Exclusive Judicial Apportionment of Litigation Costs and the Consent Threshold for High-Value Third-Party Settlements: Commentary on Matter of Rorapaugh v. New Penn Motor Express LLC

I. Introduction

The Appellate Division, Third Department’s decision in Matter of Rorapaugh v New Penn Motor Express LLC, 2025 NY Slip Op 06370 (Nov. 20, 2025), addresses two recurrent and practically important issues in New York workers’ compensation and third-party practice:

When is a workers’ compensation carrier’s consent required for a settlement of a related third-party action under Workers’ Compensation Law (§) 29(5)?
Which forum has authority to equitably apportion litigation expenses (counsel fees and costs) between the claimant and carrier under § 29(1), the Workers’ Compensation Board or the court in which the third-party action was brought?

The case arises out of a fatal work-related motor vehicle accident. The decedent’s spouse, claimant Sally Rorapaugh, pursued two parallel avenues:

a New York workers’ compensation death benefits claim, and
a federal third-party wrongful death action in the U.S. District Court for the Northern District of New York.

After a substantial $9 million third-party settlement (with a net recovery of approximately $5.9 million to the claimant), the employer and its workers’ compensation carrier challenged both:

the validity of the settlement for lack of carrier consent, and
the Workers’ Compensation Board’s authority to calculate the carrier’s equitable share of litigation expenses and award “fresh money” to the claimant.

The Third Department:

affirmed the Board’s conclusion that the carrier’s consent to the settlement was not required, because the settlement far exceeded the total statutory workers’ compensation benefits potentially payable; but
reversed the Board’s determination that it could equitably apportion litigation costs and award the claimant $113,631.55 in “fresh money,” holding that only the court in which the third-party action was instituted has jurisdiction under § 29(1) to make that equitable apportionment.

This commentary examines the opinion’s reasoning, its grounding in prior precedents such as McComber, Kelly, Burns, and Stenson, and its likely impact on New York workers’ compensation and third-party practice. In particular, the decision crystallizes two important principles:

Consent Threshold Rule: Where a claimant’s third-party settlement substantially exceeds the full statutory value of potential workers’ compensation benefits, carrier consent under § 29(5) is not required.
Exclusive Judicial Apportionment Rule: Absent agreement, the equitable apportionment of litigation expenses under § 29(1) must be obtained by motion to the court in which the third-party action was instituted; the Workers’ Compensation Board lacks jurisdiction to make that apportionment and award “fresh money.”

II. Factual and Procedural Background

A. The Fatal Accident and Workers’ Compensation Claim

In July 2019, claimant’s spouse (the “decedent”) was killed in a motor vehicle accident while acting in the course of his employment. The claimant (his widow) filed a claim for workers’ compensation death benefits in August 2019.

B. The Third-Party Wrongful Death Action

In July 2020, claimant also commenced a third-party wrongful death action in the U.S. District Court for the Northern District of New York, naming the driver and owner of the other involved vehicle as defendants. This action was brought pursuant to Workers’ Compensation Law § 29, which preserves an injured worker’s or dependent’s right to sue a negligent third party while receiving workers’ compensation benefits.

C. Settlement, Stipulation of Dismissal, and Jurisdictional Complications

The third-party action was settled for $9 million. As the Workers’ Compensation Board later noted (fn. 2), the claimant’s net recovery after fees and costs was approximately $5.9 million.

In February 2021, the parties to the third-party action filed a stipulation of dismissal in the District Court, which the court granted. Crucially, the stipulation did not inform the court that the action had been settled.

After dismissal, claimant attempted on August 27, 2021 to obtain a compromise order from the District Court under Workers’ Compensation Law § 29(5), apparently in an effort to substitute judicial approval for the carrier’s consent. As the Appellate Division recounts in footnote 1:

Although claimant had attempted to get a compromise order from District Court in lieu of the carrier's consent on August 27, 2021 (see Workers' Compensation Law § 29 [5]), the court rejected the request based upon the fact that, in their stipulation seeking dismissal of the third-party action, the parties failed to inform the court that the action had been settled and, in light of the court's subsequent dismissal of the action, it no longer had jurisdiction to make a compromise order.

