Matter of Drewes v. Steel (2003)

Our plain-English summary of Matter of Drewes v. Steel (New York Supreme Court, Appellate Division, May 8, 2003).

Patricia Drewes's husband died of mesothelioma caused by workplace asbestos exposure, and a workers' compensation claim was established. His last employer, Guterl Steel, was primarily liable for benefits through its carrier, the State Insurance Fund (SIF). In 1995 the Workers' Compensation Board directed Lumbermens Insurance Company, the carrier for an earlier employer, to pay 21.6% of the benefits. Starting in 1997, Drewes settled wrongful death claims against several third parties, with the SIF's consent but without asking Lumbermens. Lumbermens objected. The Board held that both carriers had liens on the settlement proceeds under Workers' Compensation Law § 29, that Lumbermens' consent was required, and that the SIF forfeited further reimbursement from Lumbermens by not getting it. The SIF and Guterl appealed. The Appellate Division affirmed. It held that Lumbermens was liable for part of the compensation, so it had a lien and its written approval was needed. It found the Board's decision to put the duty to obtain consent on the SIF rational and consistent with prior decisions.

We wrote this summary from the court's opinion with the help of AI. It is not the court's wording, and it is not legal advice. The full opinion is below.

The decision

• Court: New York Supreme Court, Appellate Division, 3rd Dept.
• Decided: May 8, 2003
• Citation: 305 A.D.2d 769
• Stage: Appeal from workers' compensation or benefits
• State: New York

Outcome. The Appellate Division affirmed the Workers' Compensation Board's decision that Lumbermens had an enforceable lien and that the State Insurance Fund forfeited further reimbursement from Lumbermens by not obtaining its consent to the third-party settlements.

What the court held. A carrier ordered to contribute a share of compensation benefits is liable for compensation and so holds a lien under Workers' Compensation Law § 29(1) on third-party settlement proceeds, and its written consent to the settlements is required. The Board could rationally put the duty to obtain consent on the State Insurance Fund.

Issues decided: Fault, Apportionment and Settlement Credits, Wrongful Death and Survival, Employer and Contractor Liability, and Workers' Compensation, Settlements and Releases.

The people and their exposure

• Claimant's husband (decedent, husband of Patricia Drewes): mesothelioma; died

The defendants

• Guterl Steel (employer)
• State Insurance Fund (insurer)
• Lumbermens Insurance Company (insurer)

Amounts in the opinion

• $341,749.06 (settlement)

The court's opinion

The text below is Google Scholar's copy of the court's opinion, a public record. Numbers in brackets, such as [*921], mark where each page of the printed reporter begins.

305 A.D.2d 769 (2003)

761 N.Y.S.2d 106

In the Matter of the Claim of PATRICIA DREWES, Respondent,

v.

GUTERL STEEL et al., Appellants, and

LUMBERMENS INSURANCE COMPANY, Respondent.

WORKERS' COMPENSATION BOARD, Respondent.

Decided May 8, 2003.

Appellate Division of the Supreme Court of the State of New York, Third Department.

[*771] Crew III, J.P., Peters, Spain and Kane, JJ., concur.

Lahtinen, J.

