Thought Leadership

Mr. Webb workers’ compensation claim was denied, and he filed a petition with the Industrial Accident Board that sought acknowledgment of the accident, medical expense benefits and temporary total disability (TTD) benefits. Mr. Webb received short term disability (STD) benefits from his employer for the time he missed from work. The STD benefits were provided at no cost to the claimant and wholly funded by the employer through the Insurance Coverage Office (ICO). 

The employer eventually acknowledged the work accident as compensable and agreed to pay medical expenses and TTD of $15,556.00. The settlement offer from the employer specified that the TTD period overlapped with the STD period and that there was a likely offset as the claimant could not receive both. Accordingly, the TTD check was be held in an escrow account until the ICO calculated the recoupment amount owed for the STD benefits that were paid during the TTD period. Additionally, there was no separate attorney fee payable as part of the settlement. The claimant accepted the offer. The TTD check was issued and delivered to the claimant’s attorney, again with the explicit requirement that the funds were subject to offset by the STD benefits paid and should not be disbursed until the correct recoupment amount was determined.

The ICO determined that the STD recoupment owed was $15,486.00—almost equivalent to the TTD payment. Instead of reimbursing the ICO, per the settlement agreement, the claimant’s attorney sent the TTD check back and demanded an “attorney’s lien” on the TTD amount paid for one-third of the total recovery. That was the private contingent fee negotiated between the claimant and his attorney. The employer filed a motion with the IAB to enforce the settlement agreement. The IAB held that the settlement contract was clear. The claimant was to repay the STD recoupment amount once it was determined. No separate attorney fee was included as part of the agreement. The claimant was ordered to issue the check to the ICO. The claimant appealed.

On appeal, the claimant’s attorney contended that the Industrial Accident Board did not have jurisdiction to enforce the settlement agreement and that the workers’ compensation carrier did not have a right to negotiate the STD recoupment. The court held that the Board had authority to adjudicate the ICO’s right to set off its payments against payments awarded by the workers’ compensation carrier and the Board has statutory authority to give effect to agreements between the parties, including provisions not directly related to the compensation itself. Moreover, the court held that the Board’s authority to award attorney fees was limited by statute. The claimant’s attorney’s private contingent fee with Mr. Webb did not create a right to the fee from the ICO. The court would not void and rewrite the agreement. The claimant’s attorney was not entitled to the relief requested and the Industrial Accident Board decision was affirmed. 

_{What’s Hot in Workers’ Comp, Vol. 28, No. 6, June 2024 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}