Ace Fire Underwriters Insurance Company,, Appellant,v.Special Funds Conservation Committee, Respondent.BriefN.Y.October 19, 2016To Be Argued By: LISA LEVINE Time Requested: 15 Minutes APL-2015-00250 New York County Clerk’s Index No. 154920/13 Court of Appeals STATE OF NEW YORK ACE FIRE UNDERWRITERS INSURANCE COMPANY, c/o SEDGWICK CMS, Petitioner-Appellant, —against— SPECIAL FUNDS CONSERVATION COMMITTEE, Respondent-Respondent. BRIEF FOR PETITIONER-APPELLANT d LISA LEVINE STEWART, GREENBLATT, MANNING & BAEZ 6800 Jericho Turnpike, Suite 100W Syosset, New York 11791 Telephone: (516) 433-6677 Facsimile: (516) 433-4342 Attorneys for Petitioner-Appellant November 20, 2015 TABLE OF CONTENTS Page Corporate Disclosure Statement………………………………………………iii Table of Authorities…………………………………………………………...iv, v, vi Preliminary Statement………………………………………………………...1, 2, 3, 4, 5 Questions Presented……………………………………………………………6 Statement of Jurisdiction………………………………………………………6, 7 Statement of the Case………………………………………………………….7 A. The Workers’ Compensation Claim.……………………..……………7, 8, 9 B. The Third Party Action………………………………………………...9, 10, 11, 12, 13 C. The Proceeding Below…………………………………………………13 i. The arguments and findings in the trial court………………………13, 14, 15, 16, 17, 18 ii. The Appellate Division, First Department’s Decision……………..18, 19, 20 Legal Argument………………………………………………………………...21 POINT I. There is a conflict between the First Appellate Department and Second Appellate Department which presents a targeted opportunity to resolve whether a trial court has the authority to issue an order granting a Workers' Compensation carrier consent to settlement nunc pro tunc pursuant to New York State Workers’ Compensation Law Section 29(5) when the Special Fund Conservation Committee’s liability for Workers’ Compensation Law Section 15(8)(d) reimbursement has been established…………………………………………………….21 a. The Interplay Between Workers’ Compensation Law Section 15(8)(d) and Workers’ Compensation Law Section 29(5)……21, 22, 23, 24, 25, 26, 27, 28, 29, 30 POINT II. The First Department erred in holding that the power to issue a nunc pro tunc order directing consent to settlement pursuant to Workers’ Compensation Law Section 29(5) is vested in the Workers’ Compensation Board………………………….30, 31 -i- a) The New York State Workers’ Compensation Board does not have the authority to issue a nunc pro tunc order of consent to settlement, exclusive jurisdiction remains within the discretion of the trial court……………………………………………..31, 32, 33, 34, 35 The First Department’s reliance on Matter of Selective Insurance Company of America v. State of New York Workers’ Compensation Board, 103 A.D.3d 72, 953 N.Y.S.2d 363 [3 rd Dept. 2012] is misplaced………………..36 b) Catapano v. Jow, 73 A.D.2d 1361, 902 N.Y.S.2d 684 [3 rd Dept. 2012] is silent on the issue of consent to settlement nunc pro tunc and is therefore not controlling…………………………………………………..37 c) Workers’ Compensation Law Section 29(5) must be construed as a whole and in accordance with its legislative intent……………………………………………..40 Point III. The decision articulated by the Appellate Division, Second Department in Matter of Empire State Workers’ Compensation Trust v. Special Funds Conservation Committee, 125 A.D.3d 967, 5 N.Y.S.3d 193 (2015) should be recognized and applied by this Court……………………………………………………44, 45, 46, 47, 48 Conclusion……………………………………………………………………….48, 49 -ii- CORPORATE DISCLOSURE STATEMENT Pursuant to Rule 500.1(f) of the Rules of Practice of the Court of Appeals of the State of New York, Plaintiff-Appellant Ace Fire Underwriters Insurance Company, states that it has no parent company, subsidiaries or affiliates,, and that no publicly held corporation owns 10% or more of its stock. -iii- TABLE OF AUTHORITIES CASES: Page Bach v. Cooperman, 89 A.D.2d 539, 452 N.Y.S.2d 629 (1 st Dept. 1982)…………19 Bernthon v. Utica Mutual Ins. Co., 297 A.D.2d 278, 710 N.Y.S.2d 332 (3 rd Dept. 2001)…………………………………………………………………….33 Matter of Brigotta Farmland, 2006 WL 1064007, 2006 N.Y. Work. Comp. 2006 N.Y. Work. Comp. 80213739 (4/18/06)………………………………………20, 35, 41, 42 Catapano v. Jow, Inc., 73 A.D.3d 1361, 902 N.Y.S.2d 684, appeal after remand, 91 A.D.3d 1018, 935 N.Y.S.2d 920, lv. to appeal den. 19 N.Y.3d 809, 973 N.E.2d 913, 95 N.Y.S.2d 462 (2012)…………………………………………………………….3, 12, 14, 15, 20, 26, 35, 37, 38, 45 Cole v. Saranac Lake General Hospital, 282 A.D. 66, 125 N.Y.S.2d 891 [3 rd Dept. 1953]……………………………………………………………………...43 Curtin v. City of New York, 287 N.Y. 238, 39 N.E.2d 903 [1942]…………………43 Matter of Eden II, 2008 WL 222109, 2008 N.Y. Work. Comp. 0955 3672 (5/19/08)………………………………………………………………………………4, 15, 47 Matter of Empire State Transportation Workers’ Compensation Trust v. Special Funds Conservation Committee, 125 A.D.3d 967, 5 N.Y.S.3d 193 (2 nd Dept. 2015)………………………………………………………………………4, 5, 29, 30, 44, 45, 46, 48 Matter of Florence Corp, 2014 WL 672247, 2014 N.Y. Work. Comp. Bd. 2040 6132 (11/20/14)……………………………………………………………………………..38 Matter of Gilson v. National Union Fire Insurance Company, 246 A.D.2d 897, 668 N.Y.S.2d, 287 (3 rd Dept. 1998)………………………………………………………5, 47 Held v. State Workers’ Compensation Board, 83 A.D.3d 35, 921 N.Y.S.2d 674 (3 rd Dept. 2013)……………………………………………………………………29 Matter of Hospital League District 1199, 2015 WL 3395954, 2015 N.Y. Work. Comp. Bd. 0002 5544 (5/20/15)………………………………………………...38 -iv- Jackson v. City of New York, 70 A.D.3d 694, 896 N.Y.S.2d 361 [2 d Dept. 2010]…….33 Matter of Johnson v. Buffalo & Erie Private Industry Council, 84 N.Y.2d 13, 613 N.Y.S.2d 861, 636 N.E.2d 1394 (1994)…………………………………………………..33 Loguidice v. DIC Underhill & Palmeri, 72 A.D.2d 657, 421 N.Y.S.2d 414 (3 rd Dept. 1979)…………………………………………………………………………….25 Lubrano v. New York State Workers’ Compensation Board, 83 A.D.2d 841, 441 N.Y.S.2d 570 [2d Dept. 1981]…………………………………………………………19 Matter of MABSTOA, 2003 WL 4846825, 2003 N.Y. Work. Comp. 0927 5173 (1/13/03)……………………………………………………………………………………5, 47 Medina v. Phillips, 88 A.D.3d 524, 930 N.Y.S.2d 570 (1 st Dept. 2011)………………..…17, 18 Middleton v. Boardman, 210 A.D. 467, 206 N.Y.S. 725 (2d. Dept. 1924)……………….. Napolitano v. A. Christen Realty, 28 A.D.2d 647, 327 N.Y.S.2d 106 (3 rd Dept. 1971)……25 People v. Mobile Oil Corp, 48 N.Y.2d 192, 422 N.Y.S.2d 33, 393 N.E.2d 724 (1979)……………………………………………………………………………………29, 41 Rodriguez v. New Sans Souc; N.H., 98 A.D.3d 1205, 961 N.Y.S.2d 588 (3 rd Dept. 2012)……………………………………………………………………………….4, 34 Matter of Saks, Inc., 2012 WL 4846825, 2012 N.Y. Wrk. Comp. 0052 1114 (Oct. 10, 2012)……………..…………………………………………………………4, 34, 42, 47 Matter of Savage v. American Home Care Supply, LLC., ______A.D.3d__________, 2015 WL 5839196 (3 rd Dept. 2015)……………………………………………………………22 Scannell v. Karlin, 252 A.D.2d 552, 675 N.Y.S.2d 626, lv. den. 93 N.Y.2d 805, 689 N.Y.S.2d 429, 711 N.E.2d 643 (1999)………………………………………………33 Matter of Selective Insurance Company of America. v. State of New York Workers’ Compensation Board, 102 A.D.3d 72, 935 N.Y.S.2d 368 (3 rd Dept. 2012)…………………………………………………………………………………20, 30, 31, 36 Stern v.Electrol, Inc., 18 A.D.2d 1117, 238 N.Y.S.2d 1005 (3 rd Dept. 1963)…………………25 Matter of Spurling v. Beach, 93 A.D.2d 306, 463 N.Y.S.2d 293, lv. den. 64 N.Y.2d 605, 486 N.Y.S.2d 1025, 476 N.E.2d 340 (1985)…………………………………18 -v- Matter of Surianello v. Consolidated Edison of New York, Inc., 123 A.D.3d 1369, 1 N.Y.S.3d 392 (3 rd Dept. 2014)…………………………………………………………22 Matter of Wad Rentals, 2001 WL 10913, 2001 N.Y. Work. Comp. 0971 0341 (4/4/01)………………………………………………………………………………34 Matter of Wheeler v. Bloomingdales, 93 A.D.3d 903, 940 N.Y.S.2d 186 (3 rd Dept. 2012)……39 Matter of Wright v. Golden Arrow Line, 206 A.D.2d 759, 615 N.Y.S.2d 473 (3 rd Dept. 1994)…………………………………………………………………………………33 -vi- STATUTES & RULES Page 22 NYCRR 500.22(c)………………………………………………………………… 22 NYCRR 600.14 (b)……………………………………………………………….. CPLR Article 78……………………………………………………………………..17 CPLR 5513(b)(d)……………………………………………………………………... CPLR 5602(a)(1)(i).…………………………………………………………………6 Workers’ Compensation Law Section 14(6)………………………………………..41 Workers’ Compensation Law Section 15(8)………………………13, 15, 16, 21, 22, 23, 39, 45. Workers’ Compensation Law Section 15(8) (b)……………………………………32 Workers’ Compensation Law Section 15(8)(d)……2, 7, 8, 10, 20, 21, 26, 30, 31, 36, 38, 44, 46 Workers’ Compensation Law 15(8)(h)…………………………………………..…37 Workers’ Compensation Law 15(8)(h)(2)……………………………………….….8 Workers’ Compensation Law 15(8)(h)(4)…………………………………………..37 Workers’ Compensation Law 15(8)(w) …………………………………………….8 Workers’ Compensation Law 23…………………………………………………….17, 18 Workers’ Compensation Law Section 29……………………………………11, 12, 25, 32, 34, 46 Workers’ Compensation Law Section 29(1)………………………………………...25, 32, 41 Workers’ Compensation Law Section 29(5)………………………………………...1, 2, 3, 5, 6, 9, 13, 14, 15, 16, 17, 18, 20,21, 25, 26, 27, 28, 29, 30, 33, 35, 37, 38, 39, 40, 42, 43, 45, 46 Workers’ Compensation Law Section 32…………………………………………..8, 9, 10, 11, 12 OTHER Special Disability Fund, and the Second Injury Fund for Reopened Cases………..24 Specialfunds.org, Special Funds Conservation Committee, 2013………………….24 -vii- PRELIMINARY STATEMENT The issue presented on this appeal is whether New York State Workers’ Compensation Law Section 29(5) gives a trial court discretion to issue an order nunc pro tunc directing consent to settlement as and between an employer and/or its Workers’ Compensation carrier and the Special Funds Conservation Committee where the liability of the Special Disability Fund is established prior to the settlement of a Workers’ Compensation claimant’s personal injury action. The Appellate Division, First Department and the Appellate Division, Second Department are split on the issue, with the First Department holding that the Workers’ Compensation Board retains the authority, while the Second Department has remanded the issue back to the trial court for a nunc pro tunc consent determination. 