Claimant's husband died of mesothelioma, an occupational disease caused by decedent's workplace exposure to asbestos. A workers' compensation claim was established and Guterl Steel, decedent's last employer, was directly and primarily liable for the payment of workers' compensation benefits. After the compensation case was established, the State Insurance Fund (hereinafter SIF), Guterl's workers' compensation carrier, appealed to the Workers' Compensation Board for apportionment from Lumbermens Insurance Company, the carrier for a previous employer of decedent, and in 1995 Lumbermens was directed to contribute 21.6% of all compensation benefits paid to claimant (see Workers' Compensation Law § 44). In 1997, claimant began settling third-party wrongful death claims arising from decedent's workplace exposure to asbestos against numerous defendants. Pursuant to Workers' Compensation Law § 29, claimant negotiated with and obtained the consent of the SIF to settle with several of the defendants. The SIF, without the knowledge and consent of Lumbermens, agreed to continue to pay a death benefit to claimant in return for payments from the settlement amount which would satisfy liens for medical benefits ($18,170.74) and death benefits ($40,678.24).[*] In December 2000, a Workers' Compensation Law Judge (hereinafter WCLJ) issued a decision acknowledging the third-party settlement and noted that the net recovery of $341,749.06 received by claimant would suspend weekly compensation benefits of $234.03 until November 15, 2028. Claimant's compensation attorney immediately wrote to the Board in an effort to correct the decision to reflect the consent of the SIF to the third-party settlements and its agreement to continue uninterrupted compensation benefits to claimant. Upon receipt of this correspondence, Lumbermens immediately [*770] objected to the third-party settlements on the ground that it was neither consulted nor did it consent to the settlements and was prejudiced thereby. At a subsequent hearing, the WCLJ decided the case without considering Lumbermens' objection but, on appeal, the Board held that both the SIF and Lumbermens had enforceable liens under Workers' Compensation Law § 29 (1) since each was liable for payment of compensation benefits. The Board further held that the SIF's failure to obtain Lumbermens' consent to the settlement resulted in a forfeiture of its right to further reimbursement from Lumbermens. The SIF and Guterl (hereinafter collectively referred to as SIF) appeal.

The main issue before us is whether the Board correctly decided that Lumbermens, liable to the SIF for 21.6% of all compensation payments pursuant to Workers' Compensation Law § 44, has an enforceable lien under Workers' Compensation Law § 29 requiring its consent to the third-party settlements. We agree with the Board's interpretation of the applicable statutory provisions and affirm. Workers' Compensation Law § 29 (1) provides in relevant part that any entity liable for the payment of compensation benefits shall have a lien on the net proceeds of any third-party recovery. Lumbermens was liable for the payment of 21.6% of claimant's compensation award after the SIF's successful application to the Board for apportionment and, therefore, it was entitled to a lien on the net proceeds of the third-party settlements, and its written approval to these settlements was required (see Workers' Compensation Law § 29 [5]).

In the alternative, the SIF argues that if Lumbermens' consent to the third-party settlements was required, it was claimant's duty to obtain such consent and, by failing to do so, she forfeited her right to 21.6% of the future compensation benefits that the SIF agreed to continue to pay. We disagree. We find that the Board's decision placing the responsibility upon the SIF to obtain Lumbermens' consent and forfeiting the SIF's right to contribution from Lumbermens for failing to do so (see Workers' Compensation Law § 29 [5]; Matter of Johnson v Buffalo & Erie County Private Indus. Council, 84 NY2d 13, 19 [1994];

Matter of Stiffen v CNA Ins. Cos., 282 AD2d 991, 992 [2001], lv denied 97 NY2d 612 [2002]; Matter of Bernthon v Utica Mut. Ins. Co., 279 AD2d 728, 728 [2001]) to be rational, reasonable and consistent with its prior decisions (see Matter of Mace v Owl Wire & Cable Co., 284 AD2d 672, 674 [2001]; Matter of State Farm Mut. Auto Ins. Co. v Levin, 263 AD2d 233, 237 [2000], lv denied 95 NY2d 754 [2000]; see also Kaplan v Upjohn Healthcare Serv., 1990 WL 202787 [1990]). Ordered that the decision is affirmed, without costs.

[*] Lumbermens received no part of the payment made by claimant to satisfy the liens for medical and death benefits notwithstanding their 21.6% contribution to the compensation payments. Lumbermens' recoupment of its contribution to the SIF from these payments was deferred by the Board "to the court of competent jurisdiction pursuant to [Workers' Compensation Law] § 29 (1)."

Sources

• The opinion on Google Scholar
• New York asbestos laws
• New York asbestos exposure sites