| Matter of Bissell v Town of Amherst |
| 2010 NY Slip Op 09650 [79 AD3d 1638] |
| December 30, 2010 |
| Appellate Division, Fourth Department |
| In the Matter of Peter E. Bissell, Respondent, v Town ofAmherst et al., Respondents, and New York State Insurance Fund,Appellant. |
—[*1] Maxwell Murphy, LLC, Buffalo (Alan D. Voos of counsel), forpetitioner-respondent.
Appeal from a judgment of the Supreme Court, Erie County (Paula L. Feroleto, J.), enteredNovember 4, 2009. The judgment granted the application of petitioner to extinguish the lien ofrespondent New York State Insurance Fund.
It is hereby ordered that the judgment so appealed from is unanimously modified on the lawby denying those parts of the petition seeking to extinguish a lien asserted by respondent NewYork State Insurance Fund against the proceeds that petitioner obtained in a third-party actionand seeking to recover from that respondent its share of litigation costs related to future medicalpayments and as modified the judgment is affirmed without costs, and the matter is remitted toSupreme Court, Erie County, for further proceedings in accordance with the followingmemorandum: Petitioner sustained grave injuries while employed by respondent McGonigle &Hilger Roofing Company and working on property owned by respondent Town of Amherst(Town). Although petitioner began receiving workers' compensation benefits, he commenced anaction against his employer and the Town seeking damages for his injuries. On a prior appeal inthat action, we modified the judgment in favor of petitioner and his wife (hereafter, plaintiffs) by,inter alia, setting aside the award of damages for past and future pain and suffering and granting anew trial on those elements of damages unless plaintiffs stipulated to reduced awards (Bissell v Town of Amherst, 56 AD3d1144 [2008], lv dismissed in part and denied in part 12 NY3d 878 [2009]).
After an amended judgment was entered for $23,400,000, respondent New York StateInsurance Fund (NYSIF) asserted a lien against the proceeds of the judgment in the amount of$219,760.34 for past payments of compensation and medical benefits. NYSIF recognized that itwas obligated to contribute toward the litigation costs incurred by petitioner "in effecting thethird-party recovery based both on the lien to be recovered and on the present value of futureworkers' compensation [benefits] being saved as a result of its credit right." Using the equitableapportionment percentage (EAP) of 33.5%, which represents the percentage that litigation costsbore to the third-party recovery, NYSIF calculated that its share of litigation costs was$171,840.37, and thus it sought to recover the difference of $47,919.97 from petitioner. NYSIF[*2]also recognized that it was required to contribute towardlitigation costs to the extent that it received a benefit from forgone future medical payments, butit refused to include the present value of those payments in calculating its share of litigationcosts. According to NYSIF, the present value of those future payments was "purely speculative"pursuant to Burns v Varriale (9NY3d 207 [2007]). Rather, NYSIF proposed reimbursing petitioner "for any payment ofcompensable medical treatment that [he] makes from his own funds" based on the EAP of33.5%.
Petitioner rejected that proposal and commenced this proceeding seeking to extinguish theNYSIF lien and to obtain a judgment against NYSIF in the amount of $1,399,734.80 for its shareof petitioner's litigation costs. We conclude that Supreme Court erred in granting the petition inits entirety inasmuch as the benefit received by NYSIF based on forgone future medicalpayments should not be included in calculating its share of litigation costs.
Pursuant to Workers' Compensation Law § 29 (1), an employee who is injured "by thenegligence . . . of another not in the same employ" may collect workers'compensation benefits and may also pursue his or her "remedy" against the negligent party. If theemployee elects to commence an action against the negligent party, the insurance fund or othercarrier liable for the workers' compensation benefits "shall have a lien on the proceeds of anyrecovery . . . 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 ofcompensation awarded under or provided or estimated by [the Workers' Compensation Law] forsuch case and the expenses for medical treatment paid or to be paid by it and to such extent suchrecovery shall be deemed for the benefit of such fund . . . or [other] carrier"(id.). The employee may thereafter apply "for an order apportioning the reasonable andnecessary expenditures, including attorney's fees, incurred in effecting such recovery"(id.). It is well established that the apportionment is calculated "according to the relativebenefit derived by each party from the recovery . . . The carrier's equitable share ofthe litigation costs [is] a pro rata share of the total amount of the recovery inuring to the benefitof the carrier" (Matter of Kelly v State Ins. Fund, 60 NY2d 131, 136 [1983]). Thepurpose of such apportionment is "to stem the inequity to the [employee], arising when a carrierbenefits from [the] employee's recovery while assuming none of the costs incurred in obtainingthe recovery" (id. at 138). The benefit to the fund or carrier includes the pastcompensation paid, as well as "the value of estimated future compensation payments that, but forthe employee's efforts, the carrier would have been obligated to make" (id.).
NYSIF concedes that its share of litigation costs must be based on the benefit resulting frompast and future compensation benefits, as well as past medical benefits, but it contends that thevalue of forgone future medical payments should not be considered in calculating its share oflitigation costs unless and until those payments are made. We agree. Petitioner correctly contendsthat the jury's award for future medical expenses cannot be deemed speculative inasmuch as wehave already determined that the award was supported by the evidence (Bissell, 56 AD3dat 1148; see generally Ellis vEmerson, 57 AD3d 1435, 1437 [2008]; Faas v State of New York, 249 AD2d731, 732 [1998]). That award, however, did not take into account the established rates ofcompensation for medical payments set by the Workers' Compensation Law (see §13 [a]; 11 NYCRR part 68), and the only benefit received by NYSIF is the amount of forgonemedical payments that would have been made under those rates. We thus conclude that thebenefit received by NYSIF for forgone future medical payments has not been established and thatany determination of NYSIF's share of litigation costs with respect to those payments would bespeculative (see Burns, 9 NY3d at 215; Matter of McKee v Sithe IndependencePower Partners, 281 AD2d 891 [2001]; Matter of Briggs v Kansas City Fire & Mar. Ins.Co., 121 AD2d 810, 811-812 [1986]). We therefore modify the judgment by denying thoseparts of the petition seeking to extinguish NYSIF's lien and seeking to recover from NYSIF itsshare of litigation costs insofar as the benefit received by NYSIF with respect to forgone futuremedical payments is included in the [*3]calculation of its share oflitigation costs, and we remit the matter to Supreme Court for recalculation of NYSIF's share oflitigation costs. Present—Martoche, J.P., Centra, Carni, Lindley and Pine, JJ.