The purpose of this lecture is to provide an introduction to the pitfalls facing the practitioner who is involved in litigation where an employer has failed to procure a worker’s compensation insurance policy. Although many of the same conventions are in place, the resulting problems facing an injured worker as well as a putative uninsured employer are complex. Procedural devices exist to provide protection to the employer which, as we shall discuss below, create unique obstacles to claimants and their attorneys in the prosecution of their claims.

The extensive litigation involved in the average uninsured claim result from the statutory requirement that all employers in New York must provide workers’ compensation coverage for their employers. The procedural difficulties result from balancing the remedial nature of the statute and the constitutional rights of employers. These difficulties are further exacerbated by the rising cost of compensation insurance which has led many small employers to operate their businesses without insurance. Although the Workers’ Compensation Board has gone to great lengths to address the inequities faced by claimants involved in these claims, the delays encountered by claimants are often devastating, especially when the injuries sustained are severe and permanent.

We will attempt to provide a brief outline of the relevant statutory requirements which shall include practice tips for practitioners representing claimants as well uninsured employers. The balance of the lecture shall be dedicated to a discussion of the Uninsured Employer’s Fund’ including the enforcement and collection efforts that are conducted in an effort to reduce the damages caused by recalcitrant employers.

EMPLOYER/EMPLOYEE RELATIONSHIP

Workers’ Compensation Law Section 2: This section provides extensive description of what defines employers and employees within the meaning of the Workers’ Compensation Law. This becomes a complicated issue where an employer has failed to obtain insurance as it instantly becomes an issue that must be adjudicated before a finding of “no insurance” is made.

** Hazardous Employment

** Casual Employment – Section 2(4) defines casual employment which serves to primarily protect home owners from claims brought by individuals who perform tasks at their homes. This category includes part-time home health workers, repair men, etc. As will be discussed below, most home owner policies provide a casual emplohese sections provide coverage for workers specifically engaged in work as jockeys (and support workers including trainers) and black car operyment endorsement and will provide a defense.

** Corporate Officers – Generally speaking, executive officers of a corporation are covered by a standard w/c policy. Although you need not provide coverage for officers, an employer must specifically exclude officers to deny coverage. However, in a corporation which is solely comprised of one or two officers without employees, coverage need not be provided. (General partnerships.)

Workers’ Compensation Law Section 10: Requires every employer, as defined by Section 2, to provide insurance coverage.

Workers’ Compensation Law Section 17: Alien status does not relieve an employer from providing coverage for employees as ALL employees are protected.

Workers’ Compensation Law Section 14: Average weekly wage.

Workers’ Compensation Law Sections 18-a and 18-b: Tators. The circumstances created by these types of employment presented unique problems for employers and the Board. The creation of these funds have reduced litigation and provided coverage.

** PRACTICE TIPS – Proof of earnings

Corporate records

Contracts

Audits

EXCLUSIVITY OF REMEDY: EXCEPTIONS

Workers’ Compensation Law Section 11: Workers’ Compensation benefits are the exclusive remedy available to injured workers (assuming covered employment.) Even where an employer is uninsured, the WCL provides a mechanism for the adjudication of these claims. Nevertheless, where an employer fails to provide insurance coverage, a claimant is permitted to file a civil claim to recover based upon employer/employee relationship. An employer is barred from raising the affirmative defenses of assumption of risk, contributory negligence or fellow servant liability. The action can proceed simultaneously with an action before the Board in the UEF part.

** PRACTICE TIPS – Procedure/Retainer Statement

WCL Section 50 violation required

Statute of Limitations

` Election of Remedy – see Martin v. C.A. Prods. Co., 8 N.Y.2d 226 (1960).

Avoidance of penalties

Workers’ Compensation Law Section 29: This section provides relief for employers form third party tortfeasors. However, the practitioner must be aware of a WCL Section 11 defense. See Buchner v. Pines Hotel, Inc., 87 A.D.2d 691 (1982). (Joint venture)

THE UNINSURED EMPLOYERS FUND

Workers’ Compensation Law Section 26-a: This section is responsible for the creation of the Uninsured Employers’ Fund, which acts as a surety in instances where employers fail to provide insurance coverage as required by WCL Section 10. Upon the establishment of a claim, the UEF acts in the role of a carrier, paying medical costs and indemnity to injured claimants. It is operated through the Board and staffed by attorneys from the Office of General Counsel.

