Big Day in New York Workers' Compensation Law! Court of Appeals Decides Aggregate Trust Fund Deposit Case of Raynor v. Landmark Chrysler in Ruling Against Insurance CarriersTuesday, November 15, 2011
It is the most important New York workers’ comp legal decision since the the legislature passed the sweeping New York Workers’ Compensation Reforms of March 2007.
Today, in Raynor v. Landmark Chrysler, the New York State Court of Appeals affirmed a lower appellate court ruling upholding provisions requiring private workers’ compensation insurance carriers to make mandatory Aggregate Trust Fund (ATF) deposits for claimants classified as permanently partially disabled (PPD) and injured both before and after March 13, 2007.
Based upon Raynor, if a claimant was injured on 7/1/2006 (before the reforms capping the duration of permanent partial disability (PPD) awards), but classified PPD after the reforms took place (3/13/2007), the insurance carrier must make a mandatory present value Aggregate Trust Fund deposit for the future value of the indemnity portion of the award.
For example, let’s assume a worker hurt on 7/1/2006 is classified PPD at a $400/week rate of compensation on 7/1/2008. Prior to the reform laws (heavily pressed for by the business community), the private insurance carrier could have leisurely doled out the worker’s $400/week over time, while holding the large bulk of its financial obligation to the worker in its own bank accounts. Now, after the clarification of Raynor, that scenario has been turned on its head.
Upon the worker being classified PPD, the private insurance carrier is obligated to deposit the present value sum of future indemnity payments into the Aggregate Trust Fund (ATF). In many cases, such deposits will be in the hundreds of thousands of dollars. This is a private workers’ compensation insurance company’s worst nightmare.
The New York State Insurance Fund (NYSIF) and self-insured employers are exempt from the mandatory ATF deposits, and private insurance carriers argue this gives them a distinct competitive market advantage – which is hard to dispute.
Practically, just the threat of a potential PPD classification should cause insurance companies to pull out their settlement checkbooks and pens. And this was the intention of the 2007 New York Workers’ Compensation Reform legislation, at least in part.
Prior to the reform legislation, there was too much litigation on cases that lasted sometimes for decades. The business community got their cap on PPD awards while claimants got what was hoped to be a quicker resolution of their claims. However, due to this long litigation brought by the private insurance carriers, there is currently a bottleneck of thousands of potential PPD claims at the New York Workers Compensation Board. Raynor should be the "Drano" the plumber ordered!
Now that the Raynor decision has put this issue to rest, private insurance carriers should immediately start to make settlement offers to claimants to avoid the hammer of the present value ATF deposit.
The fairness of settlement offers will be based upon the ATF’s present value discount tables and Board Bulletin 222-B. ( if you have questions about the fairness of your Section 32 workers compensation settlement offer, please contact Troy Rosasco at x123 for a Free Evaluation of your claim).
New York businesses should finally start to see a financial benefit from the illusory promises of the 2007 reforms. And all will be right in New York Workers’ Comp Land !?? Stay tuned…