Torts, Insurance and Compensation Law Weblog

On Tuesday, September, 4, 2007, the New York Court of Appeals will address an extremely important issue concerning workers' compensation practice. The appeal -- Burns v. Varriale -- addresses the following workers' compensation law issue: Whether the value of future workers' compensation benefits to be awarded to a claimant with a nonscheduled permanent, partial disability is speculative. The Appellate Division, Third Department held that the value is speculative.

The appeal will impact the way courts apportion a workers' compensation carrier's share of litigation costs a worker expends in commencing a successful lawsuit against a third party regarding the injury. This case puts a glean on an older New York Court of Appeals' case, Matter of Kelly v. State Ins. Fund, 60 N.Y.2d 131 (1983).

The Court will likely hand down a decision during October Session.

Agreeing with the Appellate Division, Third Department, the New York Court of Appeals last week in Burns v. Varriale held that the value of future workers'compensation benefits for a claimant with a nonschedule permanent partial disability is speculative, that the present value of these benefits cannot be ascertained at the time claimant recovers damages in a third-party action, and that claimant is not entitled to an apportionment of attorney's fees based on such future benefits.  Here is the Third Department's decision below.

In Paccio v. Whiting Door Manufacturing, Supreme Court, Nassau County (Lally, J.), addresses, among other things, whether the plaintiff sustained an "acquired injury to the brain caused by an external physical force resulting in permanent total disability" as set forth in Workers' Compensation Law sec. 11.   As you remember from Rubeis v. The Aqua Club, this particular injury must render the employee incapable of employment in any capacity; however, the injured plaintiff need not be unable to engage in the functions of daily living or be reduced to a vegetative state (see prior post)

The interesting point about this case is that the Court determined that an issue of fact existed as to whether the plaintiff's injuries qualified for this particular "grave injury," basing its conclusion on the plaintiff's expert affidavit regarding a physical examination that occurred a year before the affidavit's date.  The expert had numerous gaps in her affidavit, failing to clarify whether certain impairments were present prior to the plaintiff's accident.

On June 2, 2008 the Court of Appeals will hear arguments in Ramroop v. Flexo-Craft Printing, Inc. on appeal from the Appellate Division – Third Department. This case involves a claimant’s right to ongoing workers' compensation benefits after a scheduled loss of use award of more than a 50% scheduled loss of use to an arm, leg hand or foot.

Mr. Ramroop was found to have a 75% scheduled loss of use of a hand. He received that award and was seeking to obtain additional benefits under §15(3) (v) of the Workers' Compensation Law. In order to obtain those benefits a claimant must be suffering an impairment of earning capacity” “due solely to the injury and must attempt to participate in a rehabilitation program. Mr. Ramroop was not allowed to enter into a rehabilitation program as required under §15(3) (v) of the Workers' Compensation Law in order to obtain the additional weekly benefits because of his status as an undocumented alien. The Workers' Compensation Board found that the claimant’s loss of earnings was not do solely to the injury to be eligible to obtain the §15(3) (v) benefits. It stated that his earning capacity was impaired by his undocumented status that prevents him from being hired in the United States.

A problem with this decision is that encourages the hiring of undocumented workers because they would not be able to be entitled to receive benefits when disabled. Additionally, it is clear that prior to the injury despite the claimant’s status he had an ability to earn money while working. If he did not have such ability prior to the accident he never could have been working to sustain the injury in the first place. Clearly, being undocumented is not an impairment to wage earning in New York State. The decision also runs counter the Court of Appeals in Balbuena v. IDR Realty, LLC which did not impair an undocumented alien’s right to damages so long as there was no fraud in the hiring. The Third Department was also silent as to what would happen to the claimant’s right to benefits if he were to leave the United States and go to a country where he can legally work.

The decision from the Court of Appeals may have a very substantial impact on all of the undocumented aliens working in New York State and their right to collect workers' compensation benefits after sustaining an injury. So far the Workers' Compensation Board has not expanded its bar to paying undocumented aliens to other situations. The decision will have to be watch closely.

Ronald Balter of Caruso, Spillane, Leighton, Contrastano, Ulaner & Savino, P.C. wrote this post.

On June 10, 2008 the Court of Appeals decided the case of Preserver Insurance Company v. Ryba. The case involved the limits of liability of an out of state workers' compensation insurance policy when the employer is impleaded under §11 of the Workers' Compensation Law.

A New Jersey employer started doing work in New York State. One of its employees was injured and filed for workers compensation as well as commencing a lawsuit. The employer was impleaded. The employer then commenced a declaratory judgment action to accomplish three things.

1- It sought a ruling that it had no duty to defend a contractual claim because of a breach by its assured.
2- It sought a ruling that it did not have to defend the employer because the action was not incidental to its New Jersey operations.
3- That if liable its liability was limited to the limits in the policy, even though the similar clauses on New York policies have no limits.

The carrier did not appeal the findings that it had a duty to defend the action. So the only real issue before the Court of Appeals was the limits of its liability under what New York calls the 1-B portion (Employers Liability Insurance coverage) of the policy, or in older terms, its Dole v. Dow 30 N.Y. 2d 143 (1972) liability.

