85 A.D.3d 35
N.Y. App. Div.2011Background
- New York's Workers’ Compensation Law requires funding of compensation via the State Insurance Fund, private insurance, or self-insurance, with group self-insurance allowed since 1966 under §50(3-a).
- Plaintiffs are groups of self-insurers that joined to form group self-insured trusts and are challenging annual assessments by the Workers’ Compensation Board for defaulted private self-insurers’ liabilities.
- The contested assessments were authorized by former §50(5)(f) and (g) to fund payments for the liabilities of insolvent self-insurers and were applied to all self-insurers, including groups.
- In 2008, the Legislature relabeled §50(5)(f) as (g) and confirmed broad Board authority to assess group self-insurers, and changed the formula for each group’s share of assessments.
- Supreme Court granted summary judgment for plaintiffs on Takings Clause grounds; other challenges were dismissed; the appellate court reversed in part and otherwise denied relief to plaintiffs, with prospective amendments noted.
- The Court of Appeals ultimately addressed construction of the statute, constitutional challenges, and the continuing effect of the 2008 amendments on inactive groups.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §50(5) (former [f]) authorizes board assessments against group self-insurers for defaulted groups' liabilities | Pls argue groups are not private self-insured employers and thus not within former (f). | Defs contend group self-insurers are included via §50(3-a) and amendments, treated as self-insurers for assessments. | Yes; statute includes groups; assessments authorized. |
| Whether the 2008 amendments imposing assessments on group self-insurers violate the Takings Clause | Takings from groups for others' defaults are unconstitutional. | Assessment scheme is proportional to role as self-insurers and consistent with statutory framework. | Not a taking. |
| Whether the assessments violate due process (vagueness, notice, retroactivity) for plaintiffs | Argue vagueness and retroactivity; lack of notice. | Statute sufficiently clear; amendments are within legitimate legislative adjustment. | No due process violation. |
| Whether the 2008 amendments altering continuing assessments for inactive groups and the decreasing-claims formula violate due process or constitute a taking | Claim unfair exit penalty and arbitrary formula changes. | Adjustments are rational, reflect liabilities, and address prior drafting errors; preserved issues not raised. | No due process or taking violation; amendments upheld. |
Key Cases Cited
- Connolly v. Pension Benefit Guaranty Corp., 475 US 211 (1986) (regulatory taking framework; investment-backed expectations)
- Lingle v. Chevron U. S. A. Inc., 544 US 528 (2005) (takings analytical framework; regulation not always a taking)
- Penn Central Transp. Co. v. New York City, 438 US 104 (1978) (factors for regulatory takings; economic impact and expectations)
- Concrete Pipe & Products of Cal., Inc. v Construction Laborers Pension Trust for Southern Cal., 508 US 602 (1993) (legislative adjustments; reasonableness of regulations; investments-backed expectations)
- Crosby v. State of N.Y., Workers’ Compensation Bd., 57 NY2d 305 (1982) (Board may recoup administrative expenses from self-insurers)