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-20 16-00 180 To be Argued by: ROBERT E, GREY Time Requested' 10 minutes App, Div, Third Dept Docket 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 APPELLANT JOSEPH TERRANOVA Of Counsel: Robert E, Grey Dated: October 24,2016 GREY & GREY, LLP, Attorneys for Appellant JOSEPH TERRANOVA 3 60 Main Street Farmingdale, New York 11735 TeL (516) 249-1342 Fax (516) 586-8579 TABLE OF AUTHORITIES CASES l:l,rig~ Kansas City Fire & Mar. Ins. Co., 121 A.D.2d 810, 504 NY.S.2d 256 (3rd Dept. 1986) . . . ................... . Bur:_ns v. y_arrial", 9 N.Y. 3d 207, 849 NY.S.2d l, 879 N.E.2d 140, 456 N.E. 2d 131 (2007) ... Kelly v. State Insurance Fund, 60 N.Y.2d 791, 468 NYS 2d 850 (1983) .......... . McKee v Sithe Independence Power Partners, 281 A.D.2d 891, PAGE 18 l, 2, 3, 4, ll, 13, 15, 16,18,20, 22, 24, 25, 26 3,11,12, 14, 15,22, 23 722 N Y S 2d 1 9 5 (4th Dept. 2 00 l). . .. . . . .. .. . .. . . .. . .. . . . . . . . .. . .. . . . .. . .. 18 Schmidt v. Falls Dodge, Inc., 19 N.Y.3d 178, 947 NYS.2d 376, 970 N.E.2d 399 (2012).. ..... .. .. ..... .. . ........ 20 Stenson v. NYS Dept. ofTransp., 84 A.D.3d 22, 919 N.Y.S.2d 584 (3d Dept. 2011). .. ........ ...... .. ........ ..... ..... ... .. 3, 11, 17 Statutes Workers' Compensation Law§ 15(3) ....................................... 20 Workers' Compensation Law§ 29(1) ....................................... 13 Workers' Compensation Law§ 29(3)...... .......... ........ .. ... .... .. .... 14 Workers' Compensation Law§ 29(4). ..... .. .... ... ...... .. . .. ..... .. ...... 14 II TABLE OF CONTENTS Table of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... " 1l Jurisdictional Statement ........... . Preliminary Statement .................................... . Questions Presented ... Statement of Facts . Argument .... POINT I: POINT II: THE APPELLATE DIVISION'S DECISION THAT CLAIMANT- APPELLANT WAS NOT ENTITLED TO AN EQUITABLE APPORTIONMENT OF HIS THIRD-PARTY LITIGATION COSTS PURSUANT TO BURNS V. V ARRIALE WAS ERRONEOUS AS A MATTER OF LAW. ................................... . THE APPELLATE DIVISION'S DECISION WAS CONTRARY TO PUBLIC POLICY AND THE EFFICIENT ADMINISTRATION OF THE .JUDICIAL SYSTEM ....................... . 3 4 5 il 12 22 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 111 JURISDICTIONAL STATEMENT The Court of Appeals has jurisdiction over this appeal pursuant to CPLR § 5602. The order of the Appellate Division was a final determination of the case, and this Court granted Claimant-Appellant leave to appeal on September 13, 2016. Matter ofTerranq_ya v. Lehr<;:on§.lrc Co,, 2016 N.Y. LEX!S 2780, Motion No. 2016-615 (Sept 13, 20!6). This appeal presents a question of law that is novel and of great public importance. The question presented is whether this Court's decision in Matter of Burns v. Varriale, 9 N Y 3d 207, 849 NY S 2d l, 879 N.E.2d 140, 456 N.E. 2d 131 (2007) requires a workers' compensation carrier to contribute its equitable share of the third-party litigation expense attributable to a schedule loss award that was speculative at the time of the third-party settlement. In Burns, this Court held "that the value of future workers' compensation benefits for a claimant with a nonschedule permanent partial disability is speculative, that the present value of these benefits cannot be ascertained at the time claimant recovers damages in a third-party action, and that claimant is not entitled to an apportionment of attorney's fees based on such future benefits." Burns, 9 N. Y.3d at 210. The Court noted that the value of a future compensation award is speculative "if a claimant does not receive benefits for death, total disability or schedule loss of use." Burns, 9 N.Y.3d at 215. ln the case at bar, Claimant-Appellant was found to have a schedule loss of use after the settlement of the third-party action, the extent of which was not determined prior to the settlement. Thus, the question presented is whether the nature of the compensation award (a schedule loss) or the degree of certainty with which it could be ascertained at the time of the third-party settlement is the determining factor in whether this Court's decision in Burns should be applied. This issue affects a great number of workers' compensation and personal injury cases. The Court therefore has jurisdiction in this matter to address an issue of great public importance. 