The papers filed electronically as NYSCEF 14-28 were read on Plaintiff's Order to Show Cause seeking an Order pursuant to New York General Obligations Law ("GOL") Section 5-335, determining an alleged lien imposed by Shelter Point Life Insurance Company (hereinafter "Insurer") to be invalid and unenforceable. Insurer issued a New York Disability Benefits Law Insurance Policy to Plaintiff's employer, as defined in Worker's Compensation Law ("WCL") Article 9, covering employees for injuries not arising out of and in the course of employment. Based upon foregoing papers, and all prior proceedings held in connection with this matter, the motion is hereby determined as follows:

The present motion stems from a premises liability action wherein Plaintiff alleges to have sustained personal injuries. The action was commenced by the filing of a summons and complaint with the Rockland County Clerk on May 19, 2022, and ultimately settled on November 29, 2023, for the gross amount of One Hundred Twenty-Five Thousand ($125,000.00) Dollars. A "Final Notice of Lien" dated August 2, 2023, was, thereafter, asserted by Insurer, purporting to impose a lien in the sum of $2,346.00 as against the settlement proceeds, seeking the recovery of New York State Disability Law benefits paid on behalf of the Plaintiff. It is Plaintiff's contention, however, that a lien for benefits paid to an injured party is expressly proscribed by GOL § 5-335(a), that provides in pertinent part as follows:

"When a person settles a claim, whether in litigation or otherwise, against one or more other persons for personal injuries . . . , it shall be conclusively presumed that the settlement does not include any compensation for the cost of health care services, loss of [*2]earnings or other economic loss to the extent those losses or expenses have been or are obligated to be paid or reimbursed by an insurer. By entering into any such settlement, a person shall not be deemed to have taken an action in derogation of any right of any insurer that paid or is obligated to pay those losses or expenses; nor shall a person's entry into such settlement constitute a violation of any contract between the person and such insurer.

No person entering into such a settlement shall be subject to a subrogation claim or claim for reimbursement by an insurer and an insurer shall have no lien or right of subrogation or reimbursement against any such settling person or any other party to such a settlement, with respect to those losses or expenses that have been or are obligated to be paid or reimbursed by said insurer.

GOL §5-335(a).

While this statutory prohibition broadly precludes the assertion of a lien, the gravamen of this dispute is the interpretation of GOL § 5-335(c) that limits the applicability of § 5-335(a) as follows: "This section shall not apply to . . . an insurance contract providing workers' compensation benefits[.] (emphasis added).

Although it is conceded that this case did not involve an injury that occurred in the course of employment, and that no Article 2 Worker's Compensation benefits were paid, the Insurer contends that GOL § 5-335(c) nevertheless renders the prohibitions of §5-335(a) inapplicable in this case, contending that the disability benefits were made pursuant to "an insurance contract providing workers' compensation benefits" within the meaning of this statutory exception.

Plaintiff contends that although disability payments are covered by New York Worker's Compensation Law, "disability benefits" paid by Insurer are clearly not "worker's compensation benefits" within the meaning of 5-335(c). As noted by Plaintiff, the term "insurer" as set forth in GOL § 5-335(a) is defined as "any insurance company or other entity which provides for payment or reimbursement of health care expenses, health care services, disability payments, lost wage payments or any other benefits under a policy of insurance or an insurance contract with an individual or group[.]" GOL § 5-101(4). Plaintiff therefore posits that since the Insurer is an "insurer" that paid "disability payments" to the Plaintiff, the GOL § 5-335(a) prohibition against asserting a lien applies. In other words, while the WCL excludes "worker's compensation benefits" it expressly includes "disability benefits" from the imposition of a lien. In support of this contention, Plaintiff relies on the stated legislative purpose and intent underlying the enactment of § 5-335 which "is to ensure that insurers will not be able to claim or access any monies paid in settlement of a tort claim whether by way of a lien, a reimbursement claim, subrogation, or other-wise so that the burden of payment for health care services, disability payments, lost wage payments or any other benefits for the victims of torts will be borne by the insurer and not any party to a settlement of such a victim's tort claim." 2013 Sess. Law News of NY, Ch. 516 (A. 7828-A).

