Keser v. New York State Elmira Psychiatric Center, 90 N.Y.2d 102 (1997)
Workers’ Compensation Law § 25 (3)(f)’s late payment penalty provisions apply to untimely reimbursements made by an employer’s compensation carrier for wages paid during an employee’s disability, regardless of whether the reimbursement is a monetary payment directly to the employee.
Summary
The New York Court of Appeals held that late payment penalties under Workers’ Compensation Law § 25(3)(f) apply when a compensation carrier is late in reimbursing an employer for wages paid to a disabled employee. Peter Keser, an Elmira Psychiatric Center employee, received wages while disabled via accrued leave time, creating a lien on any compensation award. The State Insurance Fund (carrier) was late in reimbursing the Center. The court found that penalties apply regardless of whether payment goes directly to the employee or as reimbursement to the employer. This promotes prompt payment of benefits and avoids harm to employees who may not have leave time restored promptly.
Facts
Peter Keser, Deputy Director at Elmira Psychiatric Center, suffered a job-related disability in October 1991.
He filed for workers’ compensation benefits, which were contested by the State Insurance Fund (carrier).
Per an agreement, the Center paid Keser’s wages using his accrued leave time, creating a lien on any potential workers’ compensation award.
The Workers’ Compensation Law Judge (WCLJ) directed the carrier on November 6, 1992, to credit the Center for wages paid between October 1991 and October 1992.
The carrier reimbursed the Center 42 days later, on December 18, 1992.
Procedural History
The WCLJ assessed a 20% penalty against the carrier on November 12, 1993, for late payment, pursuant to Workers’ Compensation Law § 25(3)(f).
The Workers’ Compensation Board affirmed the award and penalty.
The Appellate Division affirmed the Board’s decision, citing Matter of White v New York City Hous. Auth.
The Court of Appeals granted the carrier leave to appeal.
Issue(s)
1. Whether Workers’ Compensation Law § 25(3)(f)’s late payment penalty provisions apply to reimbursements made by a compensation carrier to an employer for wages paid to a disabled employee.
2. Whether these penalty provisions apply when the reimbursement is made via accounting credit between state agencies, rather than monetary payment to the employee.
Holding
1. Yes, because the court must look at the terms of the award to determine whether a penalty should be assessed, not whether the employee received payment.
2. Yes, because the focus is on timely compliance with the terms of the award, not the mechanics of payment.
Court’s Reasoning
The Court reasoned that Workers’ Compensation Law § 25(3)(f) mandates a 20% penalty if the carrier fails to make “payments of compensation according to the terms of the award within ten days.”
The Court rejected the argument that “compensation” includes only payments directly to the employee, finding no such limitation in the statute.
The Court cited Matter of Deas v New York City Hous. Auth., where a similar penalty was deemed payable to the claimant, implicitly supporting the penalty assessment itself.
Workers’ Compensation Law § 2(6) defines “compensation” as money allowances “payable to an employee,” indicating a broader meaning than monies actually received.
The Court emphasized that a liberal construction of the statute advances the public policy favoring prompt payment of benefits.
The Court acknowledged that late reimbursement can harm employees by delaying the restoration of accrued leave time. The court noted that “The employee who has received wages during a period of disability by drawing upon accrued sick leave may not have these sick leave credits restored until the employer has been reimbursed.”
The Court found immaterial the fact that reimbursement was an accounting credit between state agencies, stating “The focus of the penalty inquiry is on whether there has been timely compliance with the terms of the award, as opposed to the mechanics of payment.”
The Court emphasized the mandatory and automatic nature of the penalty under § 25(3)(f) if the award is not timely paid, citing Matter of Surdi v Premium Coal & Oil Co.
The dissent is not discussed as there was no dissent in this case.