July 9, 2012

La route à Montréal

Join the TICL Section as it prepares for the summer meeting in Montréal. On August 1, 2012* there will be a networking event in Buffalo to learn about the meeting and the CLE program that will be presented in Montréal.

Full details on the Buffalo event are here.

* This is a change in the date.

June 8, 2012

TICL 2012 Summer Meeting in Montreal, Quebec


The Tort Insurance and Compensation Law Section will be heading out of the country again for its summer meeting. Although leaving the country we are not traveling that far. We are going to our neighbor to the north and holding our summer meeting from August 16 through August 19, 2012 in Montreal Quebec.

The site of the meeting is the Intercontinental Montreal.

The program will include a total of 8.0 hours of CLE including 1.5 hours of ethics. In addition to the CLE there will be activities and tours for the entire family. Detailed information on the program and activities is here.

You can register for the meeting here.

Discounted hotel reservations form is available here.

Come join TICL in Montreal for CLE, family fun and networking with colleagues from around the state and the province.

For additional information on the meeting visit the TICL section on the New York State Bar Association's website here or contact Lori Nicoll at the State Bar.

March 27, 2012

Kelly Case Limited - Burns Applies to Medical Expenses in Permanent Total Cases


For nearly 30 years attorneys have had to try to estimate the future benefit to a workers' compensation carrier of the cost of future medical bills that the workers' compensation carrier would no longer be liable after a related third party action settled. This task was created by the Court of Appeals in Kelly v. State Insurance Fund, 60 N.Y. 2d 131 (1983). The Court of Appeals has now eliminated the requirement to take into account the value of the future medical expenses when seeking to have a workers' compensation carrier reduce their lien beyond their current cost of the litigation by reducing it because of the future benefit they receive. They did so in Bissell v. Town of Amherst, 2012 NY Slip Op 02250 (March 27, 2012). The unanimous decision was written by Judge Eugene F Pigott, Jr.

The first crack in Kelly came in the case of Burns v. Varriale, 9 N.Y. 3d 207 (2007). Under Burns the Court of Appeals limited Kelly to only those cases in which the claimant was found to have either a scheduled loss of use or was found to have a permanent total disability, in addition to death cases. In Burns the Court found that the future benefit to a claimant who was found to have a permanent partial disability was to speculative to require an additional reduction of a workers' compensation carrier's lien because the future benefits to a claimant were too speculative to determine at the time of the settlement the future benefit to the workers' compensation carrier. This meant that the workers' compensation carrier would have to pay for their additional benefit on a weekly basis. The workers' compensation carrier would have to continue to pay the injured worker that percentage of the weekly rate that was equal to the percentage cost of litigation. The percentage cost of litigation is obtain be dividing the sum of attorney fee (AF) plus expenses (E) by the amount of the gross settlement (GS), or in algebraic form (AF +E)/GS. If that figure was 34.68% the workers' compensation carrier would continue to pay the claimant that percentage of the weekly benefits awards. If the awarded rate was $250.00 the workers' compensation carrier would pay the claimant $86.70 per week. They would also have to pay for the same percentage of the medical expenses as they were incurred.

In early 2002 Peter Bissell fell while working on a building owned by the Town of Amherst. After litigation a jury awarded him $30,000,000.00 that after post verdict applications was eventually settled for $23,400,000.00 with a present value of $4,259,536.00 for future medical expenses. The workers' compensation carrier was willing to waive all but approximately $48,000.00 of its lien as its share of the costs of litigation. The plaintiff sought $1,399,734.80 in fresh money from the workers' compensation carrier as the value of its overall future benefit because of the settlement. The workers' compensation carrier rejected the demand. However, the Justice in Erie County Supreme Court ordered them to pay the money sought by the plaintiff. On appeal to the Fourth Department* , the Appellate Division reversed and agreed with the workers' compensation carrier and indicated that Burns applies to future medical expenses even in a case where the injured worker has been found to have a permanent total disability, as Mr. Bissell was found to have.

