N.Y. court reinforces workers’ comp. law dictating claims payments

The New York Court of Appeals ruled against insurers in six separate cases Nov. 15 by upholding a law requiring private insurers to deposit payments for some workers’ compensation benefits into state trust funds.

The 6-0 ruling applies to six cases involving workers who were injured before the law, the New York Workers’ Compensation Reform Bill, was enacted in 2007, according to Reuters.

In the leading case, Randy Raynor hurt his back while working for Landmark Chrysler in December 2004. His workers’ compensation claim was settled in June 2008, when a judge ordered Erie Insurance Co., Landmark’s insurance carrier, to place about $200,000 in a trust fund for Raynor, Reuters reported.

Landmark and Erie Insurance Co., based in Pennsylvania, sued the state Workers’ Compensation Board in 2009, claiming that Raynor was not protected by the law because he was injured before it was enacted.

The insurance company also claimed the law violated the Takings, Contracts, Equal Protection and Die Process clauses of the U.S. Constitution because it puts private insurers at a competitive disadvantage in relation to the state insurance fund and self-insured entities such as New York City, according to Reuters.

Erie also said that a provision capping the number of weeks for which a claimant can collect workers’ compensation, passed at the same time as the trust-find law, also applies to workers with permanent partial disabilities, Reuters reported. The cap, ranging from 225 to 525 weeks, depends on the percentage of income that was lost as the result of an injury, and applies only to those injured after the law’s enactment in March 2007.

The Court of Appeals ruled against Erie and in favor of Raynor and workers in the other cases.

The New York Workers’ Compensation Reform Bill was created to protect injured workers with permanent partial disabilities from the potential insolvency of private insurance carriers. Before the law, insurance companies had more control of the terms in workers’ compensation settlements, including the payment schedule.