Credit on SLU Payments and Recovery of a Third-Party Action Lien: Why They Live Together in Perfect Harmony

In New York, Workers’ Compensation Law Section 15(4-a) provides a carrier the right to take a credit against a subsequently determined schedule award for disability payments that have already been received for the same injury. This is relatively common knowledge in the world of workers’ compensation, and this credit is never met with much pushback from claimant’s counsel – unless, of course, a third-party action is involved.

Under Workers’ Compensation Law Section 29, the carrier is permitted both a recovery of benefits previously paid – paid out in the form of a lien from the third-party action proceeds, as well as an offset of amounts to which the claimant is later found to be entitled.

Accordingly, the issue that typically arises is in situations where the third-party action has been resolved, the carrier has recovered its lien under Section 29, and now a schedule loss of use award is on the immediate horizon. In pushing the narrative of a potential double recovery on the part of the carrier, the question that likely will pop up from claimant’s counsel is as follows: is the carrier permitted to take credit for indemnity payments previously made on a schedule loss of use award in a case where a lien has previously been recovered?

The answer is a clear and resounding ”yes.”

As clarified by the Third Department in Page v. Insulpane Inc., there are two distinct types of recoupment: the recovery of benefits previously paid from the proceeds of the third-party action under Section 29, and the right to take a credit against a schedule award under Section 15(4-a). 251 A.D.2d 767 (1998).

At the end of the day, these provisions serve two entirely different purposes: Section 29 is designed to shift the burden of paying benefits from the employer’s carrier to the party actually responsible for the injury, while Section 15(4-a) is designed to limit the total amount of workers’ compensation benefits received by the claimant, regardless of whether the carrier is able to shift liability to a third party. As such, and as found in Page, restricting the carrier to enforcement of only one of these rights would result in a windfall/double recovery by claimant.

When this situation arises in practice, there is no reason to back down when claimant’s counsel starts to weave the web of a double recovery narrative – in fact, it’s the claimant’s double recovery that needs to be avoided!

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