1 On or about May 29, 2013, appellant, Ace Fire Underwriters Insurance Company c/o Sedgwick (“appellant” and/or “Ace”) filed a Notice of Petition in the Supreme -1- 1 Empire State Workers’ Compensation Trust v. Special Funds Conservation Committee, 125 A.D.3d 967, 5 N.Y.S.3d 193 (2d. Dept. 2015). At the time of the filing of this Brief, appellant’s motion for consent to settlement nunc pro tunc was marked submitted and remained pending before the Supreme Court, Nassau County. Court, New York County for an order pursuant to Workers’ Compensation Law Section 29(5) seeking nunc pro tunc consent to settlement of an underlying third party personal injury action. The Motion was denied by Supreme Court and the petition was dismissed. (R.8 – 10). 2 On appeal, the First Department affirmed the Supreme Court’s denial of the motion and the dismissal of the petition. The court held that where the employee is required to obtain the carrier’s consent prior to settlement, the carrier is required to obtain the respondent, Special Fund Conservation Committee’s (“respondent” and/or “The Fund”) consent prior to the settlement as well, where the carrier entitled to reimbursement by the Fund pursuant to Workers’ Compensation Law Section 15(8)(d). Having failed to obtain The Fund’s consent prior to settlement of the underlying person injury action, the carrier should seek a determination as to appropriate relief from the Workers' Compensation Board. (R. v – vii). The First Department, in relying on the statutory authority which mandates that a Workers’ Compensation claimant must obtain prior written consent or an order -2- 2 All numbers in parenthesis refer to pages in the Record on Appeal. from the court seeking consent to settlement of a third party personal injury action adopted the reasoning in Catapano v. Jow, Inc., 73 A.D.3d 1361,902 N.Y.S.2d 684 appeal after remand, 91 A.D.3d 1018, 935 N.Y.S.2d 920, lv. to appeal den. 19 N.Y.3d 809, 973 N.E.2d 913, 951 N.Y.S.2d 467 (2012), which states that the consent of The Fund should be sought by the employer or its carrier if there is a right to reimbursement from The Fund at the time of settlement of the third party action. (R.v – vi). By imputing the statutory obligation of consent to settlement on the Workers’ Compensation carrier, the First Department failed to recognize that by the same analysis, the Workers’ Compensation carrier should be afforded the relief available to the injured worker who fails to obtain prior written consent set forth in Workers’ Compensation Law Section 29(5), i.e. a motion for consent to settlement in the trial court where the underlying personal injury action was venued. Moreover, the First Department erred in stating that the carrier must seek a remedy before the Workers’ Compensation Board which had previously determined the claimant’s entitlement to benefits. (R. vi – vii). It is well settled that the Workers’ -3- Compensation Board does not have the authority to issue a consent order nunc pro tunc. Indeed, it is respectfully submitted that the exclusive jurisdiction to grant such an order remains with the trial court. (Rodriguez v. New Sans Souci, N.H. 98 A.D.3d 1205, 961 N.Y.S.2d 588 (3 rd Dept. 2012). Lastly, the First Department’s decision stating that the appellant must obtain consent to settlement from the Workers’ Compensation Board is in direct conflict with the Appellate Division, Second Department’s decision in Empire State Transportation Workers’ Compensation Trust v. Special Funds Conservation Committee, 125 A.D.3d 967, 5 N.Y.S.3d 193 (2 nd Dept. 2015). This recent decision by the Appellate Division, Second Department aptly states: “The Workers’ Compensation Board has previously determined that, where, as here, a carrier failed to timely obtain consent of the Special Funds Conservation Committee to settlement of a personal injury action, the carrier may still obtain reimbursement from the Special Disability Fund, but only if it obtains a nunc pro tunc order from a Court directing the Special Funds Conservation Committee to consent (see: Matter of Saks Inc., 2012 WL 4846825, (2012) N.Y. Work. Comp. LEXIS 11851, *3 [WCB Case No. 0052 1114]; see also: Matter of Eden II, 2008 WL 2221709, *2 2008, N.Y. -4- Work. Comp. LEXIS 4785, 4 [WCB Case No. 0954 3622]; C.F. Matter of MABSTOA, 2003 WL 134665, *2, N.Y. Work. Comp. LEXIS 7783,* 4 [WCB Case No. 0927 5173]). A request to compel nunc pro tunc consent to settlement is addressed to the discretion of the Supreme Court (see: Matter of Gilson v. National Union Fire Insurance Company, 246 A.D.2d 897, 898, 668 N.Y.S.2d 287”. The Court continued: Here, because the Supreme Court erroneously believed that it had no power to issue a nunc pro tunc order directing the Special Funds Conservation Committee to consent to settlement, it did not exercise its discretion. Accordingly, we remit the matter to the Supreme Court, Nassau County, for the Court to determine, in its discretion whether to issue an order, nunc pro tunc, directing the Special Funds Conservation Committee to consent to the settlement of the personal injury action. This action presents a focused opportunity for this Court to resolve the conflict between the First Appellate Department and the Second Appellate Department on the issue of whether a trial court has the authority to order consent to settlement nunc pro tunc pursuant to Workers’ Compensation Law Section 29(5) as and between a Workers’ Compensation carrier and the Special Funds Conservation Committee. -5- QUESTION PRESENTED 1. Whether the Appellate Division, First Department erred when it held that the trial court did not have discretion to grant consent to settlement nunc pro tunc pursuant to Workers’ Compensation Law Section 29(5) and the appellant should seek a determination as to appropriate relief from the Workers’ Compensation Board. The First Department erred in holding that the authority to issue a nunc pro tunc order pursuant to Workers’ Compensation Law Section 29(5) directing such consent is vested in the Workers’ Compensation Board. STATEMENT OF JURISDICTION This Court has jurisdiction over this appeal pursuant to CPLR Section 5602(a)(1)(i). This action originated in the Supreme Court, New York County, and the decision below is an order of the Appellate Division, First Department entered on February 24, 2015 that finally determined the action, and is not appealable as a -6- matter of right (R.v-vii); this Court granted leave to appeal on September 22, 2015 (R.iv). STATEMENT OF THE CASE A. The Workers’ Compensation Claim The injured worker, Carlos Ramirez (“Ramirez” and/or “claimant”) was injured during the course of his employment with the Coca Cola Bottling Company (“Coca Cola” and/or “employer”) on March 28, 2007 (R.13). As a result thereof, he brought a claim for Workers’ Compensation benefits which was indexed under New York State Workers’ Compensation Board file number 0071 4858, and established for work related injuries to the neck, back and left shoulder (R.14, 21). At a Workers’ Compensation Board hearing held on October 14, 2010, Law Judge John Mara found that Workers’ Compensation Law Section 15(8)(d) was -7- applicable to the case, with 100% reimbursement subject to classification (R.14, R.24). 3 The claimant was classified as having a permanent partial disability under Workers’ Compensation Law Section 15(3)(w) at a hearing held on August 16, 2011 (R.14, R.26). The Workers’ Compensation Board determined that the claim was subject to the provisions of Workers’ Compensation Law Section 15(8)(d), and entitlement to reimbursement was pursuant to the provisions of Workers’ Compensation Law Section 15(8)(h)(2). The parties stipulated on the record to those findings. Accordingly, the Workers’ Compensation Board found that “the claimant is classified for Special Fund purposes (and) should the proposed Section 32 settlement agreement be disallowed or should either party withdraw from said agreement, it is stipulated that the findings set forth in the stipulation will be -8- 3 Workers’ Compensation Law Section 15(8)(d) entitles a Workers’ Compensation insurance carrier to reimbursement from a statutorily created fund (The Special Disability Fund) where certain criteria are met. In order to support a claim for reimbursement, the carrier must submit medical evidence showing that: (1) the claimant has a preexisting permanent physical impairment that hinders, or is likely to hinder employment potential; (2) the claimant has a subsequent work related injury or occupational disease; and (3) the disability is materially and substantially greater than the disability that which have resulted from the work injury alone. rescinded and the case will be restored to the calendar for further development of the record” (R.27). 