This sequence created a significant procedural trap: the third-party court had already dismissed the case without being made aware of the settlement, and later refused to issue a compromise order for lack of jurisdiction.

D. The Carrier’s Post-Settlement Objections

In August 2021, after learning that the third-party action had in fact been settled, the employer and its workers’ compensation carrier (collectively, the “carrier”) argued:

They had not consented to the settlement as required under Workers’ Compensation Law § 29(5).
Their payments on the workers’ compensation claim should therefore be discontinued.
Further benefits to claimant were barred by § 29.

E. Proceedings Before the WCLJ and the Workers' Compensation Board

Following hearings, the Workers’ Compensation Law Judge (WCLJ) determined, among other things, that:

The carrier’s consent was not necessary because the amount claimant received in the settlement exceeded the total workers’ compensation benefits to which she was entitled.
The WCLJ set payments at a temporary total disability rate, subject to the carrier’s lien and any lien reduction.

On administrative appeal, the Workers’ Compensation Board modified the WCLJ’s decision:

It affirmed that the carrier’s consent was not necessary.
It rejected the carrier’s assertion that the Board lacked jurisdiction to calculate the lien reduction.
It calculated:
- the carrier’s lien on claimant’s benefits as $109,402.81, and
- the carrier’s apportioned share of claimant’s third-party litigation expenses as $223,934.36.
Because the carrier’s equitable share of litigation costs exceeded its lien, the Board concluded that the carrier owed claimant an additional $113,631.55 in “fresh money.”
The Board rescinded the WCLJ’s temporary total disability classification but otherwise allowed weekly benefits to continue, subject to the carrier’s credit.

F. Appeal to the Appellate Division, Third Department

The carrier appealed to the Appellate Division, challenging:

The Board’s conclusion that the carrier’s consent under § 29(5) was not required for the third-party settlement.
The Board’s jurisdiction and method of calculating the lien reduction and the $113,631.55 “fresh money” award.

III. Summary of the Court’s Opinion

Justice Aarons, writing for a unanimous panel (Clark, J.P., Pritzker, Reynolds Fitzgerald and McShan, JJ., concurring), issued a decision that:

A. On Consent to Settlement (§ 29(5))

Reaffirmed that under Workers’ Compensation Law § 29(5), carrier consent to a third-party settlement is required “only if the settlement is for less than the statutory amount of compensation benefits.” (quoting McComber v Lehrer McGovern Bovis, Inc., 28 AD3d 402, 403 [1st Dept 2006]).
Accepted the Board’s finding that the full value of claimant’s potential death benefits over her remaining life expectancy was approximately $1.2 million.
Held that the net settlement of approximately $5.9 million so vastly exceeded this figure that, even if claimant outlived her life expectancy, consent was not required.

B. On Lien Reduction and Equitable Apportionment of Litigation Expenses (§ 29(1))

Restated that a compensation carrier has:
- a lien on the third-party recovery to the extent of past benefits paid, and
- a right to offset future workers’ compensation benefits by the amount of the claimant’s net recovery.
Reaffirmed that the carrier must pay its equitable share of the claimant’s litigation expenses, which is assessed based on the total benefit the carrier derives (both lien and future credit) from the claimant’s recovery (per Kelly, Brisson, and Burns).
But emphasized that under Workers’ Compensation Law § 29(1), where the parties do not agree, the equitable apportionment of legal expenses must be made by the court in which the third-party action was instituted, not by the Workers’ Compensation Board.
Held that, in light of the statute and claimant’s failure to obtain carrier consent, her “only recourse” for equitable apportionment was to move in the federal District Court for such an order.
Concluded that, under these circumstances, the Board lacked jurisdiction to determine the equitable apportionment of costs and to award the claimant $113,631.55 in fresh money.

