Workers’ Compensation – Settlement of a Personal Injury Case (1998)

Although an injured worker cannot sue his or her employer for a work-related injury, a lawsuit can be filed against a “third party” who was responsible for the accident. A “third-party lawsuit” cannot be settled without written consent from the workers’ compensation insurance company. The insurer also usually has a “lien” against the worker’s lawsuit, and is entitled to recover some of what it paid in workers’ compensation and medical bills.

Where the injury is the result of a motor vehicle accident, the insurer still has the right to approve any settlement of a third-party lawsuit, but it does not have a lien if its payments are the same as the benefits that would have been paid under New York’s “No-Fault Law” for a car accident.

Our client was represented by another attorney, who settled her third-party lawsuit without the insurer’s (in this case, the City of New York’s) consent. The City argued that she had forfeited all further workers’ compensation benefits – even the benefits that were equal to No-Fault benefits, against which the City had no lien. The Workers’ Compensation Board agreed with the City, and we appealed.

The Appellate Division, Third Department found that the Board’s decision was inconsistent with its decisions in other similar cases. It reversed the Board, and returned the case to it for a new decision.

Read the Waters decision here.