When Raising a Defense in a New York Workers’ Compensation Claim Can Cost that Party Everything in the Civil Case

02.01.22

Category: New York

The crossroads of workers’ compensation and civil defense merged on Thursday, January 27, 2022, with the New York State Appellate Division, 3rd Department’s decision in Walker v. GlaxoSmithKline.

The Walker Court held that Judicial Estoppel precluded a defendant in a personal injury action from asserting the affirmative defense that workers' compensation was the plaintiff’s exclusive remedy. In Walker, a temp worker for the Manpower agency was injured at a pharmaceutical plant owned by the defendant. The court reasoned that a defendant could not take a position that a plaintiff was an employee and thus barred by the exclusive remedy of workers’ compensation in the civil suit, while at the same time taking an opposite position in the workers’ compensation case. The Appellate Division reached this conclusion, despite no judicial finding by the Workers Compensation Board that the defendant was not the plaintiff’s employer. The court simply found that the resulting discharge of the pharmaceutical company and its insurance carrier in the workers’ compensation proceeding was enough to establish that it benefited from maintaining its position.

When a workers’ compensation case is filed, often more than one employer or insurance carrier is identified as a party of interest. In Walker, both the insurance carriers for the pharmaceutical company and the temp agency were placed on notice. When there is a question of whether an injured worker was an employee or not, the insurance company must raise the defense of no-employment, or that issue will be waived. Once an insurance company accepts liability, the issue of employment becomes moot. In Walker, the insurance company for Manpower ultimately agreed to accept coverage, and the denial by the pharmaceutical company was never addressed.

Years later, the defendant pharmaceutical company in the civil case raised an affirmative defense in its answer that the action was barred by the plaintiff’s exclusive remedy of workers’ compensation since the plaintiff was the pharmaceutical’s employee. In New York, an employee cannot sue his or her employer for personal injury damages. Additionally, a worker may be a general employee of one entity and a special employee of another entity. A special employee is transferred for a limited time of whatever duration to the service of another and limited liability inures to the benefit of both the general and special employer. Factors in deciding whether a special employment relationship exists, include:

  1. Who has the right to control the employee's work;
  2. Who is responsible for the payment of wages and the furnishing of equipment;
  3. Who has the right to discharge the employee; and
  4. Whether the work being performed was in furtherance of the special employer's or the general employer's business. Either employer can get the benefit of Sec. 29 of the workers’ compensation law. See, Munion v Trustees of Columbia Univ. in City of N.Y., 120 A.D.3d 779 (2nd Dept. 2014).

Comment: The Walker Court would not permit the defendant pharmaceutical company to even assert that it was a general or special employer. The dissent in Walker believed the majority went too far by not allowing the defendant to raise an alternative position, particularly without a judicial finding by the Workers’ Compensation Board. When merely raising a defense in workers’ compensation can damage the civil side of a case, both the workers’ compensation practitioner and the civil defense counsel will need to coordinate and be careful to ensure that their positions are protected and aligned.  

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