New York Law Review

Tag: Advance Payments

  • Matter of Lezette v. Metro. Transp. Auth., 55 N.Y.2d 923 (1982): Reimbursement of Employer Advances and Employee Rights

    Matter of Lezette v. Metro. Transp. Auth., 55 N.Y.2d 923 (1982)

    An employer’s right to reimbursement for advance payments of compensation is limited when the employee surrenders valuable vested rights in return, and reimbursement would result in a net benefit to the employer and a net detriment to the employee.

    Summary

    This case addresses whether an employer is entitled to reimbursement for advance payments of compensation when the employee is required to use accrued sick leave credits during the period of disability, where these credits are not restored. The court held that reimbursement was not appropriate because the employee surrendered valuable vested rights (sick leave credits convertible to retirement service) in exchange for the advance, leading to a disproportionate benefit for the employer and detriment to the employee. The court emphasized that reimbursement is not intended to create such an imbalance.

    Facts

    The claimant, Lezette, was an employee of the Metropolitan Transportation Authority (MTA). Pursuant to a collective bargaining agreement, the MTA made payments to Lezette in the manner of wages during a period of disability. The first 10 days of sick leave were charged against Lezette’s accrued sick leave credits, which were not restored after use. The MTA sought reimbursement for these advance payments under the Workers’ Compensation Law.

    Procedural History

    The case reached the New York Court of Appeals after a determination regarding the employer’s right to reimbursement for advance payments of compensation when sick leave credits were charged against the employee without restoration. The lower courts’ decisions are not explicitly detailed in the Court of Appeals opinion but the Court of Appeals affirmed the denial of the employer’s claim.

    Issue(s)

    Whether an employer is entitled to reimbursement for advance payments of compensation under Workers’ Compensation Law § 25(4)(a) when the employee is required to utilize non-restorable accrued sick leave credits during the disability period, and reimbursement would result in a net benefit to the employer and a net detriment to the employee.

    Holding

    No, because the employee surrendered valuable, vested rights in return for the advance, and reimbursement under these circumstances would result in a net benefit to the employer and a net detriment to the employee, creating a disproportionate result that the Workers’ Compensation Law does not intend to achieve.

    Court’s Reasoning

    The court reasoned that while Workers’ Compensation Law § 25(4)(a) allows reimbursement for advance payments of compensation, this right is not absolute. The court emphasized that the collective bargaining agreement required the first 10 days of sick leave to be charged against the claimant’s accrued sick leave credits, which were not restored. These sick leave credits could be converted into additional retirement service credits, representing a valuable vested right for the employee. The court found that reimbursing the MTA would lead to a net benefit for the employer because the sick leave debits would permanently reduce the employer’s potential future liabilities (retirement contributions). Citing Matter of Milan v. Tricot Prods. Corp., 53 N.Y.2d 867 (1981) and Matter of Lynch v. Board of Educ., 3 N.Y.2d 871 (1957), the court underscored that reimbursement should not create an imbalance favorable to either the employer or the employee. The court concluded that allowing reimbursement in this case would contradict the intent of the Workers’ Compensation Law by creating a disproportionate benefit for the employer at the expense of the employee’s vested rights. The court stated, “A concomitant of the advance, therefore, was that the employee surrendered valuable vested rights in return. It follows that reimbursement of the advance under these circumstances would result in a net benefit to the employer and a net detriment to the employee.”

  • Aircraft Products Manufacturing Corp. v. Workmen’s Compensation Board, 38 N.Y.2d 367 (1975): Special Fund Liability and Advance Compensation Payments

    38 N.Y.2d 367

    When an employer makes advance payments of compensation to an employee within three years of the filing of a formal claim, the Special Fund for Reopened Cases is not liable, even if seven years have elapsed since the initial injury.

    Summary

    This case addresses whether the Special Fund for Reopened Cases is liable for a workmen’s compensation award when a formal claim is filed more than seven years after the initial injury, but the employer made voluntary payments or provided benefits related to the injury within three years of the claim. The Court of Appeals held that the Special Fund is not liable. Even though the claim was filed long after the injury, the employer’s recent advance payments of compensation preclude shifting liability to the Special Fund. These payments effectively toll the three-year limitation, as they are treated as equivalent to formal compensation payments. The court emphasized that the purpose of the Special Fund is to protect employers from stale claims, but this protection does not apply when the employer has acknowledged the injury through recent payments.

    Facts

    The claimant suffered a work-related back injury on September 1, 1960, while working for Aircraft Products Manufacturing Corporation. He received treatment, but did not miss work until 1965-1970, when he was absent for 10 days and received sick pay from the employer per a union contract. In the summer of 1970, he missed five weeks, receiving sick pay and vacation pay. From September 1970 to April 18, 1971, the employer assigned the claimant light work at a reduced schedule but regular pay rate, recognizing his continuing disability. On April 18, 1971, the claimant became totally disabled due to the back injury. He filed a formal claim for workmen’s compensation in June 1971.

    Procedural History

    The Workmen’s Compensation Board affirmed the referee’s decision, finding a work-related disability and that the employer’s wage payments during the disability were advance compensation made within three years of the claim. The Appellate Division affirmed, stating that an initial award is not payable from the Special Fund, regardless of when the accident occurred. The employer and its insurance carrier appealed to the Court of Appeals.

    Issue(s)

    Whether liability for an initial workmen’s compensation claim, filed over seven years after the injury, is chargeable to the Special Fund for Reopened Cases, despite the employer’s advance payments of compensation within three years of the formal claim.

    Holding

    No, because the employer made advance payments of compensation within three years of the formal claim, the Special Fund is not liable, even though more than seven years had passed since the initial injury.

    Court’s Reasoning

    The court reasoned that while Section 25-a of the Workmen’s Compensation Law provides for Special Fund liability after a lapse of seven years from the date of injury and three years from the last payment of compensation, the employer’s advance payments of compensation within the three-year period preclude shifting liability to the Special Fund. The court emphasized that these voluntary payments are treated as equivalent to formal compensation awards. The court distinguished its prior holding in Matter of Casey v. Hinkle Iron Works (299 N.Y. 382), stating that it should not be read restrictively to contradict the rule applying to stale initial claims with advance compensation payments. The court found that the Board’s determination that the payments were advance compensation was supported by substantial evidence. The court also addressed the employer’s argument that the payments were made by successor corporations. The court found that the successor corporations assumed Aircraft Products’ liabilities, including the compensation award, according to Business Corporation Law § 906, subd. (b), par. (3). As the court stated, “Initial stale claims, therefore, are to be measured from the last payment of compensation in accordance with the statutory language.”