4 B. The Third Party Action In addition to the Workers’ Compensation claim, the claimant brought an action in the Supreme Court, State of New York, New York County against defendant, Lex Bakery Corp, d/b/a Café Metro Max Capital. On the eve of trial the action was settled with the consent of the appellant for the gross sum of $500,000.00. A closing statement was filed with the Office of Court Administration on or about May 24, 2012, and the net settlement proceeds were disbursed to the claimant (R.15, R.41). In accordance with Workers’ Compensation Law Section 29(5), appellant’s lien was reduced to $101,007.02, and the carrier reserved its right to assert a holiday against the net proceeds of the third party action (R.15, R.43). Thereafter, at a -9- 4 The claimant and the appellant previously negotiated a waiver agreement pursuant to Workers’ Compensation Law Section 32 in the amount of $107,250.00 which would include a total of five compensation cases with the lead case being the accident of March 28, 2007 under Workers’ Compensation Board file number 0071 4584 (R.14, R.29 – R.40). Workers’ Compensation Board hearing held on December 20, 2012, Law Judge Mara found that the third party action was settled with the consent of the carrier with a net to the claimant of $197,479.94. All parties were directed to produce a letter of consent, and the carrier was directed to take credit for the net proceeds of the third party action. (R.15, R.45). It is not disputed that appellant did not request respondent’s consent either prior to or at the time of the settlement of the third party action. By letter dated February 23, 2013, appellant requested respondent’s retroactive consent to settlement. Appellant noted that the claimant had been classified permanently partially disabled and a finding had been made of a 63% loss of wage earning capacity which would entitle the claimant to a 375 week indemnity cap. (R.15, R.41, R.47 – 49). Additionally, Workers’ Compensation Law Section 15(8)(d) responsibility had been established at 100% entitling appellant to reimbursement for both indemnity and medical payments after the statutory retention period. (R.47). It was further noted that the parties (claimant and appellant) had previously negotiated a Workers’ Compensation Law Section 32 waiver agreement in the amount of $107,250.00 which would include a total of five cases with the lead case -10- being the Workers’ Compensation claim of record. Respondent, by its representative, Michael Bart, agreed to settlement of the five Workers’ Compensation claims pursuant to the Section 32 waiver agreement. (R.47, R.48). During the processing of the Section 32 document, the third party personal injury action was settled with appellant’s consent, and a statutory lien reduction was taken pursuant to Workers’ Compensation Law Section 29 (percentage of reduction was negotiated at .3509% based on litigation expenses). (R.48). Thus, the overall lien as of the date of settlement (May 24, 2012) was $155,608.62, said lien was reduced by $54,601.60 resulting in a net lien recovery of $100,007.02. (R.48). Appellant further stated that although respondent was not contacted prior to the settlement of the third party action, appellant did not compromise the lien in excess of the statutory reduction as required pursuant to Section 29 of the New York State Workers’ Compensation Law. (R.48). Appellant also indicated that pursuant to the classification, the cap had already been exhausted up to approximately $30,000.00 from the date of classification, and accordingly, the remaining cap was approximately $110,000.00, which was less than the third party net recovery for which appellant was currently taking -11- credit in the amount of $197,479.94. (R.48). Accordingly, the entire indemnity cap was credited against the net recovery. (R.48). Since the claimant had been classified permanently partially disabled, there was, in addition, a potential Burns exposure representing .3509% of $375.00 per week or a rate of $131.59 from the date benefits were suspended up to the date at which the overall third party net recovery was exhausted. Appellant advised that it was seeking to resolve the workers’ compensation claim pursuant to a Section 32 settlement agreement at a nominal figure since the indemnity cap had been exhausted. (R.48). The settlement would include both in medical and indemnity in view of potential Burns exposure. (R.48). Lastly, in the February 25, 2013 letter, respondent’s consent was requested to the third party settlement, and it was noted that the lien recovery of $101,007.02 would be distributed pro rata. (R.48 – 49). By letter dated February 26, 2013, respondent declined to grant consent (R.16, R.50). Respondent referred to the decision of the Appellate Division, Third Department in Catapano v. Jow, Inc., 91 A.D.3d 1018, where the Court set forth the requirement that Special Fund’s consent to settlement under Workers’ Compensation Law Section 29 is required -12- whenever its liability is established at the time of settlement. Respondent averred that in the absence of consent, reimbursement by Special Funds is forfeited. “Here, Workers’ Compensation Law Section 15(8) was established per Notice of Decision filed 10/19/10, prior to the settlement of 5/24/12. Thus, the Special Funds was a necessary party of interest and its consent was required at the time of the settlement. Lack of Special Funds consent was noted at the hearing in this matter” (R.50). C. The Proceedings Below i. The arguments and findings of the trial court. Appellant filed a petition in the Supreme Court, New York County for an order, nunc pro tunc, for judicial consent to settlement pursuant to Workers’ Compensation Law Section 29(5) on or about May 29, 2013. (R.11 – 50). Appellant referred to Workers’ Compensation Law Section 29(5), which requires that any compromise of a third party cause of action by an employee or his dependents in an amount less than the compensation provided shall be made only -13- with the written approval of the commissioners of the State Insurance Fund for the person, association, corporation or insurance carrier that is liable to pay the same, written approval of the commissioners of the State Insurance Fund or written approval of the person, association, corporation or the insurance carrier need not be obtained if the employer or his dependents obtain a Compromise Order from a justice of the Court in which the third party action was pending (R.16). According to the plain language of the statute, appellant argued, the mandate to obtain written consent or an Order from the Court, runs between the injured employee, and his or her dependents, and the employer and its workers’ compensation carrier. Although the statute is silent with regard to the responsibility of a workers’ compensation carrier to seek the consent of The Fund, the Appellate Division in Catapano v. Jow, Inc., supra, held that the consent of The Fund should be sought by the employer or its carrier, if there is a right to reimbursement from the Special Disability Fund. The right of the carrier or the employer to reimbursement may be waived and lost if the Fund has not consented to the settlement (R.16). Appellant therefore argued that if the carrier is required to obtain The Fund’s prior consent or lose its right to reimbursement, then Workers’ Compensation Law Section 29(5) should also confer the right upon the workers’ compensation carrier to seek nunc pro tunc -14- consent. Appellant noted that prior to the decision in Catapano v. Jow, Inc., a Workers’ Compensation Board Panel in Matter of Eden II, 2008 WL 222109, 2008 N.Y. Work. Comp. 0954 3672 (5/19/08), affirmed a Workers’ Compensation Law Judge’s decision which found that The Fund’s consent to the third party settlement was required before giving consent to the claimant, and specifically noted that there was no evidence that The Fund’s consent was not necessary either because the carrier had obtained a Nunc Pro Tunc Order compelling the Fund’s consent or because the amount of the third party recovery was excessively high. The Court in Catapano, supra, therefore, affirmed placement of the responsibility to obtain consent on the Workers’ Compensation carrier from The Fund before consenting to the claimant’s third party action, where The Fund was ultimately liable to the carrier for reimbursement under Workers’ Compensation Law Section 15(8). The Third Department did not address the issue of consent nunc pro tunc as and between a carrier and The Fund. Appellant argued therefore that in the absence of any authority to the contrary, where The Fund has declined to provide consent, or should the carrier not obtain prior consent, then the mechanism for nunc pro tunc consent set forth