The court found that the policy was actually a New Jersey policy and that the limits in the policy from New Jersey trumped what would have happened if it was a New York policy. The court stated that the true limits of liability are to be determined based upon the states that the policy was actually written for. The policy was only effective in New York for occasional work that may have been done in New York State. It was not a policy that would have been effective if the employer was a New York employer on a regular basis. Because the carrier only issued the policy for regular coverage in New Jersey it was determined to be New Jersey policy and therefore, the limits in the policy are valid when and if the carrier has an obligation to defend an action in which the employer has been impleaded. Had the policy been written to cover a ful time New York operation then the policy limits would not have been effective.

A careful reading of the decision shows that based upon the actions of the employer the carrier may not have had any liability in either the workers' compensation case or the personal injury action. The claimant was injured in New York on a job site that was more than an occasional New York work appearance. It appears that eh intent of the policy would be to cover an employee when they were traveling in New York, such to go to the airport on a business trip. It was not meant to cover regular on going New York operations. However, the carrier never sought to disclaim on this basis.

The Court went on at the end of the decision to indicate that under the 2007 amendments to the Workers Compensation Law [§50(2)] that any out of state employers must have a policy issued under New York law. It will be interesting to see how the court will interpret a similar situation for an accident that occurs on or after September 9, 2007 where the policy did not list New York as a place for which the policy was actually written.

http://www.nycourts.gov/ctapps/decisions/jun08/97opn08.pdf

The court felt that in order to understand the decision that the Information Page be made a part of the official reporting of the decision. The information page is here

Post by Ronald Balter

A preview of the issues at stake in the case of Ramroop v. Flexo-Craft Printing was previously posted.

The Court of Appeals in affirming the result of the decision of the Third Department in the case of Ramroop v. Flexo-Craft Printing on different grounds than the Appellate Division decision denies an entire segment of the work force in New York State the additional benefits available under §15(3)(v) of the Workers' Compensation Law. Under either theory the Mr. Ramroop, an undocumented alien, has been barred from receiving additional benefits. The Court of Appeals decision was 5-2 with the dissenting opinion finding that the majority took a narrow view of the Workers' Compensation Law and also was of the opinion that the record was in sufficiently developed to allow the Court to make a decision on the issue.

The majority was of the opinion that the claimant not entitled to the §15(3)(v) benefits because he is unable to participate in a “Board approved rehabilitation program”. The Court stated that no rehabilitation program could admit the claim because of his undocumented status and that he could not be legally employed in the United States.

The court went on to say that the legislature in enacting §15(3)(v) of the Workers' Compensation Law did not intend to restore to employment a person who is legally unemployable. Because of that the court felt constrained to deny the claimant benefits under §15(3)(v).

Section 17 was raised by the claimant starting at the Law Judge level to try to save the claimant’s right to the benefits. The court indicated that §17 of the Workers' Compensation Law as it has been amended exists so as to not deny a person who is entitled to an award just because they leave the United States or Canada. The court found §17 inapplicable to this situation because there was no denial of benefits to the claimant because he was leaving the United States for a country other than Canada. The court’s language in dealing with the §17 arguments raise questions as to what happens if an undocumented alien leaves the United States and returns to work in another country earning less than they did when injured. Once out of the country according to the court the claimant cannot have any of the benefits they are entitled to receive diminished because they are out of the country. This person would apparently be entitled to receive benefits under §15(3)(v) of the Workers' Compensation Law.

The court’s decision seems to be self contradictory. Although the claimant cannot be retrained and returned to the work force to make him eligible to receive the additional benefits under §15(3)(v) the court looked favorable upon two prior decisions on related issues. The first case favorable cited by the court was Balabuena v. IDR Realty, LLC, 6 N.Y. 3d 338 (2006). In Balabuena the court held that the New York State Labor Law protects undocumented aliens despite the federal Immigration Reform and Control Act of 1986. The court also let stand a 1960 decision of the Appellate Division which allowed the payment of basic workers' compensation benefits to undocumented aliens. Testa v. Sorento Restaurant, 10 A.D. 2d 133 lv to appeal denied 8 N.Y. 2d 705 (1960).

The dissent agreed with the majority’s interpretation of §17 of the Workers' Compensation Law in that it could not save the claimant to receive the awards under §15(3)(v). However, as to the merits the dissent by Judge Ciparick, which included Chief Judge Kaye, felt the court acted prematurely. The courts decision was based upon the fact that the New York State Education Department’s Office for Vocational and Educational Services for Individuals with Disabilities could not retrain the claimant because of his status. However, neither the claimant’s attorney nor the attorney for the employer and its workers' compensation carrier was aware if there was another agency or organization that would accept the claimant for retraining and rehabilitation. The dissent wanted the case to be referred back to the Workers' Compensation Board to determine if there is a program that would accept the claimant.

The dissent was believes that the legislative history of §15(3)(v) is such that only medical impairments to participating in a rehabilitation program could act to bar a claimant from receiving the supplemental benefits.

The dissent in its conclusion raised the difficult issue that is confronted in this case.

The purpose of section 15 (3) (v) is to re-employ the worker and maximize the worker's earning capacity (see Governor's Program Bill, Bill Jacket, L. 1970, ch 286, at 3). For this Court to now hold that a worker's earning capacity is diminished because of a lack of authorization to work in this country when the lack of authorization existed pre-injury defeats this legislative purpose.

