The American Insurance Association (AIA) and New York State officials reached a fair, reasonable settlement which will return a substantial portion of a state assessment on workers’ compensation insurers that was part of the 1996 Omnibus Workers’ Compensation Reform Act. The state legislature on March 26, 2001 approved a $23.5 million appropriation in the state’s deficiency budget (A7121/S3546), a portion of which funds the settlement.
AIA indicated that it is pleased with the return of part of the assessment, which was intended to recapture insurers’ estimated reserve savings stemming from repeal of liability under the so-called Dole v. Dow rule. The settlement, reached through negotiations conducted by AIA on behalf of its member companies, calls for the state to refund 51 percent of each insurer’s share of the assessment.
The 1996 Reform Act repealed “Dole v. Dow” liability for all but “grave injuries.” The Court of Appeals’ 1972 Dole decision allowed a third-party manufacturer responsible for an employee’s work-related injury to recover the portion of the judgment attributable to the employer’s responsibility for the injury. AIA noted that this circumvented the exclusive remedy provisions of workers’ compensation law that limit an employer’s liability for employees’ work injuries to benefits provided by the Workers’ Compensation Act, in return for the prompt payment of the injured workers’ medical expenses and provision for lost income.
AIA conducted the negotiations with the governor’s office, Division of the Budget, and Department of Insurance to resolve this issue on behalf of its member companies. The decision to accept the agreement has been made by each individual AIA member company.
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