Robbing Peter to pay New York

From today’s editorials: Businesses overpay on workers compensation insurance, and New York gets a windfall. That’s fair?


One of the last things Andrew Cuomo did as attorney general was announce that his office had secured a $120 million settlement from four insurance groups that had overcharged businesses for workers’ compensation coverage. But businesses won’t see a dime of the money they overpaid, thanks to the state Legislature.

Instead, the state, like some kind of Robin Hood gone bad, is keeping the victims’ money for itself.

As the attorney general’s office explains it, the Workers’ Compensation Board charges annual fees to insurers, which in turn pass the costs on to policyholders. A decade ago, the board changed calculations, but it apparently caused some confusion, resulting in some insurers charging too little to their clients, and some insurers charging too much.

In particular, 36 insurance companies that are part of four insurance groups — ACE, Zurich, Pennsylvania Manufacturers, and CNA — overcharged their policyholders, according to Mr. Cuomo.

The state learned of the overcharges, and Assembly Speaker Sheldon Silver asked the attorney general’s office to investigate. The Legislature also took steps to make sure the industry ended the overcharges. So far, so good. But then, lawmakers required in the 2009 and 2010 budget bills that the excess charges to be returned — to the state, that is, not to businesses.

Mr. Silver, who joined Mr. Cuomo in a press release praising the recovery, may be pleased with the outcome, but just who has been made whole here? These overcharges didn’t come out of the state’s pocket in the first place. Keeping money that rightfully belonged to employers does nothing but turn these overcharges into a back door tax.

The Legislature’s money grab also taints the office of the attorney general. We realize these are tough financial times for the state, but that doesn’t justify using the attorney general’s office as New York’s ambulance chaser, capitalizing on victims to make a fast buck.

Mr. Cuomo, who was sworn in as governor a few hours after he announced that settlement, should work with the Legislature to do the right thing and ensure that this money gets to the employers it was taken from in the first place. And, as he prepares the state’s next executive budget, to make sure that New York doesn’t solve its fiscal problems by skimming any more money that was wrongly taken from its citizens or businesses.