Statutory Discord Settled in Co-Worker Injury Suit

     ALBANY, N.Y. (CN) - Workers' compensation law in New York trumps vehicle-and-traffic regulations when it comes to paying for injuries, the state's high court ruled.
     The case arose after a 2007 accident near Albany in which a man suffered injuries while his co-worker drove them back from a business meeting and collided with another vehicle.
     Workers' compensation law barred the injured passenger, Matthew Isabella, from suing the car's driver, his co-worker Roberta Oldenborg, because he was injured during the course of his employment.
     He received workers' compensation benefits for his injuries but sued the other vehicle's driver, Doris Hallock, and owner, husband Peter Hallock, for negligence in a 2009 federal complaint.
     The Hallocks countered that Oldenborg was to blame for Isabella's injuries, and they filed a third-party complaint under vehicle-and-traffic law against Oldenborg's husband, Michael Koubek, who owned the car she was driving.
     Koubek moved for summary judgment in the Hallocks' action, contending that his wife's immunity under workers' compensation law protected him from liability.
     A federal judge denied the motion and the claim moved ahead until a settlement between the parties granted $800,000 to Isabella.
     The deal called for a jury to apportion liability between Koubek and the Hallocks, and it stipulated that the Hallocks would pay the entire $800,000 if an appeal ended with dismissal for Koubek.
     Jurors ultimately put 90 percent of the blame for Isabella's injuries on Oldenborg and 10 percent on the Hallocks.
     New York's highest judicial body, the Court of Appeals, said the 2nd Circuit asked it to step in after "recognizing that it was presented with a novel issue of state statutory law."
     The decision opens with the gist of the two statutes: that workers' compensation benefits are "the exclusive remedy" of an employee injured by the negligence of a co-worker, while vehicle-and-traffic law "renders a vehicle owner vicariously liable for injuries resulting from the negligent permissive use of a vehicle."
     "Read together, these statutes render workers' compensation benefits the exclusive remedy of an injured employee, thereby barring the employee from recovering against a negligent coemployee or employer," Judge Victoria Graffeo wrote for the seven-member court.
     The Hallocks, though, argued that nothing in the workers' compensation law barred their third-party claim because Koubek had no employment relationship with any of the parties in the case.
     Graffeo said the high court had addressed the "friction" in the laws before, in a pair of 1958 cases that "remain applicable law."
     In one, Rauch v. Jones, the court rejected the argument that the exclusivity provision of workers' compensation law did not apply when a passenger injured in a car driven by a co-worker sought to sue the vehicle's owner, with whom there was no employer or co-worker relationship.
     "We observed that the vicarious liability provision [of vehicle and traffic law] was intended to create a remedy where no right to relief existed and determined that, because the workers' compensation law already provided the passenger with redress, derivative liability should not attach," Graffeo wrote.
     In the second case, Naso v. Lafata, the court pointed to Rauch "and further reasoned that, were we to allow the injured passenger to recover from the vehicle owner under the vehicle and traffic law, it would be unfair not to permit the owner to obtain recoupment from the tortfeasor driver, yet allowing such a claim would thwart the purpose of ... [the workers' compensation] exclusivity provision and ultimately pin liability on the immunized driver," Graffeo wrote.
     While neither of those cases involved a third-party contribution claim, the court in 1983 extended the reach of Rauch and Naso to third parties in Kenny v. Bacolo, according to the ruling.
     The 1983 decision involved dismissal of a third-party claim against a driver and the vehicle's owner because the court reasoned that, since the driver was immune from liability under the federal Longshore and Harbor Workers' Compensation Act, no liability could extend to the owner.
     "We do not perceive any meaningful distinction between Kenny and the case before us," Graffeo said, calling the federal act similar to New York's workers' compensation law. "Consequently, we find Kenny to be controlling in Koubek's favor."
     "In sum," she wrote, "we hold that a defendant may not pursue a third-party contribution claim under vehicle and traffic law ... against a vehicle owner where the driver's negligence was a cause of the plaintiff's injuries, but the driver is insulated from a lawsuit under workers' compensation law."
     Concurring were Chief Judge Jonathan Lippman and Judges Susan Read, Robert Smith, Eugene Pigott, Jenny Rivera and Sheila Abdus-Salaam.
     Arthur Siegel of Bond Schoeneck & King in Albany argued for Koubek. Glenn Kaminska of Ahmuty Demers & McManus in Albertson, near Mineola on Long Island, represented the Hallocks.