In Auqui v. Seven Thirty One Limited Partnership,1 dated Feb. 14, 2013, the Court of Appeals held that a New York Workers’ Compensation Board’s determination regarding the duration of an injured worker’s disability was a factual determination that “should be given preclusive effect…relevant to lost earnings and compensation for medical expenses” in the claimant’s third-party tort action. This is a further expansion of the doctrine of collateral estoppel that has broad implications for claimants, insurance carriers, employers and defendants involved in Workers’ Compensation (WC) claims where a companion third-party tort action has been brought.
The ‘Auqui’ Case Jose Verdugo was a food deliveryman who was hurt at work in nyc. The New York workers compensation board found him to be disabled on Dec. 24, 2003. Subsequently, an administrative law judge (ALJ) determined that Verdugo was no longer disabled as of Jan. 24, 2006. A full panel of the NEW YORK WORKERS COMPENSATION BOARD affirmed the decision of the ALJ. In 2004, while collecting compensation benefits, plaintiffs brought a separate action in civil court against the third-party building owner, Seven Thirty One Limited Partnership, the general contractor, and a subcontractor. In April 2009, counsel for the owner defendants in the third-party suit moved to preclude plaintiff from litigating the duration of Verdugo’s disability on the grounds of collateral estoppel. Ultimately, the Court of Appeals agreed and held that the ALJ’s finding that Verdugo’s disability ended Jan. 24, 2006, precluded the plaintiff from re-litigating the duration of his disability in the civil suit. Critical to the court’s decision were its findings that the duration of a disability is a question of fact, that the plaintiff had been given a full and fair opportunity to litigate the issue of ongoing disability, and that the issues in question in the Queens Workers compensation proceeding and the civil suit are identical.3 On the surface then, it appears that the Auqui court’s decision is fully in line with precedent that holds that issue preclusion or the doctrine of collateral estoppel is applicable to the factual determinations of quasi-judicial administrative agencies.4 Arguably, the impact of the Auqui court’s decision rests not with the law articulated but with the law as applied. Is the duration of a claimant’s disability, as the court held, a purely factual one? The Appellate Division and dissent maintained that the duration of a disability is a legal conclusion or at least a mixed question of law and fact. In finding that the duration determination is a factual one, is the court in Auqui expanding the category of what it considers a question of fact and signaling its intention to defer to the final adjudications of administrative agencies to a greater degree?
A worker hurt at work in nyc can make a WC claim for first-party benefits from the employers’ compensation carrier administratively while simultaneously pursuing a civil tort action in court against parties other than the employer relating to the same accident. The two actions historically follow mostly separate tracks. They would intersect most notably at the point of settlement or judgment in the tort action which requires the claimant to repay two-thirds of the New York Workers Compensation carriers’ lien (or obtain a waiver) to avoid a double recovery. The Auqui decision increases the importance of the NEW YORK WORKERS COMPENSATION BOARD “fact” findings that will have preclusive effect in personal injury lawsuits. When injured workers lose a factual determination before the NEW YORK WORKERS COMPENSATION BOARD, there is now an increased likelihood that the claimant/plaintiff will not be able to re-litigate the same issue in a second forum, the so-called third-party action. The decision effectively gives defendants greater opportunity to limit a plaintiff’s claims. Moreover, the holding in Auqui can be expected to apply to all NEW YORK WORKERS COMPENSATION BOARD fact determinations including lack of causal relation of injuries to the loss, the percentage disability and necessity of certain types of treatment and/or therapy. In addition, plaintiffs may be precluded as to claims relating to the corollary issues of future lost wages and future medical expenses during any time period the claimant is found not disabled. Auqui potentially impacts both the pain and suffering and the economic components of the plaintiff’s third-party action damage claims. If a plaintiff attempts to make any claim on an issue already determined by the NEW YORK WORKERS COMPENSATION BOARD in a bill of particulars, a deposition or otherwise, defendants must be prepared and able to identify the impropriety of the claim and assert collateral estoppel. The proper procedural device for a defendant seeking to assert collateral estoppel will depend on the stage of the lawsuit and timing of the NEW YORK WORKERS COMPENSATION BOARD ruling. A motion in limine, a motion to preclude, a motion for summary judgment, a motion to strike claims from a plaintiff’s Bill of Particulars, or even a motion to dismiss portions of the plaintiff’s complaint may all be appropriate procedures to assert collateral estoppel. The increased importance of the fact finding at the agency adjudication level may also impact how lawyers interact. Traditionally, claimants had different lawyers for their WC claim and lawsuit. However, another consequence of Auqui may be to foster a closer and more coordinated relationship between WC and plaintiff counsel. Counsel may now consider working together to aggressively pursue disability claims during the WC hearing or risk forfeiting them. From the defendants’ perspective, it is now more important for defense counsel to obtain plaintiffs’ WC (and carrier) files, to review them carefully, and to take advantage of any favorable rulings in the WC forum. In addition, defense counsel now have the added opportunity and responsibility to carefully monitor ongoing developments in the WC action.