2 PRELIMINARY STATEMENT The issue to be decided in this case is whether a workers' compensation carrier is obligated to contribute its equitable share of the injured worker's third- party litigation costs when the Workers' Compensation Board enters an award for "schedule loss" after the third-party settlement. The Appellate Division, Third Department erroneously concluded that the carrier was not required to do so because the award was for schedule loss of use. To the contrary, the relevant question was not the character of the award, but rather the fact that it was undetermined and thus speculative at the time the third-party action was settled. The decision below is wholly inconsistent with this Court's decisions in Kelly v. State Insurance Fund, 60 N.Y.2d 791, 468 N.Y.S.2d 850, 456 N.E. 2d 131 (1983) and Burns v. Varriale, 9 N.Y.3d 207, 849 N.Y.S.2d 1, 879 N.E.2d 140 (2007), as well as the Third Department's prior decision in Stenson v. NYS Dept of Transportation, 84 AD.3d 22, 919 N.Y.S.2d 584 (3d Dept. 2011). In addition, the decision below is contrary to public policy and the efficient administration of the judicial system. 3 QUESTIONS PRESENTED Question l: Did the Appellate Division, Third Department err as a matter of law in in concluding that the Carrier was relieved of responsibility to contribute its equitable share of Claimant-Appellant's third-party litigation expense because his workers' compensation claim concluded with a scliedule loss award after the third- party settlement'~ Answer: Yes, The relevant inquiry under this Court's decision in Burns v, Varriale is whether the later workers' compensation award was "speculative" at the time of the third-party settlement, not the character of the award as a schedule loss of use, Question 2: Was the decision of the Appellate Division, Third Department, contrary to public policy and the efficient administration of the court system? Answer: Yes. The Appellate Division's decision would allow insurance carriers to reap significant benefits at the expense of injured workers, and would also discourage the prompt settlement of third-party lawsuits. 4 STATEMENT OF FACTS On July 7, 2009 Claimant-Appellant Joseph Terranova ('Terranova") was employed by Employer-Respondent Lehr Construction Co. ("Lehr") as a foreman. (R. 14). Lehr was insured by Carrier-Respondent New Hampshire Insurance Co. ("Carrier"). (R. 23 ). Terranova injured his right knee when he tripped over a raised Door tile, and filed a claim for workers' compensation benefits. (R. 24-25). His claim was accepted by Lehr and the Carrier, which filed various forms reflecting Terranova's average weekly wage, lost time, and workers' compensation benefits paid. (R. 27- 30). On May 9, 2011 the Carrier obtained an "independent medical examination" of Terranova by its consultant, Dr. Rubinfeld, who reported that he had a ] 0% "schedule loss of use" of his right leg. (R. 32). Neither the Carrier nor the Board took any action based on this report at that time. Terranova also brought a third-party action against the contractor responsible for the defective flooring, and on March 14, 2012, Terranova's attorneys wrote to the Carrier seeking its written consent to a settlement of that action in the sum of$ 173,500. (R. 39). Terranova's letter stated that the litigation expense associated with the third-party action was 34.78% of the gross recovery, 5 sought reduction in the Carrier's lien by that percentage, and "demanded that [the Carrier] agree that any future workers' compensation benefits be subject to the New York State Court of Appeals case of Burns v. Varriale." (R. 39). On March 30, 2012, the Carrier responded that it would consent to the third- party settlement and accept the sum proposed by Terranova's attorneys in satisfaction of its lien. (R. 41). However, the Carrier also stated that it "reserves all of its rights under section 29, subdivision 3 and 4 of the workers' compensation law to take credit, to the full extent permitted by law, for the full amount of the claimant's net recovery from the third-party action, as against any and all future, further payments without any additional offset for attorney's fees." (R. 41) (emphasis in original). The Carrier's letter further stated that "the claimant has agreed to forego any and all claims pursuant to Burns v. Varriale, and any and all further claims pursuant to Kelly v. State Insurance Funds" [sic]. (R. 42). The Carrier's March 30, 2012 letter was rejected by Terranova's attorneys, and on April4, 2012 the Carrier issued a second consent letter. (R. 43). In place of the language quoted above, the new letter instead stated "[t]hat it is understood by the parties herein, including the claimant, that the $14,018.75 lien reimbursement reflects a reduction of the carrier's lien pursuant to Kelly v. State Insurance Funds [sic] and all parties reserve all their rights to Burns v. Varriale." 