Employer's prolonged delay waives exclusive remedy defense

Under New York law, an employer waives the exclusive remedy defense if it waits until after "the point of final disposition" to raise the defense. This is especially true if another party will be prejudiced by the late assertion.

Case name: Miraglia v. H & L Holding Corp., No. 5399N, 25228/00 (N.Y. App. Div. 03/03/09).

Ruling: The New York Supreme Court, Appellate Division held that a contractor's unreasonable delay in asserting the workers' compensation exclusivity defense resulted in the defense being waived.

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What it means: Under New York law, an employer waives the exclusive remedy defense if it waits until after "the point of final disposition" to raise the defense. This is especially true if another party will be prejudiced by the late assertion.

Summary: The employee was working for a contractor on a residential structure when he fell from planks and was impaled by a steal beam on the ground, causing him to become paraplegic and suffer other complications. The employee sued the landowner, who sued the contractor as a third-part defendant. The employee recovered more than $6 million from the landowner's insurer. The employee also obtained a judgment against the landowner and the contractor for $18 million.

After unsuccessfully appealing the judgment, the contractor asserted for the first time that because it was the employer, and it paid workers' compensation to the employee, the court could not enter a judgment against it based on workers' compensation exclusivity.

The New York Supreme Court, Appellate Division held that the contractor's unreasonable delay in asserting the defense of workers' compensation exclusivity resulted in the defense being waived. The court explained that under New York law, an employer relinquishes the exclusive remedy defense it waits too long to assert the defense. Waiting until after the appeal was finalized was too long, the court said.

The court pointed out that the contractor had assumed the landowner's defense in the case. The landowner then filed for dissolution. Allowing the contractor to assert the defense at this stage would cause prejudice to the employee, the court found.

The court held that the contractor could not raise the defense this far into the litigation.

May 14, 2009

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