in Workers’ Compensation Law Section 29(5) should enable a workers’ compensation carrier to obtain The Fund’s nunc pro tunc consent in the Court where the third party action was pending (R.18). -15- On the contrary, respondent argued that Workers’ Compensation Law Section 29(5) was not applicable to The Fund’s consent and reimbursement under Workers’ Compensation Law Section 15(8) (R.53). Respondent further claimed that consent to settlement pursuant to Workers’ Compensation Law Section 29(5) is between the claimant and the insurance carrier or the employer, and not The Fund. According to Respondent, the statute makes no provision for the Special Disability Fund or for any intervention or consent on its part (R.52). Respondent averred that the Court did not have jurisdiction to address reimbursement under Workers’ Compensation Law Section 15(8) which falls within the jurisdiction of the Board (R.54). Respondent concluded that appellant did not exhaust its administrative remedies before the Workers’ Compensation Board (R.55). The Supreme Court, New York County (James, D.) denied appellant’s Motion and stated that the respondent” is correct that Workers’ Compensation Law Section 15(8) contains no language that allows appellant to obtain a compromise order from this Court of a settlement of a third party action under which the Insurance Company seeks reimbursement from The Committee of workers’ compensation -16- benefits paid by the Insurance Company to an employee which is a plaintiff in that third party action” (R.8 – 9). The Court continued “…such silence contrasts with the provisions of Workers’ Compensation Law Section 29(5) that permit an employee or his/her dependents to obtain a compromise order from a justice of the court in which the third party action is pending that approves a settlement of such third party action, timely or nunc pro tunc, where the employer or dependent is/are entitled to receive Workers’ Compensation benefits” (Medina v. Phillips, 88 A.D.3d 524 [1 st Dept. 2011]). (R.9). The court then (erroneously) stated that the insurance carrier must seek an administrative determination by the New York State Workers’ Compensation Board, whether nunc pro tunc or otherwise of its application for approval of its request for reimbursement from the respondent (R.9). The Court continued that there appeared to be a conflict as to whether such Workers’ Compensation Board determination would be subject to direct appeal to the Appellate Division, Third Department pursuant to Workers’ Compensation Law Section 23, or to a review pursuant to CPLR Article 78 (R.9). The Court concluded “in any event, this proceeding may not be maintained either because without a final and binding determination, it is premature or because recourse to this Court pursuant to CPLR Article 78 is interdicted by the exclusive jurisdiction -17- of the Appellate Division, Third Department pursuant to Workers’ Compensation Law Section 23” (R.9 – 10). ii. The Appellate Division, First Department’s Decision. Appellant argued that the issue of a trial court’s discretion in this matter was one of first impression, and that if, as a matter of law, Workers’ Compensation Law Section 29(5) compelled the appellant to obtain the respondent’s consent prior to settlement of the third party personal injury action, then it should likewise allow appellant to obtain consent via a judicial order nunc pro tunc as set forth in the same statute. (R.5). Indeed, Workers’ Compensation Law Section 29(5), appellant averred, specifically directs the settling party which failed to obtain prior consent, to obtain a judicial order in the court where the third party action was pending. (R.5). Appellant further argued that contrary to the trial Court’s decision, the Workers’ Compensation Board does not have jurisdiction to direct the parties to consent to settlement, and therefore there is no recourse to the Appellate Division, Third Department (Matter of Spurling v. Beach, 93 A.D.2d 306, 463 N.Y.S.2d 293, lv. den. 64 N.Y.2d 605, 486 N.Y.S.2d 1025, 476 N.E.2d 340; Medina v. Phillips, 88 A.D.3d 524, 930 N.Y.S.2d 570 (1 st Dept. 2011)) (R.5). -18- Appellant pointed out that at the hearing held December 20, 2012, Law Judge Mara directed all parties to produce a letter of consent, and that the Workers’ Compensation Board clearly did not decline to provide consent because it was not within their jurisdiction to do so. Therefore, there was no pertinent Workers’ Compensation Law Judge’s decision appealable to the Appellate Division, Third Department, and appellant’s motion was not premature (R.5 – 6). Lastly, appellant stated it is well established that the assertion of jurisdiction by the Workers’ Compensation Board over a matter that is subject to review by the Appellate Division renders exclusive jurisdiction in that Court and interdicts recourse to proceeding pursuant to CPLR Article 78 (Lubrano v. New York State Workers’ Compensation Board, 83 A.D.2d 841, 441 N.Y.S.2d 570 [2 nd Dept. 1981]; Bach v. Cooperman, 89 A.D.2d 539, 452 N.Y.S.2d 629 [1 st Dept. 1982]) (R.6). Thus, a decision of the Workers’ Compensation Board is not subject to an Article 78 proceeding, but the point is nonetheless moot because the issue did not arise from a decision of the Workers’ Compensation Board (R.6). The First Department affirmed the trial court’s denial of the appellant’s motion for consent to settlement nunc pro tunc and found: -19- “Workers’ Compensation Law Section 29(5) permits an employee to settle a lawsuit arising out of the same accident as gave rise to his Workers’ Compensation claim for less than the amount of the compensation he has received only if the employee has obtained written consent to the settlement from the carrier, or in the alternative judicial approval. We find that, just as the employee is required to obtain the carrier’s consent prior to settlement, the carrier is required to obtain the Special Fund Conservation Committee’s consent prior to the settlement where it is entitled to reimbursement by the Committee pursuant to Workers’ Compensation Law Section 15(8)(d) (see Workers’ Compensation Law Section 29(5); Matter of Catapano v. Jow, Inc., 91 A.D.3d 1018 (3 rd Dept. 2012) lv. den. 19 N.Y.3d 809 [2012]). Citing, inter alia, Employer: Brigotta Farmland, 2006 WL 1064007, 2006 N.Y. Work. Comp. Lexis 3343 [WCB Case No. 8021 3739, April 18, 2006]). Petitioner, having failed to obtain the Committee’s consent prior to the settlement of the underlying personal injury action, seeks a Court Order directing the Committee to consent nunc pro tunc. Since the Committee is an administrative agency governed by the Workers’ Compensation Law and subject to the authority of the Workers’ Compensation Board, we find that petitioner should seek a determination as to appropriate relief from the Board, which has already determined that the injured claimant’s entitlement to certain payments and petitioner’s entitlement to reimbursement under Workers’ Compensation Law Section 15(8)(d) see: Matter of Selective Insurance Company of AM. v. State of New York Workers’ Compensation Board, 102 A.D.3d 72 [3 rd Dept. 2012])” (R.3 – 5). -20- LEGAL ARGUMENT POINT I. There is a conflict between the Appellate Division, First Department and the Appellate Division, Second Department, which presents a targeted opportunity to resolve whether a trial court has the authority to issue an order granting a Workers' Compensation carrier consent to settlement nunc pro tunc pursuant to New York State Workers’ Compensation Law Section 29(5), when The Fund’s liability for Workers’ Compensation Law Section 15(8) reimbursement has been established. a) The Interplay Between Workers’ Compensation Law Section 15(8)(d) and Workers’ Compensation Law Section 29(5) Workers’ Compensation Law Section 15(8)(d) provides for a Workers’ Compensation carrier’s reimbursement by the Special Disability Fund under certain circumstances. An injured employee must have sustained a permanent disability prior to the work related injury, and when combined with the subsequently established work related injury, he/she must suffer a materially and substantially greater disability than would have resulted from the work injury alone. When the liability of the Special Fund’s, pursuant to Workers’ Compensation Law Section 15(8) is established by the Workers’ Compensation Board, the Workers’ Compensation insurance carrier is then entitled to -21- reimbursement of medical and indemnity benefits paid after 260 weeks (Matter of Savage v. American Home Care Supply, LLC -- A.D.3d--2015 WL 5839196 [3 rd Dept. 2015]; Matter of Surianello v. Consolidated Edison Company of New York, Inc., 123 A.D.3d 1369, 1369-1371, 1 N.Y.S.3d 392 [2014]). The Fund was formed under Workers’ Compensation Law Section 15(8) to promote the hiring of workers suffering from preexisting impairments. Section 15(8) was substantially developed after World War II when injured veterans were returning from war and seeking reentry into the work force. Under Workers’ Compensation Law Section 15(8), if an employee had a permanent physical impairment and incurred a subsequent disability