The majority today forecloses the availability of additional compensation for severely injured workers solely because they may lack permanent residency status or authorization to work in this country, ignoring the history of our Workers’ Compensation Law and this State's commitment to protect all workers, irrespective of immigration status (see Balbuena v IDR Realty LLC, 6 NY3d 338, 358-359 [2006]).

Although this case results in a defeat for the injured workers’ of New York there may be a silver lining in the decision. The silver lining may be in footnote one in the majority decision with the application of the Reform Bill of 2007. The footnote describes four types of injuries, permanent total disability, temporary total disability, permanent partial disability and temporary partial disability. Under the reform bill limits were imposed as to how long a claimant can collect benefits in case where the claimant is found to have permanent partial disability. The Court of Appeals says that in addition to the four previously mentioned types of cases they are also cases that are

called schedule loss of use awards because the statue assigns – as by a ‘schedule’ – a fixed number of lost weeks compensation according to the bodily member injured. . . . Schedule loss of use awards “compensate for loss of earning power” and, like all other compensation awards “are intended to provide a limited and certain, not full but uncertain remedy regardless of the fault of the employer, and to continue the wage income as nearly uniform as the provisions of the law would permit after the employee’s injury. (Citations omitted)

This can lead to a beneficial interpretation as to how the now limited permanent partial disability benefits are to be paid to injured workers. The amendments to §15(3)(w) of the Workers' Compensation Law in the reform bill now puts a limit on the length of time that person can collect permanent partial disability benefits. This makes those awards similar to awards under §15 (3)(a) through §15(3)(l). As an example a person with a $900.00 average weekly wage who was injured on July 2, 2007 and found to have 1% permanent partial disability would be entitled to 225 weeks of additional benefits after a finding of permanency. The question is what rate those 225 weeks should be paid. A 1% disability on a $900.00 average weekly wage is a rate of $6.00. The Workers' Compensation Law mandates a minimum rate of $100.00 in such a case. The issue that will have to be decided first by the Workers' Compensation Board and eventually the courts is whether that award should be paid at $100.00 per week or at $500.00 per week. The $500 rate is the rate at which a scheduled loss of use under §15 (3)(a) through §15(3)(l) would be paid. If the Workers' Compensation Law is to continue to make sure that all injured workers “continue the wage income as nearly uniform as the provisions of the law would permit after the employee’s injury” as stated in the footnote the $500.00 rate would be the logical rate at which to pay the individual. This interpretation would as the dissent pointed out would be in the tradition of Judge Cardozo who stated that the Workers' Compensation Law was enacted to make sure that injured workers are saved from becoming one of the derelicts of society, a fragment of human wreckage. (Dissent at page 2.)

Post by Ronald Balter

The Appellate Division – Third Department limited the amount of benefits that a claimant can receive in any one week to the maximum allowed by the Workers' Compensation Law. The Appellate Division had previously indicated that there may have been a way for an injured worker to actually collect over the maximum rate allowed by law. The court reached its decision in the case of Lamantia v. Midland Elevator Company, 2009 NY Slip Op 01379 (February 26, 2009)

Mr. Lamantia stopped working when he sustained a back injury. As a result of that injury the claimant never returned to work. When he stopped working he also realized that he had developed carpal tunnel syndrome and filed a separate claim for that condition.

On the day that the claimant was classified as having a permanent partial disability he was also awarded a scheduled loss of use for his hands. The State Insurance Fund objected to paying the scheduled loss of use since for the “weeks it covered” the claimant was already paid the maximum rate of $400.00 per week in the back case.

The Workers' Compensation Board affirmed the Law Judge and the State Insurance Fund took the case up to the Third Department. This was a full frontal attack on the Miller v. North Syracuse Central School District, 1 A.D. 3d 691 (2003) case. The Court of Appeals had already questioned the viability of Miller in the LaCroix v. Syracuse Executive Air Service, Inc., 8 N.Y. 3d 348 (2007) case.

The Third Department was able to read the tea leaves from the Court of Appeal and all but overruled Miller. The Third Department now indicates that a person’s benefits are limited to the maximum rate in §15(6) of the Workers' Compensation Law for the date of accident and that it is an overall limit of money that is paid every week. No longer can a claimant collect benefits for temporary and permanent disability for the same week and have the benefits exceed the maximum rate for the date of accident and/or disability.

As a result of this case there will be the end of awarding full benefits for a hearing loss where the worker eventually stops working because of an accident as in this case or from an OD such as asbestosis.

Currently there is legislation pending in both houses of the Legislature to attempt to resolve this matter. The “Same As” bill numbers are A2021 sponsored by Assemblywoman Susan John and S2776 sponsored by State Senator George Onorato.

The Appellate Division decided one of the most important cases in years recently involving the rights of undocumented workers to receive workers' compensation benefits. The case is Amoah v. Mallah Management, LLC.

In this case the claimant used phony documents to get his job. The claimant entered the country legally but was not permitted to work. He then stayed longer in the country than his visa permitted him stay. After he was injured he filed a workers' compensation claim and filed a PI case under his roommate’s name, whose name and Social Security number he used. The roommate eventually demanded a piece of the workers' compensation benefits and the negligence recovery. The claimant balked at this. The claimant eventually told this story to the workers' compensation carrier on a voluntary basis.

