New York State Court of Appeals
Third-Party Action — Settlement Credit
Beth V. v. New York State Office of Children & Family Services, et al.
Background: On appeal, the Court of Appeals was asked whether a workers’ compensation carrier can take a credit under Section 29 (4) of the Workers’ Compensation Law against the settlement proceeds of a civil rights lawsuit brought by a recipient of workers’ compensation benefits against her employer and co-employees for injuries arising from the same incident. The claimant was choked and raped by a resident at a secure juvenile detention facility. She was classified with a permanent disability by a workers’ compensation judge. She commenced a separate action, alleging hostile work environment and negligent investigation following her complaints about the resident prior to the attack.
Ruling: The Court of Appeals held that, under the terms of the settlement agreement, the carrier is entitled to offset the full amount of the settlement proceeds. The insurance carrier waived its right to a lien on the settlement proceeds, but reserved its right to take a credit against future benefits in the amount of her net recovery. The intent of Section 29 was to provide a reimbursement of the compensation carrier whenever a recovery is obtained in tort for the same injury that was a predicate for the payment of compensation benefits.
James E. Buckley for the appellant; Thomas A. Phillips for the respondent NYS Office of Children & Family Services; Jill B. Singer for the respondent Special Funds Conservation Committee