Practitioners are supposed to know not only how to gain a client, but how to settle a case without causing collateral damage.  One such trap, though well known, open and obvious, is the settlement of tort actions when plaintiff has been awarded Workers’ Compensation benefits.  In short, before settling a tort action where plaintiff has been awarded WC benefits, the permission of the WC compensation carrier must be obtained.  If it is not, then plaintiff will lose future WC benefits to an amount equal to the tort settlement. 

In Gowins v M. Weiss & Assoc., P.C.; 2010 NY Slip Op 33101(U); October 26, 2010;Supreme Court, New York County; Docket Number: 110928/08;;Judge: Judith J. Gische gives the controlling Appellate Division authority and permits amendment of the complaint to add Judiciary Law 487.

The controlling appellate authority on the facts presented is the case of Northrop
v. Thorsen, (46 AD3d 780 [2nd Dept. 20071). In Northrop, the attorney being sued for
malpractice, like the attorneys here, resolved an underlying tort action without first
obtaining the required approval of either the worker’s compensation carrier or the Court.
Unlike the case at bar, no effort was made to have the court approve the settlement
nunc pro tunc. The court held in Northrop, supra, that the lawyer’s failure to comply
with Worker’s Compensation Law §29(5) constituted professional negligence, without
the need for an expert witness. The court held further, however, that the duty to seek a
nunc pro tunc approval of the settlement rested with the attorney and the failure to do
so was “part of defendant’s malpractice.  This Court holds that plaintiff in this case is entitled to summary judgment on the issue of liability "

Plaintiff seeks to amend the complaint to assert a third cause of action based
upon violations of Judiciary Law 5 487. The gravamen of the complaint is that
defendants deliberately delayed and failed to provide him information about this and/or
the Worker’s Comp. Action for their own gain and/or advantageAt bar the a civil claim under Judiciary Law  487 may stand even when there is also a claim for legal malpractice. Moormann v. Perini & Hoerger, 65 AD3d 1106 (2nd Dept. 2009). Here, the proposed complaint states a cause of action. Defendants’ factual disputes about the viability of the claim can be fairly resolved at trial.".