C. Disposition

The Court ordered:

ORDERED that the decision is modified, without costs, by reversing so much thereof as held that claimant was entitled to $113,631.55; matter remitted to the Workers' Compensation Board for further proceedings not inconsistent with this Court's decision; and, as so modified, affirmed.

Thus:

The no-consent-required ruling stands.
The Board’s apportionment and fresh money award is reversed.
The matter returns to the Board to administer benefits and lien/credit issues consistent with the Appellate Division’s jurisdictional holding.

IV. Legal Framework: Workers’ Compensation Law § 29

A. Dual-Track Recovery: Workers’ Compensation and Third-Party Actions

Workers’ Compensation Law § 29 allows an injured worker or, in death cases, the decedent’s dependents to:

receive workers’ compensation benefits from the employer/carrier (a no-fault, statutory remedy), while
also suing a negligent third party for full tort damages (e.g., pain and suffering, wrongful death damages).

B. The Carrier’s Two Key Benefits Under § 29

Under New York law (as synthesized in Kelly, Brisson, Burns, and Stenson), the carrier receives two distinct statutory benefits from a claimant’s third-party recovery:

Past Benefits Lien (§ 29(1))
The carrier has a lien on the third-party recovery to the extent of compensation and medical benefits already paid. The claimant must satisfy this lien out of the gross recovery.
Future Benefits Offset (§ 29(4))
The carrier may offset (suspend or reduce) future compensation payments until the claimant’s net recovery is exhausted. In substance, the third-party tortfeasor (rather than the carrier) funds the claimant’s future stream of benefits, to the extent of the net recovery.

C. Equitable Apportionment of Litigation Expenses (§ 29(1))

Because the carrier’s lien and future offset are both benefits directly flowing from the claimant’s (and her counsel’s) efforts in the third-party litigation, the Court of Appeals in Matter of Kelly v State Ins. Fund, 60 NY2d 131 (1983), held that equity requires the carrier to bear an appropriate share of the litigation expenses proportionate to the benefit it receives.

Workers’ Compensation Law § 29(1) contains the statutory mechanism:

Should the [claimant] secure a recovery from [a third party], whether by judgment, settlement or otherwise, such [claimant] may apply on notice to such lienor to the court in which the third-party action was instituted ... for an order apportioning the reasonable and necessary expenditures, including [counsel] fees, incurred in effecting such recovery. Such expenditures shall be equitably apportioned by the court between the [claimant] and the lienor.

Thus, when the parties do not agree on how to divide litigation costs between the claimant and the carrier, the statute directs that the court where the third-party action was brought resolve the issue.

D. Consent to Settlement (§ 29(5))

Separate from cost apportionment, § 29(5) governs when a third-party settlement requires carrier consent (or a court “compromise order”) to preserve the claimant’s entitlement to ongoing workers’ compensation benefits. Courts have construed § 29(5) to require consent:

only when the settlement is for less than the total “statutory amount of compensation benefits” potentially payable under the Workers’ Compensation Law; and
no consent is required when the settlement is for more than that statutory amount.

The leading statement of this rule is McComber v Lehrer McGovern Bovis, Inc., 28 AD3d 402 (1st Dept 2006), which is central to the Rorapaugh court’s analysis.

V. Precedents Cited and Their Influence

A. McComber v Lehrer McGovern Bovis, Inc., 28 AD3d 402 (1st Dept 2006)

In McComber, the First Department held that carrier consent under § 29(5) is required “only if the settlement is for less than the statutory amount of compensation benefits.” The rationale is that if a claimant’s settlement is greater than the total workers’ compensation benefits potentially payable, the carrier suffers no prejudice from the settlement – the recovery fully covers both past and prospective compensation exposure.

In Rorapaugh, the Third Department directly quotes and applies this rule. The Board had calculated the full value of claimant’s future death benefits based on her age and life expectancy (~$1.2 million). Because the net settlement was about $5.9 million, the court saw no realistic scenario in which the carrier would be disadvantaged:

Even if, as the carrier argues, claimant lives beyond her estimated life expectancy, given the significant disparity between what she would collect in benefits in her lifetime and the $5.9 million she received in the settlement, the carrier's consent to the settlement agreement was not necessary (see Workers' Compensation Law § 29 [5]; McComber, 28 AD3d at 403).

