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Court Allows Further Deduction on SLU Award for Attorney Fee Previously Paid from Employer Reimbursement

On 6/4/20, the Appellate Division, Third Department decided Razzano v. New York State Dep't. Of Corrections and Community Supervision, holding that the Board correctly deducted the full amount of an attorney fee from a claimant's schedule loss of use award. The claimant in Razzano injured his left shoulder while closing a door at work. He missed work because of his injury but continued to receive his full wages. After he filed a workers’ compensation claim, the employer filed a claim for reimbursement of the wages it had paid him.

A workers’ compensation law judge ("WCLJ") awarded the claimant lost time but deducted the amounts already paid by the employer. The WCLJ also awarded the claimant's attorney a fee of $2,050 as a lien on the credit to the employer.

The WCLJ later awarded the claimant a 42% schedule loss of use ("SLU"), less the payments already made by the department and an additional attorney fee. The employer's workers' compensation insurance carrier deducted an additional $2,050 from the SLU award, representing the attorney fee paid from the initial lost time awarded. 

The claimant contended that he was underpaid because the initial attorney fee of $2,050 was improperly deducted from the SLU award. The WCLJ agreed and imposed a penalty on the carrier.

On review, the Board reversed, finding that that the employer was entitled to full reimbursement of the advanced wages without any reduction for the attorney fees. The Board directed that the amount be paid from the SLU award. On appeal, the Appellate Division affirmed. 

“Here, the initial $2,050 award of counsel fees was a lien on the employer's reimbursement credit, which was limited to the temporary total disability and temporary partial disability payments being received by claimant — the total of which was insufficient to cover both the counsel fees and reimbursement to the employer,” the court explained. “Once claimant received the SLU award, there were sufficient funds to satisfy the employer's right to reimbursement, leaving claimant with an excess from which counsel fees could be paid.”

Given the Board’s broad discretion over attorney fees, the court said it saw no basis to disturb the directive. 

Our partner Joseph DeCoursey successfully prepared the brief to the Appellate Division in Razzano. Anyone with questions about the case should feel free to contact Mr. DeCoursey.

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