Thirteen self-insured employer group trusts are set to argue in court Friday they should not have to pay millions in New York State Workers' Compensation Board emergency assessments to pay for worker claims against self-insured trusts that have gone bust.

Richard Honen, an attorney with Phillips Lytle law firm--representing the group self-insured trusts that are fighting the assessments--said they are arguing the board lacks the authority to take such action.

Meanwhile, Art Wilcox, director of the New York AFL-CIO public employee division, said his organization intends to file a brief in support of the board because "if something isn't done soon, a host of folks might soon not get their benefits."

Trusts that are objecting to the assessments, according to Mr. Wilcox, are on the hook because they signed a joint and several agreement that they would be responsible for the liabilities of trusts that cannot pay claims. "They might have been misled by brokers, but it's what they signed," he said.

The case is due to be heard in Albany Supreme Court, a county level tribunal, by Acting Justice Kimberly A. O'Connor. Earlier this month, the judge ordered the 13 to pay routine assessments, which support Workers' Compensation Board operational costs, but stayed the emergency assessments.

Brian Keegan, a spokesman for the board, said at this point he could not say when the agency would run out of money to pay injured workers with claims against trusts that are in default, while other figures, he noted, are "a moving target."

Mr. Honen said the 13 trusts--which are holding back money and are administered by First Cardinal LLC--cover close to a million employees and 1,000 employers.

According to his figures, the board is seeking $64 million from all of the trusts in the state--including his clients.

The attorney said the board this year is seeking $11 million from the trusts he represents, which is "a seven or eight thousand percent increase. They paid about $130,000 last year."

He said his clients' position is that the statute calls for the board to first pursue the trusts that haven't paid, "and they haven't done that."

Mr. Keenan said the board's position is that if it is able to collect from the defaulting trusts, it would reassess.

According to Mr. Honen, he has heard that the money for claims could run out in 10 weeks or longer, but the board has not spelled out "is there a default--is there money to pay absent these assessments?"

He said that in addition to arguing the board has no authority to assess the healthy trusts for the default of an unhealthy trust, even if it had the authority, it has never promulgated regulations necessary to set a framework for such assessments.

The board, in its court papers, said the trusts objecting to the assessments have $251 million in assets. They pointed to language in the state workers' comp law that whenever its chairman finds benefits may be unpaid by reason of a default, "the chairman shall levy an assessment against all private self-insured employers..."

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N.Y. Comp Board Emergency Assessments Spark Court Battle

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