Thus McComber provides the doctrinal backbone for the consent holding in Rorapaugh.

B. Matter of Kelly v State Ins. Fund, 60 NY2d 131 (1983)

Kelly is the foundational case on how to apportion litigation expenses between claimants and carriers. It established that:

the carrier’s lien for past benefits paid entitles it to reimbursement from the recovery; but
the carrier must pay its equitable share of litigation expenses on both:
- the reimbursement (lien), and
- the benefit of not having to pay future compensation (future offset).

The Court of Appeals recognized that absent such sharing, the carrier would receive a “free ride” on the claimant’s litigation efforts. Therefore, litigation costs must be apportioned based on the carrier’s total benefit from the recovery.

In Rorapaugh, Kelly is cited for two key points:

As authority that the carrier’s equitable share of expenses is proportionate to the total benefit it derives from the claimant’s recovery (60 NY2d at 135–36).
As authority that the court (not the Board) is the ultimate decision-maker on equitable apportionment under § 29(1) (60 NY2d at 138).

Thus, Kelly underpins both:

the substance of the apportionment rules, and
the jurisdictional allocation of the apportionment decision to the third-party court.

C. Matter of Brisson v County of Onondaga, 6 NY3d 273 (2006)

Brisson reiterated that the carrier’s benefit includes both:

its lien for past payments, and
its right to offset future benefits.

The decision clarified aspects of the formula for calculating the carrier’s share and reinforced that the apportionment must consider the entire economic benefit the carrier receives from the third-party recovery.

In Rorapaugh, Brisson is cited in the string of authorities supporting the standard understanding of lien and future offset under § 29, and the need to apportion litigation expenses accordingly.

D. Burns v Varriale, 9 NY3d 207 (2007)

Burns refined Kelly by addressing cases where future benefits are speculative or not fixed, such as non-schedule permanent partial disability claims. The Court of Appeals held:

The carrier’s share of litigation costs attributable to uncertain future benefits may need to be reassessed over time, rather than set once and for all at the time of settlement.
The essential principle remains: the carrier must share, proportionately, in the costs of achieving the recovery from which it benefits.

In Rorapaugh, Burns is cited:

to reaffirm that the carrier’s offset of future benefits must be taken into account in apportioning litigation expenses (9 NY3d at 215), and
as part of the authority supporting the view that equitable apportionment is a judicial, not administrative, function (9 NY3d at 214).

E. Matter of Stenson v New York State Dept. of Transp., 84 AD3d 22 (3d Dept 2011)

Stenson is a Third Department decision that elaborated on:

the dual benefits to carriers under § 29 (lien and future offset), and
the need to consider the future offset when apportioning litigation expenses.

Notably, Stenson acknowledged that § 29(1) assigns equitable apportionment of expenses to the court, but in practice the Workers’ Compensation Board has often been involved in related calculations, especially concerning:

determining the amount of the carrier’s future credit, and
implementing or adjusting the credit as benefits resume or are modified.

In Rorapaugh, Stenson is cited for:

describing the carrier’s dual benefits and the need to take the future offset into account in apportioning costs (84 AD3d at 24–25); and
the principle that “the ultimate determination of the equitable apportionment of legal expenses resides in the courts vested with the powers of fact finding and the exercise of a sound discretion” (84 AD3d at 26).

The Court adds “compare Stenson” when declaring that the Board has no jurisdiction to apportion expenses in the circumstances of Rorapaugh, signaling that Stenson should not be read as granting the Board general jurisdiction to perform Kelly/Burns apportionments absent judicial involvement.

F. Becker v Huss Co., 43 NY2d 527 (1978)

Becker is an earlier Court of Appeals decision dealing with § 29 liens and third-party recoveries. It is cited in Rorapaugh (along with Kelly and Burns) as part of the authority that apportionment of expenses is to be made by the court where the third-party action was instituted.