by accident or occupational disease arising out of or in the course of the employment, resulting in a permanent disability caused by both conditions that was materially and substantially greater than that which would have resulted from the subsequent injury alone, the employer or carrier was reimbursed from the Special Disability Fund for all compensation and medical benefits after a certain of number of weeks set by statute. -22- The 1945 Act enacted a new and more carefully drawn subdivision 8 to Workers’ Compensation Law Section 15. The Act contains a declaration of policy and legislative intent and in pertinent part states: (a) declaration of policy and legislative intent: Third: That it is the considered judgment of the legislature that the system embodied in this subdivision, which makes a logical and equitable adjustment of the liability under the workmens compensation law which an employer must assume in hiring employees, constitutes a practical and reasonable approach to a solution of the problem for the employment of physically handicapped persons. The purpose of the 1945 Bill described in a memorandum dated April 16, 1945 from Mary Donlon of the Workers’ Compensation Board to the counsel of Governor Thomas E. Dewey, states in pertinent part: “This bill will protect employer’s from disproportionate workmans compensation costs by providing a Special Fund to absorb that part of the compensation payments, which are attributable to the previous permanent physical impairment of a worker”. -23- Thereafter, in 1987 the Workers’ Compensation Law was amended. The purpose of the amendment was described by the bill’s sponsor, Senator Walter J. Floss, Jr., in a letter to the governor’s counsel dated July 8, 1987 and states in pertinent part: The bill changed the purpose of the section from one that encourages the hiring of partially disabled or handicapped persons to one that enables insurance carriers to shift the burden of full liability in certain cases from their shoulders and place it on a second injury fund, whether or not the employer had knowledge of a preexisting permanent physical impairment. We had no objection to the purpose of this proposal, as it will help carriers by removing an important barrier to Second Injury Fund relief and eliminate a source of much litigation. (Special Disability Fund and the Second Injury Fund for reopened cases, SpecialFunds.org, Special Funds Conservation Committee, 2013). What is clear, in the legislative history of the statute and in the memoranda in support of its enactment and amendments thereto, is that the nature and purpose of the Fund is both equitable and remedial in nature, and in particular the 1987 amendment served to remove obstacles to employer reimbursement. Importantly, the statute clearly provides for reimbursement to the carrier from the Special Disability Fund. The statute is notably silent with regard to the obligation of a carrier to request the Special Funds consent where a third party action is pending or risk losing its right to reimbursement. -24- In contrast, in order for a carrier to obtain reimbursement, the statute and its enabling regulations clearly set forth the method and manner by which a carrier must make a claim for reimbursement (see: Loguidice v. Dic Underhill & Palmieri, 72 A.D.2d 657, 421 N.Y.S.2d 414 [3 rd Dept. 1979], Stern v. Electrol, Inc., 18 A.D.2d 1117, 238 N.Y.S.2d 1005 [3 rd Dept. 1963] Napolitano v. A. Christen Realty, [38 A.D.2d 647]). Importantly, the statute remains silent with regard to a carrier’s continued right to reimbursement after the initial notice has been filed, and where a third party action is pending. The requirements for consent to settlement are found in Workers’ Compensation Law Section 29. Specifically, Workers’ Compensation Law Section 29(1) permits an injured employee to pursue his/her remedies under the workers’ compensation law and bring an action against a third party tort feasor, not in the same employ for the same injuries. In order to preserve his/her right to continue receiving workers’ compensation benefits, Workers’ Compensation Law Section 29(5) provides that the injured employee must obtain the consent of the workers’ compensation carrier, in writing, prior to the settlement of the third party action. Should the -25- injured employee fail to obtain prior written consent of the workers’ compensation carrier, Workers’ Compensation Law Section 29(5) permits the injured employee to obtain a compromise order from a justice of the Court in which the third party action was pending. Workers’ Compensation Law Section 15(8)(d), clearly does not require The Fund’s prior consent be obtained in order to secure reimbursement. However, the Appellate Division, Third Department, in Catapano v. Jow, Inc. 91 A.D.3d 1013, 935 N.Y.S.2d 920, lv. den. 19 N.Y.3d 809, 873 N.E.2d 913, 95 N.Y.S.2d 462 (2012), held that a workers’ compensation carrier was obligated to obtain The Fund’s consent to the third party settlement or waive its right to reimbursement. The Court in Catapano v. Jow, Inc. interpreted the consent language in Workers’ Compensation Law Section 29(5), which clearly sets forth the obligations as and between a workers’ compensation claimant and his/her employer and/or its workers’ compensation carrier, to likewise apply between the employer and/or a workers’ compensation carrier and The Fund even though the statute itself is silent. In pertinent part, Workers’ Compensation Law Section 29(5) provides: -26- “In case of payment of an award…such payment will operate to give the employer or insurance carrier liable for the award, a cause of action for the amount of such payment…a compromise of any such cause of action by the employee or his dependents at an amount less than the compensation provided for by this Chapter, shall be made only…with the written approval of commissioners of the State Insurance Fund…and otherwise with the written approval of a person, association, corporation or insurance carrier liable to pay the same”. The commentaries to Workers’ Compensation Law Section 29(5) state: However, if there is a third party action and it is being settled, the consent of the Special Disability Fund should (emphasis supplied) be sought by the employer or its carrier, if there is a right to reimbursement from the Special Disability Fund. The right of a carrier or the employer to the reimbursement may be waived and lost, if the Fund has not consented to settlement”. It is therefore clear that both the Workers’ Compensation Board and the Appellate Division, Third Department have construed that portion of Workers’ Compensation Law Section 29(5) to impute a requirement on a carrier seeking reimbursement or contribution from another party, specifically The Fund, to obtain The Fund’s consent to settlement prior to a carrier consenting to a third party action. While the obligation to obtain consent is not disputed, the method of -27- obtaining consent is the subject of conflict between the First and Second Departments . Although, it is apparent that a carrier is required to obtain The Fund’s consent to settlement pursuant to Workers’ Compensation Law Section 29(5), the statute and the case law do not discuss the application of the remedial provisions of the statute which permits consent to settlement nunc pro tunc if certain requirements are met. The portion of the statute provides: “However, written approval of the commissioners of the State Insurance Fund or such officer thereof designated by them or written approval of the person, association, corporation or the insurance carrier need not be obtained if the employee or his dependents obtain a Compromise Order from a justice of the Court in which the third party action was pending”. It is respectfully submitted, that if a workers’ compensation carrier is obliged by virtue of Workers’ Compensation Law Section 29(5) to obtain the Special Fund’s prior written consent to settlement of a third party action, then so too should the carrier be afforded the remedial opportunity set forth in the same statute which, as a matter of law is provided to a claimant. Indeed, it is a well settled principle of statutory construction that a statute or ordinance must be construed as a whole and that its various sections must be considered together and with reference to each -28- other (Held v. State Workers’ Compensation Board, 85 A.D.3d 35, 921 N.Y.S.2d 674 [3 rd Dept. 2013]; People v. Mobile Oil Corp, 48 N.Y.2d 192, 199, 422 N.Y.S.2d 33, 393 N.E.2d 724 [1979]; see also: McKinney’s Cons. Law of New York, Book I, Statutes Sections 97, 98, 130). Appellant argued below that if in fact The Fund’s consent is mandated by the language of Workers’ Compensation Law Section 29(5), then so too should the carrier be permitted to avail itself of the remedy set forth in the same paragraph of the statute; i.e., redress to the trial court in which the third party action was pending. In Matter of Empire State Workers’ Compensation Trust v. Special Funds Conservation Committee, supra, the Second Department, in reversing a decision of the Supreme Court, Nassau County, (Woodard, J.), held “here, because the Supreme Court erroneously believed that it had no power to issue a nunc pro tunc order directing the Special Funds Conservation Committee to consent to settlement, it did not exercise its discretion” supra, (125 A.D.3d 968, 969). The Second Department remitted the matter to the Supreme Court, Nassau County for the Court to determine, in its discretion, whether to issue an Order nunc pro tunc directing The Funds to consent to the settlement of the third party action. 