N.Y. Court Holds Up Assessments for Failed Workers’ Comp Trusts

By | July 10, 2008

The New York Workers’ Compensation Board must do a better job of showing why a significant assessment was been levied against employer groups in the state that self-insure against workers’ compensation claims, a Supreme Court judge in Albany has ruled.

That decision stems from an ongoing legal battle between the board — which oversees self-insurance pools in the state — and 13 self-insured trusts which have sued the board for forcing them to pay assessments that will fund claims against other trusts that have defaulted. Those combined assessments now total more than $11 million.

In court papers, the board maintains that nine trusts in the state have defaulted and are insolvent in terms of their ability to pay outstanding or potential claims. The board believes it is therefore authorized by state law to level the assessments.

However, the 13 trusts counter that the board arbitrarily and wrongly created assessed against them, and that the board has failed to convincingly show the nine trusts have actually defaulted — an argument with which the judge, Acting Supreme Court Justice Kimberly O’Connor of the third Judicial District, agreed.

O’Connor, in overturning several previous court rulings, found the board had overstepped its authority in levying the assessment and failed to adequately show that the nine defaulted trusts had in fact become insolvent.

However, O’Connor also upheld that the board was authorized by state law to make assessments on trusts, prompting board Chair Zachary Weiss to say he was “pleased the board has prevailed on the law and that this decision will allow us to collect the money needed to pay the claims of injured workers.”

The court has asked the board to supply additional information about its assessment process. Weiss pledged the board would go ahead and provide that information.

Added Weiss: “The bottom line is the board has the legal right to pay the claims of injured workers by assessing group self insured trusts and will conform to the court’s decision as we move ahead with this important responsibility.”

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