Despite a unanimous decision in the Fourth Department the Court of Appeals granted leave to appeal. The court rejected the belief that the award by the jury is the way to determine the workers' compensation carrier's share of the cost of litigation, even in permanent total disability case. The Court looked at its language in Burns, and decided that when they were talking about benefits other than for a permanent total disability, scheduled loss of use or death benefits could not be reliably be calculated. As to any other benefit under the Workers' Compensation Law, future medical expenses, it is "impossible to reliably predict the future medical the claimant will need, ..." The Court then went on to say that as the medical expenses are incurred the workers' compensation carrier can contribute their equitable share of the costs. Furthermore, the Court indicated that all future medical care will be determined by the Workers' Compensation Board under the Workers' Compensation Law and not according to an award by a jury in the personal injury action.

Mr. Bissell was found to have a permanent total disability and is a paraplegic as a result of this accident. Therefore, Dole v. Dow Chemical Company, 30 N.Y. 2d 143 (1972) impleader was allowed under Workers' Compensation Law §11. Despite the verdict in the lawsuit the workers' compensation carrier (the State Insurance Fund) has yet to reimburse the direct defendant, the Town of Amherst. This case has become somewhat of a cause célèbre in Western New York. The town of Amherst has sued the State Insurance Fund in the Court of Claims to force them to pay the town back for what it paid in the settlement. The Town has had to issue bonds and borrow money in order to pay the full judgment. The Buffalo News has run a number of articles on this part of the litigation recently. The articles are here, here and here.

* Although this case has an impact upon the Workers' Compensation Law, it is not actually a workers' compensation case. This case is the personal injury action arising out of an accident in which the injured person was entitled to workers' compensation benefits. Therefore, the appeal went to the Fourth Department rather than the Third Department, where all appeals from the Workers' Compensation Board are heard.

January 5, 2012

2011 TICL Award Winners

The Torts Insurance and Compensation Law Section is proud to announce it award winners for 2011. The awards will be presented on January 25, 2012 at the Annual TICL - Trial Lawyers Dinner to be held at Cipriani's Wall Street. The featured speaker at the dinner will be the Hon. A. Gail Prudenti, Chief Administrative Judge of the State of New York.

Doulas Hayden has been awarded the 2011 John E. Leach Memorial Award for outstanding service and contributions to the legal profession as a member of and past Chair of the TICL Section.

Mirna Santiago and Joanna Young have been named the co-winners of the Outstanding Section Chair award for their work with the TICL Diversity Committee.

The outstanding District Representative award will be shared by Sharon Stern Gerstman and Paul Jones for their leadership in the 8th Judicial District.

TICL also wishes to thank NYSBA President Vincent Doyle, President-Elect Seymour James, Immediate Past President Stephen Younger, Manny Romero, Tim Fennell, Sherry Wallach and Glen Lau Kee for the tremendous support the TICL Section received this past year from the Executive Committee of the NYSBA. We would also like to thank Pat Johnson, Lori Nicoll, Barb Mahan, Megan O'Toole and her staff for all their hard work for the section throughout the year.

Outgoing TICL Chair Thomas J. Maroney has also announced a special presentation will be made at the dinner to the entire TICL Diversity team of Mirna M. Santiago, Joanna L. Young, James P. Delaney, Roderick J. Coyne, Lawton W. Squires, Jean F. Gerbini and Carlos M. Calderón.

December 14, 2011

Workers' Compensation Not A Defense to Uninsured motorist Claim

An employee of a self-insured employer was injured in a motor vehicle accident while driving his employer's car. The accident was caused by an uninsured driver. As such the worker sought to claim against the employer's uninsured provisions of it being self insured for liability on its cars as well as for workers' compensation purposes.

When arbitration was sought for the uninsured benefits the employer moved to stay the arbitration which was granted. On appeal the Appellate Division - First Department lifted the stay and leave to appeal to the Court of Appeals was granted by the First Department. The right to claim uninsured motorist benefits from an entity that is self-insured for auto liability was resolved by the Court of Appeals in Allstate Ins. Co. v. Shaw, 52 N.Y. 2d 818 (1980). However, Shaw did not address the right to seek such a recovery where the person seeking the recovery was receiving workers' compensation benefits from his employer.

The Court of Appeals rejected the exclusivity protections of Workers' Compensation Law §11 to bar this claim. The Court considered the claim for the uninsured motorist benefits to be a contractual action and not a claim for benefits "on account of such injury or death or liability arising therefrom [sic]..." (Workers' Compensation Law §11) Therefore, the arbitration for the uninsured motorist benefits could proceed by the employee against his self-insured employer. Elrac, Inc. v. Exum, 2011 NY Slip Op 08961(December 13, 2011)

Based upon Exum, there is no reason why this doctrine would not apply in the case of a claim for underinsured motorist benefits as well. The exact same logic should apply to such a claim against an employer's vehicle.

