compensation payments already made, see id. § 29(1), and (ii) a credit against future workers’ compensation payments otherwise required, see id. § 29(4). The latter so called “carrier’s credit” provision limits the financial obligation of the carrier to “the deficiency, if any, between the amount of the [third-party] recovery against such other person actually collected, and the compensation provided or estimated” by the Board. Id. The provision thus assures that the claimant will receive the full workers’ compensation provided by law, but also gives the carrier a benefit in the form of relief from the obligation to make additional payments to the extent that the third-party recovery exceeds the workers’ compensation award. 7 The WCL also includes two provisions designed to assure that a claimant receives the full benefit of the third-party settlement. First, the statute expressly provides that the carrier shall have a lien on the proceeds of any third-party recovery, “after the deduction of the reasonable and necessary expenditures, including attorney’s fees, incurred in effecting such recovery.” WCL § 29(1). The § 29(1) lien is thus limited to the value of the net proceeds of the third-party recovery, that is, what the claimant actually receives after paying litigation costs.1 Second, the statute authorizes the claimant to seek an equitable apportionment to the carrier of reasonable litigation costs incurred to obtain the third-party recovery: Should the employee or his dependents secure a recovery from such other [third party], whether by judgment, settlement or otherwise, such employee or dependents may apply on notice to such lienor to the court in which the third party action was instituted, or to a court of competent jurisdiction if no action was instituted, for an order apportioning the reasonable and 1 Depending on the value of the third-party recovery relative to the total amount of workers’ compensation payments already made, this limitation serves to make a claimant whole, but by itself, may provide a claimant little incentive to obtain a third-party recovery. For example, if the net proceeds of the third-party recovery are less than or equal to total workers’ compensation payments already made, then the claimant will have received no benefit from obtaining the third-party recovery. 8 necessary expenditures, including attorneys’ fees, incurred in effecting such recovery. WCL § 29(1). As for how the subject apportionment is calculated, the statute provides only that the subject litigation costs “shall be equitably apportioned by the court.” Id. It is nonetheless common for a claimant and a carrier to seek to resolve the apportionment calculation themselves when the claimant seeks the carrier’s consent to settle the third-party action. See generally Justin Teff, After Burns v. Varriale: Essential Lessons for Workers’ Compensation Third-Party Action Attorneys, N.Y. St. B. J. 48, 49 (2011). A claimant needs such consent or else court approval to preserve any right to future workers’ compensation. WCL § 29(5). C. This Court’s Decisions Implementing these Provisions This Court has twice before addressed the WCL’s equitable- apportionment provision. Because this appeal involves an ambiguity in the Court’s decisions, those decisions are described here. In Kelly v. State Ins. Fund, 60 N.Y.2d 131 (1983), a case involving death benefits under the WCL, this Court held that the equitable- 9 apportionment provision applied not only to reduce the compensation carrier’s lien by its equitable share of litigation costs incurred in obtaining a third-party recovery, but also its credit by that equitable share. Id. at 136. After all, the purpose of the provision “was the desire to stem the inequity to the claimant, arising when a carrier benefits from an employee’s recovery while assuming none of the costs incurred in obtaining the recovery.” Id. at 138. That purpose, the Court explained, was best served by an allocation that takes into consideration “the full benefit that the carrier receives from an employee’s recovery in a third- party action.” Id. Moreover, the Court held that the present value of the future compensation payments that the carrier would be relieved from making was “not so speculative that it would be improper to estimate and to assess litigation costs against this benefit to the carrier” at the time of the third-party recovery. Id. at 139. This estimate of the present value of future compensation payments has since become known as the “Kelly calculation.” And because that calculation could reasonably be made, the Court upheld the decision to offset the carrier’s lien on workers’ compensation payments already made, as well as the carrier’s credit for 10 future payments that otherwise would be due, by the carrier’s equitable share of litigation costs.2 In Burns v. Varriale, 9 N.Y.3d 207 (2007), the Court clarified that the kind of workers’ compensation award involved will sometimes render the value of the carrier’s credit too speculative to calculate at the time of a third-party recovery, making it inappropriate for a court at the time of the recovery to offset that benefit by a carrier’s