Claim of McDowell v. La Voy

OPINION OF THE COURT

Main, J.

Following the death of her husband on a job site in November of 1971, the claimant widow herein made application for compensation benefits and also retained an attorney to prosecute a wrongful death action on her behalf. When the attorney failed to commence a timely death action, the widow sued him for malpractice and eventually obtained a settlement in the amount of $75,000 without the consent of any of the alleged employers or their respective carriers in the compensation claim. Thereafter, a compensation Referee disallowed the subject claim upon concluding that, pursuant to section 29 of the Workers’ Compensation Law, the malpractice settlement could be properly effected only with the consent of the compensation carriers, but the board reversed this determination. In its decision the board found that the settlement was a recovery in a malpractice action and "not an action against a third party responsible for the injury suffered by decedent”. Accordingly, it held that the consent of the compensation carriers was not required by the statute and restored the case to the Referee Calendar for further consideration. These appeals followed.

Initially, we would point out that by our decision in Matter of McDowell v La Voy (59 AD2d 995) we have previously ruled that, under the peculiar facts and circumstances presented here, the instant appeals are not premature, but rather present a threshold legal issue which should be resolved at this time, i.e., whether the widow’s malpractice settlement constituted a third-party settlement within the meaning of section 29 of the Workers’ Compensation Law so as to bar payment of compensation benefits to her.

Such being the case, we turn immediately to the merits of the appeals and hold that the board’s decision cannot be sustained. In so holding, we are, of course, overruling this court’s decision in Matter of Cresci v Krasilousky Trucking Co. (5 AD2d 569, mot for lv to app den 4 NY2d 677). While the reasoning in Cresci (supra) was persuasive at the time, it seems to us to have been eroded by more recent developments in the law. It is the legislative intent in enacting a statute which is controlling, and, in this instance, the Legislature clearly intended that a decedent’s survivors not recover "full compensation benefits undiminished by the amount of a recovery at law” (Matter of Petterson v Daystrom Corp., 17 NY2d 32, 39). The basis of liability here was the wrongful death of claimant’s husband, and therefore, section 29 should be applicable to the $75,000 settlement of the related malpractice suit against the attorney for which, practically speaking, the measure of damages was the same as in the death action, just as it should apply to "any remedy to obtain satisfaction of [claimant’s] damage” (Commissioners of State Ins. Fund v Motor Vehicle Acc. Ind. Corp., 26 AD2d 325, 326, aifd 21 NY2d 918). In effect, the settlement was a substitute for the usual third-party recovery against a negligent tort-feasor or wrongdoer and, as such, it should not have been made without the consent of the allegedly liable compensation carriers (Matter of Ryan v General Elec. Co., 26 NY2d 6). Since the carriers’ consent was neither sought nor obtained, however, claimant must consequently be denied compensation benefits in accordance with section 29.

Such a result fulfills the primary purpose of the statute by denying claimant a double recovery (see Matter of Amo v Empsall-Clark Co., 9 AD2d 852).

The decision should be reversed, without costs, and the matter remitted to the board for further proceedings not inconsistent herewith.