November 15, 2011

Court of Appeals Upholds ATF Deposits


On July 1, 2010 the Appellate Division Third Department upheld the ATF deposit provisions in the 2007 reform of the New York State Workers' Compensation Law. A full review of those decisions is here. The cases were appealed to the Court of Appeals.

More than four years after the legislature enacted mandatory Aggregate Trust Fund deposits in all cases in which a claimant was classified as having a permanent partial disability after July 1, 2007 and involving a private workers' compensation carrier litigation challenging those requirements has been decided by the Court of Appeals.

In reaching this decision the court first looked at the statutory text of the amended §15(3)(w) of the Workers' Compensation Law. Although the amended §15(3)(w) applied to accident occurring on or after the effective date of amendment (March 13, 2007) the provisions regarding Aggregate Trust Fund deposits in Workers' Compensation Law §27(2) refers to "any such award made on or after July first two thousand seven..." without any limitation as to the date of accident or disability. Without similar language relating to the date of accident or disability the deposit provisions apply to all cases if a finding of a permanent partial disability is made after July 1, 2007.

The workers' compensation carrier once again argued that applying the law to accidents before the amendments was a retroactive application of the law. The Court of Appeals adopted the rationale of the Appellate Division that the law was not being applied retroactively but prospectively to actions taken by the Workers' Compensation Board prior to July 1, 2007.

The court also rejected the reliance of workers' compensation carriers on Burns v. Varriale, 9 N.Y. 3d 207 (2007) claiming that because the future benefits payable were not ascertainable that there was no way to properly determine the Aggregate Trust Fund deposit amount. That argument was rejected because the court indicated that the method of calculating the deposit is set by law and actuarial tables. Because of the certainty of the method of determining the value of the deposit there was nothing speculative about the determination.

The constitutional challenges raised by the workers' compensation carriers before the Court of Appeals was also rejected. A taking clause challenge was rejected because nothing was being taken from the workers' compensation carriers for a public purpose. The deposit has no effect on the liability of the workers' compensation carrier. It only requires the workers' compensation carrier to pay the present value of what they owe the claimant to the Aggregate Trust Fund to ensure that the claimant is paid in a timely fashion.

A Contracts Clause violation was also rejected because even before the amendment was enacted a discretionary deposit into the Aggregate Trust Fund was possible. The amendment only made what was discretionary mandatory.

The Aggregate Trust Fund deposit only applies to private workers' compensation carriers. It does not apply to the State Insurance Fund or a self-insured employer. This led to an equal protection challenge as well. The Aggregate Trust Fund was created to protect claimants from the insolvency of a workers' compensation carrier. There are other methods that ensure the payment of benefits to a claimant by the State Insurance Fund or a self-insured employer. The different treatment by the legislature of a workers' compensation carrier from the treatment of the State Insurance Fund or a self-insured employer is rational and therefore survives the challenge.

The Court of Appeals also found no Due Process violations in the law because at every step of a case from the date of the injury until the date the deposit is directed and made the workers' compensation carrier has many procedural protections in the law and process. Furthermore, the workers' compensation carriers failed to show that it was losing a "cognizable vested property interest" and that state was "wholly without legal justification" in enacting the law. Raynor v. Landmark Chrysler

The Court of Appeals also decided five other cases on the Aggregate Trust Fund issue. The case of <em>Collins v. Dukes Plumbing and Sewer Service, Inc., Parkhurst v. United Rentals Aerial Equipment, Inc., Arthur v. Gould Pumps ITT, <em>Salgy v. Halsted Communications, and Hardy v. Trico, (November 15, 2011) affirmed the Appellate Division decisions based upon the rationale in Raynor.

July 12, 2011

TICL Announces Program for Summer Meeting 2011

The TICL Summer 2011 Meeting will include a CLE program with a total of 7 CLE credits including 1 CLE hour in ethics. The meeting will take place at the Harborside Hotel and Marina in Bar Harbor, Maine from August 14 through August 17, 2011. In addition to the CLE there will be an opening night cocktail reception, a closing night cocktail reception and dinner as well as other activities on Mount Desert Island for the whole family.

The full program is available here.

Program registration is here.

Hotel registration here.

