64 N.Y.2d 365 | NY | 1985
OPINION OF THE COURT
The transfer of $190 million from the State Insurance Fund to the general fund of the State does not violate the
I
The purpose of the present action is to obtain judgment (1) declaring unconstitutional section 92 (2) of chapter 55 of the Laws of 1982, which directed the State Insurance Fund (SIF) to transfer to the State’s general fund $190 million by March 1, 1983, and (2) requiring the return of that sum plus interest from March 1, 1983 to the SIF. The SIF exists “for the purpose of insuring employers against liability for personal injuries or death sustained by their employees [worker’s compensation liability], including liability * * * imposed upon employers by reason of a suit or claim brought against the employer by another to recover the amount of damages obtained from such other by an employee of the employer for injuries or in case of death by his dependents for death sustained by such employee arising out of and in the course of his employment [so-called IB coverage]” (Workers’ Compensation Law § 76 [1]; bracketed material added).
Section 86 of chapter 55 added a new section 87-f to the Workers’ Compensation Law which in its subdivision 1 establishes the mechanism for annual so-called “dry” appropriations to the SIF of $190 million and provides in its subdivision 2 that any appropriation thus made “shall be deemed an admitted asset of the state insurance fund” and that any transfer of moneys from the SIF to the State’s general fund “is deemed a proper and prudent legal undertaking for any state officer with the responsibility for the custody or the investment of the assets of the fund”. Subdivision 1 requires inclusion in each year’s budget bill for the next fiscal year of $190 million for the SIF and provides that if in any year the Governor fails to do so or the Legislature fails to appropriate the budgeted amount, the amount appropriated for the preceding fiscal year “shall be payable forthwith to the fund on the first day of July of such year”. Section 93 of chapter 55 requires that any action relative to the foregoing be brought against the State and holds harmles s every State officer responsible for the custody or investment of the SIF, as well as persons employed by or who advise such an officer, from liability by reason of the transfer directed or othe r provisions of the act. Chapter 404 of the Laws of 1982 made the necessary $190 million appropriation to the SIF “for the purpose of maintaining the solvency” of the fund, but provided “that no expenditure may be made from this amount if other assets of such fund not part of reserves for claims or losses are available,”
The plaintiffs are two nonprofit corporations and a commercial corporation who are employers insured by the SIF.
Plaintiffs moved for summary judgment and the SIF-defendants not only joined in and supported that motion
II
Nothing in article 6 of the Workers’ Compensation Law expressly establishes the SIF as a mutual insurance organization. A mutual insurance company is organized and operated for the benefit of its policyholders who are by virtue of their policies members of the company (2 Couch, Insurance § 19.14 [2d ed]). It is run by a board of directors elected by the members (Insurance
When one turns to the provisions governing the SIF, it is at once apparent that there are more dissimilarities than likenesses between it and a mutual insurance company. The only reference to mutual companies in article 6 of the Workers’ Compensation Law, which governs the SIF, is in section 99, which requires the Commissioners to report to the Superintendent of Insurance “at the same time and in the same manner as is required from mutual employer’s liability and workmen^ [worker’s] compensation corporations”. But unlike mutual insurance companies, the SIF was created and exists as a State agency within the Department of Labor (Workers’ Compensation Law § 76 [l]),
Plaintiffs argue that the provisions of section 76 (1) descriptive of the Fund
What has been said so far establishes that State Insurance Fund policyholders have no property interest in the surplus of the Fund, short of the actual declaration of a dividend by the Commissioners. Plaintiffs’ impairment of contract argument is largely answered by that conclusion, but we note further our agreement with the Appellate Division (102 AD2d, at p 378 ff) that nothing in the statutory provisions so far referred to or in section 89’s direction that “premiums in the state fund shall be fixed at the lowest possible rates consistent with the maintenance of a solvent fund and of reasonable reserves and surplus” rises to the level of language “ ‘susceptible of no other reasonable construction’ than that a contract was intended” (Pennsylvania R.R. Co. v State of New York, 11 NY2d 504, 511). Likewise there being neither property nor contract interest of policyholders in surplus, the effect upon them of loss to the SIF of interest on the $190 million transferred cannot constitute a de facto tax in violation of article III of the New York Constitution.
Ill
The remaining State constitutional grounds can be more summarily disposed of. By transferring $190 million from one State pocket (the SIF) to another (State general funds), the State has relieved the Fund’s Commissioners of the necessity of exercising investment discretion with respect to part of the funds previously entrusted to them, but has done so in the exercise of its prerogative as owner of the surplus funds and, therefore, without infringing upon separation of powers. Nor by doing so has the State improperly loaned its credit to itself, or created a debt to itself. Rather it has, as already noted, simply given a
Finally, we perceive no violation of the provisions of article VII, § 7 of the State Constitution governing appropriation bills.
For the foregoing reasons, the order of the Appellate Division should be affirmed, without costs.
Chief Judge Wachtler and Judges Jasen, Simons and Kaye: concur; Judge Alexander taking no part.
Order affirmed, without costs.
. Unlike the claim advanced in American Ins. Assn. v Chu (64 NY2d 379 [decided herewith]), the claim presented by plaintiffs herein is not premature, for the transfer of $190 million from the SIF to the State will reduce by some $134 million over the next five years accretions to the Fund through interest, in which plaintiffs claim a present contract and property right.
. The State-defendants argue that, the SIF being a State agency, the SIF-defendants have no standing to challenge constitutionality of the statute. The Commissioners are, however, required by Workers’ Compensation Law § 77 to be policyholders insured in the SIF and to take a constitutional oath of ofiice. Thus, notwithstanding the immunity and indemnity provisions of section 93 of chapter 55 of the Laws of 1982, they have standing (Board of Educ. v Allen, 20 NY2d 109, affd 33x US 236).
. We agree, for the reasons expounded by the Appellate Division (102 AD2d, at pp 372-374), that the SIF is a State agency. For the history of its creation, see, Sadigur v State of New York (173 Misc 645).
. Workers’ Compensation Law § 53 provides that: “An employer securing the payment of compensation by contributing premiums to the state fund shall
. The reference is to the Workers’ Compensation Commission, as it is presently designated (see, L 1913, ch 816, § 3 [2]).
. Though Cardinal held only the Fund liable to the policyholder, the case presented no issue concerning liability of the State as distinct from the SIF. Nor, in light of the broad language of Workers’ Compensation Law § 53 (quoted in n 4, supra) relieving an employer insured by the SIF “from all liability for personal injuries or death sustained by his employees,” do we attach significance to the fact that Workers’ Compensation Law § 76 (1) uses more explicit language as to third-party claims. Matter of Consolidated Mut. Ins. Co. (Arcade Cleaning Contrs.) (60 NY2d 1), which dealt with the security fund under Insurance Law § 334, is not to the contrary.
. The last two sentences of the subdivision read: “Such fund shall consist of all premiums received and paid into the fund, of property and securities acquired by and through the use of moneys belonging to the fund and of interest earned upon moneys belonging to the fund and deposited or invested as herein provided. Such fund shall be applicable to the payment of losses sustained on account of insurance, to the payment of expenses in the manner provided in this chapter and to the payment of premiums for reinsurance in any insurance corporation of the whole or any part of any policy obligations;’
. The section reads: “No money shall ever be paid out of the state treasury or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law; nor unless such payment be made within two years next after the passage of such appropriation act; and every such law making a new appropriation or continuing or reviving an appropriation, shall distinctly specify the sum appropriated, and the object or purpose to which it is to be applied; and it shall not be sufficient for such law to refer to any other law to fix such sum.”