6 (R. 43). Five months later, on September !9, 2012, Terranova's treating orthopedist, Dr. McMahon, filed a C-4.3 medical report form stating that he had a 55% "schedule loss of use" of his right leg. (R. 45). On October 3, 2012 the Board issued a notice directing the Carrier to either accept Dr. McMahon's opinion or to obtain a contrary medical report within sixty days. (R 48). When the can·ier did not respond to this notice, the Board issued a Notice of Proposed Decision on December 4, 201 2 implementing a schedule loss of use award in accordance with Dr. McMahon's opinion. (R. 49). The Carrier objected to the Board's Proposed Decision on the basis that Terranova had settled his third-party action and "the direction for an award must be subject to the carrier's properly reserved third party credit right." (R. 52). In response to this objection, the Board cancelled its Proposed Decision on December 31, 2012. (R 54). A hearing was then held on January 3!, 2013. (R. 55). After a colloquy in which the parties agreed that Terranova's third-party action had been settled with consent for $173,500 with a net recovery of$93,130.39, the Workers' Compensation Law Judge ("WCL Judge") made those findings. (R. 57). Thereafter, the Carrier presented a new basis for its objection to the Proposed 7 Decision, now asserting that it was in error because the 20 ll report of its consultant, Dr. Rubinfeld was contrary to the opinion of Dr. McMahon. (R. 58). The WCL Judge agreed that the extent of Terranova's schedule loss was an unresolved issue and directed depositions of Dr. McMahon and Dr. Rubinfeld. (R. 58-59). A series of depositions, hearings and appeals ensued regarding the extent of Terranova's schedule loss of use and whether the Carrier was entitled to take credit for his net tbird-party recovery. (R. 61-86). The amount in dispute depending on whether the Board accepted the opinion of Dr. Rubinfeld or Dr. McMahon was $77,760. (R. 50, 64). Ultimately, in a Memorandum of Board Panel Decision filed on April l, 2014, the Board upheld the WCL Judge's conclusion that Terranova had a 10% schedule loss of use of his right leg. (R. 87). However, the Board Panel found "that further development of the record regarding the carrier's credit under WCL § 29(4) is warranted" (R. 90). A hearing was then held on June 6, 2014. (R. 92). Terranova's attorney argued that the Canier was responsible for its equitable share of the third-party litigation expense associated with the schedule loss award because the award was entered after the date of the third-party settlement. (R. 96). The Carrier's attorney 8 contended that "Bums wouldn't apply because it's a schedule, not a [permanent partial disability]!' (K 97). The WCL Judge found that "Burns does not apply" because the award was for a schedule loss of use, and because Terranova's net third-party recovCJy exceeded the value of the award. (R. 98). On June 6, 2014, Terranova appealed the WCL Judge's decision. (R. 102). Terranova contended that the Carrier's lien reduction did not take his schedule loss award into consideration, that he had specif1cally reserved his rights under )3urns v. Vaniale, and that the carrier was therefore obligated to pay a portion of the later award. (R. 104-108). Terranova argued that "the case at har falls into the category of cases to which the rule in Burns and Stenson was intended to apply, that is, a case in which benefits were awarded after the third-party settlement for which the carrier contributed nothing at the time of the third-party settlement. Thus, in order to prevent unjust enrichment to the carrier, it must be charged with its proportionate share of the litigation expense for the additional benefits that are now due as a result of the schedule loss award." (R. 108-1 09). The Carrier filed a rebuttal in which it contended that the decisions in Burns and Stenson do not apply to "schedule loss" awards, and that the WCL Judge's decision was therefore conect. (R. 110-116). In a Memorandum of Board Panel Decision filed March 25,2015 the Board 9 found "that any reliance on Burns is incorrect as litigation costs for a schedule loss of use is determined under Matter of Kelly" (R. 11). The Board held "that as this case was subsequently resolved with a schedule loss of use award, the holding in Kelly v State Insurance Fund applies, and based upon the particulars of the carrier's consent of third party action, the Board need not consider the issue of an equitable apportionment of the litigation expenses per Burns." (R. 11 ). ln a decision dated May 19, 2016, the Appellate Division, Third Department affirmed the Board. (Exhibit A). Terranova now moves for leave to appeal to this honorable Court from the decision of the Appellate Division, Third Department. 