5 -29- 5 The Motion for consent to settlement nunc pro tunc is pending in the Supreme Court, Nassau County. The decision in Matter of Empire State Workers’ Compensation Trust, supra, was issued on February 25, 2015, one day after the First Department issued its decision in this matter. Here, the First Department held that the appellant must seek consent to settlement from the Workers’ Compensation Board “since the Committee is the administrative agency governed by the Workers’ Compensation Law and subject to the authority of the Workers’ Compensation Board, because it…has already determined the injured claimant’s entitlement to certain payments and petitioner’s entitlement to reimbursement under Workers’ Compensation Law Section 15(8)(d), see: Matter of Selective Insurance Company of America v. State of New York Workers’ Compensation Board, 102 A.D.3d 72 (3 rd Dept. 2012)” . The First Department’s reasoning is flawed and not based on the applicable, controlling law. POINT II. The First Department erred in holding that the power to issue a nunc pro tunc order directing consent to settlement pursuant to Workers’ Compensation Law Section 29(5) is vested in Workers’ Compensation Board. It is respectfully submitted, that the First Department incorrectly concluded that the appellant must seek consent to settlement from the Workers’ Compensation Board “since the Committee is the administrative agency governed by the Workers’ -30- Compensation Law and subject to the authority of the Workers’ Compensation Board because it…has already determined the injured claimant’s entitlement to certain payments and petitioner’s entitlement to reimbursement under Workers’ Compensation Law Section 15(8)(d), (see: Matter of Selective Insurance Company of Am. v. State of New York Workers’ Compensation Board, 102 A.D.3d 72 [3 rd Dept. 2012])” (R.vi – vii). 6 a. The New York State Workers’ Compensation Board does not have the authority to issue a nunc pro tunc order of consent to settlement: exclusive jurisdiction remains within the discretion of the trial court. The First Department’s reliance on the finding of Workers’ Compensation Law Section 15(8)(d) liability in the underlying Workers’ Compensation claim as a predicate for holding that the Workers’ Compensation Board retains the authority to determine consent to settlement in a third party action is misplaced as a matter of law. It is undisputed that the Workers’ Compensation Board found that the employee’s claim was subject to the provisions of Workers’ Compensation Law -31- 6The First Department concluded that the issue of nunc pro consent remains within the discretion of the Workers’ Compensation Board. In a letter dated October 9, 2015 to the Clerk of the Court of Appeals, respondent stated that the decision finding an application for nunc pro tunc consent is properly before the Workers’ Compensation Board rather than a trial court was based upon a mistake of fact. If that is so, then by virtue of respondent’s argument, the First Department mistakenly held that the Workers’ Compensation Board has jurisdiction over the issue of nunc pro tunc consent. Also, the crux of the decision focused on where the discretion lies i.e., with the Board or with the Court. Section 15(8)(b)( (R.24). It is further undisputed that the claimant commenced an action against a third party tort feasor for the same injuries underlying the Workers’ Compensation claim. The right to pursue a third party action is set forth in Workers’ Compensation Law Section 29(1). In pertinent part, Workers’ Compensation Law Section 29 entitled “Remedies of Employees; Subrogation”, provides that while the exclusive remedy of an employee who sustained an injury that arises out of and in the course of the employment is a claim against the employer for Workers’ Compensation, if the injury or death is caused by someone else, there is also a right to sue that third person for negligence of tort. If the injured employee does commence a third party action, the payor of Workers’ Compensation benefits, the employer, or its Workers’ Compensation carrier is entitled to a lien against the net recovery from the third party action for all sums (exclusive of those sums paid in lieu of first-party benefits) paid to the claimant under the Workers’ Compensation Law. In addition, the employer or its Workers’ Compensation carrier is also entitled to an offset against payment of future benefits. Thus, here, while payment of Workers’ Compensation benefits were directed by and under the auspices of the Workers’ Compensation Board, an employer or carrier’s right to reimbursement vests as a result of the third party -32- action in the civil court. Therefore, if the injured employee intends to settle or compromise the third party action for a sum less than the total compensation paid or payable, he/she must obtain the prior written consent of the employer or its Workers’ Compensation carrier or, in the alternative, obtain an order on notice from the Court approving the settlement. The failure to obtain either the insurance carrier’s consent or court approval of the settlement of the lawsuit arising out of the same incident as the employee’s Workers’ Compensation claim, will bar the employee from receiving further Workers’ Compensation benefits (Jackson v. City of New York, 70 A.D.3d 694, 896 N.Y.S.2d 361 [2 nd Dept. 2010]). Workers’ Compensation Law Section 29(5) is clear in its requirement that an employee must obtain the written approval of the employer or its Workers’ Compensation carrier prior to any settlement of a third party action unless the employee “obtains a Compromise Order from a Justice of the Court in which the third party action was pending” (Bernthon v. Utica Mutual Insurance Company, 297 A.D.2d 278, 710 N.Y.S.2d 332 [3 rd Dept. 2001]), see: Matter of Johnson v. Buffalo & Erie County Private Industry Council, 84 N.Y.2d 13, 19, 613 N.Y.S.2d 861, 636 N.E.2d 1394; Matter of Wright v. Golden Arrow Line, 206 A.D.2d 759, 760, 615 N.Y.S.2d 473, see also: Scannell v. Karlin, 252 A.D.2d 552, 553-554, 675 N.Y.S.2d 626, lv. den. -33- 93 N.Y.2d 805, 689 N.Y.S.2d 429, 711 N.E.2d 643). Although the Workers’ Compensation Board can require that the injured employee produce evidence of a nunc pro tunc order or the carrier’s consent to the third party action, the Board itself does not have the authority to issue a decision directing that the parties consent to settle (Rodriguez v. New Sans Souci, N.H., 98 A.D.3d 1205, 961 N.Y.S.2d 588 [3 rd Dept. 2012]). Indeed, the Workers’ Compensation Board has confirmed that it is without jurisdiction or authority to approve settlement of third party claims. In Matter of Wad Rentals, LTD, 2001 WL 10913, 2001 N.Y. Work. Comp. Bd. 0977 0341 (4/1/01) the Board explicitly stated “Workers’ Compensation Law Section 29 is clear in its statement that settlements of third party actions must first be approved, by written consent of the carrier, or by judicial approval of a Civil Court. There is no provision in the Workers’ Compensation Law giving Workers’ Compensation Law judges the authority or jurisdiction to approve settlement of third party claims”. Too, in Matter of Saks Incorporated, 2012 WL 4846825. Comp. Bd. 0052 1114 (10/10/12) a unanimous Board Panel stated: -34- The issue of the Special Fund’s consent is paramount to the carrier’s request for reimbursement. Where the liability of the Special Fund has been established prior to the settlement of a claimed personal injury action, the carrier waives its right to reimbursement by the Special Fund, if the Special Fund’s consent to settlement is not obtained (see: e.g. Matter of Catapano v. Jow, Inc., 91 A.D.3d 1018 [2012]; Matter of Brigotta Farmland, 2006 N.Y. Wrk. Comp. 80213739). Thus, because the carrier failed to obtain the Special Fund’s consent prior to providing its own consent to the claimant’s third party action, the carrier must produce a nunc pro tunc order to receive reimbursement from the Special Fund. (emphasis provided). Based on the foregoing, it is abundantly clear, that the First Department’s conclusion that the Workers’ Compensation Board has the authority to direct consent to settlement is without authority. Workers’ Compensation Law Section 29(5) clearly mandates that a consent order must be obtained by the trial court where the third party action was pending. As aforestated, the Workers’ Compensation Board has explicitly stated that it does not have authority to grant consent, and, that a Workers’ Compensation carrier which has failed to obtain The Fund’s consent after The Fund’s liability has been determined must seek a consent order from the trial court. -35- b. The