New York State Court of Claims

New York State Court of Claims

IACAMPO v. THE STATE OF NEW YORK, #2004-009-131, Claim No. 86220


Synopsis


In this proceeding, the Court found that the net Workers' Compensation Lien was fully extinguished by the benefit to the carrier, based upon the Kelly formula of Workers' Compensation Law § 29(1).

Case Information

UID:
2004-009-131
Claimant(s):
LUCA IACAMPO and FILOMENA IACAMPO, His Wife
Claimant short name:
IACAMPO
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
86220
Motion number(s):

Cross-motion number(s):

Judge:
NICHOLAS V. MIDEY JR.
Claimant's attorney:
MACKENZIE HUGHES, LLP
BY: Stephen T. Helmer, Esq.,Of Counsel.
Defendant's attorney:
HON. ELIOT SPITZER
Attorney GeneralBY: No Appearance.
Third-party defendant's attorney:
LAW OFFICE OF THOMAS M. NIARCHOS
BY: George K. Myrus, Esq.,Of Counsel.
Signature date:
September 14, 2004
City:
Syracuse
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)


Decision

By a Decision and Order dated September 6, 2002, this Court directed that a judgment be entered pursuant to CPLR Article 50-B, with respect to a prior decision by this Court dated December 28, 2001, which had awarded damages to claimants Luca and Filomena Iacampo. Travelers' Property and Casualty (Travelers) is the Workers' Compensation carrier for Santaro Industries, Inc., the employer of Luca Iacampo. As such carrier, Travelers made payments to and for the benefit of Mr. Iacampo from the date of his accident up to the filing of this Court's Article 50-B Decision and Order, which was filed September 23, 2002. In this application now before the Court, Travelers seeks reimbursement of its lien which has been asserted against the proceeds of the claimants' recovery. Claimants, through their attorney,[1] contend that the Travelers lien has been fully extinguished, pursuant to Workers' Compensation Law § 29(1).

With regard to this matter, both parties have relied upon the 1983 Court of Appeals decision in Matter of Kelly v State Insurance Fund, 60 NY2d 131, and its progeny, as well as formulas and computations contained and described in the article "The Section 29 Workers' Compensation Lien in Third-Party Actions", by D. Carl Lustig, III, Esq., published in the Trial Lawyers Quarterly (Vol. 30, Number 2 and Number 3, 2000, NYS Trial Lawyers Institute).

The Court has received and reviewed the following papers in connection with this application:
Submission, with Exhibits and Appendix, by George K. Myrus, Esq., dated February 3, 2003 1


Affirmation, with Exhibits, of Edward C. Schepp, Esq., dated February 6, 2003 2


Memorandum of Law, submitted on behalf of Luca Iacampo 3


Reply to Claimants' Submission, dated February 14, 2003 4


Affirmation on Behalf of Travelers, by George K. Myrus, Esq., dated February 14, 2003 .5


Reply Memorandum of Law (Iacampo), dated March 7, 2003 6


Second Reply Memorandum of Law (Iacampo), dated March 31, 2003 7


Affirmation II by Edward C. Schepp, Esq., dated March 31, 2003 8


Correspondence from George K. Myrus, Esq., dated April 7, 2003 9


Correspondence from Edward C. Schepp, Esq., dated April 11, 2003 10


Correspondence from Edward C. Schepp, Esq., dated April 12, 2003 11

Correspondence from Stephen T. Helmer, Esq., to George K. Myrus, Esq., dated February 5, 2004 12

In addition to the above submissions, the Court also scheduled a hearing to allow additional arguments by counsel. At this hearing, and after conferring with counsel for both parties, certain stipulations with regard to the mathematical figures needed to complete the "Kelly calculation" were placed on the record.

The parties stipulated that the amount of Travelers' existing Workers' Compensation lien is $770,507.59. They also agreed that the sum of $50,000.00 should properly be deducted from the existing lien, since that amount represents compensation benefits paid in lieu of no-fault benefits. The parties also agreed that Aetna Insurance Company (the predecessor in interest to Travelers) was paid $27,639.87 following the settlement of an action commenced by claimants against the operator of the car that struck Mr. Iacampo in this accident. This amount was paid to Aetna as a partial payment for past compensation benefits provided to claimant Luca Iacampo, and therefore is also properly deducted from the existing Travelers' compensation lien. After subtracting both offsets, the parties agreed that the net Workers' Compensation lien in this proceeding is $692,867.72.

Furthermore, the parties also stipulated that the cost of litigation (attorney's fees plus litigation related disbursements) as a percentage of the verdict was 34.721%. Finally, the parties also stipulated that the present value of future indemnity payments for which Travelers would have been obligated to make to Luca Iacampo, but for this claim against the State, amounts to $205,440.16.

