Tag Archives: Kelly Apportionment

Future Medical Benefits Are No Longer Part Of The Kelly Calculation.

Workers’ Compensation carriers attacks upon their obligation to pay their equitable apportionment of the costs incurred in obtaining recoveries in personal injury lawsuits pursuant to Workers’ Compensation Law §29 continues unabated, after having lost the first round in Matter of Kelly v State Ins. Fund 60 NY2d 131 (1983).

In a personal injury action, where, the plaintiff has or is still receiving workers’ compensation benefits, the plaintiff’s workers’ compensation carrier is required to pay its equitable share of the expenses incurred in obtaining the recovery. Under Matter of Kelly, supra the carrier’s equitable share was calculated by adding the carrier’s lien (the total of indemnity and medical benefits paid) and the present value of future benefits to plaintiff which the carrier will not have to pay because of plaintiff’s recovery (“the holiday”) and then multiplying this sum by the percentage the litigation expenses (attorney’s fee and litigation costs) plaintiff incurred compare to the plaintiff’s total recovery.

Equitable Share = (Lien + Present Value of Future Benefits) * (Expenses/Recovery)

If the carrier’s equitable share turns out to be greater than its lien, it must pay the difference to the plaintiff as fresh money.

In Burns v Varriale 9 N.Y.3d 207 (2007) the Court ruled that in calculating “the holiday” that the workers’ compensation carrier received for Kelly purposes, the present value of future workers’ compensation indemnity benefits to be awarded to a plaintiff with a nonscheduled permanent, partial disability was too speculative to be included in the calculation. This holding was based upon a finding that if a plaintiff did not receive benefits for death, total disability or a scheduled loss of use, the carrier’s future benefit could not be quantified by actuarial or other reliable means” and so the future benefit was speculative, and it was improper for a court to apportion litigation costs based on that benefit. This of course did not let the workers’ compensation carrier off the hook, but just required that it’s equitable share of expenses be paid out over time, in lieu of the workers’ compensation indemnity benefits that the carrier did not have to pay.

Now in Matter of Bissell v Town of Amherst (2012 NY Slip Op 02250) the Court rules that future medical expenses as awarded by a jury are “to speculative to be included in the calculation of the future benefit to the carrier” and thus “the carrier need only pay its equitable share … once the [plaintiff] incurs and pays each medical expense.” This holding went beyond the issue framed by the Court which was “whether the [workers’ compensation carrier] is bound by the jury’s future medical expenses award, such that the [carrier’s] 33.5% share of litigation costs can be “quantified or reliably predicted” and, therefore, should be included as part of the Kelly calculation.” The Court concluded, “that the jury verdict for future medical expenses is not the proper barometer by which the Fund’s share of litigation costs may be measured,” and then as noted went on to decide that no finding was possible.

Thus, except in the cases of death, total disability or a scheduled loss of use, the Kelly calculation will not include future benefits and plaintiff will have to seek relief on a piecemeal basis in the future. And in those instances where future benefits are included, only indemnity and not medical will be included.

The Court concluded it’s decision by setting forth the next area of battle when they said:

“although the claimant cannot include future medical expenses as part of the Kelly calculation, that does not mean that the carrier is relieved of paying its equitable share of the benefit. The trial court has the discretion to “fashion a means of apportioning litigation costs as they accrue and monitoring (e.g., by court order or stipulation of the parties) how the carrier’s payments to the claimant are made,” thereby ensuring that the carrier’s equitable share of litigation costs is based on concrete, realized benefit, while concomitantly ensuring that the claimant will not wait indefinitely for the carrier’s payment of its share”

I see disputes over the need for further medical treatment and whether treatment is related to the injuries in question. Additionally these decisions will have to be resolved by the Workers’ Compensation Board, (see infra,) and if plaintiff is represented by counsel, will the additional attorney’s fees be fully or partially paid by the carrier, since the carrier normally pays those fees in full, and I have never understood those fees to be included in the workers’ compensation lien.

Interestingly, this ruling raises the question, if the evidence which was presented to a jury as to future medical expenses is too speculative for equitable apportionment calculations, why is it not too speculative for a jury to award future medical expenses in the personal injury action. The Court’s answer to that question is as follows:

“Future medical expenses—when considered in light of the benefit to the carrier, which is the focus of the Kelly analysis—cannot reliably be calculated … because it is impossible to reliably predict the future medical care the claimant will need, when the expenses from such care will accrue and how much it will cost when they do. While some of those items may reasonably be ascertained by a jury in a third-party action, there is a distinction between a nonspeculative future medical expenses award made by a jury and the benefit that the carrier receives under the Workers’ Compensation Law as a by-product of that award.”

This unsatisfactory “explanation” is clarified by the following, which shows that the Court was fashioning a practical explanation for not following the juries finding but permitting it in personal injury actions:

“In a third-party action, the injured employee will have only one opportunity to obtain a recovery for future medical expenses, and the jury assessing the medical evidence will have the chance to make but one award for such expenses, if any. By contrast, in the workers’ compensation context it is possible to wait and see what happens, and to require the carrier to pay its share of litigation costs when that share can be accurately calculated—i.e., when the actual medical expenses that the carrier has been relieved from paying are known. Moreover, whether the claimant is entitled to medical treatment pursuant to the Workers’ Compensation Law is a determination that must be made by the Workers’ Compensation Board, and such determination is not dependent upon the jury’s verdict in the third-party action.”