March 2012 Worker’s Compensation Lien Update

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The New York State Court of Appeals holds that future medical benefits are so speculative that they cannot be considered in the reduction of workers compensation liens.

In the Matter of Bissell v. Town of Amherst, NY Slip Op 2250 [Ct App 2012], the Court of Appeals has held that future medical benefits cannot be considered in calculating the workers compensation carrier’s lien against a third party recovery.  For those not familiar with this area of the law, where an injured party receives workers compensation benefits the carrier paying such benefits has a statutory lien against any recovery from a third party.  For example, a construction worker injured in a fall might receive lost wages and have his medical bills paid by his employer’s workers compensation carrier.  In the event that he then sues a third party (property owner or general contractor), his workers compensation carrier is entitled to recover those costs that it paid out.  In addition, the workers’ compensation carrier may be entitled to stop future payments in their entirety, or in part, if there are additional funds available to the injured party.

In Bissell the case went to verdict resulting in a jury determination that Mr. Bissell was entitled to over $4,000,000.00 for future medical expenses.  By time of trial, the workers compensation carrier had paid out over $300,000.00 in benefits for medical and lost wages.  It asserted a lien of over $200,000.00 for these benefits, after reduction for its proportionate share of attorneys’ fees and costs.  Mr. Bissell argued, however, that not only should the lien be extinguished in its entirety, but that the carrier should contribute fresh money of over one million dollars representing its share of the cost of recovering the future medical bills.  The argument being that the carrier will now not have to pay for those future medical expenses and as such reaped an enormous benefit.  As with the past lien, the carrier is responsible for the cost of obtaining that benefit.  In addition, Mr. Bissell argued that the future medical expenses can be determined with accuracy as the jury made an actual award.

Unfortunately, the Court of Appeals held that even though the jury made such a determination, it cannot be used against the carrier in computing the actual benefit.  Instead, the Court held that the true benefit can only be determined when future medical bills are actually accrued.  Thus, no reduction of the lien for the medical expenses awarded by the jury and no responsibility for payment of its share of the litigation expenses incurred in obtaining the benefit.

The holding appears to be a windfall for the worker’s compensation carrier.  In our experience and in speaking with various carriers, it appears rare that an injured party actually forwards future medical bills to the carrier.  Instead, they find other sources of payment or are able to stop treatment.  This results in no future liability for the carriers in practical terms.  While the Court’s holding may result in an unintended benefit to the carriers, there is now some certainty on this issue.  To see the entire decision, please click here.