§ 227. Actionable injuries in claims for disability benefits; subrogation. 1. If an employee entitled to disability benefits under this article be disabled by injury caused by the negligence or wrong of a third party, such employee need not elect whether to take such disability benefits or to pursue his remedy against such third party, but may take his benefits under this article. The carrier liable for payment of disability benefits under this article or the chairman in case of benefits paid under section two hundred seven or two hundred thirteen shall have a lien on the proceeds of any recovery from such third party, whether by judgment, settlement or otherwise, after the deduction of reasonable and necessary expenditures, including attorneys' fees, incurred in effecting such recovery, to the extent of the total amount of disability benefits provided by this article and paid, and to such extent such recovery shall be deemed for the benefit of such carrier or the chairman. Should the employee secure a recovery from such third party, whether by judgment, settlement or otherwise, such employee may apply on notice to such lienor to the court in which the third party action was instituted, or to a court of competent jurisdiction if no action was instituted, for an order apportioning the reasonable and necessary expenditures, including attorneys' fees, incurred in effecting such recovery. Such expenditures shall be equitably apportioned by the court between the employee and the lienor. Notice of the commencement of such action shall be given within ninety days thereafter to the employer or carrier or to the chairman, as the case may be. The foregoing rights, limitations, and procedures shall also apply to actions and recoveries under the employers' liability act, and section six hundred eighty-eight, title forty-six, United States code, and under the maritime doctrine of wages, maintenance and cure. Any of the foregoing providers of disability benefits which has recovered a lien pursuant to the provisions hereof against the recovery of a person injured on or after December first, nineteen hundred seventy-seven and before July first, nineteen hundred seventy-eight, through the use or operation of a motor vehicle in this state, shall notify such person by certified mail, in a manner to be approved by the chairman and the superintendent of financial services, of the responsibilities of an "insurer" (as defined in subsection (g) of section five thousand one hundred two of the insurance law), to reimburse such person under such circumstances to the extent that the recovered lien represents first party benefits as defined in article fifty-one of the insurance law.

1-a. Notwithstanding any other provisions of this article the carrier liable for payment of disability benefits under this article, or the chairman in case benefits are paid under section two hundred seven or section two hundred thirteen of this chapter shall not have a lien on the proceeds of any recovery received pursuant to subsection (a) of section five thousand one hundred four of the insurance law, whether by judgment, settlement or otherwise for disability benefits paid, which were in lieu of first party benefits which another insurer would have otherwise been obligated to pay under article fifty-one of the insurance law. The sole remedy of any of the foregoing providers to recover the payments in the situation specified in the preceding sentence shall be pursuant to the settlement procedures contained in section five thousand one hundred five of the insurance law.

2. If such disabled employee has been paid disability benefits under this article but has failed to commence action against such other within six months prior to the expiration of the statute of limitations, the carrier or the chairman, as the case may be, may maintain an action against such third party. If the carrier or the chairman, as the case may be, having paid disability benefits to a disabled employee, who is also a "covered person" (as defined in subsection (j) of section five thousand one hundred two of the insurance law), and who was injured in a motor vehicle accident in this state on and after December first, nineteen hundred seventy-seven and before July first, nineteen hundred seventy-eight, maintains an action against such third party, who is also a "covered person", and recovers, whether by judgment, settlement or otherwise, it shall advise the disabled employee, by certified mail, in a manner to be approved by the chairman and the superintendent of financial services, of the responsibility of an "insurer" (as defined in subsection (g) of section five thousand one hundred two of the insurance law) to further compensate such disabled employee.

2-a. Notwithstanding any other provisions of this article, the failure of a "covered person" (as defined in subsection (j) of section five thousand one hundred two of the insurance law), who has been paid disability benefits under this article for injuries arising out of the use or operation of a motor vehicle in this state, to commence an action against such other within six months prior to the expiration of the statute of limitations, shall not operate to permit the carrier or the chairman to institute an action against such other third party for recovery of disability benefits paid which were in lieu of first party benefits which an insurer would have otherwise been obligated to pay under article fifty-one of the insurance law unless such third party is not a "covered person". The sole remedy of any of the foregoing providers to recover the payments in the situation specified in the preceding sentence when the other party is a "covered person" shall be pursuant to the settlement procedures contained in section five thousand one hundred five of the insurance law.

3. A compromise of any such cause of action by the employee in an amount less than the benefits provided by this article shall be made only with the written consent of the carrier or the chairman, as the case may be.