In further support of the contention that GOL § 5-335 precludes an offset for disability benefits herein, Plaintiff relies on the United States Court of Appeals, Second Circuit's decision in Arnone v. Aetna Life Ins. Co., 860 F.3d 97 (2d. Cir. 2017) which upheld the statutory prohibition against any reduction in the insured's disability benefit. In Arnone, Aetna asserted a lien against the proceeds of a personal injury settlement to recover disability benefits paid to [*3]Arnone from his employer's benefit plan. Arnone was seriously injured while working at the site of his employer's customer. Denying Aetna's offset claim, the Court held as follows:

[W]e conclude that section 5-335 would prohibit Aetna's offset action as a matter of law and, for that reason, would render its decision arbitrary and capricious . . . section 5-335's conclusive presumption would bar Aetna from offsetting portions of Arnone's settlement against his ongoing disability benefits. The statute prohibits insurers from treating settlement amounts as "compensation for the cost of health care services, loss of earnings or other economic loss." NY Gen. Oblig. Law § 5-335(a).

Despite the determination reached in Arnone, supra, the Insurer posits that WCL § 227 is dispositive of the issue herein notwithstanding the clear dictates of GOL § 5-335. WCL § 227(1) provides in pertinent part that "[t]he carrier liable for payment of disability benefits under this article . . . shall have a lien on the proceeds of any recovery from such third party, whether by judgment, settlement or otherwise . . . " WCL § 227(1). The Insurer herein further contends that the foregoing provision when read in pari materia with GOL § 5-335(c) that exempts from the prohibition of subdivision (a), any benefits made "pursuant to a policy of insurance or an insurance contract providing workers' compensation benefits" makes it clear that the term "worker's compensation benefits" perforce includes any benefit defined in the Worker's Compensation Law including disability benefits. This Court disagrees.

This Court finds that GOL § 5-335 clearly and unequivocally prohibits Disability Benefits liens issued pursuant to WCL §227. In addition to the foregoing, fundamental rules of statutory construction compel the determination that the phrase "workers' compensation benefits" as set forth at § 5-335(c) is a generic phrase pertinent to Article 2 "compensation benefits" only and not disability benefits paid pursuant to Article 9, which are plainly not exempt from the anti subrogation provisions. The clear legislative intent of the anti-subrogation provisions of GOL § 5-335 undeniably evidences that the Legislature intended to preclude liens for worker's compensation benefits, but not disability benefits. If intended to apply to both worker's compensation and disability benefits, the statutory exemption would have plainly referred to all benefits extended pursuant to the New York WCL and not the basic commonly accepted term "worker's compensation benefits" that refers to compensation paid in connection with accidents caused by on the job injuries. Indeed, Article 2, Section 10(1), of the WCL instructs that "[e]very employer subject to this chapter shall in accordance with this chapter . . . secure compensation to his employees and pay or provide compensation for their disability or death from injury arising out of and in the course of the employment . . . " (emphasis supplied). In contrast, Article 9, § 9 defines disability as the inability of an employee, as a result of injury or sickness not arising out of and in the course of an employment, to perform the regular duties of his employment or the duties of any other employment which his employer may offer him at his regular wages and which his injury or sickness does not prevent him from performing. In contrast with the phrase "compensation" relied upon in Article 2, Article 9 defines payments as "money allowances," not compensation. WCL § 201(10). In fact, the term "compensation is not referenced in Article 9.

Therefore, for all of the reasons set forth hereinabove, it is, hereby

ORDERED, that Plaintiff's motion is granted to the extent that it is hereby ADJUDGED and DECLARED that Shelter Point's lien for paid disability benefits is invalid and unenforceable against the proceeds of the personal injury settlement; and it is further

ORDERED, that Plaintiff's application for reasonable attorney's fees and costs incurred in connection with the preparation and filing of this motion is denied.

The foregoing constitutes the Decision and Order of this Court.