On May 2nd the N.Y. Supreme Court issued an important statement relating to the assessments issued to many New York based businesses who are on bended knee trying to pay the significant charges being accrued from their participation in New York’s Self Insured Trusts. In a significant ruling, “Riccelli Enterprises Inc., et al., versus the State Workers Compensation Board,” an appellate court upheld an injunction against state efforts to assess 826 transportation employers that once belonged to a failed self insurance trust.
“This is a significant development in the NY Workers Comp Board’s collection suits,” said Joseph Makowski, a Buffalo attorney who represents 225 employers from eight trusts.” Some other trusts are going to try for injunctive relief.” Linda Clark, an Albany attorney representing employer clients in ten trusts, said the Riccelli decision will only have persuasive authority on other courts, not binding authority.” That said, Clark revealed the ruling may provide a “path“ for employers to resist the Board’s aggressive collection efforts.
“A lot felt pressured to enter agreements that were beyond their means,” said Clark, a litigator with the firm Hiscock & Barclay LLP.
A NY Workers Compensation Board spokesperson said the Board has no plans to shift it’s collections procedures in response to the Riccelli ruling.
In the past several years the board has assumed responsibility for most of the 60 some self insurance trusts that sprang up in response to legislation during the administration of Gov. George Pataki, later failing. All the self insurance trusts combined have deficits north of $900 million. The state recently issued $390 million in bonds to pay an insurer to administer the failed trust’s remaining claims and deficits. The NY Workers Compensation Board is looking to employers that were once members of those trusts to foot the final bill. In doing so the board is compelling employers to pay the board calculated assessments or face lawsuits in court.
The trial judge in the Riccelli case, Supreme Court Judge John C. Cherundolo wrote the board’s approach was too strict in a case involving the Transportation Industry Workers’ Compensation Trust. In that 2012 opinion concluded the Workers Compensation Board over stepped their bounds by imparting a “two part scheme of assessment.” First the board argues that it must impose an interim assessment within 120 days. Secondly at an undefined point in the future the board must levy the actual assessment for the entire liability of the group self insurer after a post deficit reconstruction.
That statute doesn’t allow for that Cherundolo wrote. “Had the legislature intended to provide for the two step process advanced by the board it could have simply so provided, but it did not. The powers to support multiple assessments is unsupported.”
The Riccelli decision could have ramifications for the 7,000 odd employers that once belonged to trusts besides TRIWCT” said Makowski the Buffalo based attorney.
This is the second tool employers have been gifted in recent months. Earlier litigation commenced on 5 insurance brokerage firms including The Cool Insuring Agency & Rampart Insurance Brokerage for placing clients in these trusts and not monitoring their solvency.
Clearly this is an ugly mess that hurts everyone. Further it runs counter to the “Open for Business” claims by NY Governor Andrew Cuomo when the state is aggressively targeting these businesses and putting such onerous financial burdens upon them through the NY Workers Compensation Board Assessments.
We suggest that you reach out to your legal counsel for options as it relates to your particular assessment and payment agreements. Clearly there have been significant developments that can help you on this front. If you have additional questions with respect to Workers Compensation Insurance or how the Riccelli ruling may give NY employers relief, call a Risk Advisor. We “trust” this article was helpful to you.
Special thanks to Peter Mantius of Work Comp Central for his contributions in this article.
Photo by Christopher Gower on Unsplash 