First Department’s reliance on Matter of Selective Insurance Company of America v. State of New York Workers’ Compensation Board, 103 A.D.3d 72, 953 N.Y.S.2d 363 [3 rd Dept. 2012] is misplaced. By stating that the Workers’ Compensation Board has the authority to determine the appropriate relief, because it “…has already determined the injured claimant’s entitlement to certain payments and petitioners entitlement to reimbursement under Workers’ Compensation Law Section 15(8)(d)” (R.v – vii), the First Department mistakenly relied on Matter of Selective Insurance Company of America v. State of New York Workers’ Compensation Board, (ibid). That case involved whether Workers’ Compensation carriers who paid an assessment to the Workers’ Compensation Board, which assessment was allocated by the Board based upon the carrier’s proportionate share of the “total written premiums” that it was wrote in the preceding year, were entitled to a credit or refund of assessment made to the Board’s administrative and operational expenses. Matter of Selective Insurance Company of America, supra, is completely factually distinguishable from the matter at hand inasmuch as it involves the credit/refund amendment which changed the methodology for computing assessments and surcharges, and which is essentially an accounting mechanism. More importantly, the amendment was -36- codified in Workers’ Compensation Law Section 15(8)(h)(4) which authorized, but did not compel, the Board to issue credit/refunds “in the case of overpayments made to the Fund”. The Board, under the authority of the Workers’ Compensation Law, found that the surcharges collected from policyholders did not constitute “overpayment” within the meaning of the amendment and the courts affirmed. That case, in part, speaks only to the statutory authority retained by the Board to issue a credit or refund of its assessment paid to the Board based on the carrier’s proportionate share of total “standard premiums” (L. 2009 Ch. 56, Section 1, Part QQ, Section 1, 2 amending WCL Section 15(8)(h) [Special Disability Fund} and 151[2][b] “Board expenses”). The case involved Board expenses only and has absolutely no relevance to the issue of consent to settlement and the obligations and remedies under Workers’ Compensation Law Section 29(5). As such, the First Department’s reliance thereon is unavailing. c. Catapano v. Jow, 73 A.D.3d 1361, 902 NY.S.2d 684[3rd Dept. 2012] is silent on the issue of consent to settlement nunc pro tunc and is therefore not controlling. While the Third Department in Catapano v. Jow, supra, confirmed that where The Fund is liable for reimbursement pursuant to Workers’ Compensation Law Section -37- 15(8)(d), consent by the Workers’ Compensation carrier must be obtained, neither the Third Department, the legislature, nor the Workers’ Compensation Board discussed the issue of judicial consent nunc pro tunc. Nor, did the court in Catapano indicate where it believes such authority rested. Clearly, in reading the decision in Catapano v. Jow, supra, and the administrative decisions by the Workers’ Compensation Board upon which it refers and relies, the authority mandating the prior consent of The Fund is based on the clear language of Workers’ Compensation Law Section 29(5). The Third Department in Catapano v. Jow, supra, in reversing a Workers’ Compensation Board Panel’s Decision, did not elucidate a bright line rule or set forth any reasoning underlying its decision. While the Catapano decision does state that where The Fund is liable for reimbursement, consent by the Workers’ Compensation carrier must be obtained, it merely referred to previous Workers’ Compensation Board Panel Decisions which held that a compensation carrier waived its right to reimbursement if it did not retain prior consent to settlement. In Matter of Florence Corp, 2014 WL 672247, 2014 N.Y. Work. Comp. Bd. 2040 6132 (November 20, 2014) and even more recently, in Matter of Hospital League District 1199, 2015 WL 3395954, 2015 N.Y. Wrk. Comp. Bd. 0002 5544 (May 20, 2015), the Board has repeatedly held -38- that when a carrier has a previously determined right to obtain reimbursement from another party for its obligation to pay compensation to a claimant, it has an obligation to obtain approval of the other party before consent to a claimant’s third party settlement under Workers’ Compensation Law Section 29(5), and, if it fails to do so, waives its right to such reimbursement. The same equitable considerations are applicable, the Board has stated, where the carrier’s right to reimbursement from the other party is based upon a finding of Workers’ Compensation Law Section 15(8) liability. Compare: Matter of Wheeler v. Bloomingdales, 93 A.D.3d 903, 940 N.Y.S.2d 186 [3 rd Dept. 2012] the liability of The Fund for Workers’ Compensation Law Section 15(8) liability had not been established at the time the employee settled his third party action. Therefore, the Board found that the consent of The Fund was not required and the Appellate Division affirmed. The Court in Wheeler, supra, stated in pertinent part “the Board has previously determined that, where the liability of the Fund has been established prior to the settlement of the claimant’s personal injury action, the carrier waives its right to reimbursement by the Fund if the Fund’s consent to settlement is not obtained (citation omitted)”. Indeed, Workers’ Compensation Law Section 29(5) requires the consent of the Fund to a settlement “if a deficiency of compensation would be payable from” the Fund. -39- d. Workers’ Compensation Law Section 29 (5) must be construed as a whole and in accordance with its legislative intent. The legislative intent of Workers’ Compensation Law Section 29(5) is equitable and remedial in nature, and was enacted in part, for the purpose of preventing double recovery. The statute sets forth the right and obligations of the parties to a Workers’ Compensation claim and a resulting third party action premised upon the same injuries. While Workers’ Compensation Law Section 29(5) refers specifically to the requirement that an injured employee must obtain the carrier’s prior written consent, nowhere does the statute refer to the carrier’s purported obligation to obtain the Fund’s consent. Rather, the Board and the courts have consistently interpreted the statute and construed its meaning to impute this requirement to the carrier in order to obtain reimbursement from the Fund. Appellant respectfully submits that if the obligations explicitly imposed on an injured employee is imputed to a carrier, then, the remedy afforded an injured employee to seek nunc pro tunc consent as set forth in Workers’ Compensation Law Section 29(5), shall likewise be afforded to the carrier. -40- “It is a well settled principle of statutory construction that a statute or ordinance must be construed as a whole and that its various sections must be considered together and with reference to each other”. )People v. Mobile Oil Corp, 48 N.Y.2d 192, 199, 422 N.Y.S.2d 33, 397 N.E.2d 724 [1979]) (see McKinney’s Cons. Laws of New York, Book 1, Statutes Sections 97, 98, 130). The Court there stated that one section of the statute could not be considered apart from another section to effectuate the purpose of the statute. This reasoning was employed by the Workers’ Compensation Board in Matter of Brigotta Farmland, 2006 WL 1064007, 2006 N.Y. Work. Comp. Bd. 8021 3739 (April 18, 2006). That case concerned Workers’ Compensation Law Section 14(6) reimbursement. The Fund claimed that because it had previously reimbursed the carrier for a portion of its payments to the claimant, it had a lien pursuant to Workers’ Compensation Law Section 29(1), and its consent to settle a third party action was required. The Board noted that although the carrier was liable for direct payment to the claimant, the Fund’s reimbursement to the carrier arising from its statutory obligation is to reimburse the carrier for a portion of the claimant’s award based upon the claimant’s concurrent earnings was sufficient to create a statutory lien in favor of the Fund as well. Therefore, the Board Panel found that both the carrier and the Fund were liable for payment of compensation. -41- The Board Panel in Matter of Brigotta Farmland, supra continued: “Accordingly, the Board Panel refers to Workers’ Compensation Law Section 29(5) which provides in pertinent part ‘in case of payment of an award…such payment will operate to give the employer or insurance carrier liable for the award, a cause of action for the amount of said payment…a compromise of any such cause of action by the employee or its dependents at that amount, less than the compensation provided for by this Chapter, that be made only…with the written approval of the commissioners of the State Insurance Fund..and otherwise with the written approval of a person, association, corporation or insurance carrier liable to pay the same”. The Board Panel noted that this portion of the statute generally “requires either...consent or a compromise order from the Court from which the third party action is pending for claimant to settle