G. Minkowitz Practice Commentaries

The opinion references Martin Minkowitz’s Practice Commentaries to Workers’ Compensation Law § 29 for the proposition that:

An application to the court on notice to the lienor may be made to apportion such expenses if an agreement on such amount cannot be reached.

This reinforces the understanding that § 29(1) provides a judicial remedy—by motion in the third-party court—when the parties cannot agree on the carrier’s share of litigation expenses.

VI. Legal Reasoning of the Court

A. Consent to Settlement: Applying § 29(5) and McComber

1. The “Statutory Amount of Compensation Benefits”

Workers’ Compensation Law § 29(5) is intended to protect carriers from prejudice where a claimant’s settlement with a third-party tortfeasor could be inadequate to fully fund both:

the carrier’s lien for past benefits, and
the carrier’s exposure for future benefits.

Under the now-settled interpretation from McComber, carrier consent is required only when the settlement is for less than the full statutory amount of workers’ compensation benefits that might be payable over the life of the claim.

In a death case such as Rorapaugh, this involves projecting:

the weekly death benefits payable (typically two-thirds of wages, subject to statutory caps), and
the claimant’s life expectancy (or other statutory duration),

to arrive at the total expected present value of the workers’ compensation obligation.

2. Applying the Consent Threshold in Rorapaugh

The Board determined, based on “credible evidence of claimant's age and life expectancy,” that the full value of her lifetime death benefits was about $1.2 million. The Appellate Division accepted this factual finding.

The Board further found that claimant’s net third-party recovery (after fees and costs) was about $5.9 million—almost five times the projected value of her compensation benefits.

The carrier argued that claimant might live beyond her statistical life expectancy, and thus the actual benefits payable could exceed the projected $1.2 million. The Court rejected this argument as insufficient to trigger the consent requirement:

Even if, as the carrier argues, claimant lives beyond her estimated life expectancy, given the significant disparity between what she would collect in benefits in her lifetime and the $5.9 million she received in the settlement, the carrier's consent to the settlement agreement was not necessary.

The Court thus signaled that:

Speculative possibilities that the claimant might outlive life expectancy do not defeat the conclusion that a settlement many times greater than the projected benefit adequately protects the carrier’s interest.
The standard is a practical, comparative one: when the settlement far exceeds the (reasonably estimated) statutory benefit exposure, consent is not required.

B. Jurisdiction to Apportion Litigation Expenses: § 29(1) and the Board’s Role

1. The Statutory Text and Judicial Role

The Court focuses closely on the text of Workers’ Compensation Law § 29(1), which:

gives the carrier a lien on the third-party recovery for past benefits paid;
authorizes the claimant to apply “to the court in which the third-party action was instituted” for equitable apportionment of litigation expenses; and
mandates that “[s]uch expenditures shall be equitably apportioned by the court between the [claimant] and the lienor.”

The Court emphasizes earlier holdings that:

Under the statute, then, the ultimate determination of the equitable apportionment of legal expenses resides in the courts vested with the powers of fact finding and the exercise of a sound discretion.

(citing Stenson and Kelly).

2. The Board’s Lack of Jurisdiction in Rorapaugh

The Workers’ Compensation Board had taken the position that it could calculate the carrier’s equitable share of litigation expenses (and therefore determine that the carrier’s share exceeded its lien, requiring a fresh money payment of $113,631.55).

The Appellate Division disagreed, focusing on two elements:

The explicit statutory directive that apportionment be made by the court in which the third-party action was instituted (here, the District Court for the Northern District of New York); and
The claimant’s failure to obtain the carrier’s consent to the settlement agreement.

The Court concluded:

In light of the statutory language of Workers' Compensation Law § 29 (1) and the failure of claimant to obtain the carrier's consent to the settlement agreement, we conclude that her only recourse in obtaining the equitable apportionment of her legal expenses in the third-party action is to move for such an order in District Court (see Burns, 9 NY3d at 214; Kelly, 60 NY2d at 138; Becker, 43 NY2d 527, 544 [1978]); compare Stenson, 84 AD3d at 26).

