NEW YORK—A state appellate court has upheld the New York State Workers’ Compensation Board’s authority to assess financially healthy group self-insured trusts to pay for the liabilities of defaulted groups.
Last week’s decision by the 3rd Judicial Department of the Supreme Court’s Appellate Division in William Held Jr. vs. State of New York Workers’ Compensation Board stemmed from a 2008 lawsuit filed by self-insured group trusts, the ruling states.
They challenged the constitutionality of annual assessments imposed on them by the board.
Among other arguments, the plaintiffs contended that a workers comp law authorizing the board to assess all private self-insured employers when it is determined that an insolvent, self-insured employer may not meet its claims obligations does not apply to them. They argued the law does not apply to them because, as groups, they are not employers.
They also argued that the assessments amounted to an “unconstitutional taking.”
While a trial court agreed with the group trusts last year, the state appellate court disagreed. “There is no dispute that plaintiffs are self-insurers,” the appellate court ruled.
“The amounts of the assessments may have been unanticipated, but it cannot be said that their economic effect on plaintiffs rises to the level of a taking,” the court ruled. “While plaintiffs may be deprived of substantial amounts of money to pay the assessments, their liability is not made in a vacuum and directly depends on their proportional role in the self-insurance program and the workers compensation system.”
New York’s group self-insured trusts have faced a financial crisis since 2006. Since then, several have closed voluntarily while others became insolvent.