Legal Malpractice

Workers' Compensation Liens and Legal Malpractice

By (Andrew Lavoott Bluestone)

The law and its rules changes as a matter of geography.  A few miles to the south, rules are completely different.  As an example, in NY a workers' compensation carrier may recovery its payments to plaintiff after plaintiff successfullly sues a third-party.  As an aside, there are any number of legal malpractice cases in which the attorney failed to obtain the consent of the WC carrier to a 3d party settlement and cost the client dearly.  However, in NY the carrier may not recover from a Legal Malpractice recovery due to the negligent handling of a 3d party action.  The same is not true in NJ, as we see in: Cambridge Integrated Servs. Group, Inc. v Faber
2010 NY Slip Op 33286(U) ;November 22, 2010;Sup Ct, NY County;Docket Number: 104108/2009
Judge: Marcy S. Friedman. 

"The court now holds that under New Jersey Law, 'a workers' compensation lien pursuant
to N.J.S.A. 34:15-40 attaches to the proceeds of a legal malpractice action brought to recover
damages froin an attorney who failed to institute an action against a third-party tortfcasor.'
(Frazier v N,J. Mfrs. Ins. Co., 142 NJ 590, 607 Ir\rJ 19951,) New York law is to the contrary, and
holds that a workers' compensation lien applies 'only against recoveries from the third-party
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tortfeasors who are responsible for the claimant's injuries.' (Shutter v Phillips Displav
Components Co., 90 NY2d 703, 708 [1997].) However, under settled law, '[tlhe rights of an
employer to be reimbursed for workers' compensation benefits paid to an employee are governed
by the law of the State in which the benefits were paid.' (Compare Carinucci v PepsicQ. Inc.,
236 AD2d 499 [2d Dept 19971. with New Jersey Mfrs. Ins. Co. v St e cke~2,6 4 AD2d 3 14 [lSt
Dept 19991 [mistaken payments]. See also Matter of O'Cnnnor's Estate, 21 AD2d 333 [2d Dept
19641.) The court is unpersuaded that enforcement of New Jersey Law would violate public
policy under the circumstances of this case in which a New Jersey resident was paid workers'
compensation benefits in New Jersey."

Full post as published by New York Attorney Malpractice Blog on December 03, 2010 (boomark / email).