6 N.Y.3d 273 (2006)
When a self-insured employer or workers’ compensation carrier consents to the settlement of a third-party action, it must expressly and unambiguously reserve its right to offset future compensation benefits, regardless of whether there is an existing lien against the claimant’s recovery.
Summary
Alan Brisson, an Onondaga County employee, was injured in a work-related accident and received workers’ compensation benefits. He also filed a third-party action which he settled for $50,000 with the County’s consent. However, the County then sought to offset Brisson’s future compensation benefits by the net proceeds of the settlement. Brisson challenged this, arguing the County had not properly reserved its right to the offset. The New York Court of Appeals held that the County had failed to explicitly reserve its right to offset Brisson’s future workers’ compensation benefits when it consented to the third-party settlement, and therefore, waived its offset rights. This decision clarifies that explicit reservation is required regardless of the presence of a lien.
Facts
Brisson, an employee of Onondaga County, sustained a compensable back injury in a motor vehicle accident during the course of his employment on November 4, 1998.
He received workers’ compensation benefits and also pursued a third-party claim against the driver and owner of the van.
Brisson requested Onondaga County’s consent to settle the third-party action for $50,000.
On August 17, 2001, RMSCO, the County’s third-party administrator, gave consent to the settlement but requested information regarding the net proceeds. Brisson’s attorney informed RMSCO that he believed the County had neither a lien nor a right to a payment holiday; RMSCO replied that this was “not entirely correct.”
The third-party action was settled for $50,000 on September 24, 2001, and Brisson netted $32,958.73 after costs and fees.
The County then notified Brisson that his benefits would be suspended to offset the net settlement proceeds.
Procedural History
Brisson challenged the suspension of his workers’ compensation benefits before a Workers’ Compensation Law Judge (WCLJ).
The WCLJ ruled that the County was not entitled to offset Brisson’s benefits because it had not specifically reserved its right to claim credit for the settlement, relying on Matter of Hilton v Truss Sys.
The Workers’ Compensation Board affirmed the WCLJ’s decision, finding that the County failed to unambiguously preserve its offset rights.
The Appellate Division affirmed the Board’s decision, holding that whether the employer adequately preserved its right to a future offset is a factual issue for the Board, and substantial evidence supported the Board’s decision.
The County appealed to the New York Court of Appeals.
Issue(s)
1. Whether a self-insured employer or workers’ compensation carrier must expressly and unambiguously preserve its right to any offset when consenting to settlement of a third-party action, even if there is no existing lien against the claimant’s recovery?
2. Whether substantial evidence supported the Workers’ Compensation Board’s finding that Onondaga County did not expressly and unambiguously preserve its right to offset future compensation benefits when consenting to the third-party settlement?
Holding
1. Yes, because Workers’ Compensation Law § 29(5) does not distinguish between instances where an employer has both a lien and prospective offset rights and those where only the latter exists. In either case, unless the employer unambiguously reserves a lien or offset right when giving consent, the lien or offset is waived.
2. Yes, because the County’s response to the claimant’s attorney’s assertion that the County had neither a lien nor a right to a payment holiday was insufficient to explicitly reserve its right to an offset.
Court’s Reasoning
The Court of Appeals reasoned that the key consideration is whether the claimant is fully informed of the ramifications of the settlement. Claimants are unable to assess the value of a settlement without knowing the status of the employer’s or carrier’s claims against settlement proceeds.
The Court emphasized that ambiguities are resolved against the carrier in settlement negotiations.
The Court noted that Workers’ Compensation Law § 29(5) does not distinguish between cases where an employer has both a lien and offset rights, and cases where only offset rights exist.
Failure to secure the employer’s or carrier’s consent results in forfeiture of the claimant’s future compensation benefits. Similarly, unless an employer or carrier unambiguously and expressly reserves a lien or the right to offset when giving consent, the lien or offset is waived.
The Court stated that “a carrier or self-insured employer and claimant are deemed to be involved in… settlement negotiations, [and] ambiguities [will] be resolved against the carrier.”
Whether an employer adequately preserved its right to a future offset is a factual issue for the Board, and the Board’s factual findings are conclusive if supported by substantial evidence. In this case, the Board’s determination was supported by substantial evidence.
In dissent, Judge R.S. Smith agreed with the majority’s main holding but argued that the employer’s reservation of offset rights was clear in this case. The dissent stated, “The words ‘we can take credit against net third party proceeds’ are as unambiguous a statement as can be imagined that the employer retained its offset right.”