As a result of these stipulated figures, the issues requiring a resolution by this Court have been significantly narrowed. Specifically, claimants contend that the present value of future medical payments for which Travelers has been relieved, by virtue of claimants' judgment against the State, should be used to reduce and/or extinguish the existing Workers' Compensation lien. If the Court determines herein that such costs can be utilized, Travelers contends that such costs should be reduced by the amount of legal fees paid to claimants' counsel which can be attributed to the value of such future medical payments.

Travelers also contends that it is entitled to interest on the compensation payments it made to claimants from the date of claimant Luca Iacampo's injury (September 24, 1992) up to the date that such payments were terminated in October 2002 (see Defendant's Exhibit D). Finally, Travelers also contends that should this Court determine that Travelers is entitled to repayment of all or a portion of its asserted lien, it should also receive interest at the statutory rate of 9% on this amount, commencing from the date that such funds were placed in escrow (see Defendant's Exhibit E).

There is no dispute herein that pursuant to Workers' Compensation Law § 29(1), a carrier's lien must be reduced by the reasonable and necessary expenses, including attorney's fees and disbursements, incurred by the claimant in the separate action. Such expenses must be "equitably apportioned" between the claimant and the lienor. As required by the Kelly case, such "equitable apportionment" is determined by calculating the carrier's "total benefit" that it received by virtue of the claimants' successful recovery (Matter of Kelly v State Insurance Fund, supra). This "total benefit" includes both recoupment of the past benefits paid (existing lien as of date of payment of third-party proceeds) as well as the financial benefit to the carrier in being relieved of its obligation to pay compensation into the future (future benefit) pursuant to Workers' Compensation Law § 29(4). (Lustig, § 29 Workers' Compensation Lien in Third-Party Actions, Trial Lawyers Quarterly, Vol. 30, No. 2 and No. 3, at 87. [Citations omitted]).

It is the amount of this future benefit that is in dispute in this matter. As previously stated herein, the parties have stipulated that Travelers will enjoy a future benefit since it has been relieved of its obligation to pay periodic indemnity payments to claimant Luca Iacampo (and that the present value of such future indemnity payments amounts to $205,440.16). Both parties agree that this amount represents a savings to the carrier, and must be added to its existing net lien in determining the "total benefit" to the carrier.

Additionally, however, claimants maintain that the present value of future medical payments, for which the carrier has also been relieved, should also be included in determining the "total benefit" to the carrier. Travelers objects to the inclusion of such amount, contending that the benefit is too remote and/or speculative to be considered (see Donaldson v Ryder Truck Rental & Leasing, 189 Misc 2d 750). Specifically, Travelers argues that there is no certainty as to the obligations that it would have been required to pay, nor is there any certainty as to the length of time such payments would have to be made. Travelers argues that due to these uncertainties, it is not possible to calculate the present value of future medical care with sufficient certainty to include it as a "future benefit". As such, Travelers relies upon the Donaldson case, which found that the nature and cost of future medical care in that case was inadequate in both content and form, and as a result, that Court was not able to calculate a present value of estimated future medical care in determining the "total benefit" to the carrier.

In this particular claim, however, in the damages portion of this trial this Court was presented with extensive and comprehensive evidence with regard to the specific types of medical care and treatment that would be required for the balance of claimant Luca Iacampo's life. Unquestionably, claimant Luca Iacampo suffered extensive and permanent injuries in this accident, rendering him paraplegic. His need for the specific medical treatment and care as set forth in the life care plan presented to the Court at the damages phase was well documented and established. Although the value of the future medical payments cannot be determined with precise certainty, the proof before the Court at the damages trial established the very real need for specific types of medical care, goods and services, reasonably required to ensure adequate treatment for claimant Luca Iacampo. As a result, the amounts awarded as damages for such medical care, goods and services did not represent hypothetical or potentially remote costs, but rather reflected the costs of medical treatment, equipment and services actually required by Mr. Iacampo and, due to the nature and severity of his injuries, will be required for the rest of his life.

The Court therefore finds that the costs for such future medical payments, for which the carrier has been relieved, have been established with sufficient certainty so that the present value of such future medical payments should be included when determining the "total benefit" to the carrier. Essentially, the Court considers that the costs of such future care were established at the damages portion of this trial to the same degree of certainty as the future indemnity payments for which the carrier has also been relieved.