equitable share of litigation costs. Id. at 210, 215-17. And the Court held that the award at issue—a nonschedule permanent partial disability award—was precisely such an award because to continue receiving payments, the claimant would have the ongoing obligation to demonstrate that any reduced earning capacity remains a result of the disability, rather than other factors, such as age or economic conditions. Id. at 215. For such awards, the Court explained that a future court could fashion a means of 2 A carrier’s equitable share is typically deemed to be the same proportion that the claimant’s net proceeds from the third-party recovery bears to the claimant’s total recovery in the case. Thus, if a third of claimant’s third-party recovery is spent on litigation costs, then the carrier’s lien would be reduced by one third and its credit against future payments would also be reduced by one third. 11 apportioning litigation costs to any future payments as they became due. Id. at 217. The Burns Court also identified three kinds of workers’ compensation awards as sufficiently certain to permit a Kelly calculation: “death, permanent total disability, and schedule loss of use.” Id. at 215- 16. Of schedule loss of use, the Court explained that “compensation awards for schedule loss of use, which pay an employee for lost earnings associated with the loss of a specific body part, are easily ascertainable because such awards are paid out over a specific number of weeks at a set rate (or in a lump sum).” Id. at 216. STATEMENT OF THE CASE Terranova injured his knee by tripping over a raised floor tile while employed by appellant-respondent Lehr Construction (“Lehr”) in July of 2009. (R23-25.3) Lehr was insured by New Hampshire Insurance Co. (“the Carrier”). (R23.) Terranova sought workers’ compensation. (R14- 15.) In January 2010, the Carrier began making temporary payments to 3 Parenthetical references to “R__” refer to pages in the Record on Appeal. 12 him. (R29.) Those payments ultimately totaled $21,495.99, and provided a basis for a § 29(1) lien. (R43.) With proceedings before the Board still pending, Terranova pursued a third-party action against the contractor who installed the tile, and then, with the Carrier’s consent, settled that action for $173,500. (R39, R57-59, R60.) After the nearly 35% deduction for litigation costs, Terranova’s net recovery was thus $99,130.39. (R39, R57.) For purposes of obtaining the Carrier’s consent, Terranova and the Carrier exchanged drafts of a consent letter. (See R39-41.) Ultimately, the Carrier consented to the settlement on three conditions relevant here: (1) the Carrier reserved its rights to § 29(4) credit against any future workers’ compensation payments due to Terranova; (2) Terranova would pay the Carrier $14,018.75 in satisfaction of the Carrier’s § 29(1) lien, an amount that reflected a reduction by 35% for the Carrier’s equitable share of litigation costs incurred to obtain the settlement; and (3) “that the $14,018.75 lien reimbursement reflects a reduction of the carrier’s lien 13 [p]ursuant to Kelly v. State Insurance Funds [sic] and all parties reserve all their Rights [sic] to Burns v. Varriale.” (R43.)4 Proceedings before the Board continued after settlement of the third-party claim, with the parties litigating whether Terranova suffered a 10% or 55% schedule loss of use of his leg and the extent of the carrier’s credit against any future payments. (See R45-86.) After two administrative appeals, the Board awarded Terranova a 10% schedule loss of use, with a total present value of $17,280.00. (R79, 90.) After deducting payments already received, Terranova would have been entitled to a net amount of $9,960 in workers’ compensation, absent consideration of the Carrier’s credit. (R90-91.) The Board determined that value of the Carrier’s credit required additional findings (R90-91) and convened another hearing (R93-100). In the ensuing proceedings, Terranova purported to assert the rights it expressly preserved under Burns, arguing that the workers’ compensation award rendered after settlement required the Carrier to 4 The Carrier also reserved its rights under WCL § 29(3), but that provision is not at issue in this case. 14 make additional payments reflecting its equitable share of litigation costs incurred in obtaining the settlement. (R93-98.)5 The Carrier argued that (1) the issue of how much offset for litigation costs was required had been resolved at the time of the third-party settlement under Kelly, because the award was a schedule loss of use award and (2) that, because of the total net value to Terranova of the third-party settlement, the Carrier’s credit so greatly exceeded $9,960 that no monies would be due to Terranova even if a further offset for litigation costs were required. (R93- 97.) The WCL judge and ultimately the panel that rendered the Board’s final determination found for the Carrier. The Board reasoned that Burns did not apply because claimant had received a schedule loss of use award. The case was therefore governed by Kelly. (R9-11, 98-99, 101.) And because of “the particulars of the carrier’s consent of third party action,” which invoked Kelly but only purported to reserve rights under Burns, 5 Terranova calculates this amount as $3,464.09. (App. Br. at 23.) 