After this the workers' compensation carrier sought to suspend his benefits because of the use of fraudulent documents used to get the job. After development of the record the Law Judge ruled that the claimant was still entitled to workers' compensation benefits. On appeal within the Workers' Compensation Board a Board Panel affirmed the Law Judge and the workers' compensation carrier appealed to the Appellate Division. The employer and workers' compensation carrier contended that the Immigration Reform and Control Act of 1986 (see 8 USC § 1324a et seq.) (hereinafter IRCA), as interpreted by the United States Supreme Court in Hoffman Plastic Compounds v National Labor Relations Bd. (535 US 137 [2002]).*

The court analyzed the potential conflict between the New York State Workers' Compensation Law and IRCA. The analysis led it to be of the opinion that IRCA did not preempt the New York State Workers' Compensation Law under the Supremacy Clause of the United Constitution. Part the basis for this was that occupational health and safety is historically an exercise of state police powers and that Congress did not intend to supplant state law in this area. Also the Court of Appeals had already ruled in Balabuena v. IDR Realty, LLC, 6 N.Y. 3d 338 (2006) that IRCA did not take away an undocumented worker’s right to collect damages in a personal injury case.

The court also indicated that the mere fact that a person is an undocumented worker is not a bar to receiving basis workers' compensation benefits based upon the decision of the Court of Appeals in Ramroop v. Flexo-Craft Printing, 11 N.Y. 3d 160 (2008) and Testa v Sorrento Rest., 10 AD 2d 133, 135, lv denied 8 NY2d 705 (1960)

The court went on to say that IRCA was intended to deter employers from hiring undocumented workers. The court then reasoned that to allow employers who hire undocumented workers to avoid having their workers' compensation carriers pay indemnity for lost time would encourage the hiring of undocumented workers and to defeat the purpose of IRCA. It should also be noted that in this case the court found no evidence that the employer tried in any way to confirm the eligibility of the injured worker to work in the United States.

Hoffman Plastics was then distinguished in that Hoffman Plastics involved a claim for unpaid wages and for personal injury. The court then considered that the payment of workers' compensation benefits was a contractual right as a form of consideration that was part of the contract for services already performed. The court then stated that since the claimant was totally disabled and under no obligation under New York law to look for work he should not be barred from continuing to receive workers' compensation benefits. Had the claimant had a partial disability and would therefore, have been required to look for work the result may have been different. If the claimant had a partial disability New York law requires him to remain attached to the labor market. Since it would have been illegal for him to obtain employment the court may have denied his claim for ongoing benefits, which he would have been able to collect if he returned to his home country and produced medical evidence of a disability and attachment to the labor market in his home country.

The decision of the Appellate Division was a unanimous affirmance of the Workers' Compensation Board. Therefore, there is no appeal of right to the New York State Court of Appeals, New York’s highest court. The next step in this case can be either a motion to the Court of Appeal for permission to appeal to the court or an appeal directly to the United States Supreme if the workers' compensation carrier seeks to continue their fight.

* Justice Bryer wrote a dissent in Hoffman Plastics.

On June 24, 2009 the New York State Court of Appeals decided a case involving the proper statute of limitations when a person seeks to sue a doctor who performed an Independent Medical Examination (IME) performed pursuant to CPLR §3121. The case was Bazakos v. Lewis, 2009 NY Slip Op 05199. The action was commenced two years and eleven months after the examination when the plaintiff alleged that he was injured by the IME during the examination. The case was brought as a regular negligence action rather than a medical malpractice action because at the time the suit was brought the two year six month statute of limitations for medical malpractice had already expired. In a 4-3 decision the Court held that the medical malpractice statute of limitations in CPLR §214-a is the appropriate statute of limitations and dismissed the suit as untimely.

In an opinion by Judge Robert Smith the majority stated that in an IME there is a limited doctor – patient relationship between the plaintiff and the IME. Although, the court found that there was logic to the plaintiff’s position it was of the opinion that to accept the plaintiff’s argument would create an arbitrary result. Judge Smith indicated that the claim brought by the plaintiff was a claim that the doctor failed to perform his task with the required specialized skill expected of a doctor.

The plaintiff claimed that the defendant injured him by manipulating a body part. The court stated that when the plaintiff was seen for the legally mandated examination the doctor was performing “medical treatment” and that the negligent performance of that treatment led to the injury and eventual law suit. The majority saw “no good reason” to treat the plaintiff in this any differently than a person who went to a doctor to be treated on a regular basis. The court went on to indicate that there is a limited physician – patient relationship between the plaintiff and a doctor performing an IME.

In the end the majority ruled that the claim of the plaintiff was that the doctor “breached his duty "to perform the examination in a manner not to cause physical harm to the examinee." That is a claim for medical malpractice, and it is governed by the 2 year, 6 month statute of limitations.”

In a stinging dissent Chief Judge Jonathan Lippman took a sharply different approach to the situation and would have affirmed the Appellate Division’s decision allowing the three year statute of limitations for a regular negligence action under CPLR §214(5). The dissent argued that there was no medical treatment provided by the defendant because none was intended nor was any provided. The examination was a “disclosure device in litigation” and that the benefit was not for the plaintiff but in fact for the defendant in the underlying personal injury action. They added that the conduct of the defendant “during his examination … is not amenable to [a] description of medical malpractice within the meaning of CPLR §214-a.”

