Protection for Plaintiffs: The Second Department Says Yes
Every New York appellate decision gives insurers and defense counsel a chance to read the tea leaves. Are the courts continuing to protect injured plaintiffs? Or are we seeing a shift driven by the growing concern over fraudulent claims? It is noteworthy that the governor of New York, Kathy Hochul is trying to combat fraudulent automobile claims with proposed new legislation.
A recent decision from the Appellate Division, Second Department offers a cautionary signal.
In Pacheco v. P.V.E. Co., LLC, the plaintiff alleged that he was injured at a construction site and pursued benefits before the New York Workers’ Compensation Board. The Board disallowed a portion of the claim. In the related civil action, the defendants moved for leave to amend their answer to assert the affirmative defense of collateral estoppel based on the Board’s determination.
The plaintiff opposed the motion, relying on the Justice for Injured Workers Act (JIWA), codified at New York Workers' Compensation Law § 118-a. The statute provides that “no finding or decision by the Workers’ Compensation Board, judge, or other arbiter shall be given collateral estoppel effect in any other action or proceeding arising out of the same occurrence,” with the limited exception of determining the existence of an employer–employee relationship.
The trial court denied the defendants’ motion, concluding that although JIWA was enacted on December 30, 2022, it applied retroactively and therefore barred the proposed collateral estoppel defense.
The Second Department affirmed.
While New York law generally presumes that statutes operate prospectively unless the Legislature clearly expresses a contrary intent, the court determined that JIWA should be applied retroactively. As the court explained, “based upon the operation of JIWA, the court properly determined that the defendants’ proposed amendment to their answer to assert the affirmative defense of collateral estoppel was palpably insufficient and devoid of merit.”
For insurers and defense counsel, the decision is significant for three reasons.
First, it limits the practical utility of Workers’ Compensation Board determinations in related civil litigation. Historically, defendants could rely on collateral estoppel where issues had been fully and fairly litigated before the Board. JIWA, and the Second Department’s interpretation of it, largely forecloses that strategy, even where the Board has already made factual findings adverse to the claimant.
Second, the court’s willingness to apply the statute retroactively expands its impact beyond cases arising after its enactment. The decision suggests that courts may interpret JIWA broadly in order to effectuate what they perceive as the Legislature’s remedial purpose.
Third, the Second Department is now following the First Department which had previously decided that the JIWA applies retroactively. If the Second Department had decided differently, it may have set the stage for a definitive decision by New York’s highest court, the Court of Appeals.
The takeaway for defense practitioners is straightforward: Workers’ Compensation Board findings will generally no longer serve as a basis for collateral estoppel in related civil actions, and courts may apply that limitation even to cases that predate the statute. As a result, defendants and insurers should be prepared to litigate issues in civil cases that previously might have been resolved through preclusion.
Monitoring how appellate courts continue to interpret JIWA will be critical for both insurers and defense counsel evaluating exposure and litigation strategy in construction and workplace injury cases.
Our experienced team at Gerber Ciano Kelly Brady will help you understand New York’s appellate decisions and how they may affect your cases.
For more information, contact Thomas Bona at tbona@gerberciano.com or Brendan Fitzpatrick at bfitzpatrick@gerberciano.com.
