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Workers’ Compensation – Lien on Personal Injury Action (2017)

A worker who is injured in the course of the employment because of the negligence of a third party – someone other than the employer or a co-worker – may file a workers’ compensation claim and also sue the third party. When the lawsuit – called a third-party action – settles, the workers’ compensation insurer has a lien against the recovery for the benefits it has paid. However, the lien is reduced by the insurer’s fair share of the injured worker’s litigation expenses – the personal injury attorney’s fee and disbursements. The insurer also generally has a credit for the worker’s net recovery, but that credit is also subject to reduction if the injured worker’s personal injury attorney reserves his or her “Burns rights.”

We represented our client in both his workers’ compensation and personal injury cases. When then personal injury case settled, we made sure that our client’s “Burns rights” were preserved. When the workers’ compensation case was settled later with an award for schedule loss of use (for permanent injury to a limb), the insurance company took the position that Burns rights did not apply to that type of case, and that it was entitled to a full credit for our client’s personal injury recovery without paying any portion of the third-party litigation expenses.

The WCL Judge, Workers’ Compensation Board, and Appellate Division, Third Department all agreed with the insurance company’s position. We asked the Court of Appeals, New York’s highest court, for permission to appeal, which was granted.

The Court of Appeals unanimously agreed with our position, holding that an injured worker is entitled to “Burns payments” from the workers’ compensation insurer for any type of workers’ compensation award that is entered after the third-party settlement, including schedule loss awards. This important decision clarified the law and made certain that injured workers receive the full benefit of their personal injury and workers’ compensation cases.

Read the Terranova decision here

Watch a video of the argument here Terranova

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