From this, the Court draws the controlling jurisdictional conclusion:

Accordingly, under these circumstances, the Board does not have jurisdiction to determine the equitable apportionment of claimant's costs and expenses, and its finding that claimant be awarded $113,631.55 in fresh money must be reversed.

Thus, the Court holds that the Board cannot stand in for the third-party court in performing a Kelly/Burns apportionment when:

no carrier consent was obtained, and
no judicial apportionment order has been made by the court in which the third-party action was instituted.

3. The Role of the Pennsylvania Orphans’ Court (Footnote 3)

The record showed that claimant had also petitioned the Court of Common Pleas of York County, Pennsylvania Orphans’ Court Division for approval of the $9 million wrongful death settlement and allocation among:

claimant,
decedent’s heirs, and
claimant’s attorneys.

The Orphans’ Court granted that petition. However, the Appellate Division notes in footnote 3:

Insofar, however, as the court was not the one in which the third-party action was instituted, it does not satisfy the requirements of Workers' Compensation Law § 29 (1).

This underscores that for purposes of New York’s workers’ compensation lien and cost apportionment:

Approval by another court (even one overseeing wrongful death settlement and distribution in another state) is not a substitute for the specific § 29(1) apportionment by the court where the New York third-party action was actually brought.

4. The Jurisdictional Trap: Dismissal Before § 29(1) Motion

The procedural history reveals a practical problem:

The District Court had already dismissed the third-party action, without being told that a settlement was reached.
It later refused to issue a compromise order under § 29(5) for lack of jurisdiction (fn. 1).
Yet the Appellate Division now says claimant’s only recourse for equitable apportionment of litigation expenses is to “move for such an order in District Court.”

The opinion does not address directly how the District Court might reacquire jurisdiction over the dismissed action (e.g., via a motion to reopen, modification of the dismissal order, or reliance on ancillary jurisdiction). Nonetheless, for New York law purposes, only that court can issue the § 29(1) apportionment order; the Workers’ Compensation Board may not.

This creates a strong cautionary lesson for practitioners: do not stipulate to dismissal of the third-party action before obtaining the necessary § 29(1) and § 29(5) orders, or at least ensuring the court retains jurisdiction to enter them.

VII. Complex Concepts Simplified

A. What is a “Lien” in this Context?

When a workers’ compensation carrier pays benefits, and the claimant later recovers money from a negligent third party, the carrier has a lien on the recovery. This means:

The claimant must use part of the third-party recovery to reimburse the carrier for the benefits already paid.
The lien amount is simply: all compensation and medical payments made up to the time of the recovery.

B. What is the “Future Benefits Offset”?

After a third-party recovery, the claimant typically ends up with a “net” recovery (after fees, costs, and lien reimbursement). Under § 29(4):

The carrier can stop or reduce paying future workers’ compensation benefits until the claimant’s net recovery is used up (in theory).
During this period, the third-party settlement, not the carrier, is effectively paying the claimant’s loss of earnings and other compensable losses.

This future credit is a substantial benefit to the carrier; it is part of what must be considered in apportioning litigation costs.

C. What is “Equitable Apportionment of Litigation Expenses”?

Litigation expenses include:

attorney’s fees (often one-third or 40% contingency),
court costs, and
other necessary expenses (experts, discovery, etc.).

The principle from Kelly and § 29(1) is that when a claimant’s lawsuit benefits the carrier (through lien reimbursement and future offset), the carrier should pay a proportionate share of those expenses. This prevents the carrier from receiving a “free ride.”

“Equitable apportionment” is thus:

a fair division of litigation expenses between claimant and carrier,
based on the relative economic benefit each receives from the third-party recovery.

D. What is “Fresh Money”?

“Fresh money” is shorthand used in workers’ compensation practice for a situation where:

The carrier’s fair share of litigation expenses (based on its total benefit) is greater than its lien for past payments.
In that case, after applying the carrier’s share of expenses against the lien, there is a remainder that the carrier must pay the claimant—money the claimant would not otherwise receive from the recovery itself.

