Ryan v. General Electric Co., 26 N.Y.2d 6 (1970)

A workers’ compensation insurance carrier has a lien on payments made to dependents by the United States Government under the Military Claims Act for death caused by noncombat activities of the armed forces, to the extent of the compensation awarded.

Summary

This case addresses whether a workers’ compensation insurance carrier has a lien on settlement payments received by a widow under the Military Claims Act for the death of her husband. The husband, an airplane pilot, was killed when his plane was struck by a Navy jet. The widow received workers’ compensation benefits and later a settlement under the Military Claims Act. The court held that the carrier had a lien on the Military Claims Act payments. The court reasoned that these payments were a substitute for a tort recovery, even without a showing of negligence, and should be subject to the lien under Section 29 of the Workers’ Compensation Law to reimburse the carrier.

Facts

The claimant’s husband, an airplane pilot employed by General Electric, was killed when his airplane was struck by a Navy jet towing a practice target. The Navy jet had reported difficulty reeling in its target and was in a steep dive at the time of the collision. There were no survivors. The claimant, as the surviving widow, received workers’ compensation death benefits. Subsequently, she negotiated a settlement with the Department of the Navy under the Military Claims Act and received $5,000, followed by an additional $120,000 award by special act of Congress.

Procedural History

The Workmen’s Compensation Board reversed the referee and held that the settlement and award were a “recovery” covered by Section 29 of the Workmen’s Compensation Law. The Appellate Division affirmed the Board’s decision by a divided court. The claimant widow appealed to the New York Court of Appeals.

Issue(s)

Whether payments received from the United States Government under the Military Claims Act constitute a “recovery” for “negligence or wrong” that is subject to a lien under Section 29 of the Workers’ Compensation Law, or whether such payments are a gratuity.

Holding

Yes, the payments were in the nature of a recovery for negligence or wrong, even though not necessarily in settlement of a judicially cognizable cause of action, because the Military Claims Act serves as a substitute for a tort recovery and Section 29 should be broadly read to cover a Federally authorized substitute for any possible tort recovery.

Court’s Reasoning

The court reasoned that the Military Claims Act provides for administrative settlements for injuries or death arising from “noncombat” activities of the armed services. These activities, such as operating aircraft, often involve inherently dangerous activities that, if conducted by private persons, would likely result in liability even without proof of negligence. While awards under the Military Claims Act are not explicitly conditioned on a showing of negligence, claimants must be free of contributory negligence.

The court emphasized that the Military Claims Act serves as a substitute for a tort recovery, even if it’s unclear whether a claimant would have an action at law under common-law principles. The requirement that the claimant accept the amount tendered in “full satisfaction” suggests that the payment isn’t a mere gratuity but is connected to possible liability.

The court referenced Matter of Petterson v. Daystrom Corp. (17 Y 2d 32, 39), stating that Section 29 is designed “to provide for 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.” The court concluded that this legislative design is best effected by allowing reimbursement where the recovery, although perhaps not a traditional tort, is based on some kind of wrong resulting from hazardous activities. Thus, the order of the Appellate Division was affirmed.