Sexual Harassment Settlement Bars Further Workers Compensation Benefits, De

A recent upstate appellate decision addresses the correlation between a sexual harassment claim, on the one hand, and workers’ compensation benefits, on the other.

In Shiner v. Suny at Buffalo, No. 522762, 2016 WL 6782717, (N.Y. App. Div. 3d Dept. Nov. 17, 2016), the court affirmed the Workers Compensation Board’s decision that claimant’s failure to obtain the consent of her employer’s workers’ compensation carrier to the settlement of a third-party sexual harassment action barred her from receiving further benefits.

Here are the facts, as summarized by the court:

One of claimant’s supervisors, an associate dean, reportedly sexually harassed and groped her at an office holiday party in December 2010. She filed a claim for workers’ compensation benefits, which was established for posttraumatic stress disorder and neck injury. Claimant also commenced an action in federal court against her employer and the associate dean alleging a hostile work environment, discrimination, battery and assault. That action settled in August 2013 for $255,000, with both defendants contributing funds to the settlement and $65,000 specifically allocated for “back and front pay.” Thereafter, the employer’s workers’ compensation carrier, the State Insurance Fund (hereinafter the carrier), asserted that claimant should be barred from future workers’ compensation benefits because she had neither sought nor obtained its consent to the settlement as required by Workers’ Compensation Law § 29(5). Claimant contended that the carrier’s consent was not required because the federal action was not a third-party action within the meaning of the statute. A Workers’ Compensation Law Judge determined that the federal action was a third-party action, which claimant had settled without seeking or obtaining the carrier’s consent, and, accordingly, that she forfeited further benefits as of the date of the August 2013 settlement. The Workers’ Compensation Board affirmed and claimant now appeals.

The court summarized the law:

Workers’ Compensation Law § 29(5) requires either the carrier’s consent or a compromise order from the court in which the third-party action is pending for a claimant to settle a third-party action and continue receiving compensation benefits” (Matter of Johnson v. Buffalo & Erie County Private Indus. Council, 84 N.Y.2d 13, 19 [1994]; see Matter of Hulbert v. Cortland County Sheriff’s Dept., 69 AD3d 987, 988 [2010], lv denied 14 NY3d 710 [2010]; Matter of Wright v. Golden Arrow Line, 206 A.D.2d 759, 760 [1994] ). Claimant urges that her federal lawsuit was not a third-party action since the statute addresses “the negligence or wrong of another not in the same employ” (Workers’ Compensation Law § 29[1] ) and the associate dean who harassed her had the same employer as her. The Court of Appeals, however, has recently reiterated that Workers’ Compensation Law § 29, “ ‘read in its entirety and in context, clearly reveals a legislative design 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 ’ “

Applying the law to the facts, the court held:

Here, the Board’s finding that, in her federal action, claimant “sought and received a recovery that was a predicate for the payment of compensation benefits” is supported by substantial evidence, including, among other things, the terms of the stipulation of settlement of that action. Given such finding, the Board’s determination that the federal action was a third-party action is consistent with the case law construing Workers’ Compensation Law § 29 notwithstanding the involvement of a coemployee and allegations of intentional conduct. It is undisputed that claimant did not seek or obtain the carrier’s consent or a compromise order before settling such action. Under such circumstances, the Board’s determination that claimant forfeited future benefits by entering into the settlement without the carrier’s consent must be affirmed.

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