10 ARGUMENT The issue to be decided in this case is whether a workers' compensation carrier is obligated to contribute its equitable share of the injured worker's third- pariy litigation costs when the Workers' Compensation Board enters an award for "schedule loss" after a third-party settlement. In finding that this Court's decision in Burns v. Varriale, 9 N.Y.3d 207, 849 N.Y.S.2d l, 879 N.E.2d 140 (2007), does not apply to a later award for schedule loss, the decision below permitted the carrier to take full credit for Claimant-Appellant's net third-party recovery while contributing nothing to the litigation expense incurred by Claimant-Appellant in securing that recovery. The court below erroneously focused on the character of the compensation award as a "schedule loss," rather than the fact that it was undetermined and thus speculative at the time the third-party action was settled. The decision below is wholly inconsistent with this Court's decisions in Kelly v. State Insurance Fund, 60 N.Y.2d 791,468 N.Y.S.2d 850,456 N.E. 2d 131 (!983) and Burns, supra, as well as the Third Department's prior decision in Stenson v. NYS Dept of Transportation, 84 AD.3d 22, 919 N.Y.S.2d 584 (3d Dept. 20 ll ). In addition, the decision below is contrary to public policy and the efficient administration of the judicial system ll POINT I: THE APPELLATE DIVISION'S DECISION THAT CLAIMANT-APPELLANT WAS NOT ENTITLED TO AN EQUITABLE APPORTIONMENT OF HIS THIRD-PARTY LITIGATION COSTS PURSUANT TO BURNS V. VARRIALE WAS ERRONEOUS AS A MATTER OF LAW. In this case, the Carrier's equitable apportionment at the time oftbe third- pariy settlement was calculated based on its lien at the time, and without consideration of any workers' compensation benefits that might be awarded in the future. (R. 43). The parties further agreed that the Carrier would be responsible for a further contribution to Claimant-Appellant's third-party litigation expense in the event of a future workers' compensation award. (R. 43). However, when an award of workers' compensation was later made for a "schedule loss of use," the Carrier took the position that it was entitled to a full credit for Claimant-Appellant's net third-party recovery, without any additional contribution towards Claimant-Appellant's third-party litigation expenses. (R. 52). The Board and the Appellate Division, Third Department agreed with the Carrier's position based on the character of the workers' compensation award as a "schedule loss." (R. 8-13, A-3-A-6). Based on the statute, as interpreted by this Court in Kelly v. State Insurance Fund, 60 N.Y.2d 791,468 N.Y.S.2d 850,456 N.E. 2d !31 (1983) and Burns v. 12 Varriale, 9 NY 3d 207, 849 NYS.2d 1, 879 N.E.2d 140 (2007), the decisions below were erroneous as a matter of law. Workers' Compensation Law § 29( l) provides in pertinent part that: "[i]f an employee entitled to compensation under this chapter be injured or killed by the negligence or wrong of another not in the same employ, such injured employee, or in case of death, his dependents, need not elect whether to take compensation and medical benefits under this chapter or to pursue his remedy against such other but may" do both. WCL § 29(1) The statute further provides that the compensation "carrier ... shall have a lien on the proceeds of any recovery from such other, whether by judgment, settlement or otherwise, after the deduction of the reasonable and necessary expenditures, including attorney's fees, incurred in effecting such recovery, to the extent of the total amount of compensation awarded under or provided or estimated by this chapter for such case and the expenses for medical treatment paid or to be paid by it and to such extent such recovery shall be deemed for the benefit of ... [the] carrier." !d. The injured worker is entitled to "an order apportioning the reasonable and necessary expenditures, including attorneys' fees, incurred in effecting such recovery. Such expenditures shall be equitably apportioned by the court between 13 the employee" and the compensation carrier. !d. In addition to the compensation carrier's right to a lien under Workers' Compensation Law § 29(! ), it also has the right to take credit for the injured workers' net recovery "[i]n the event of a modification of an award increasing the compensation previously awarded." }VCL § 29Q). However, if the injured worker's entitlement to compensation exceeds his or her net third-party recovery, then the compensation carrier must "contribute only the deficiency, if any, between the amount of the recovery against such other person actually collected, and the compensation provided or estimated by this chapter for such case." WCL § 29( 4) In Kelly v. State Insurance Fund, 60 N.Y.2d 791,468 N.Y.S.2d 850,456 N.E. 2d 131 ( 1983), this Court held that "the impetus for amending the [workers' compensation] law to provide for allocation of litigation costs between the employee and the carrier ... 