In the Matter of Joseph A. Terranova, Jr., Appellant,v.Lehr Construction Co. et al., Respondents. Workers' Compensation Board, Respondent.BriefN.Y.November 15, 2017 APL 2016-00180 App. Div. Third Dept. 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. -------------------------------------------------------------------------------------------------- REPLY BRIEF FOR APPELLANT JOSEPH TERRANOVA --------------------------------------------------------------------------------------------------- GREY & GREY, L.L.P. Attorneys for Appellant JOSEPH TERRANOVA 360 Main Street Farmingdale, New York 11735 Tel. (516) 249-1342 Fax (516) 586-8579 Of Counsel: Robert E. Grey Dated: February 7, 2017 ii TABLE OF AUTHORITIES CASES PAGE Bissell v. Town of Amherst, 18 N.Y.3d 697, 883 N.Y.S.2d 172, 910 N.E.2d 1001 (2012)……………………… 1, 2 Burns v. Varriale, 9 N.Y.3d 207, 849 N.Y.S.2d 1, 879 N.E.2d 140, 456 N.E. 2d 131 (2007)…………. 1, 2, 4, 5, 6 Kelly v. State Insurance Fund, 60 N.Y.2d 791, 468 N.Y.S.2d 850 (1983)…………………………………………….. 5 iii TABLE OF CONTENTS Argument …………………………………………………………… 1 1 ARGUMENT Respondents Lehr Construction Co. and New Hampshire Insurance contend that the rule in Burns v. Varriale, 9 N.Y.3d 207, 849 N.Y.S.2d 1, 879 N.E.2d 140, 456 N.E. 2d 131 (2007) should not be applied to the case at bar because it was not “impossible” to determine the eventual award of workers’ compensation benefits at the time of the third-party settlement. Brief for Respondents Lehr and New Hampshire at p. 15. We respectfully submit that “impossibility” is not the standard that this honorable Court established in Burns, nor was it the Court’s intent for an injured worker’s third-party recovery to result in a windfall for the workers’ compensation carrier. In support of this contention, Respondents first assert that the presence or absence of a legal determination about the extent of Appellant’s schedule loss of use would not have been determinative, citing this Court’s decision in Bissell v. Town of Amherst, 18 N.Y.3d 697, 883 N.Y.S.2d 172, 910 N.E.2d 1001 (2012). However, the decision in Bissell provides no support for Respondents’ argument. To the contrary, the decision in Bissell required the application of the Burns formula to future medical expenses precisely because they were speculative, despite a jury verdict establishing the figure. We respectfully submit that if the extent of future benefits established by a legal determination at the time of the 2 third-party settlement is speculative (as in Bissell), then the extent of future benefits that have not been established by a legal determination at the time of the third-party settlement (as here) must also be considered speculative. Thus, the Respondents’ reliance on Bissell is misplaced, as the opinion in that case in fact supports the application of Burns to the case at bar. Respondents Lehr and New Hampshire also contend that the ultimate award in Appellant’s workers’ compensation case was not speculative at the time the third-party action was settled because a medical report including an opinion about his schedule loss was filed prior to the third-party settlement, although it was not adopted by the Workers’ Compensation Board until years later. Respondents conveniently gloss over the fact that the issue of the extent of Appellant’s schedule loss of use was the subject of protracted litigation before the Workers’ Compensation Board, and that the original opinion was adopted only after litigation and a series of appeals, all of which occurred long after the third- party settlement. In essence, Respondents allege that Appellant should have been blessed with perfect foresight at the time of the third-party settlement, anticipated that a dispute would later arise over whether he had a ten percent loss of use of his leg or a fifty-five percent loss of use of his leg (a difference in benefits of $77,760), accurately predicted that the dispute would be resolved in favor of the 3 carrier, and attempted to negotiate the compensation carrier’s recoverable lien based on that prediction. Also conveniently omitted from Respondents’ brief is any discussion of what its position would have been had Appellant negotiated a lien repayment based on the expectation of an eventual finding of a ten percent schedule loss of use, but had later been successful in obtaining a finding of a fifty-five percent schedule loss of use. It is evident, however, that Respondents Lehr and New Hampshire would then argue that Appellant was not entitled to any further contribution for the additional award for schedule loss of use because of its character as a “schedule loss” award, which has been their contention throughout this litigation and is now the issue before this honorable Court. Respondent Workers’ Compensation Board also notes that Appellant could have endeavored to negotiate the compensation carrier’s lien repayment taking into consideration the medical report in the record at that time. Brief for Respondent Workers’ Compensation Board at p. 20-21. However, like Respondents Lehr and New Hampshire, Respondent Board fails to take into consideration the dim likelihood as a practical matter of obtaining a consent letter and engaging in a lien negotiation in which the compensation carrier would have (1) agreed to reduce its lien in consideration of the probability that Appellant 4 would later be found to have at least a ten percent schedule loss of use and (2) preserved Appellant’s claim for further contribution to the third-party litigation expense if he was ultimately found to have a greater schedule loss of use. However, unlike Respondents Lehr and New Hampshire, Respondent Board concedes that further guidance is needed from this Court as to whether the timing of a workers’ compensation award is more important than the type of the award in determining whether the rule in Burns should apply. Brief for Respondent Board at p. 21-22. Moreover, Respondent Board acknowledges that if the type of award is given precedence over the timing of the award, then there will not be “a fair and equitable apportionment of the full costs of obtaining the third-party recovery in all cases” and that the compensation carrier “will not ultimately bear its full equitable share of the claimant’s litigation costs.” Brief for Respondent Board at p. 22. We respectfully submit that this Court’s decision in Burns was intended to obviate all of these issues. The clear purpose of the decision in Burns was to impose upon the compensation carrier an obligation to pay its equitable share of third-party litigation costs associated with its credit for workers’ compensation awards entered after the date of the third-party settlement for which the compensation carrier made no contribution at the time of the third-party 5 settlement. As set forth in the Brief for Appellant, that is precisely the situation in the case at bar. The sole reason that the issue returns to this honorable Court is to resolve the question of whether the fact that the later-entered workers’ compensation award was one for “schedule loss” should supersede the goal of ensuring that the compensation carrier contributes its equitable share of the third-party litigation expense as the future benefit accrues to the compensation carrier. As set forth in the Brief for Appellant, we respectfully submit that it was never the intention of this honorable Court to exclude from Burns a schedule loss award entered after the date of the third-party settlement, but merely to exclude from Burns (and to include under Kelly v State Ins. Fund, 60 N.Y.2d 791, 468 N.Y.S.2d 850 (1983)) the portion of a previously entered schedule loss award that extends beyond the date of the third-party settlement. Instead, Respondents Lehr and New Hampshire seek to exploit a minor ambiguity in the Burns decision in order to evade their equitable share of the third- party litigation costs under both Kelly and Burns, and to obtain a windfall from Appellant’s third-party recovery. As noted by Respondent Workers’ Compensation Board, this would be an inequitable and unjust result. 6 We therefore respectfully submit that the decision below should be reversed. This honorable Court should hold that any award of workers’ compensation benefits made after the date of a third-party settlement to which no additional reduction of the compensation carrier’s lien was made pursuant to Kelly is subject to the rule in Burns, and that the compensation carrier remains liable for its equitable share of the third-party litigation costs in proportion to its benefit from such further award. Dated: Farmingdale, New York February 7, 2017 Respectfully submitted ________________________ Robert E. Grey, Esq. Grey & Grey, LLP Attorneys for Claimant-Appellant 360 Main Street Farmingdale, NY 11735 (516) 249-1342