15 the Board determined that no further consideration of equitable apportionment was required. (R11.)6 On Terranova’s direct appeal, the Third Department affirmed.7 (R3- 6.) It held that because the case involved a schedule loss of use award, it was governed by Kelly, and as a consequence, petitioner was not entitled to post-settlement apportionment of litigation costs. (R6.) The Third Department expressly noted its holding’s consistency with Burns and also its own subsequent decision in Stenson v. New York State Dept. of Transp., 96 A.D.3d 1125 (3d Dep’t), lv. denied, 19 N.Y.3d 815 (2012). (R6.) Appeal to this Court followed. 6 The WCJ judge also reasoned in the alternative that the amount of the credit rendered the issue academic because it so clearly exceeded the schedule loss of use award. (R99, 101.) The Board made no similar finding to that effect, however. 7 The Board did not participate in the case before the Third Department. 16 ARGUMENT THE WORKERS’ COMPENSATION BOARD ADHERED TO GUIDANCE IN BURNS, KELLY, AND STENSON Neither Burns nor Kelly squarely addressed the situation presented in this case—where the type of award is one identified in Burns as quantifiable and governed by Kelly, but the award was not finalized by the Board until after a third-party recovery.8 Nevertheless, the Board was constrained not only by this Court’s statements in Burns and Kelly, but also by the Third Department’s decision in Stenson, to find that claimant’s settlement precluded a further equitable apportionment of litigation costs to the Carrier post-settlement. This Court’s decisions in Burns and Kelly seem to create two distinct categories of third-party recovery cases: (1) “Kelly cases,” where the nature of the workers’ compensation award makes a Kelly calculation 8 In Burns, the workers’ compensation award had already been made by the time of the third-party recovery. Id. at 210-11. In Kelly, the workers’ compensation award had been finalized before the claimant’s third-party action even went to trial, and the claimant only applied to the Surrogate’s Court for an equitable apportionment of litigation costs after the appeal in the third-party action was resolved. See In re Estate of Kelly, 110 Misc. 2d 356, 357-58 (N.Y. Sur. Ct. 1981), aff’d sub nom Matter of Kelly v. State Ins. Fund, 94 A.D.2d 609 (1st Dep’t 1983), aff’d Kelly, 60 N.Y.2d at 141. 17 possible, and thus all obligations between claimant and carrier may be addressed at the time of the third-party recovery,9 and (2) “Burns cases,” where the indeterminate present value of the workers’ compensation award requires post-recovery apportionment as future payments by the carrier become due. The underlying proceeding is not obviously either kind of case. Here, the Board had to decide whether to categorize Terranova’s claim on the basis of the type of the award ultimately rendered by the Board or the timing of the award vis-a-vis the third-party settlement. The award is for a schedule loss of use, a type of award whose value Burns expressly said was “easily ascertainable” and governed by Kelly. Burns, 9 N.Y.3d at 216. But the award was not finally determined until after the third- party settlement, rendering a “Kelly calculation” at the time of settlement somewhat more speculative than the award in Kelly itself. And muddying matters still further is the fact that the language agreed to by Terranova and the Carrier in the Carrier’s consent letter expressly invoked Kelly as 9 When the value of the offset exceeds the value of the lien, the outstanding obligations by the creditor are usually paid in a lump sum commonly referred to as a “fresh money” payment. See Burns v. Varriale, 9 N.Y.3d 207, 211 (2007). 18 the basis for extinguishing the Carrier’s lien, but then purported to reserve any rights under Burns. Since this Court’s decision in Burns, the Third Department has addressed a similar type-versus-timing issue in the Stenson litigation, specifically Stenson v. New York State Dept. of Transp., 84 A.D.3d 22 (3d Dep’t 2011).10 Stenson presented the question whether the availability of ongoing equitable apportionment under Burns is affected by the timing of the third-party recovery. In Stenson, as here, the third- party settlement preceded the Board’s finalization of the award, but the award was a permanent partial disability award. Id. at 24, 26-27. The Board had reasoned that ongoing equitable apportionment under Burns was available, among other things, only when the injured employee had been classified with a permanent partial disability before obtaining a third-party recovery. Id. at 23-24. The Third Department reversed. It reasoned that the Burns holding did not apply “to cases in which the claimant received benefits for death, total disability or 10 Although the Third Department’s decision appealed here cites the final decision in that litigation, its reasoning is more detailed in this earlier Stenson decision. 