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, and to ensure that the claimant receives a full measure of the recovery proceeds." Kelly, 60 N. Y.2d at 793. The Court noted that"[ w ]hen an employee brings a third-party action ... there is no question that the carrier benefits not only by the recovery of its lien but also by the 14 value of" its credit for the claimant's net third-party recovery. Kelly, 60 N.Y.2d at 794. The Kelly Court thus held that a compensation carrier's lien must be reduced by its equitable share of the third-party litigation cost, having due regard not only to its lien at the time of the third-party settlement, but also for the present value of its future liability. Kelly, supra. The Court held that"[ o]ffsetting the carrier's lien by its equitable share of the litigation costs docs no more than provide a convenient and practical means of settling accounts between the claimant and the carrier" at the time of the third-party settlement. Kelly, 60 N Y2d 795. In Bums v. Varrialc, 9 N Y3d 207, 849 N.Y.S.2d I, 879 N.E.2d !40 (2007), this Court modified the rule in Kelly, holding "that the value of future workers' compensation benefits for a claimant with a nonschedule pcnnanent partial disability is speculative, that the present value of these benefits cannot be ascertained at the time claimant recovers damages in a third-party action, and that claimant is not entitled to an apportionment of attorney's fees based on such future benefits" at the time of the third-party settlement. Bums, 9 N.Y.3d at 210. The Court held that future worker's compensation benefits are speculative "if a claimant does not receive benefits for death, total disability or schedule loss 15 of use." ]3urns, 9 N.Y.3d at 215. The Court noted that unlike permanent partial disability benefits, which may be stopped or modified for a variety of reasons, death and permanent total disability benefits "can be reliably predicted using life expectancy tables." Burns 9 N.Y.Jd at 2_1_('). In addition, the Court noted that "awards for schedule loss of use ... are easily ascertainable because such awards are paid out over a specific number of weeks at a set rate (or in a lump sum)." !d. However, the Burns decision explicitly upheld the Kelly principle that the purpose of Workers' Compensation Law§ 29 is "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" and to "ensur[e] that a compensation carrier assumes its fair share of the costs of litigation." Bu_rns, 9 N.Y.2d at 213-214. The Court therefore held that"[ e]ven if the present value of the future benefits cannot be ascertained at the time of claimant's recovery in a third-party action, the canier should be required to periodically pay its equitable share of attorney's fees and costs incurred by claimant in securing any continuous compensation benefits." Burns, 9 N.Y.3d at 217 (emphasis added). Thus, the fundamental shift from Kelly to Burns is that instead of requiring the compensation canier to contribute its equitable share of the third-party litigation 16 expense attributable to future workers' compensation benefits at the time of the third-party settlement, the carrier is obligated to pay those costs as later workers' compensation benefits accrue. The Appellate Division, Third Department elaborated on the Bums rule in Ste.DJLQn v,._NYSj2~J2LQfTrall§Jh, 84 A.D.3d 22, 919 NYS2d 584 (3d Dept 20 ll). In Stenson, the Appellate Division held that the rule in Bums is not limited to "nonscheduled permanent partial disability" cases, but rather extends to all cases other than "death, total disability or schedule loss," to which the "Kelly rule" applies. Stenson, 84 ADJd at 27. The court noted that "[t]herc is no requirement that the claimant be classified with a permanent partial disability to obtain continuing apportionment under Burns; rather, the requirement is that the compensation benefits upon which apportionment is based be nonspeculative, such as those that have accrued. Stenson, 84 AD .3d at 26-27 (citations