New York: 13 self-insured groups win ruling against WC board

Thirteen workers' compensation self-insured groups recently won a two-year legal battle with the New York State Workers' Compensation Board over a series of assessments.

In 2008, the groups filed legal action after the NYSWCB significantly increased assessments to help pay for the nearly $450 million in losses of several unrelated self-insured groups that had defaulted on their workers' comp obligations and are currently charged with fraud. In 2007, the 13 groups had an aggregate assessment of $104,000. In 2008, after changes were made to the state's workers' comp law, the board increased those assessments to more than $11 million. Even though the 13 self-insured groups closed at the end of 2008, new assessments continued to accrue against the former members.

Prior to their dissolution, attorneys for the 13 groups argued that the firms were in sound financial shape and had provided workers' comp coverage to more than 7,000 public and private employers and their 200,000 employees throughout New York.

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The New York State Supreme Court ruled that board authority to levy the assessments under the state's workers' comp law represented an "unconstitutional taking of their [the plaintiffs] private property without just compensation."

The NYSWCB is expected to appeal the ruling.

Richard S. Flaherty, president and CEO of First Cardinal LLC, which had acted as a third-party administrator for the 13 self-insured groups, said he was pleased with the court's decision.

"We felt it was unfair that the 7,000 business owners who participated in these healthy, well-run self-insured groups should have to collectively pay for millions of dollars in unpaid claims for several completely unrelated groups that failed to set their reserves properly."

The 13 self-insured groups that filed the complaint included Cooperative Association of Food Enterprises, Contractors Compensation Trust, The ELEC-CON Trust, Empire State Transportation Workers' Compensation Trust, Empire State Education Trust, First Automotive Services Trust, Empire State Hospitality Workers' Compensation Trust, New York McDonald's Operators Self-Insurance Trust, New York Petroleum Associations Compensation Trust, NYSARC Workers' Compensation Trust, NY Transportation Workers' Compensation Trust, Retailers of New York Workers' Compensation Trust, and Selective Safety Trust.

Read more at the WORKERSCOMP Forum^TM homepage.

May 17, 2010

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