19 schedule loss of use”; for those cases, Kelly “required apportionment at the time of settlement.” Id. 25 (emphasis added). It was only “in other cases,” the Third Department stated, that the Court of Appeals had “directed, without limitation,” that the carrier be required to pay its equitable share of litigation costs incurred by a claimant in securing a third-party recovery after the third-party settlement had been finalized. Id. (emphasis added). Stenson thus suggests that the question whether ongoing equitable apportionment as contemplated by Burns is required turns on the type of award, not its timing vis-a-vis a third-party recovery. Under this rule, the payments made by a carrier to a claimant prior to the third-party settlement will always be subject to equitable apportionment when calculating the amount of the lien. The availability of equitable apportionment with respect to the carrier’s credit against future payments, however, may depend upon the type of award ultimately issued by the Board. The Board adhered to that suggestion here. Because Terranova received a schedule loss of use award, the Board treated this case as a “Kelly case” in which the third-party settlement, which included a 20 settlement of the carrier’s equitable share of litigation costs, resolved the full extent of the carrier’s equitable share of those costs. And the language of the consent agreement between Terranova and the Carrier invoked Kelly and only reserved claimant’s rights under the inapplicable Burns, reinforcing the Board’s conclusion that further, post-settlement equitable apportionment was not appropriate. (See R11.) The Board recognizes the potential inequity to a “type-trumps- timing” rule. Under such a rule, a claimant who settles a third-party action in advance of the Board’s final determination of a classic Kelly award risks undervaluing the ultimate award and, consequently, the carrier’s full equitable share of the litigation costs incurred in the third- party recovery. Terranova did not in fact miscalculate the value of the Carrier’s equitable share of litigation costs at the time of the third-party settlement here. Nothing in the parties’ proposed or final consent letters addressed the extent of Terranova’s schedule loss of use award. (See R39- 44.) But Terranova had earlier been examined by an independent physician, who found that Terranova suffered a 10% loss of use of his right leg. (R33-36.) While Terranova later obtained a second opinion that 21 he incurred a 55% loss of use (R45-47.), the Board rejected that opinion. (R76-79.) The parties thus had a non-speculative basis to estimate the Carrier’s full equitable share of litigation costs of the time of the third- party recovery based on a 10% schedule loss of use award. Yet claimant did not seek even a partial offset based on the 10% schedule loss of use award that claimant was virtually certain to obtain. The Board also recognizes that the risk to claimants generally of undervaluing their ultimate workers’ compensation award is in tension with the underlying principles of Burns and Kelly, and even with other language found in Stenson. All of three of those cases recognize that the Legislature’s primary intent in providing for equitable apportionment of fees was to ensure “that a compensation carrier assumes its fair share of the costs of litigation.” Burns, 9 N.Y.3d at 214 (quoting Matter of Kelly, 60 N.Y.2d at 138); see also Stenson, 84 A.D.3d at 25. If the type of award, rather than its timing, governs equitable apportionment, it may be possible for a carrier with skilled counsel to escape some portion of its “fair share” of those costs. Accordingly, while the Board felt constrained by the statements of this Court in Kelly and Burns, as well as those of the Third Department 22 in Stenson, to find as it did here, it welcomes this Court’s further clarification of the jurisprudence in this area. The Board urges revision of the rigid “Burns case” vs. “Kelly case” structure in favor of a more outcome-oriented approach. The Court’s jurisprudence should promote a fair and equitable apportionment of the full costs of obtaining the third- party recovery in all cases, regardless of the timing of that recovery. In this case, if the Carrier is not required to make any additional payment to claimant, it will not ultimately bear its full equitable share of claimant’s litigation costs. CONCLUSION The Board was constrained by the holdings of Kelly, Burns, and Stenson to conclude that all obligations between the parties, present and future, were to be resolved at the time of the third-party settlement because Terranova's award was a schedule loss of use award. Dated: Albany, New York January 31, 2017 BARBARAD. UNDERWOOD Solicitor General ANDREA 0SER Deputy Solicitor General Patrick A. Woods Assistant Solicitor General of Counsel Respectfully submitted, ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for . By: ~---- JatrickA. Woods Assistant Solicitor General The Capitol Albany, New York 10271 (518) 776-2020 Reproduced on Recycled Paper 23 CERTIFICATION Pursuant to section 500.13(c)(l) of this Court's Rules ofPractice, I certify that, according to the word-processing system used to prepare this brief, the body of the brief (including footnotes) contains 4,613 words.