omitted) (emphasis added). In the case at bar, the Board did not finally determine the extent of Claimant-Appellant's schedule loss of use until two years after the settlement of the third-party action, and the carrier's contribution to the third-party litigation expense did not take the schedule loss award into consideration. Thus, Kelly could not be applied because the carrier's recoverable lien at the time of the third- 17 party settlement could not be adjusted based on an uncertain future benefit The Carrier contends, however, that it was also relieved of its ongoing obligation under Burns because the character of the award was for "schedule loss," This argument fails to take into account both the plain language and the basic reasoning ofBur11~ as set forth above, Under Kelly, supra, the value of future workers' compensation awards is to be taken into consideration at the time of the third-party settlement and the compensation carrier's lien is to be reduced at that time, The decision in Burns limited this mechanism to cases in which the future compensation award could be determined with reasonable certainty at the time of the third-party settlement, such as death cases, permanent total disabilities, and schedule loss awards that had already been determined and which were payable into the future "over a specific number of weeks at a set rate," Bums, 9 n Y3d at 215 (emphasis added), The reference to schedule loss awards in Bums was dicta, as that case did not involve such an award, It is likely traceable to the decisions in Briggs v Kansas City Fire & MaL Ins. Co,, 121 AD,2d 810, 504 NYS2d 256 (3rd Dept 1986) and McKee v Sithe Independence Power Partners, 281 AD2d 891, 722 NY.S,2d 195 (4th Dept 2001} However, neither Briggs nor McKee involved schedule loss awards, In Briggs, the claimant was found to have no disability, and 18 there was therefore no reliable way to determine what his future compensation benefits might be, or to reduce those benefits to present value. ]3_rigg;;, supra. Although Briggs cites several lower court opinions, none of those opinions involve an award for schedule loss of use. In Mc:Kee, the decision recited no facts, but merely mentioned that the claimant "was not receiving ongoing compensation for a total disability or scheduled loss of use." McKee, 281 A.D.2d at 891 (emphasis added). Neither Briggs, McKee, Burns, Stenson, nor any case cited in any of those decisions actually involved an award for schedule loss of use. None ofthcse cases, and no prior or subsequent case, has addressed the question of whether there is a distinction to be drawn between a schedule loss award that is detcnninable at the time of the third-party settlement and one that is not. When including schedule loss awards in the class of awards that may be deemed nonspeculative, the Burns decision noted that because schedule loss awards may be paid periodically, an award entered before a third-party settlement may run into the future beyond the date of the settlement, and thus detennined 19 with reasonable certaintyi Burns, 9 N.Y.3d at 215. Here, however, the schedule loss award was not detennined at the time of the third-party settlement, nor did it run into the future. 2 Instead, the award was determined over two years later. There was therefore no opportunity at the time of the third-party settlement to calculate the extent of the carrier's responsibility for the third-party litigation expense based on the schedule loss award, and the parties did not do so. Bearing this in mind, Terranova specifically rejected the Carrier's consent letter stating that it would take credit for his net third-party recovery "without any additional offset for attorney's fees," and instead insisted that the Carrier provide consent acknowledging that he had "reserve[d] all [his] rights to Burns v. Varriale" regarding the Carrier's potential liability for further payments if an additional workers' compensation award was entered. (R. 42, 43). 1 Workers' Compensation Law§ 15(3) specifies the number of weeks of compensation payable for various injuries. In the event an award is made for a greater number of weeks than have elapsed from the date of the accident to the date of the award, the award is payable into the future. For example, an award for a I 00% schedule loss of use of an ann is equal to 312 weeks ofeompensation benefits. WCL § 15(3). If that detennination was made 112 weeks after the accident, the injured worker would be entitled to payment for another 200 weeks into the future. Sec, Q,£, Schmidt v. Falls Dodge, Inc., 19 N.Y.3d 178,947 N.Y.S.2d 376,970 N.E.2d 399 (2012). If a third-party action was settled during the period in which such a schedule loss award was being paid, the future portion of the award would not be speculative, having been previously determined. 