The dissent added that allowing the two year six month statute of limitations to apply in this situation is not consistent with the intent of CPLR §214-a. The shortened statute of limitations for medical malpractice was “to address the threat to the health and welfare of New Yorkers posed by the "inability of health care providers to get malpractice insurance at reasonable rates" and to help assure that "the adequate delivery of health care services" would not be impaired (citation omitted).” The shorter statute of limitations in CPLR §214-a was not intended to afford protection to those doctors engaged in litigation support.

The dissent went on to add it makes sense to treat a doctor who is actively treating a person and another who is providing litigation support differently under the law. The risks facing a doctor treating an individual on a regular basis is clearly different than the risks involved for a doctor in a non-treating context. The defendant’s duty to the plaintiff was only to not harm him. “[H]e had no medical duty competently to diagnose, inform or, indeed, to treat the [plaintiff].”

The dissent was troubled by the majority’s acceptance of medical malpractice in the absence of medical treatment. It stated

[t]he majority must accept what it purports to reject, namely, that what will be malpractice in the context of ongoing medical treatment may not, no matter how glaring the breach, be malpractice in the context of an exam understood by the parties thereto to have no medical treatment objective. Indeed, most of what would be malpractice in the former context is not even actionable in the latter.

The dissent added that since the only duty the defendant owed to the plaintiff was to not harm him. The breach of that duty does not sound in medical malpractice but in negligence. The obligation of the doctor to the examinee to not harm the examinee is ordinary negligence. The examination, despite what it is called, is far from independent in the ordinary sense of the word and is paid for and controlled by the plaintiff’s adversary.

The dissent’s contempt for the majority can be seen in the penultimate paragraph of the dissent.

The cause of action the majority now recognizes for medical malpractice is not only still-born in this action, but, I will venture, will never possess viability as an actual claim for relief. I am confident that the majority has not the slightest intention to open the vistas of malpractice so wide as to actually permit such claims in the absence of anything cognizable as treatment. What is involved then is simply the arbitrary creation of an exception for a group of practitioners who, as a group, neither seek nor are entitled to the protection properly afforded and reserved to those engaged in the delivery of medical care and treatment.

Judge Smith was joined in the majority by Judges Ciparick, Graffeo and Read. Chief Judge Lippman was joined in the dissent by Judges Pigott and Jones.

The Appellate Division Third Department recently ruled on whether or not an employer who obtains a workers' compensation policy in New Jersey through the assigned risk pool has coverage under the New York State Workers' Compensation Law when a claim is made against the employer before the New York State Workers' Compensation Board. The case is Chumra v. T & J Painting Company, decided July 9, 2009.

The state of New Jersey does not have the equivalent of the New York State Insurance Fund, as an insurer of last resort. Instead they have an assigned risk pool for employers who cannot otherwise find an insurance company willing to write a policy of workers' compensation insurance. In order to encourage insurance companies to voluntarily cover an employer in New Jersey, there are restrictions on the type of policy that a workers' compensation carrier can write when they gain an assured through the assigned risk pool.

The restriction is that the carrier is prohibited from including an “all states endorsement” in the policy. This means that the policy they write through the assigned risk pool is limited to coverage under the New Jersey Workers' Compensation Law. The workers' compensation carrier cannot write the policy for the assured to fully cover the employer across the country, except in those states similar to Ohio that have a monopolistic state run workers' compensation insurer. The policies do contain a limited “all states endorsement” for limited coverage in other states so as to protect an assured if an employee is injured in another state on a business trip.

In fact the policy lists four requirements in order for it to protect an assured in a jurisdiction other than New Jersey. Those requirements are:

1. The claimant must have been hired in New Jersey

2. At the time of the injury they must have been principally employed in New Jersey.

3. The employer must not have been required to have workers' compensation insurance in the other state where the injury occurred.

4. The work being performed in the other state must be temporary in nature.

In the case before the New York State Workers' Compensation Board the Workers' Compensation Board only made a finding that the work being performed in New York State was temporary. No findings were made about the three other requirements to make the policy effective in New York State. Therefore, the court restored the matter to the Workers' Compensation Board to make findings of fact on the other three issues before finding that the policy protected the employer and made Travelers Insurance Company liable for the benefits the claimant was claiming.

On remand if the Workers' Compensation Board finds that any one of the first three requirements are not met the claim will become the liability of either the Uninsured Employers Fund in New York or it could determine that there is no jurisdiction for the Workers' Compensation Board ( although this is unlikely because the injury occurred in New York State).

In September of 2009 it was learned that the New York State Workers' Compensation Board was starting a Business Process Improvement (BPI) initiative. From internal emails that were obtained it appeared that the Workers' Compensation Board was seeking to drastically limit the hearing process. The Workers' Compensation Board was seeking to make decisions in an informal manner without direct input from the litigants before it rather than hold hearings.

Upon learning of this situation and the negative impact it could have on clients in the workers' compensation system attorneys who represent injured workers, workers' compensation carriers and self-insured employers met through the New York State Bar Association’s (NYSBA) Tort Insurance and Compensation Law Section’s (TICL) Workers’ Compensation Division. As a result of this meeting a subcommittee set up after a 2001 review of the Workers' Compensation Board conducted by NYSBA was reconstituted and a series of meeting to discuss changes that the Workers' Compensation Board wanted to place in the system took place.