a third party action and can continue receiving Workers’ Compensation benefits”. (Citation omitted). Likewise, in Matter of Saks, Inc., 2012 WL 4846825, 2012 N.Y. Wrk. Comp. Bd. 0052 1114 (Oct. 10, 2012) the Board Panel noted that the issue of The Fund’s consent is paramount to a carrier’s request for reimbursement. There, the liability -42- of The Fund had been established prior to the settlement of the claimant’s personal injury action, and, because the carrier failed to obtain The Fund’s consent prior to providing its own consent to the claimant’s third party action, the carrier must produce a nunc pro tunc order to receive reimbursement from The Fund. Where different provisions of the same section of the statute are intended to carry out the same purposes in different circumstances, they must be read together, and each must be given a construction that will effectuate the legislative intent and every provision of the statute should be given effect where possible (Curtin v. City of New York, 287 N.Y. 238, 39 N.E.2d 903 [1942], Cole v. Saranac Lake General Hospital, 282 A.D. 66, 125 N.Y.S.2d 891 [3 rd Dept. 1953]). Accordingly, the entirety of Workers’ Compensation Law Section 29(5) must be read as a whole and every provision of the section should be given the same effect. By doing so, the equitable and remedial purpose of the statute will be met. It is respectfully submitted that if Workers’ Compensation Law Section 29(5) permits a claimant to seek nunc pro tunc consent in the trial court, a carrier which is likewise obligated to obtain consent should also be permitted to seek consent in the court where the third party action is pending. -43- Point III. The Decision Articulated By The Second Department In Matter Of Empire State Workers’ Compensation Trust V. Special Funds Conservation Committee, 125 A.D.3d 967, 5 N.Y.S.3d 193 (2 nd Dept. 2015) Should Be Recognized And Applied By This Court. In Empire State Workers’ Compensation Trust v. Special Funds Conservation Committee, supra, the Second Department’s decision issued February 25, 2015, just one day after the First Department’s Decision in this matter, the Court reversed a decision of a Supreme Court, Nassau County (Woodard, J.), which denied the carrier’s petition to compel The Fund’s consent to settlement of a claimant’s personal injury action nunc pro tunc. The facts of that case are analogous to the facts herein. There, too, the employee sustained injuries during the course of his employment, and his claim for Workers’ Compensation benefits was approved on a determination that he did sustain a permanent partial disability. Liability under Workers’ Compensation Law Section 15(8)(d) was established by the Board. Thereafter, the employee commenced a personal injury action against the third party tort feasor which resulted in a settlement with the Workers’ Compensation carrier’s consent. However, neither the employee nor the carrier obtained the -44- consent of the Fund which had previously been directed by the Board to reimburse the carrier pursuant to Workers’ Compensation Law Section 15(8). The carrier’s request for retroactive consent to settlement was denied by The Fund on the grounds that the carrier’s failure to timely obtain consent forfeited its right to reimbursement from the Fund under Workers’ Compensation Law Section 15(8). The carrier in Empire State Workers’ Compensation Trust v. The Special Funds Conservation Committee, supra, commenced a proceeding in the Supreme Court, Nassau County, seeking to compel The Fund to consent to settlement nunc pro tunc pursuant to Workers’ Compensation Law Section 29(5). The crux of the carrier’s argument was that since the Third Department in Catapano v. Jow, Inc., supra, confirmed that the consent of the Fund should be sought by an employer or its carrier if there is a right to reimbursement from the Special Disability Fund, then Workers’ Compensation Law Section 29(5) likewise confers the right upon the carrier to seek nunc pro tunc consent. Inasmuch as that requirement was found to flow from Workers’ Compensation Law Section 29(5), in keeping with the statutes legislative intent and proper construction, the carrier argued that since the Board had affirmatively placed, and the Appellate Division had confirmed the -45- obligation by a carrier to obtain the prior consent of the Fund stems from the requirements set forth in Workers’ Compensation Law Section 29(5), then equity likewise required that the remedy provided to a claimant, i.e. a proceeding for nunc pro tunc in the Court should also apply. To impute extra meaning to one portion of the statute, i.e., that the consent requirement applies as and between a carrier and The Fund, then to stop short from permitting the carrier to apply to the trial court for relief would be unjust and inequitable. Furthermore, this would result in unjust enrichment to The Fund, clearly contrary to the intent of the statute. Lastly, the carrier argued that in the absence of a judicial remedy for consent to settlement nunc pro tunc, The Fund could decline to provide consent to the carrier even prior to settlement with the knowledge that by doing so, the carrier would essentially be forced to forfeit reimbursement pursuant to Workers’ Compensation Law Section 15(8)(d) because it would have no further recourse. This would result in a windfall to the Fund and undue prejudice to the carrier. This is inapposite of the purpose of Workers’ Compensation Law Section 29. The Supreme Court in Empire State Transportation Workers’ Compensation Trust, supra, denied the carrier’s petition concluding that it lacked discretion to judicially compel such consent. The Second Department reversed and held: -46- “The Workers’ Compensation Board has previously determined that where, as here, a carrier failed to timely obtain consent of the Special Funds Conservation Committee to settlement of a personal injury action , the carrier may still obtain reimbursement from the Special Disability Fund, but only if it obtains a nunc pro tunc order from a court directing the Special Funds Conservation Committee to consent (see Matter of Saks, Inc., 2012 WL 4846825 *1, 2012 N.Y. Work. Comp. Lexis 11851 *3 [WCB Case No. 0052 1114]; see also: Matter of Eden II, 2008 WL 2221709 *2, 2008 N.Y. Work. Comp. 164785 *4, [WCB Case No. 0954 3622]; C.F. Matter of MABSTOA, 2003 WL 134665, *2, 2003 N.Y. Work. Comp. Lexis 77783 *4 [WCB Case No. 0927 5173]). A request to compel nunc pro tunc consent to a settlement is directed to the discretion of the Supreme Court (see Matter of Gilson v. National Union Fire Insurance Company, 246 A.D.2d 897, 898, 668 N.Y.S.2d 287)”. The Second Department concluded: “Here, because the Supreme Court erroneously believed that it had no power to issue a nunc pro tunc order directing the Special Funds Conservation Committee to consent to settlement, it did not exercise its discretion. Accordingly, we remit the matter to the Supreme Court, Nassau County, for the court to determine, in its discretion whether to issue an order, nunc pro tunc, directing the Special Funds Conservation Committee to consent to settlement of the personal injury action”. -47- It is respectfully submitted that the Second Department correctly held that it is the trial court that has the discretion to issue an order, nunc pro tunc directing the Fund to consent to settlement of a personal injury action where the Fund’s liability has previously been determined. Such holding is in keeping with the legislative intent and plain meaning of the statute. Although the Board has the authority to direct the parties to obtain an order from the courts for nunc pro tunc consent, and in the failure to do so, to foreclose the payment of future Workers’ Compensation benefits, the Board itself does not have authority to issue consent. Importantly, the First Department has failed to cite any authority which would authorize the Board to do so. CONCLUSION For the foregoing reasons, appellant respectfully submits that the decision of the Appellate Division, First Department be reversed, and that this Court find in accordance with the Second Department’s decision in Empire State Workers’ Compensation Trust v. Special Funds Conservation Committee, supra, that an order to directing consent to settlement nunc pro tunc as and between a Workers’ -48- Compensation carrier and the Special Funds Conservation Committee is within the sound discretion of the trial court where the third party action was pending. Dated: Syosset, New York November 19, 2015 Yours, etc. STEWART, GREENBLATT, MANNING & BAEZ Attorneys for the Petitioner/Appellant Ace Fire Underwriters Insurance Company c/o Sedgwick CMS 6800 Jericho Turnpike, Suite 100W Syosset, New York 11791 Tel: 516-433-6677 Fax: 516-433-4342 Email: Llevine@sgmblaw.com By:________________________________ LISA LEVINE Cc: Special Funds Conservation Committee Respondent Two Tower Place Albany, New York 12203 Attn: Jill B Singer Tel; 518-438-3585 jsinger@specialfunds.org Rosado, Chechanover, Bayrasli & Dudley, LLP Attorneys at Law 31-00 47 th Avenue 2 nd Floor Long Island City, New York 11101 -49- s/ Lisa Levine