N.Y. court finds rape victim’s settlement subject to subrogation

Last week a New York appellate court ruled that a civil settlement received by a New York rape victim can be subrogated by the workers’ compensation insurer covering her injuries. Subrogation is the practice of substituting one party for another where a claim or right is concerned. As a result of this decision, the victim’s insurer can take credit against her civil settlement monies from a third party.

According to court records, a woman named Beth V. was working as a youth division aide at a juvenile detention center when she was physically assaulted, raped and kidnapped. As a result, a workers’ compensation case was established for physical injury, PTSD and rape. She was also classified with a permanent partial disability and awarded workers’ compensation benefits.

Ms. V then sued her employer and several co-workers in federal court for, among other things, deprivation or her civil rights, alleging physical and psychological damages. The federal action ultimately settled for $650,000.00. It was then that Ms. V’s workers’ compensation carrier, the New York State Insurance Fund, sought to take a credit for any future payments due under Ms. V’s recovery. They cited the basis for this as Workers’ Compensation Law Section 29 but were kind enough (yes, that was sarcasm) to waive any lien against benefits already paid to Ms. V.

Ms. V challenged the carrier’s right to take a credit, arguing that any offset provisions in place under Section 29 do not apply to the proceeds of her settlement. A workers’ comp law judge agreed with her, finding that Section 29 doesn’t apply to any recoveries made against an employer. He also made note that the claimant’s recovery in the federal lawsuit was for a violation of her civil and constitutional rights and as such is not included within the statute.

A panel of the Workers’ Compensation Board reversed the WC law judge’s ruling, so Ms. V appealed. The appellate court then stated in its ruling that when a claimant is able to recover in a civil action for the same injuries that were the basis for workers’ comp benefits, the insurer has a lien against any recoveries.

“Here, the settlement stipulation and the testimony of the attorney who represented the claimant in the federal court action constitute substantial evidence supporting the Board’s conclusion that the injuries for which claimant recovered in the settlement were the same injuries for which workers compensation benefits were awarded,” the opinion reads. “Accordingly, the carrier is entitled to a credit against the settlement recovery.”

Georgia workers’ compensation law allows for subrogation by the workers’ comp insurer when the injured worker has been made fully whole under O.C.G.A. § 34-9.11.1, which includes this relevant language:

“the employer or insurer’s recovery under this Code section shall be limited to the recovery of the amount of disability benefits, death benefits, and medical expenses paid under this chapter and shall only be recoverable if the injured employee has been fully and completely compensated, taking into consideration both the benefits received under this chapter and the amount of the recovery in the third-party claim, for all economic and noneconomic losses incurred as a result of the injury.”  

Have more questions about Georgia workers’ comp legal issues?  Call us at 404-354-5432.

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