New York’s Highest Court Reverses Itself on Prior Damages-Limiting Decision

by Wilson Elser

In the first Maria Auqui v. Seven Thirty One Limited Partnership et al. (Auqui) decision earlier this year (February 14, 2013), the Court of Appeals held that when a Workers' Compensation Board (WCB) decision sets forth the date a worker’s disability ended, a trial court in a third-party lawsuit should not allow for any award for lost earnings and medical expenses after that disability end date. This decision was particularly significant for personal injury cases where the plaintiff was a construction worker who was a member of a union and/or claimed significant lifetime medical expenses, yet the WCB found a reason to deny a claim of permanent disability. (This decision did not affect personal injury pain and suffering awards in any way.)

The latest Court of Appeals Auqui decision does not entirely eliminate the ability to seek collateral estoppel in a personal injury case as to an administrative finding. However, based on the Court’s decision and the wording of the opinion, it appears likely that this case will be cited by New York’s trial and appellate courts in the future to prevent defendants from relying on WCB decisions to reduce damages claims in personal injury litigation.

Original Decision
The Court of Appeals held earlier this year (February 14, 2013) in Maria Auqui v. Seven Thirty One Limited Partnership et al. that a WCB decision finding that the plaintiff was no longer disabled after a specific date was to be given collateral estoppel effect in a third-party personal injury action. The plaintiff in Auqui was injured in 2004 when a sheet of plywood fell from a building and hit him, allegedly causing head and neck injuries. After two years of treatment, the Workers’ Compensation insurer was successful in obtaining a WCB decision that the plaintiff no longer suffered from any disability as of January 24, 2006. In 2009, the defendants in the personal injury action were successful in arguing that the plaintiff was precluded from relitigating the length of his disability with respect to lost earnings and compensation for medical expenses.

There existed the potential for this decision to be used to limit damages in many high-exposure personal injury cases if there had been a WCB final determination on disability prior to trial. For example, it was hoped that this decision would be helpful in defending New York Labor Law §240(1) cases in which statutorily imposed liability may be almost certain and the plaintiff alleges significant injuries (e.g., a traumatic brain injury, or TBI) yet there was only limited medical treatment with no cognitive therapy or objective evidence (e.g., radiographic films) of brain damage. The exposure presented in such a case can exceed $5 million. A large portion of the exposure is typically attributable to the alleged need for a lifetime of medical expenses, as testified to by a life care planner, and lost earnings that can exceed $125,000 per year based on union contract provisions. As such, in a case alleging a TBI where the WCB has issued a decision stating that any medical disability has ended, there was the potential to eliminate several million dollars of exposure.

The earlier decision was explicitly limited to lost earnings and medical expenses, with the Court stating that: “The determination of the WCB should be given preclusive effect as to the duration of plaintiff's disability, relevant to lost earnings and compensation for medical expenses.”

Decision after Reargument
Reargument is very rarely granted by the Court of Appeals, but on June 27, 2013, it agreed to review its decision in Auqui. Numerous groups representing unions and business interests submitted briefs in support of defendants. New York’s legislature introduced bills (Senate bill 5754 and Assembly bill 7757) that, if enacted, would have revised the New York Workers’ Compensation statutes to prevent a court from granting preclusive effect to any decision by the WCB in a personal injury case.

On December 10, 2013, the Court of Appeals dramatically reversed itself, holding that the WCB’s determination of disability could not be used as collateral estoppel in the Auqui personal injury litigation on the issue of lost earnings and future medical expenses. It based the decision on its determination that “… defendants have failed to meet their burden of establishing that the issue decided in the workers’ compensation proceeding was identical to that presented in this negligence action.” The Court held that “determinations of administrative agencies are entitled to collateral estoppel effect,” where:

  • “The issue a party seeks to preclude in a subsequent civil action is identical to a material issue that was necessarily decided by the administrative tribunal”
  • “There was a full and fair opportunity to litigate before that tribunal.”

On reargument, the Court of Appeals found that the issue decided before the WCB hearing was not identical to the one before the trial court in Auqui. The Court of Appeals stated that the WCB focuses on a claimant’s ability (or inability) to perform the duties of his or her employment, while negligence actions focus on broader legal issues, including the much larger question of the impact of the injury over the course of a plaintiff’s lifetime. As such, the Court held that “… based on the scope and focus of each type of action, it cannot be said that the issues are identical.”

Potential Impact of Auqui on New York Personal Injury Litigation
This case will likely be relied on by New York’s mid-level appellate courts to deny efforts to use WCB decisions to reduce damages claims. The Court of Appeals does leave open the possibility of using administrative agency determinations in certain limited situations in personal injury cases.

Arguably, it is rather challenging to reconcile the Court’s determination in Auqui on reargument with its statement that “quasi-judicial determinations of administrative agencies are entitled to collateral estoppel effect where the issue a party seeks to preclude in a subsequent civil action is identical to a material issue that was necessarily decided by the administrative tribunal and where there was a full and fair opportunity to litigate before that tribunal.”

In the Court’s first decision, it specifically found a full and fair opportunity to litigate the issue of causally related lost wages and medical treatment, thereby resulting in issue preclusion in the personal injury action. Notably, this most recent decision offers no specific insights into or otherwise discusses the Court’s first decision in reaching an opposite conclusion. Indeed, apart from whether there is an exact match of the issues, given the lengthy discussion about the purposes and process involved in WCB proceedings and determinations, it will be challenging for defendants to present a scenario where a court would apply collateral estoppel principles to limit a plaintiff’s damages based upon an underlying WCB decision.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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