In Rorapaugh, the Board concluded that:

lien = $109,402.81; and
carrier’s share of litigation expenses = $223,934.36.

Because the latter exceeded the former by $113,631.55, the Board ordered the carrier to pay that difference as “fresh money.” The Appellate Division reversed this, not because “fresh money” is conceptually improper, but because the Board lacked jurisdiction to decide the apportionment at all.

E. What is a “Compromise Order” Under § 29(5)?

If a settlement is for less than the total statutory amount of compensation benefits, § 29(5) requires either:

the carrier’s written consent to the settlement, or
in lieu of consent, a court order approving (“compromising”) the settlement.

This order is often referred to as a “compromise order.” It is typically obtained from the court overseeing the third-party action. In Rorapaugh, the District Court refused to issue such an order because the case had already been dismissed and it deemed itself without jurisdiction (fn. 1).

VIII. Impact and Practical Implications

A. Clarifying When Carrier Consent is Unnecessary

Rorapaugh reinforces and slightly refines the consent rule under § 29(5):

Consent is not required when the third-party settlement substantially exceeds the full projected statutory benefits.
Courts are willing to rely on reasonable life expectancy projections and will not be swayed by highly speculative arguments that the claimant might dramatically outlive those projections—especially when the settlement is multiple times larger than the projected benefits.

For practitioners:

In high-value settlements (like the $9 million gross / $5.9 million net recovery here), carrier consent may not be a legal prerequisite to preserving continuing compensation rights.
However, counsel should still carefully document the calculation of the statutory benefit value and consider proactively addressing this with the carrier to avoid later disputes.

B. A Firm Line on Jurisdiction: Only the Third-Party Court Can Apportion Litigation Expenses

The decision has significant implications for the division of authority between:

the Workers’ Compensation Board, and
the courts where third-party suits are filed.

Key takeaways:

Equitable apportionment of litigation expenses under § 29(1) is a judicial function. The statute explicitly assigns it to “the court in which the third-party action was instituted.”
The Workers’ Compensation Board cannot unilaterally fill this role, at least where there is no carrier consent and no prior judicial apportionment order.
Without a court order apportioning litigation expenses, the Board must treat the lien and credit calculations accordingly—likely giving the carrier the benefit of a full lien and credit until a judicial apportionment order is entered.

Practically, this means:

When settling a third-party action, claimant’s counsel must address apportionment with the court before dismissal, either by:
- obtaining a specific § 29(1) Kelly/Burns order apportioning costs, or
- embedding an apportionment determination in the settlement approval order.
Relying on the Workers’ Compensation Board to later adjust for the carrier’s share of costs risks leaving the claimant without a remedy, especially if the third-party action has already been dismissed.

C. Implications for Federal Courts and Multi-Jurisdictional Settlements

The third-party action here was in federal court (NDNY), and additional approval was obtained from a Pennsylvania Orphans’ Court. The Appellate Division’s treatment has several implications:

Federal courts hearing New York-based third-party actions must be prepared to entertain § 29(1) motions for apportionment of litigation expenses.
Parties should ensure that any stipulation of dismissal expressly:
- acknowledges the existence of a settlement, and
- either (a) attaches the § 29(1) order, or (b) retains the court’s jurisdiction to enter such an order.
Approval orders from other courts—such as a Pennsylvania Orphans’ Court order approving a wrongful death settlement and distribution—do not satisfy § 29(1). The apportionment must come from the court “in which the third-party action was instituted.”

D. Tension With Prior Administrative Practice and Stenson

Historically, the Workers’ Compensation Board has sometimes engaged in practical, formula-based implementation of Kelly/Burns apportionments in the absence of court orders, especially where the parties acquiesced or did not raise jurisdictional objections.

Rorapaugh marks a firm doctrinal clarification:

Even if the Board can administer the consequences of a Kelly/Burns apportionment (e.g., by calculating future credits once a judicial apportionment is in place),
it cannot itself decide the equitable apportionment of litigation expenses when the parties disagree and no court order exists.

