A judge has ruled that New York officials must create a factual record of need before they levy a special assessment against employer groups that self insure for workers' compensation claims.
The finding Monday by Acting Supreme Court Justice Kimberly O'Connor in Albany comes in the dispute between the New York Workers Compensation Board and 13 group self-insured trusts that balked at paying an emergency assessment to pay claims against defaulted trusts.
According to the board, there are nine defaulted trusts, however, the judge raised a question about their level of insolvency.
Judge O'Connor found that the WCB had "improperly exercised its authority" in levying the assessment because it must demonstrate first that surety bonds and other financial supports for the defaulting trusts "are about to become exhausted."
A spokesperson for the board, Brian Keegan, said that when it comes to proving insolvency of the failed trusts, the board is "more than willing and able to do that."
He said while 13 trusts, most with the First Cardinal group, had gone to court, 40 other trusts had paid the assessments.
The judge, while finding the board acted improperly concerning the contested assessment, also ruled that the law was "unambiguous" about the board's authority to assess "all private self insurers for the anticipated losses, liabilities and expenses" of defaulted trusts.
However, Rich Honen, one of the attorneys representing the trusts, noted that the judge wrote later that provisions authorizing assessment "appear to be inconsistent.
He said in another action the trusts are testing the constitutionality of the statute, which was not addressed in the case just heard and the judge must now fully address the constitutional question. "This is a long process," remarked Mr. Honen.
The board he said "wanted $12 million when the day started- they got nothing."
In another portion of the decision the judge said it was "irrelevant" that last month the legislature revised the law governing trusts, stiffening penalties and regulations.
Under the new measure, the board will have the ability to borrow up to $52 million from the Fund for Uninsured Employers to pay claims against defaulted trusts and offset assessments against trusts that remain viable.
This article was updated 3:46 p.m.
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