In these meetings all of which included the Chair of the Workers' Compensation Board, Robert Beloten, and various members of his staff the subcommittee was told of how the Workers' Compensation Board was looking to proceed in the future. The Workers' Compensation Board was advised that the subcommittee believed that there were serious due process issues that the Workers' Compensation Board was overlooking as it sought a make overhaul of its decision making process. The Workers' Compensation Board said it understood the concerns that were being expressed and that they would take them under advisement.

On January 14, 2010 a meeting was held in New York City with the Chair and other staff members from the Workers' Compensation Board. Also attending this meeting was the president of NYSBA Michael Getnick. At this meeting the Chair indicated that no final decision on the program had been made. Two weeks later the Chair met the members of the TICL Workers Compensation Division at the Annual Meeting of NYSBA. President Getnick attended this meeting as well. At that meeting the Chair indicated that the program was going to start as a Pilot Program in the Hauppauge District Office of the Workers' Compensation Board. Everyone was advised that the pilot program would be evaluated for any success before being expanded statewide.

After hearing this everyone in the subcommittee was shocked when the Workers' Compensation Board announced in its in-house newsletter, Across the Board, that the plan, now renamed Managed Adjudication Path (MAP) would be Workers' Compensation Board policy across the state on February 26, 2010. The subcommittee had another meeting scheduled with the Chair and his staff for February 24, 2010, just two days before MAP was to be implemented statewide.

Contact was made with the Labor Committee of the New York State Senate chaired by Sen. George Onorato. The Senator scheduled a public hearing for early on that same day. The subcommittee contacted people from around New York State to testify about their concerns about the MAP program.

The first to testify was the Chair Beloten who was assisted by the General Counsel of the Workers' Compensation Board and the Director of Operations. After their testimony about 15 people testified on their opinion on the MAP program. The people who testified from around the state were people with hundreds of years of combined experience in workers' compensation in New York State. The people who testified included three sitting Law Judges from the Workers' Compensation Board as well as two of their retired colleagues. Four members of the subcommittee testified as well. They were committee chair Chris Lemire, Mark Hamberger, John Sciortino and William Crossett. These attorneys who represent both sides of the table and were unanimous in their opinions that the MAP program was bad for injured workers, workers' compensation carriers and employers in New York State.

Opposition to MAP was also expressed by organized labor and business interests in New York State. The biggest support for the hearing process came from a person with unique knowledge of both sides of the table. The head of workers' compensation for a major employer in New York State expressed his support for the hearing process. As an injured worker he liked it because he got his day in court. As an employer he was able to see what was happening to the people injured when they were working for his employer.

At the outset of the hearing Senator Onorato expressed his concerns about the Workers' Compensation Board’s intended use of the MAP program. After all of the testimony the Senator again expressed his concerns over MAP and asked that the Workers' Compensation Board reconsider what it was planning to do.

After the Senate hearing the subcommittee went to the Workers' Compensation Board’s offices in Albany to meet with the Chair and his staff. Because of the length of time of the Senate hearing the Chair was no longer available to meet with the subcommittee. However, the meeting took place with members of the Chair’s senior staff. Part of the discussion was about what the Workers' Compensation Board planned to do about MAP which was scheduled to be implemented in less than 36 hours by the time of the meeting. The staff at the meeting could not give an answer at that time because the Senate hearing had just ended and the Workers' Compensation Board would have to discuss the testimony and the admonitions from Senator Onorato. At the end of the meeting the subcommittee was told that it would be notified on February 25, 2010 what the Workers' Compensation Board planned to do.

On February 25, 2010 Senator Onorato issued a statement that urged the Chair and the Workers' Compensation Board to reconsider it plans and to meet with the Senate Committee and the stakeholders in the system if the Workers' Compensation Board believes that changes must be implemented to improve the system. The Senators full statement is available here. Later that day Chris Lemire received a communication from the Workers' Compensation Board’s General Counsel Kenneth Munnelly on behalf of Chairman Beloten. The statement said:

Dear Chris:

As promised during yesterday's meeting, here is a statement by the Chair concerning his decision to delay MAP until we can brief stakeholders on the details of our process changes. We will contact you shortly concerning the date of the briefing. If you have any questions, please feel free to contact me. Thanks.

At a hearing before the State Senate yesterday, numerous stakeholders in the workers' compensation system expressed concerns about the Board's plan to reform and streamline its concilliation [sic] process. I continue to believe strongly that the proposed changes will result in lower costs, and maintain full protections for the parties' due process rights. Nonetheless, given the scope of concern expressed by many stakeholders and by the Legislature, I think it is appropriate to delay the initiative so that there is time for more discussion and feedback. In the next several weeks, the Board will set up a forum in which the details of the Board's process changes can be set forth before interested parties in full detail, and where there can be a full and frank discussion about the concilliation [sic] process. After the briefing, I will consider all suggestions and proposals by stakeholders before a reform program is implemented.

As of now the MAP program implementation has been put on hold. The subcommittee will continue to meet with the Chair and his staff to make sure that the New York State workers' compensation system is fair to all parties involved and that their due process rights are not violated. The subcommittee and Workers' Compensation Board both want a system that allows for a fair and just outcome for all parties with an opportunity to be heard by the decision makers at the Workers' Compensation Board.

A video of the Senate hearing will be posted shortly by the Senate here.

the other members of the subcommittee are Ronald Balter, Paul Siminerio, Peter Walsh, John Snyder and Alex Dell.