Based on this determination, the Court must therefore determine the present value of such medical care to be included in the lien calculations. In its prior damages decision, and based upon the stipulation of counsel for the parties in that proceeding, this Court determined that the life care plan for specific health related goods and services for the balance of claimant Luca Iacampo's life was $1,736,707.00. In order to determine the legal fees attributable to such award in its Article 50-B decision and order, this Court found that the present value of such life care plan was $1,321,278.00 (an amount which was also stipulated to at that time by counsel for the parties). It is this amount ($1,321,278.00) that claimants contend represent a benefit to Travelers accruing from the third party recovery in this action. Travelers, on the other hand, contends that the Court should first deduct the legal fees of claimants' counsel which, on the basis of their contingency fee agreement, can be directly attributed to this portion of the damages award. Therefore, according to Travelers, the amount of $880,852.00 (representing the present value of the future life care plan after deduction of legal fees attributable to the total present value of $1,321,278.00 as made in the Article 50-B decision and order) represents the proper amount to be included in the formula.[2]

In order to determine the proper amount to be applied in accordance with the dictates of Workers' Compensation Law § 29, the Court must look to the benefit accruing to the carrier, and not to the recovery (gross or net) awarded to the claimants in the underlying action. In this particular matter, therefore, Travelers has been relieved from the responsibility of making any payments whatsoever for medical care, goods or services for the duration of the life expectancy of Luca Iacampo. As set forth herein, the Court had previously determined that the amount of such future medical care was $1,736,707.00, with a present value of $1,321,278.00. Such amount properly represents the actual benefit accruing to Travelers in being relieved of its obligation to make such payments. It therefore follows that there should be no reduction for the legal fees attributable to such payments in determining the "total benefit" to Travelers.

Based on these findings, and utilizing the formula set forth in the Lustig article (which has been relied upon by both parties) the net Workers' Compensation lien can now be determined with the following calculations:

LIEN CALCULATION
Present Value of Future Indemnity Payments: $205,440.16

Present Value of Future Medical Payments: $1,321,278.00

Plus: Existing Workers' Compensation Lien: $770,507.59

Less: Offset for Payments in Lieu of No-Fault and Prior AETNA $27,639.87 Recoupment:

$77,639.87
Total Benefit to Carrier:$2,219,585.88


Cost of Litigation as a Percentage of Verdict:34.721%

Multiplied By: Benefit to Carrier:2,219,585.88

Carrier's Share of Cost of Litigation:$770,662.41


Existing Workers' Compensation Lien:$692,867.72

Less: Carrier's Cost of Litigation:($770,662.41)

Net Workers' Compensation Lien:-$77,794.69

Based on the foregoing, the asserted compensation lien of $770,507.59 has been totally extinguished by the "equitable apportionment" required by Workers' Compensation Law § 29.

Not only has the existing lien been extinguished, the carrier's share of the cost of litigation for the total benefit it received exceeds the existing lien by $77,794.69, which amount is commonly referred to as "fresh money" (see Lustig article, pg 90).

As previously mentioned herein, however, Travelers contends that it is entitled to interest on the compensation payments made by it to claimant Luca Iacampo for the approximately ten years in which he received compensation benefits prior to his recovery in this claim (see Travelers' Exhibit D). However, the authority to assert a lien, as well as the procedure for recovery benefits paid, are benefits which have been granted to carriers only by the specific statutory authority contained in Workers' Compensation Law § 29(1). This statute makes no provision authorizing carriers to recover interest for benefits previously paid, and without such clear statutory authority, no such award of interest may be made by this Court.

Furthermore, the underlying principle of Workers' Compensation Law § 29 is to protect the employee. In this claim, claimants were not entitled to any interest, and no such award of interest was made, until the Court made a determination of liability in October, 1998. It certainly would not be equitable, or in the worker's best interest, to permit a carrier to recover interest on payments it made when the worker, in his third party action, is not allowed to recover interest on any ultimate recovery covering the same period of time. As a result, Travelers' application for interest on payments previously made, and constituting its lien, must be denied.

Similarly, Travelers has also requested that it be awarded interest on the amount of its net lien from the time that the contested amount was placed in escrow (see Travelers' Exhibit E). Since the provisions of Workers' Compensation Law § 29 must be construed liberally, in favor of the employee (see Matter of Smith v Tompkins County Courthouse, 60 NY2d 939), and since no specific statutory authority provides for the recovery of interest, such request must also be denied. Furthermore, and as previously determined herein, since the existing Workers' Compensation lien of Travelers has been totally extinguished due to the "equitable apportionment" made herein, this request has been rendered moot.

Therefore, based upon the foregoing, it is

ORDERED, that the previously asserted Workers' Compensation lien asserted by Travelers' Property and Casualty is hereby extinguished.


September 14, 2004
Syracuse, New York

HON. NICHOLAS V. MIDEY JR.
Judge of the Court of Claims




[1] Claimants were represented throughout this claim by Edward C. Schepp, Esq. At some point after this pending application was made, however, Mr. Schepp retired from the practice of law, and Stephen T. Helmer, Esq., of Mackenzie Hughes, LLP, has been substituted in place of Mr. Schepp.
[2] Obviously, and as previously discussed herein, it is the position of Travelers that none of the future health related costs should be utilized in calculating the "full benefit" to it in determining the extent of its Workers' Compensation lien. However, since the Court has found herein that such costs are properly includable, Travelers maintains that the net amount of the present value of such medical costs and services (after deduction of legal fees attributable to such recovery) and not the full amount, should be applied.