Widow defeats insurer's bid to block $9 million settlement

David Miller ; 2025-11-29 22:35:08

A widow's fight over insurance approval reveals a major shift in how courts are limiting carrier power over worker death settlements

Legal Insights

By Matthew Sellers

Nov 24, 2025Share

When Sally Rorapaugh settled her late husband's wrongful death lawsuit for $9 million, she thought the matter was closed. Instead, she faced an unexpected battle: his employer's insurance carrier demanded a cut and threatened to stop her benefits entirely.

A New York appellate court has now ruled decisively in her favor, establishing clearer boundaries for when insurance carriers can block such settlements.

In July 2019, Rorapaugh's spouse was killed in a motor vehicle accident while working. Rorapaugh filed for workers' compensation benefits that August and, a year later, sued the other driver and vehicle owner in federal court in the Northern District of New York. By February 2021, the parties reached a settlement and filed a dismissal agreement.

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When the employer and its workers' compensation carrier learned of the deal in August 2021, they took aggressive action. The carrier insisted it had never consented to the settlement and demanded that Rorapaugh's weekly benefits be stopped entirely, invoking Workers' Compensation Law § 29. Under the statute, a carrier must consent to any third-party settlement unless the settlement amount exceeds the total statutory compensation benefits the claimant would receive over their lifetime.

At issue was a straightforward calculation: Did Rorapaugh's $9 million settlement (with a net recovery of approximately $5.9 million after legal expenses) exceed her lifetime workers' compensation benefits?

A Workers' Compensation Law Judge found it did. Using credible evidence of Rorapaugh's age and life expectancy, the judge calculated that her lifetime workers' compensation benefits would total roughly $1.2 million. Since her settlement vastly exceeded that figure, the carrier's consent was unnecessary.

The Workers' Compensation Board upheld this decision on appeal and awarded Rorapaugh an additional $113,631.55 in "fresh money" after deducting the carrier's proper share of litigation expenses.

The appellate court upheld the Board's central holding. Under Workers' Compensation Law § 29(5), carrier consent is required only "if the settlement is for less than the statutory amount of compensation benefits." Because Rorapaugh's recovery so dramatically exceeded her projected lifetime benefits, consent was unnecessary.

However, the court reversed the Board's $113,631.55 award. The court determined that the Workers' Compensation Board lacks jurisdiction to apportion litigation expenses. Instead, under Workers' Compensation Law § 29(1), the equitable apportionment of expenses must be handled by the court in which the third-party action was instituted – the US District Court for the Northern District of New York. Rorapaugh cannot use the Workers' Compensation Board process to resolve this dispute and must return to federal court.

This creates a significant procedural barrier for claimants who settle third-party actions without carrier consent. While they gain the right to settle without approval if the recovery exceeds lifetime benefits, they lose access to the Workers' Compensation Board's administrative forum for resolving expense disputes.

For claimants, the ruling clarifies that carriers cannot block settlements when the recovery substantially exceeds lifetime benefits. For carriers, the ruling narrows – but does not eliminate – their power. They retain lien rights and the ability to offset future benefits, but cannot use consent requirements as leverage against substantial recoveries.