2 Although the medical report upon which the Board ultimately based its decision was filed prior to the date of the third-party settlement, it was implemented only after the submission of a contrary report, testimony from the two physicians, and an interlocutory appeal. As noted previously, the amount in dispute in the workers' compensation ease was $77,760 before the issue was finally resolved. Respondents' contention that the existence of this report rendered the later schedule loss award nonspeculative and determinable at the time of the third-party settlement is entirely lacking in merit. 20 We therefore respectfully submit that the decision in Burns does not stand for the proposition that a compensation carrier is relieved of its obligation to contribute its equitable share of the third-party litigation expense simply because the workers' compensation claim later results in an award for "schedule loss." Instead, the relevant inquiry is whether the future compensation award could be determined with reasonable certainty at the time ofthc third-party settlement, such as a case in which the schedu.le loss was determined before the third-party settlement but was payable into the future. That is not the situation in the case at bar, which is one in which the value of the future benefits-- regardless of their character- was speculative at the time the third-party action was settled. The future award was therefore incapable of being reduced to present value for purposes of assigning the Carrier's equitable share of the third-party litigation expense, and in fact that did not occur. Moreover, Claimant-Appellant properly and specifically reserved his right to claim a further contribution by the Carrier to the third-party litigation expense in the event he was entitled to further workers' compensation benefits. The decision of the Appellate Division, Third Department was therefore erroneous as a matter of law and must be reversed. 21 POINT II: THE APPELLATE DIVISION'S DECISION WAS CONTRARY TO PUBLIC POLICY AND THE EFFICIENT ADMINISTRATION OF THE JUDICIAL SYSTEM. In addition to being contrary to this Court's decisions in Kelly, SUJ2IJ:l, and Burns, suprg, the decision below is also contrary to the public policy with which tbose decisions were concerned. In Kc_lly, this Court emphasized that the purpose of equitable apportionment of third-party litigation costs was to "stem the inequity to the claimant" that would occur if the compensation carrier was given a full credit for the injured workers' net third-party recovery while paying none of the litigation expense that was incurred in creating that credit Kelly, 60 N.Y.2d at 138. In Burns, this Court reaffirmed that "the carrier should be required to periodically pay its equitable share of attorney's fees and costs incurred by the claimant in securing any continuous compensation benefits." Burns, 9 N.Y.3d at 217 (emphasis added). In this case, the third-party litigation expense was 34.78% of the third-party settlement. (R. 39). At the time of the settlement, the Carrier's lien was $21,495.99. (R. 39, 43). The Carrier therefore reduced its lien by 34.78% ($7,477.24) to $14,018.75 3 (R. 43). This lien reduction did not take into account any future workers' 3 Minor discrepancies in various figures arc due to rounding. 22 compensation payments that might be due to Claimant-Appellant. Instead, citing Burns, Claimant-Appellant expressly reserved his right to claim further contribution towards his third-party litigation expense associated with any future award. (R. 43). After litigation over the extent of Claimant-Appellant's schedule loss, the Board found that he had a ten percent "schedule loss of usc of his right leg," which would have been worth an additional $9,960 to him, as opposed to a fifty-five percent schedule loss, which would have been worth an additional $87,720.4 (R. 50, 79). If the $9,960 in additional benefits had been considered at the time of the third-party settlement, then the carrier's lien would have been reduced by an additional $3,464.09 ($9,960 x .3478), and Claimant-Appellant's net third-party recovery would have increased by a corresponding amount. Under Kelly, the Carrier's "total benefit" from Claimant-Appellant's third-pmty settlement would have included both its lien ($21,495.99) and its future liability ($9,960), for a total of $31,455.99. The Carrier's equitable share of the third-party litigation expense would have been 34.78% of that figure, which means that $10,940.39 would have been deducted from its lien instead of$7,477.24. See, Kelly, supra. 