New York Law Review

Tag: Employer Reimbursement

  • Keser v. New York State Elmira Psychiatric Center, 90 N.Y.2d 102 (1997): Late Payment Penalties Apply to Employer Reimbursements

    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.

  • Landgrebe v. County of Westchester, 57 N.Y.2d 50 (1982): Employer Reimbursement from Schedule Award After Consequential Injury

    Landgrebe v. County of Westchester, 57 N.Y.2d 50 (1982)

    An employer can only be reimbursed from a schedule award for wage payments advanced for the disability directly related to the injury that resulted in the schedule award, not for payments related to a prior, separate injury, even if the latter injury is found to be consequential.

    Summary

    This case addresses whether an employer can be reimbursed from a workers’ compensation “schedule award” for wage payments made during an employee’s initial disability when a later, consequential injury leads to the schedule award. The employee suffered a back injury, and the employer paid his full wages during his disability. Later, a recurrence of back pain caused a separate hand injury, resulting in a schedule award. The court held that the employer could only be reimbursed from the schedule award for wage payments related to the hand injury, not the initial back injury. This decision underscores that reimbursement must be tied to the specific injury underlying the schedule award, preventing employers from using the award to recoup unrelated prior expenses.

    Facts

    Donald Landgrebe, a Westchester County correction officer, injured his back at work on March 9, 1977. The county paid Landgrebe his full wages during his resulting disability, totaling $3,383.07. Landgrebe later suffered a hand injury when a recurrence of back pain, stemming from the original injury, caused him to fall while operating a snowblower at home. This resulted in the partial amputation of two fingers. The Workers’ Compensation Board determined the hand injury was consequential to the original back injury and awarded Landgrebe $4,422.50 as a “schedule award” for the permanent loss of use of his fingers.

    Procedural History

    The Workers’ Compensation referee initially directed the carrier to reimburse the county in full from the schedule award. The Workers’ Compensation Board modified this decision, allowing reimbursement only for payments advanced after the hand injury. The Appellate Division reversed and remitted the case. The Workers’ Compensation Board then appealed to the New York Court of Appeals.

    Issue(s)

    Whether an employer who has paid full wages to an employee during a period of disability resulting from a work-related injury can obtain full reimbursement of these payments out of a “schedule award” granted for a different, though consequential, injury.

    Holding

    No, because reimbursement from a schedule award is limited to wage payments advanced for the disability directly related to the injury that resulted in the schedule award. The employer cannot recoup costs associated with the initial back injury from the subsequent hand injury award.

    Court’s Reasoning

    The court reasoned that while section 25(4)(a) of the Workers’ Compensation Law allows employers to be reimbursed for wage payments made during disability, this right is not unlimited. The purpose of the law is to aid injured workers, and reimbursement should not create a situation where an employee is penalized for a subsequent injury. The court distinguished this case from Matter of Ott v. Green-Wood Cemetery, noting that Ott involved a single industrial episode, whereas this case involved two distinct injuries. The court emphasized that the schedule award for the hand injury was meant to compensate for the loss of use of the fingers and was “replacement for the partial loss of a hand; in fact, in the context of such a serious condition, the wage loss here, only for two weeks, was insignificant. The “schedule award” then has to be seen as an award for a dignitary loss or as a cushion against a future earning capacity at a time when the security and continuity of an ongoing employment may be gone.” Permitting the employer to recoup costs associated with the original back injury from this award would undermine its purpose. The court also highlighted policy considerations, stating that courts should avoid arrangements that convert “an unreimbursable portion of a past advance into a lien against funds which may likely be needed by an insured worker during times of future and largely unconnected disability”. As the court observed, “the language of section 25 (subd 4, par [a]) of the Workers’ Compensation Law favors matching a reimbursement and an award when a particular event brought both about.”

  • 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.”

  • Milan v. Trico Products Corp., 53 N.Y.2d 867 (1981): Employer Reimbursement for Holiday Pay During Disability

    53 N.Y.2d 867 (1981)

    An employer may be entitled to reimbursement under Workers’ Compensation Law § 25(4)(a) for holiday pay provided to an employee during a period of disability, and the Workers’ Compensation Board has jurisdiction to resolve such claims.

    Summary

    Clarence Milan, an employee of Trico Products Corp., was awarded workers’ compensation benefits for a period of disability. Trico paid Milan his regular wage for the July 4th holiday, which fell within this period, but did not pay disability for that day. The Workers’ Compensation Board affirmed the compensation award and denied Trico’s request to credit the holiday pay against the award, asserting it lacked jurisdiction over the issue. The Appellate Division affirmed. The Court of Appeals reversed, holding that the Workers’ Compensation Board had jurisdiction to determine whether Trico was entitled to reimbursement under Workers’ Compensation Law § 25(4)(a) for the holiday pay, and remitted the matter to the Board for resolution.

    Facts

    Clarence Milan was totally disabled from June 7 to July 7, 1977, while employed by Trico Products Corp. Trico, a self-insured employer, paid Milan his regular wage for the July 4th holiday. Trico did not pay Milan disability benefits for July 4th. Milan was awarded worker’s compensation benefits for his period of disability, inclusive of the July 4th holiday.

    Procedural History

    The Workers’ Compensation Board affirmed the compensation award and denied Trico’s request to credit the holiday pay against the award, stating it lacked jurisdiction over the holiday pay issue. The Appellate Division affirmed the Board’s decision. Trico appealed to the New York Court of Appeals.

    Issue(s)

    Whether the Workers’ Compensation Board erred in determining that it lacked jurisdiction to consider Trico’s claim for credit for the holiday pay against the worker’s compensation award, pursuant to Workers’ Compensation Law § 25(4)(a)?

    Holding

    Yes, because Workers’ Compensation Law § 25(4)(a) provides for reimbursement to the employer for “payments to an employee in like manner as wages during any period of disability,” and the Workers’ Compensation Board therefore erroneously declined jurisdiction of Trico’s claim.

    Court’s Reasoning

    The Court of Appeals reasoned that the Workers’ Compensation Board incorrectly determined it lacked jurisdiction over Trico’s claim for credit for the holiday pay. The Court cited Workers’ Compensation Law § 25(4)(a), which allows for reimbursement to the employer for “payments to an employee in like manner as wages during any period of disability.” The Court stated, “On this record, it cannot be said as a matter of law that Trico’s claim for credit for the holiday pay does not come within the purview of section 25 (subd 4, par [a]) of the Workers’ Compensation Law.” The Court emphasized that the Board had a duty to resolve the claim under the applicable statute. The Court remitted the matter to the Appellate Division with instructions to remand to the Workers’ Compensation Board for further proceedings to determine whether Trico was entitled to a credit for the holiday pay. The decision underscores the principle that employers may be entitled to reimbursement for wage-like payments made during periods of disability under the Workers’ Compensation Law, and the Board is the proper forum for resolving such disputes.