It is important to note that the collateral estoppel effect of NEW YORK WORKERS COMPENSATION BOARD fact findings can only be used against plaintiffs and not against defendants. Unlike plaintiffs, defendants are not stopped from contesting factual issues determined by the NEW YORK WORKERS COMPENSATION BOARD because the defendants are not party to the NEW YORK WORKERS COMPENSATION BOARD proceedings, and have no opportunity to present evidence or cross-examine witnesses.6 Accordingly, defendants will be able to argue, for example, that the plaintiff’s period of disability was actually shorter than that of the NEW YORK WORKERS COMPENSATION BOARD’s determination.
It is not yet clear when a WC determination is considered final for purposes of triggering collateral estoppel in the companion action. For instance, would the Auqui court have applied collateral estoppel if the plaintiff’s appeal of the NEW YORK WORKERS COMPENSATION BOARD decision were still pending?
Internally, the NEW YORK WORKERS COMPENSATION BOARD considers its rulings final regardless of whether the claimant appeals the decision. Once a determination is made that a claimant is no longer disabled, the Workers Compensation insurer is not obligated to continue paying benefits even though an appeal on the determination is pending. Accordingly, there is a strong argument that collateral estoppel effect should similarly apply once the NEW YORK WORKERS COMPENSATION BOARD has ruled.
Collateral estoppel principles are grounded in notions of judicial economy, fairness and deterring re-litigation. There is a long history and large volume of New York case law that applies collateral estoppel in the many quasi-judicial proceedings. The Auqui decision accords with other areas of law regarding collateral estoppel in quasi-judicial proceedings. “The doctrine of collateral estoppel is applicable to determinations of quasi-judicial administrative agencies such as the NEW YORK WORKERS COMPENSATION BOARD.”7 The Court of Appeals has indicated that the threshold question as to whether a proceeding is quasi-judicial is whether the agency in question “has the statutory authority to act adjudicatively.”8 Courts have consistently applied collateral estoppel to other quasi-judicial rulings. These include arbitration;9 no-fault insurance;10 small claims;11 and special proceedings.12 Judge Eugene Pigott, writing in the dissent in Auqui, disagreed with the majority’s holding that the determination of the New York Workers Compensation board is one of fact. He argued that policy and agency considerations are an inextricable influence even on factual determinations of the NEW YORK WORKERS COMPENSATION BOARD. Therefore, he urged that it is inappropriate for courts to be bound by the NEW YORK WORKERS COMPENSATION BOARD’s rulings.13 The holding in Auqui, however, does appear consistent with notions of promoting judicial economy and deterring re-litigation.
The Auqui decision may be looked back on as fundamentally altering the legal landscape of New York workers compensation and tort law by binding them more closely together. In fact, the importance of this decision was recognized by the New York State Trial Lawyers Association which submitted an amicus curiae brief. The practical effect is that NEW YORK WORKERS COMPENSATION BOARD hearings and factual determinations take on greater significance because they can now have a more expansive preclusive effect on the companion tort action. The net result of the decision clearly favors defendants by placing an important limitation on plaintiffs’ damages claims.