4 The award was worth a total of $17,280, against which the Carrier would have been entitled to take credit for its prior indemnity payments of $7,320, leaving a balance due of $9,960. 23 In this case, however, the schedule loss award had not been determined by the Board at the time of the third-party settlement. Because it was undetcm1ined and therefore speculative, the additional benefits due as a result of the award were not capable of calculation pursuant to K_el[y, and the Carrier's lien could not be reduced based on consideration of the future award. Instead, Claimant-Appellant "reserved [his] rights to Bums v. Varriale."5 (R. 43). In finding that this Court's decision in Burns does not apply to the schedule loss award that was entered two years after the third-party settlement, the decision below permitted the carrier to take full credit for Claimant-Appellant's net third- party recovery while contributing nothing to the litigation expense incurred by Claimant-Appellant in securing that recovery. This holding was plainly contrary to the public policy expressed in this Court's decisions in Kelly and Burn~ regarding the purpose of equitable apportionment of third-party litigation costs and the compensation carrier's obligation "to periodically pay its equitable share of attorney's fees and costs incurred by the claimant in securing any continuous compensation benefits." Burns, 9 N.Y.3d at 217 (emphasis added) 6 5 We again note that, anticipating a future compensation award, Claimant-Appellant rejected a prior consent letter issued by the Carrier that did not specifically preserve his rights pursuant to Bums. 6 As set forth in Point I, supra, the fact that the award was one for "schedule loss" does not justify a departure from the rule in Burns, because the reference in that decision to schedule loss clearly referred to an award entered prior to the settlement of the third-party action which was payable into the future and was therefore capable of reduction to present value with reasonable certainty. 24 The decision below is also contrary to the efficient administration of the judicial system. In the case at bar, Claimant-Appellant relied on this Court's decision in Bums to provide certainty that if his third-party litigation expenses were apportioned based solely on the compensation CatTier's lien at the time of the third-party settlement, then further apportionment would occur if additional compensation benefits were awarded in the future. If the decision below were to be upheld, injured workers would be deprived of that certainty in any workers' compensation case that might eventually result in an award for schedule loss of use. Under those circumstances, the only way an injured worker could ensure that the compensation carrier will pay its equitable share of the third-party litigation expense would be to defer settlement of the third-party action until his or her workers' compensation case was finalized with an award for schedule loss. This would not, of course, serve the interests of either the injured worker or the efficient administration of the judicial system. We therefore respectfully submit that the interests of both public policy and the efficient administration of the judicial system would be served well by ensuring that workers' compensation carriers "periodically pay [their] equitable share of attorney's fees and expenses incurred by [injured workers] in securing 25 any continuous compensation benefits" that were not taken into account at the time of the third-party settlement, regardless of the character of such future awards as being for "schedule loss" or otherwise. Burns, 9 N.Y.3d at 217. 26 CONCLUSION. The Appellate Division, Third Department erred as a matter oflaw in concluding that the character of the award in this case, a schedule Joss award, relieved the Carrier of its obligation lo contribute its equitable share of the third- party litigation expense. The character of the award was immaterial. Instead, the relevant factor was the speculative nature of the award at the time of the third- party settlement. In addition, the decision below was contrary to the interests of public policy and the efficient administration of the judicial system. Dated: Farmingdale, New York October 24,2016 Respectfully submitted Robert E. Grey, Esq. Grey & Grey, LLP Attorneys for Claimant-Appellant 360 Main Street Farmingdale, NY 1 1735 (516) 249-1342 27