New York Law Review

Tag: Special Disability Fund

  • Ace Fire Underwriters Ins. Co. v. New York State Special Disability Fund, 31 N.Y.3d 1014 (2018): Workers’ Compensation Carrier’s Right to Reimbursement from Special Disability Fund After Third-Party Settlement

    31 N.Y.3d 1014 (2018)

    A workers’ compensation carrier may seek nunc pro tunc approval from a court to a third-party settlement, even if the Special Disability Fund’s consent was not initially obtained, provided the Fund’s consent is required under Workers’ Compensation Law § 29 (1).

    Summary

    The New York Court of Appeals addressed whether a workers’ compensation carrier, Ace Fire Underwriters Insurance Company, could retroactively obtain the Special Disability Fund’s consent to a third-party settlement under Workers’ Compensation Law § 29 (5). The employee sustained a work-related injury, and the Special Disability Fund was responsible for reimbursing the carrier for benefits after a certain period due to the employee’s pre-existing condition. The carrier approved the employee’s third-party personal injury settlement without the Special Disability Fund’s prior written consent. The Court of Appeals held that the carrier could seek court approval nunc pro tunc because Workers’ Compensation Law § 29 (5) allows court approval for settlements even if the required consent of the lienor was not initially obtained, aligning the carrier’s actions with the statute’s intent.

    Facts

    An employee of Coca-Cola Bottling Company suffered a work-related injury in March 2007. Ace Fire Underwriters Insurance Company, Coca-Cola’s workers’ compensation insurance carrier, paid benefits to the injured employee. The employee was classified as having a permanent partial disability. Due to a pre-existing condition, the Workers’ Compensation Board held that the claim was subject to Workers’ Compensation Law § 15 (8), and the Special Disability Fund was responsible for reimbursement after a certain period. The employee also initiated a third-party personal injury action, subject to Workers’ Compensation Law § 29 (1). Ace Fire approved the settlement of the third-party action. However, Ace Fire did not seek the Special Disability Fund’s written approval before the settlement.

    Procedural History

    The Workers’ Compensation Board determined the employee’s benefits were reimbursable by the Special Disability Fund. The employee filed a third-party personal injury action. Ace Fire approved the settlement of the third-party action. Ace Fire sought retroactive consent from the Special Disability Fund, which was denied. Ace Fire commenced a proceeding in Supreme Court, seeking to compel the Special Disability Fund’s consent nunc pro tunc. The Appellate Division’s order was reversed, and the matter was remitted to Supreme Court.

    Issue(s)

    1. Whether a workers’ compensation carrier can obtain court approval nunc pro tunc under Workers’ Compensation Law § 29 (5) to a third-party settlement if the carrier did not obtain the prior consent of the Special Disability Fund, assuming the Fund is a lienor.

    Holding

    1. Yes, because Workers’ Compensation Law § 29 (5) permits a carrier to seek nunc pro tunc approval for a third-party settlement, even without prior consent from a lienor, aligning with the statute’s provisions.

    Court’s Reasoning

    The Court relied on the principle of statutory interpretation that a statute should be construed as a whole, and that the various sections should be considered together and with reference to each other. The court noted that the language in Workers’ Compensation Law § 29 (1), establishing who may be deemed lienors, is essentially identical to the language in § 29 (5), which refers to entities whose consent to settlement is required. The court reasoned that there was no basis to distinguish the Special Disability Fund, as it is subject to the same rules as other lienors and that the failure to obtain the Fund’s consent can be cured by court order. The court emphasized that the legislature intended for employers to be encouraged to hire disabled employees, and the Special Disability Fund’s purpose is connected to this goal. The court highlighted, “We have repeatedly recognized ‘that a statute . . . must be construed as a whole and that its various sections must be considered together and with reference to each other.’”

    Practical Implications

    This ruling clarifies that workers’ compensation carriers, when settling third-party claims, have a potential remedy if they fail to obtain the Special Disability Fund’s consent initially. This allows the carrier to seek court approval after the fact to protect their right to reimbursement from the Fund. This reduces the risk for carriers by providing a mechanism to cure procedural errors and recover funds. The decision reinforces the importance of complying with all requirements under Workers’ Compensation Law § 29 and highlights the need for workers’ compensation carriers to consider the interplay between the various provisions of the law when settling third-party actions. Failure to adhere to procedures could impact the recovery of funds. Furthermore, this case impacts how the Special Disability Fund will handle these situations in the future.

  • Claim of State Ins. Fund, 7 N.Y.3d 832 (2006): Special Disability Fund Reimbursement After Case Reopening

    Claim of State Ins. Fund, 7 N.Y.3d 832 (2006)

    When a workers’ compensation case is closed without a determination of permanent disability and is later reopened, the 104-week limitation for filing a claim with the Special Disability Fund does not apply, even if the initial closure occurred more than 104 weeks after the date of disability.

    Summary

    This case addresses the timeliness of a claim for reimbursement from the Special Disability Fund (SDF) under New York’s Workers’ Compensation Law. A worker’s compensation claim was initially closed without a finding of permanent disability after the 104-week statutory period. The case was later reopened, and the State Insurance Fund (SIF) filed a claim with the SDF. The Court of Appeals held that because the case was closed without a determination of permanency and subsequently reopened, the 104-week limitation did not bar the SIF’s claim, even though the initial closure happened after the 104-week period. The court emphasized the purpose of the SDF—to provide reimbursement when a claim initially seems less serious but proves more substantial upon reopening.