The State of New York is about to impose a 20% reduction in the workload of the Workers' Compensation Board. As part of Governor Patterson’s attempt to save the taxpayers money by furloughing employees including all the Law Judges and court stenographers across New York State.

This will be accomplished by canceling hearings on Fridays for the foreseeable future. Hearings to be held on May 21, 2010 and May 28, 2010 are to be canceled. Hearings for Friday June 4, 2010 and future Fridays will not be scheduled at all until further notice.

Now at first look it appears that these actions will save 20% of the cost to taxpayers of running the Workers' Compensation Board. However, this will not save the taxpayers any money at all. The Workers' Compensation Board is fully funded by assessments against insurance companies that write workers' compensation insurance in New York State and the self insured employers in New York. Therefore, there will be no savings to the taxpayers in New York State.

To its credit the Workers' Compensation Board argued to the State that it should be exempted from the furloughs being imposed throughout the Executive Branch of government. However, this argument was rejected by the State.

As a result of this action the resolution of cases and making awards of benefits to claimants and authorizing medical treatment when disputed by a workers' compensation carrier will be delayed. This can mean the difference between a good result from surgery as opposed to a poor result because of the delay in authorizing the needed to procedure. It will also put added financial pressure on injured workers because is now a 25% reduction in hearings scheduled every week, which delays the time until they are able to appear before the Workers' Compensation Board to make their claim.

Unknown is whether the workers' compensation carriers and self insured employers who fund the Workers' Compensation Board will seek a rebate on their assessments because of the 20% drop in the work being performed by the Workers' Compensation Board.

On May 27, 2010 the New York State Bar Association issued a press release in which it indicated its ongoing opposition to the Workers' Compensation Board’s Managed Adjudication Path (MAP) Program. The Bar Association continues its opposition to the MAP Program because as President Michael Getnick of the New York State Bar Association stated “it would erode the due process rights of injured workers and employers. The rights of both injured workers and employers will be protected, and the timely resolution of disputed issues accomplished, only by affording both parties a prompt hearing before a Law Judge. The State Bar Association continues to urge the Board to remove this proposal and work toward what should be the common goal of achieving efficiency with justice.”

The press release can be read here. For more information on the efforts of the New York State Bar Association to prevent the implementation of the due process denying MAP program read here.

One of the keys provisions in the 2007 workers' compensation reform bill was the requirement that the private carriers make a deposit into the Aggregate Trust Fund in all cases where a claimant was classified as having a permanent partial disability, if the classification took place on or after July 1, 2007. The only exceptions were in those cases in which the private workers' compensation carrier had filed for relief under §15(8) of the Workers' Compensation Law for reimbursement from the Special Funds Conservation Committee or had a pending third party action. The provision in Workers' Compensation Law §27(2) had no limitation as to the applicable dates of accident.

Clearly this was not an amendment that the private workers' compensation carriers in New York State liked. The provisions were challenged a lawsuit against the Workers' Compensation Board in federal court directly and within the Workers' Compensation Board and New York State court system. The federal claim was denied based upon Burford Abstention Doctrine in Liberty Mutual v. Hurlbut. In the spring of 2009 the Workers' Compensation Board issued Full Board Review decisions in nearly 100 cases in which they upheld the provisions of the 2007 reform bill requiring the Aggregate Trust Fund deposits.

On the third anniversary of the requirement to make the Aggregate Trust Fund deposits in two separate decisions involving six cases the Appellate Division – Third Department unanimously affirmed the Workers' Compensation Board and found no basis to strike down the Aggregate Trust Fund deposit provision of the Workers' Compensation Law.

The more important of the two decisions is the Collins v. Dukes Plumbing and Sewer Service, Inc., 2010 NY Slip Op 05832 (July 1, 2010). This is because in Collins the court reached the constitutional issues that were not raised by the parties in the Parkhurst v. United Rentals Aerial Equipment, Inc., 2010 NY Slip Op 05833 (July 1, 2010). Obviously both cases dealt with statutory interpretation as well. In fact the analysis of statute was basically the exact same decision in both cases right down to the typographical error as to the effective date of the capping of permanent partial disability cases. (Both decisions transposed the date from March 13, 2007 to March 31 2007 in error.)

The workers' compensation carriers raised the following issues before the court to attack the statute on its face:

1. Improperly applying the deposit requirement retroactively to cases that occurred prior to the amendment’s effective date (in other words objecting to Aggregate Trust Fund deposits on non-capped permanent partial disability cases)
2. The Aggregate Trust Fund deposits were to only apply to cases in which the permanent partial disability benefits were capped
3. It was unfair to require the private workers' compensation carriers to pay the present value of the current benefits into the Aggregate Trust Fund as the rate could vary in the future
4. The computation of the present value was arbitrary and capricious because the actuarial tables could not accurately predict the length of an uncapped award

The court dealt with the issues in such a manner as to not create any wiggle room for the workers' compensation carriers to attempt additional arguments around the Aggregate Trust Fund deposits in other cases. The court said that the first argument made by the workers' compensation carriers did not involve retroactive application of the law. The amendment to §27(2) applied to what the Workers' Compensation Board was required to do in the future. It did not in any way affect what had happened in the past.