Please complete your program and hotel registrations as soon as possible.

This is your final chance to see the TICL Lobster in Maine before it becomes someone's dinner.

June 19, 2011

Beware Requests to Collect Debts from Foreigners

Did you ever receive an email asking for your assistance to collect a debt for some foreign company? If you do decide to help the person seeking your assistance you must be very careful to the terms that you agree to or you may end up owing money to your bank and you may or may not have liability insurance to protect your losses. Even if you do not have liability insurance to cover your debt to the bank your professional liability may have to defend the action. In part this is because the duty to defend by a carrier is greater that the duty to indemnify.

The case of Lombardi, Walsh, Wakeman, Harrison, Amodeo & Davenport, P.C. v. American Guarantee And Liability Insurance Company stands as a cautionary tale to be careful when seeking to help a client overseas with debt collection or any other legal issues involving currency matters. One thing to be sure to do is make sure that you do not have to pay out any monies until after your bank has finally collected on the check that you give them rather than when the check has "cleared". It was this difference in time that got the law firm into trouble leading to this litigation.

April 21, 2011

Solvent Group Self Insured Trusts Subject to Workers' Compensation Board Authority to Assess Expenses to Cover Insolvent Trusts

In Held v. State of New York Workers' Compensation Board the Appellate Division upheld the authority of the Workers' Compensation Board to assess the solvent group self insured trusts to cover the liabilities of insolvent trusts. In 2008 a major amendment to the Workers' Compensation Law was enacted to deal with the crisis of insolvent group self insured trusts in workers' compensation in New York State. It was enacted to clarify the rights and power of the Workers' Compensation Board to regulate the self insured industry in workers' compensation in New York State. This was in addition to the major amendments enacted in 2007 that cut off the benefits that injured workers could receive if they were found to have a permanent partial disability. That amendment clarified a situation that affects all types of self-insured employers in New York State. The clarification was that members of a group self insured trust could be mandated to pay assessments to cover shortfalls in other trusts.

Members of the group self insured trusts knew that when they became a member of the a trust that they could be held liable if other members of the trust they were in failed to pay their appropriate share of the funds needed to make sure that the trust was able to meet all of its obligations.

Although the Workers' Compensation Law allowed for the creation of group self insured trusts since 1966 they were not a very large segment of the self-insured employers in New York State. Most self-insured employers were large companies such as utilities. However, during the 1990s group self insured trusts became a much more common occurrence across New York State. A group of small employers in an industry would band together to form a group self insured trust under the assumption that being self insured would cheaper than purchasing workers' compensation insurance from a private workers' compensation carrier or the State Insurance Fund.

Many of the trusts were well run and properly financed. However, a segment of the trusts was poorly run and grossly underfunded. The most notorious of the poorly run trusts were those managed by Compensation Risk Managers. When the Spitzer administration came to power they saw the severity of the shortfalls involving the underfunded trusts and began to clamp down on bad actors in the area of group self insured trusts.

In order to make sure that all of the trusts would be able to have their obligations to injured workers met the Workers' Compensation Board began to impose assessments against all individual self-insured employers as well as members of all of the group self insured trusts. The assessments were made against the members of a health group self insured trust to cover the liabilities of the insolvents trusts.

When this occurred the members of the healthy trusts were upset because they believed their only liability was for shortages from members of their trust and not for other trusts. When these assessments were made the members of the properly funded trusts sued the Workers' Compensation Board to prevent it from imposing the assessments. This resulted in law suits being filed against the Workers' Compensation Board to prevent these assessments. In response to the lawsuits the legislature amended §50 of the Workers' Compensation Law to specifically confirm that the Workers' Compensation Board had the authority impose and collect the assessments. Laws of 2008 Chapter 139.

Since 1976 all self-insured employers have been required to allow the Workers' Compensation Board to pay assessments to cover unfunded liabilities of insolvent self-insured employers. This provision was enacted prior to the creation of any of the trusts involved in the lawsuit against the Workers' Compensation Board in this litigation. The court went on to say that the 2008 amendments to parts of §50 of the Workers' Compensation Law was to clarify that there is no difference between a single entity self-insured employer and a group self insurance trust and that the Workers' Compensation Board could have always imposed these assessments against the group self insured trusts.