    Facts

    A worker filed a claim for worker’s compensation benefits. The claim was closed without a determination of permanent disability. The initial closure occurred more than 104 weeks after the date of the disability. Later, the case was reopened for further consideration. After reopening, the State Insurance Fund (SIF), the worker’s compensation carrier, filed a claim with the Special Disability Fund (SDF) seeking reimbursement. The case ultimately resulted in a determination of permanent disability for the worker. The Special Disability Fund conceded it would be liable for reimbursement if the claim was timely filed.

    Procedural History

    The case was initially handled by the Workers’ Compensation Board. After the case was reopened and a determination of permanency was made, the issue of the timeliness of the claim against the Special Disability Fund arose. The Appellate Division held the State Insurance Fund’s claim to be timely. The Special Disability Fund appealed to the Court of Appeals.

    Issue(s)

    Whether the 104-week limitation for filing a claim with the Special Disability Fund applies when a workers’ compensation case is closed without a determination of permanent disability, and then reopened, even if the initial closure occurred more than 104 weeks after the date of disability?

    Holding

    No, because Workers’ Compensation Law § 15 (8) (f) provides that the 104-week limitation does not apply to a case that has been closed without a finding of permanent disability and then reopened, regardless of when the closure occurs relative to the date of disability.

    Court’s Reasoning

    The Court of Appeals interpreted Workers’ Compensation Law § 15 (8) (f), which governs the timeframe for filing claims for reimbursement from the Special Disability Fund. The SDF argued that the clause regarding reopened cases should only apply when the initial closure occurs *before* the expiration of the 104-week period. The Court rejected this interpretation, finding that the statute’s language did not support such a reading. The Court emphasized the purpose of the Special Disability Fund: “to permit an application to the Fund where a claim that initially seemed unlikely to result in a finding of permanent disability turns out, on reopening, to be a more serious claim than it first appeared.” The Court cited Matter of Burch v Hawkins, 9 AD2d 6, 8 (3d Dept 1959), supporting the view that the 104-week limitation is inapplicable in reopened cases where permanency was not initially determined. The court recognized that applying the statute literally led to the revival of a claim that would otherwise be time-barred, but held that this was the intended effect of the statute. Chief Judge Kaye and Judges Ciparick, Graffeo, Read, Smith and Pigott concurred.

  • Matter of Empire Mutual Insurance Company, 27 N.Y.2d 146 (1970): Reimbursement from Special Disability Fund After Waiver of Lien

    Matter of Empire Mutual Insurance Company, 27 N.Y.2d 146 (1970)

    An insurance carrier that waives its lien on a third-party settlement as part of its contribution to the settlement cannot then seek reimbursement from the Special Disability Fund for payments made beyond the statutory retention period.

    Summary

    Empire Mutual, acting as both the workmen’s compensation carrier and the employer’s liability carrier, sought reimbursement from the Special Disability Fund for payments made to a claimant beyond 104 weeks after the claimant settled a third-party action. Empire Mutual had waived its compensation lien and contributed $29,000 towards the settlement. The court held that because Empire Mutual effectively received reimbursement for its compensation payments by reducing its liability carrier contribution, it was not entitled to reimbursement from the Special Disability Fund. Allowing such reimbursement would constitute a windfall.

    Facts

    In 1960, a claimant sustained severe injuries. The claimant had a pre-existing physical handicap due to a prior injury while working for the same employer. Empire Mutual Insurance Company was the workmen’s compensation carrier for the employer. Empire Mutual made compensation payments to the claimant for 186-4/5 weeks.

    Procedural History

    The Workmen’s Compensation Board directed the Special Fund to reimburse Empire Mutual for payments made beyond 104 weeks. The Appellate Division affirmed the Board’s decision. The Special Fund appealed to the New York Court of Appeals.

    Issue(s)

    Whether an insurance carrier, acting as both compensation and liability carrier, is entitled to reimbursement from the Special Disability Fund for payments made to a claimant beyond the statutory retention period, when the carrier waived its lien on the proceeds of a third-party settlement and contributed to the settlement as the employer’s liability carrier.

    Holding

    No, because the insurance carrier, in voluntarily waiving its lien for the total amount of the compensation paid to the claimant and contributing to the settlement, is effectively reimbursed for its compensation payments, making it ineligible for further reimbursement from the Special Disability Fund.

    Court’s Reasoning

    The court reasoned that generally, a carrier can exercise its statutory rights as a lienor to recover payments made to the claimant from a third-party recovery, and then turn to the Special Fund for any deficiency arising after the 104th week. However, in this case, Empire Mutual acted in dual capacities: as the workmen’s compensation carrier and as the employer’s liability carrier. Empire Mutual actively participated in the third-party settlement by contributing $29,000 and waiving its lien for compensation payments.

    The court found that Empire Mutual’s cash settlement as liability carrier was reduced by the amount of payments made previously as compensation carrier. If two separate carriers had been involved, the liability carrier would have had to contribute a greater amount to satisfy the compensation carrier’s lien. In effect, Empire Mutual was already reimbursed for its compensation payments by having its payments as liability carrier reduced.

    The court emphasized that allowing further reimbursement from the Special Disability Fund would constitute a windfall for Empire Mutual. The court stated, “Here, Empire Mutual, acting in dual capacities, was fully reimbursed for its compensation payments to claimant by having its payments as liability Carrier correspondingly reduced. To allow Empire Mutual reimbursement under such circumstances would be, in effect, a windfall.”

    The court reversed the Appellate Division’s order and dismissed the claim for reimbursement from the Special Disability Fund.