As for the interpretation urged that the deposits only applied to capped cases the court indicated that this was not true because the express language of the section did not include any such limitation. The express language of the section did not support the workers' compensation carriers’ argument.

The plain reading of the text of Workers' Compensation Law §27(2) as amended says that it applies to “any such award” under Workers' Compensation Law §15(3)(w) made after July 1, 2007. Citing cases from both the United State Supreme Court and the New York State Court of Appeals the court stated that “any” is meant to be interpreted in a broad fashion. Section 15(3)(w) was part of the Workers' Compensation Law prior to the 2007 reform bill becoming law. The use of the word “any” was meant to include all cases in which an award was made under §15(3)(w) and not just the capped cases.

Furthermore, in enacting the amendments to §15(3)(w) and §27(2) of the Workers' Compensation Law the legislature indicated that the controlling date was to be the date of the award and not the date of accident. This was further proof to show that the deposit requirement was looking forward and not a retroactive amendment of the law.

Because the legislature was very clear in its intention to have the deposit to apply to all cases any argument that the requirement to make an Aggregate Trust Fund deposit was unfair was an argument to be made to the legislature and not the courts.

The workers' compensation carriers also tried to use the rationale of Burns v. Varriale, 9 N.Y. 3d 207 (2007) (the multiple variables that can limit, suspend, increase or decrease the rate of workers' compensation benefits) against having to make the deposit. The court said based upon the language of §27(2) that those arguments were irrelevant in this situation. The legislature has mandated that the Workers' Compensation Board make the calculations and for the workers' compensation carriers to make the deposit. Because the Workers' Compensation Board complied with the law’s requirement for a deposit the calculations are not arbitrary and capricious.

That was the end of the analysis in the Parkhurst case. As stated above in Collins the workers' compensation carriers also raised constitutional challenges to the Aggregate Trust Fund deposits. The constitutional issues raised were:

1. A taking of property in violation of the Taking Clause of the Fifth Amendment to the United States Constitution
2. A violation of the Contract Clause of the Unite States Constitution
3. Violated the equal protection rights of the workers' compensation carriers

The “Taking” argument was rejected by the court because although the monies are payable to the State of New York there was no taking of the property of the workers' compensation carriers for a public use. They reached this conclusion by weighing the cost to the workers' compensation carriers against its interference with their investment backed expectations and the character of the governmental action involved. The court believed that the workers' compensation carriers conceded that there was no increase in their liability to the injured workers. (This is disputed by the workers' compensation carriers.) The goal of the amendment to the Workers' Compensation Law was to secure “the payment of long-term benefits and creating an incentive for offering timely and reasonable settlements…” Therefore, there was no taking in violation of the Fifth Amendment.

As for the Contract Clause violation it was rejected because the workers' compensation carriers were liable for a potential discretionary Aggregate Trust Fund deposit before the amendments to the law three years ago.

The workers' compensation carriers claimed that the amendment to the Workers' Compensation Law violated their equal protection rights under the Constitution as well. In their arguments the workers' compensation carriers conceded that there need only be a rational basis for a private workers' compensation carrier to be required to make an Aggregate Trust Fund deposit while the State Insurance Fund and a self-insured employer were exempt from the requirement. The court found that the legislation was rational because its intent to protect injured workers to assure that the benefits would be paid was rational since the State Insurance Fund was backed by the State of New York and there are other mechanisms in place to protect those injured while working for a self-insured employer. Any claim for a denial of substantive due process was also rejected because the Aggregate Trust Fund could settle a case with an injured worker for less than the Aggregate Trust Fund deposit. The court indicated that in order to avoid this scenario all the workers' compensation carrier had to do was settle the case under §32 of the Workers' Compensation Law for a reasonable offer as they are required to do.

Since the decision of the Appellate Division was unanimous it is unlikely than any Justice would grant leave to appeal nor is it likely that the Court of Appeals would give leave to appeal either. However, the workers' compensation carriers will in all likelihood take the necessary steps to continue their appeals. Among other reason is that as long as they appeal they may not be liable to actually make the deposits. The difference between the Collins and Parkhurst become significant after all motions are made in the New York State Courts. The workers' compensation carriers involved in Collins can seek to continue their fight to the United States Supreme Court because they have raised federal constitutional issues. The workers' compensation carriers in Parkhurst will come to the end of the line at the Court of Appeals because as unlikely as it is that the Supreme Court could muster four votes to hear Collins, in the absence of a federal question raised in Parkhurst, they will not get even one vote.

The long awaited response to questions submitted to the Workers' Compensation Board in connection with the webinar that it ran on May 7, 2010 has finally been posted on the Workers' Compensation Board’s website.

In posting the answers to the questions the Workers' Compensation Board has continued to proceed with its MAP Program although they now say that MAP is just an internal business process improvement initiative. Although the Workers' Compensation Board is not publically calling its changes the MAP Program, all of the initiatives that the Workers' Compensation Board will shortly implement are part and parcel of its earlier pronouncements on the issue.

The Workers' Compensation Board had previously put the MAP Program on hold to seek further input from those parties that appear before it on a regular basis. The Workers' Compensation Board has taken the input from the parties but apparently they are going ahead with their changes to the system despite the concerns expressed by the parties that appear before the agency and the criticism of the MAP Program from the Senate Labor Committee.

The Workers' Compensation Board’s Question and Answers on the MAP Program are available here.