The court also rejected a claim that requiring the members of a trust to pay for the Workers' Compensation Board's administrative expenses violates their contractual liability to only each other. Each trust has an obligation to pay their share of the Workers' Compensation Board operating expenses and therefore within each trust each member is liable for their pro rata share of the expenses.

The amendments to §50 of the Workers' Compensation Law led the plaintiffs to amend their complaint to allege violations of the taking clauses of the New York State and United States Constitutions. The New York State challenge was dismissed in a footnote based upon the state's "broad and unencumbered" authority to enact workers' compensation legislation. To find a taking under the Fifth and Fourteenth Amendments of the United States Constitution a plaintiff must show that the regulation is 'so onerous that it is tantamount to a direct appropriation or ouster.'"

The court concedes that level of the assessments may not have been anticipated the trust members, but that the impact of the level of the assessments is not so severe as to amount to an unconstitutional taking. Because the actions taken by the Workers' Compensation Board were clearly authorized by the Workers' Compensation Law the employers who joined the trusts knew or should have known of their potential liability for any self insured employers or trusts that became insolvent. The court also found that legislation like workers' compensation, which is "to promote the common good" is not the type of legislation that can rise to the level of a taking.

A violation of the Contract Clause of the United States Constitution (Article I §10) was also alleged. This challenge was dismissed because the authority to impose these assessments was created in 1976 prior to the creation of the trusts involved in the litigation. Since the law predated the creation of the trusts, the existing legislation could not impair the contractual rights of the parties.

A due process violation was also alleged because the trusts alleged that the law was unconstitutionally vague. However, based on the court's interpretation of §50 of the Workers' Compensation Law of a sufficiently clear meaning the trust members did not have to guess at what it meant and therefore the statute was not unconstitutionally vague.

The trusts were also assessed other expenses of the Workers' Compensation Board under §15(8)(h)(4) and §151(2)(b) of the Workers' Compensation Law. The assessments were also challenged by the trusts. Changes were made in 2007 and 2008 as to how these assessments were to be calculated. The changes in these calculations also failed to violate any provisions of the United States Constitutions.

All of the challenges raised by the trusts were denied by the Appellate Division which reversed the decision of the Supreme Court Justice in Albany that had granted some of the relief requested by the trusts was reversed and summary judgment dismissing all of the claims against the Workers' Compensation Board was granted.

As a result of this decision all self-insured employers and group self insured trusts must share the cost of insolvent entities within the New York State self insurance system for workers' compensation. Each trust will be given an assessment that will be passed on to its members on a pro rata basis. Within each trust if there are shortfalls, the shortfalls will be spread around the members as they have agreed to be jointly and severely liable for the expenses of their trust.

The silver lining for the group self insured trusts and regular self-insured employers is contained in the 2008 amendment to the Workers' Compensation Law as well as an amendment that became effective on March 31, 2011. Laws of 2011 Chapter 57. If a self insured is inactive for a year they will completely avoid any additional liability for these expenses. The 2011 amendment specifically defines the term self insurer as to include a group that has been inactive for over one year.

What the long term effect of this case for self insurance in workers' compensation in New York State is unknown. However, it is likely that leave a motion for leave to appeal to the Court of Appeals will be filed. Even though the decision of the Appellate Division was unanimous the fact that Court of Appeals granted a motion for leave to appeal in the Aggregate Trust Fund cases, it would seem likely that they would grant such a motion in this case as well. IF the motion is granted a final determination on the authority of the Workers' Compensation Board to impose these assessments will not come until sometime in 2012 or 2013.

Regardless of whether or not an appeal is taken, it may not be fiscally possible for some of the members of the group self insured trusts to pay their share of the assessments, which will continue to grow over time. It may very well lead the trusts to dissolve themselves and avoid future liability by becoming inactive an "unself" insured. Since the liability for the insolvent trusts also applies to the individual self-insured employers there may be a drop in the number of self-insured employers in New York State as well. This is a trend that will bear watching over the next few years.

February 5, 2011

TICL Names Officers for 2011

The Torts, Insurance and Compensation law Section of the New York State Bar Association elected its new officers for 2011 during the Annual Meeting of the State Bar

Thomas J. Maroney of Manhattan's Maroney O'Connor LLP was named Chair for 2011. The Vice Chair is Jean F. Gerbini of Counsel to Whiteman Osterman & Hanna in Albany. The new Secretary of the Section is Robert McCarthy of Nationwide Mutual Insurance in Woodbury, New York.