By citing Stenson and then saying “compare,” the Third Department indicates that:

Stenson should be read consistently with § 29(1)’s text and with Kelly/Burns,
rather than as granting the Board general authority to perform Kelly/Burns apportionments in disputed cases.

E. Procedural Best Practices Going Forward

For claimant’s counsel and carriers alike, Rorapaugh highlights several best practices:

Quantify the Statutory Benefit Exposure
Before settlement, calculate the projected total statutory workers’ compensation benefit exposure (using wage rate, statutory caps, and life expectancy). This is critical to:
- determining whether carrier consent is legally required under § 29(5), and
- negotiating with the carrier on consent issues if the settlement is near or below that threshold.
Secure § 29(1) and § 29(5) Orders Before Dismissal
Do not stipulate to dismissal of the third-party action before:
- obtaining any necessary compromise order under § 29(5), and
- obtaining a § 29(1) order apportioning litigation expenses (Kelly/Burns order), or ensuring the court retains jurisdiction to enter one.
Do Not Rely on the Board to Fix Apportionment Later
Given Rorapaugh, the Board cannot unilaterally determine equitable apportionment in contested cases. If no judicial apportionment order is obtained, the claimant may be left with:
- a full lien,
- a full future credit, and
- no mechanism before the Board to compel the carrier to share litigation expenses.
Coordinate in Multi-State Situations
When wrongful death settlements require approval in another state’s court (e.g., an Orphans’ Court), ensure that this is in addition to, not in place of, a § 29(1) motion in the New York (or federal) court where the third-party action is pending.

IX. Broader Doctrinal Significance

Matter of Rorapaugh v New Penn Motor Express LLC does not radically change New York law, but it significantly clarifies and sharpens existing doctrines in two ways:

Consent Threshold in High-Value Settlements
The case reinforces that § 29(5) consent is a protective device for carriers in cases of inadequate settlements, not a veto power they can exercise over generous settlements that substantially exceed their statutory exposure. It underscores a pragmatic, comparative approach based on the magnitude of the settlement vs. projected benefits.
Exclusive Judicial Role in Kelly/Burns Apportionment
By holding that the Workers’ Compensation Board lacks jurisdiction to equitably apportion litigation expenses and award fresh money, the court:
- reaffirms the centrality of § 29(1)’s directive that apportionment be performed by the court where the third-party action was instituted; and
- places responsibility squarely on litigants and the third-party court to address and resolve apportionment issues at the time of settlement or shortly thereafter.

The decision thus streamlines the division of labor:

Courts (state or federal, depending on where the third-party action was filed) decide:
- whether to approve compromise settlements when required, and
- how to equitably apportion litigation expenses between claimant and carrier.
The Workers’ Compensation Board applies and administers:
- the carrier’s lien and credit consistent with § 29 and any court orders, and
- continuing benefit entitlements, classifications, and rates, subject to the carrier’s lien and offset rights.

X. Conclusion

Matter of Rorapaugh v New Penn Motor Express LLC is a significant Third Department decision that:

reaffirms that carrier consent under Workers’ Compensation Law § 29(5) is required only when a third-party settlement is less than the total statutory workers’ compensation benefits potentially payable, and
holds that the Workers’ Compensation Board lacks jurisdiction to equitably apportion litigation expenses and award fresh money under § 29(1); such apportionment must be sought by motion in the court where the third-party action was instituted.

For practitioners, the decision offers both comfort and caution:

Comfort in knowing that high-value settlements that substantially exceed projected benefit exposures will not be undone for lack of carrier consent.
Caution that failure to secure a § 29(1) apportionment order before the third-party action is dismissed may leave the claimant without any administrative forum to enforce the carrier’s obligation to share litigation costs.

In the broader legal context, Rorapaugh consolidates the Court of Appeals’ Kelly/Brisson/Burns line and aligns Third Department practice with the statutory text of § 29. It underscores that equitable sharing of litigation costs is a judicial responsibility, while the Board’s role is to administer the resulting liens, credits, and benefits within the workers’ compensation system.