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Workers' Compensation

New York Court of Appeals Upholds ATF Deposit on PPD Cases

Ronald Balter By Ronald Balter, Esq.

More than four years after the legislature enacted mandatory Aggregate Trust Fund deposits in all cases in which a claimant was classified as having a permanent partial disability after July 1, 2007 and involving a private workers' compensation carrier, litigation challenging those requirements has been decided by the Court of Appeals.

In reaching this decision the court first looked at the statutory text of the amended §15(3)(w) of the Workers' Compensation Law. Although the amended §15(3)(w) applied to accident occurring on or after the effective date of amendment (March 13, 2007) the provisions regarding Aggregate Trust Fund deposits in Workers' Compensation Law §27(2) refers to “any such award made on or after July first two thousand seven...” without any limitation as to the date of accident or disability. Without similar language relating to the date of accident or disability the deposit provisions apply to all cases if a finding of a permanent partial disability is made after July 1, 2007.[fn1]

The workers' compensation carrier once again argued that applying the law to accidents before the amendments was a retroactive application of the law. The Court of Appeals adopted the rationale of the Appellate Division that the law was not being applied retroactively but prospectively to actions taken by the Workers' Compensation Board prior to July 1, 2007.

The court also rejected the reliance of workers' compensation carriers on Burns v. Varriale, 9 N.Y.3d 207 (2007) claiming that because the future benefits payable were not ascertainable that there was no way to properly determine the Aggregate Trust Fund deposit amount. That argument was rejected because the court indicated that the method of calculating the deposit is set by law and actuarial tables. Because of the certainty of the method of determining the value of the deposit there was nothing speculative about the determination. ( subscribers can access the Lexis enhanced version of the Burns v. Varriale, 9 N.Y.3d 207 (N.Y. 2007).

The constitutional challenges raised by the workers' compensation carriers before the Court of Appeals was also rejected. A taking clause challenge was rejected because nothing was being taken from the workers' compensation carriers for a public purpose. The deposit has no effect on the liability of the workers' compensation carrier. It only requires the workers' compensation carrier to pay the present value of what they owe the claimant to the Aggregate Trust Fund to ensure that the claimant is paid in a timely fashion.

A Contracts Clause violation was also rejected because even before the amendment was enacted a discretionary deposit into the Aggregate Trust Fund was possible. The amendment only made what was discretionary mandatory.

The Aggregate Trust Fund deposit only applies to private workers' compensation carriers. It does not apply to the State Insurance Fund or a self-insured employer. This led to an equal protection challenge as well. The Aggregate Trust Fund was created to protect claimants from the insolvency of a workers' compensation carrier. There are other methods that ensure the payment of benefits to a claimant by the State Insurance Fund or a self-insured employer. The different treatment by the legislature of a workers' compensation carrier from the treatment of the State Insurance Fund or a self-insured employer is rational and therefore survives the challenge.

The Court of Appeals also found no Due Process violations in the law because at every step of a case from the date of the injury until the date the deposit is directed and made the workers' compensation carrier has many procedural protections in the law and process. Furthermore, the workers' compensation carriers failed to show that it was losing a “cognizable vested property interest” and that state was “wholly without legal justification” in enacting the law. Raynor v. Landmark Chrysler (November 15, 2011). ( subscribers can access the Lexis enhanced version of the Matter of Raynor v Landmark Chrysler, 2011 NY Slip Op 8183, 1 (N.Y. Nov. 15, 2011) decision with summary, headnotes, and Shepard's.)

The Court of Appeals also decided five other cases on the Aggregate Trust Fund issue. The case of Collins v. Dukes Plumbing and Sewer Service, Inc., Parkhurst v. United Rentals Aerial Equipment, Inc., Arthur v. Gould Pumps ITT, Salgy v. Halsted Communications, and  Hardy v. Trico, (November 15, 2011) affirmed the Appellate Division decisions based upon the rationale in Raynor.


1. It is interesting to note that the Court of Appeals did not pick up on the discrepancies between the effective date of the amendment to §27(2) and the language of §27(2). On page 4 of the decision the court indicated that the section requiring the deposits became effective on July 11, 2007 although the language of the section stated that the deposits applied to all cases in which the permanent partial disability finding was made on or after July 1, 2007.

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