ALBANY, N.Y., October 19 – The New York State Court of Appeals has upheld a decision of the Appellate Court that a claimant with a permanent partial disability in a workers compensation case is not entitled to an apportionment of attorneys fees based on future benefits.

In Burns v. Varriale, the Workers Compensation Board (WCB) classified Owen Burns III, an investigator for the Town of Colonie Police Department, as permanently partially disabled after his police vehicle was struck by a vehicle driven by defendant, James R. Varriale, Jr. The WCB ordered the towns workers compensation carrier, St. Paul/Travelers Insurance Company (Travelers) to pay $400 in benefits per week.

Burns sued Varriale and settled for $300,000. Travelers consented to the settlement and asserted its right under Workers Compensation Law Section 29 (1) to recoup the cost of benefits paid to Burns for which Travelers had a $46,523.26 lien, and to seek a credit for payment of future benefits against the proceeds of the settlement, minus the cost of legal fees and other expenses Burns incurred to obtain the settlement. The statute requires a compensation carrier seeking such recoupment to pay its equitable share of the litigation expenses.

Burns, contending that Travelers share of litigation expenses exceeded the amount of the lien, moved for an order relieving him from paying any of the settlement to Travelers and requiring the carrier to pay nearly $19,000 to cover Burns excess litigation costs.

Supreme Court ruled in favor of Burns, rejecting Travelers argument that Burns was classified as partially disabled, and that the present value of the credits Travelers would receive to offset future compensation payments was speculative and could not be used to determine its equitable share of litigation expenses. The court said, An inference of permanent and total loss of wages follows a permanent partial disability classification.

The Appellate Division, Third Department reversed, saying, When a claimant has a permanent partial disabilityneither the duration nor the amount of an award is readily predictable because the award may or may not continue for the rest of the claimants life, and the weekly benefit of an award can change based upon the claimants actual earnings. In the absence of a reliable method by which the present value of plaintiffs future benefits can be estimated, counsel fees cannot be apportioned on these benefits at this time.

Judge Theodore Jones, Jr., in a unanimous decision for the Court of Appeals, concluded, as did the Appellate Court, that the value of future workers compensation benefits for a claimant with a non-schedule permanent partial disability is speculative, that the present value of these benefits cannot be ascertained at the time the claimant recovers damages in a third party action, and that claimant is not entitled to an apportionment of attorneys fees based on future benefits.

The Workers Compensation Boards determination that the claimant has a permanent partial disability did not entitle him to weekly compensation benefits at a specific rate over his life or over a set period. Claimant has an ongoing obligation to demonstrate his continued attachment to the labor market and how much he usually earns. However, as these variables cannot be reliably predicted, the rate and duration of benefits awarded by the board may change from one period to the next. Thus, at that time, Jones said, a permanently partially disabled claimant recovers damages in a third party action, the value of future compensation benefits is speculative.

The court said that even if the present value of the future benefits cannot be ascertained at the time of claimants recovery in a third-party action, the carrier should be required to periodically pay its equitable share of attorneys fees and costs incurred by claimant inn securing the present value of future benefits in a permanent partial disability case is not ascertainable, the court cannot use these benefits for purposes of calculating the carriers equitable share of the claimants attorneys fees and costs.

This does not mean that the claimant must wait indefinitely for the carrier to pay its equitable share of litigation costs. The trial court, in the exercise of its discretion, can fashion a means of apportioning litigation costs as they accrue and monitoring (e.g., by court order or stipulation of the parties) how the carriers payments are made and, thereby, ensure that the payment of attorneys fees by the carrier is based on an actual, non-speculative benefit.

Chief Judge Judith S. Kaye, and Judges Ciparick, Graffeo, Read, Smith, and Pigott concurred in the opinion.