Workers’ Compensation Law Section 50: Security for payment of compensation. In conjunction with WCL Section10, Section 50 requires every employer to provide insurance either through the purchase of a policy or by complying with the requirements for self-insured status. In order for the UEF to pay an award, or for a civil action to proceed, the Board must determine that the putative employer violated this section.

Workers’ Compensation Law Section 52: There are attendant penalties as well as potential criminal charges, as an employer’s failure to provide coverage is a misdemeanor punishable by jail and/or fines. The Board also imposes civil penalties and requires indemnification from uninsured employers.

** PRACTICE TIPS – Corporate Liability

Avoidance of Penalties

Criminal prosecution

Coverage first = Significant delay

Litigation Costs

Workers’ Compensation Law Section 54: This section (54(5)) provides the procedure for the cancellation of a workers’ compensation policy. The most important concept to remember is that a carrier must strictly comply with the notice requirements contained within this section.

Workers’ Compensation Law Section 54-a: The Board can request security where coverage is an issue.

Workers’ Compensation Law Section 55: Acceptance of premium by carrier an estoppel.

Workers’ Compensation Law Section 56: This section provides for liability to be borne by general contractors where a subcontractor failed to obtain insurance coverage.

The policy was to force general contractors to hire subcontractors with the requisite insurance. The general contractor is provided with the remedy that it can seek indemnification from its subcontractor. Section 56 liability does not relieve a general contractor from third party liability. See Cutillo v. Emory Housing Corp., 190 N.Y.S.2d 502 (1959).

** PRACTICE TIPS - Agency. See Valverde v. N.Y.C. Housing Authority, 154 A.D.2d 756 (1989).

Broker Liability. See DelVecchio v. DelVecchio, 11 A.D.2d 574 (1960). Tavano v. Tavano Enterprises, 227 A.D.2d 836 (1996).

Improper Cancellation. Matter of Cruz v. New Millenium Construction & Restoration Corp., 17 A.D.3d 19 (2005).

Estoppel. See Winn v. Hudson Valley Equine Center, 215 A.D.2d 920 (1995).

Duty to Defend. See Sukup v. State, 19 N.Y.2d 519 (1967) – duty to defend on issue of coverage but not liable for litigation expenses. Great American Indemnity Co. v. Audlane Realty Corp., 296 N.Y.S. 655 (1937).

Jurisdiction.

Corporate Liabiltiy.

Premium audits.

In a concerted effort to reduce Workers’ Compensation fraud, the New York State Legislature incorporated a provision in the 2007 Reform Legislation that would permit the Inspector General of the Workers’ Compensation Board to share resources with other state agencies to identify employers who do not maintain workers’ compensation coverage for their employees. WCL § 136(5) has created an avalanche of litigation that has compliant as well as recalcitrant employers scrambling for legal representation. Although the statutory intent is questionable, the result is a tremendous financial windfall to the coffers in Albany. More importantly, the general practitioner as well as the commercial litigator is being drawn into an unfamiliar arena which is often devoid of precedent, due process and written rules. The purpose of this article is to briefly identify the issues, the parties involved and the potential ramifications that your client may face when involved in such a matter.

WCL § 50 requires all employers, with limited exception, to maintain workers’ compensation coverage. In a situation where a claim for benefits is filed against an uninsured employer, the Uninsured Employers Fund (“UEF”) acts as a surety and pays benefits directly to the claimant pursuant to WCL § 26-a. (WCL § 11 provides an additional remedy by permitting an injured worker to file a civil claim directly against the employer. However, this remedy is beyond the scope of this article.) The recalcitrant employer is responsible for reimbursement to the UEF for all indemnity and medical benefits advanced to the claimant. In addition, once it is determined that an employer has violated §50, the Board assesses an additional penalty in the amount of $1000 for each ten-day period of non-compliance. An employer is deemed to have defaulted if the assessments are not paid within ten days of mailing of the notice, after which a judgment is entered. § 52(1)(c) holds corporate officers personally liable for penalties and assessments. It is thus a misnomer that dissolving a corporation shall absolve the individual owners of their debt obligations pursuant to WCL §§ 26-aand 52. Section 52 provides a final row of sharp teeth inasmuch as a violation constitutes a class E felony and is punishable by a fine of not less than $5000 and not more than $50,000 in addition to any other fines and penalties (§ 52(a) and (b) further describe criminal penalties.)

Up to this point, we have only discussed the instances where a claim is filed against an uninsured employer and until recently, it had been more or less unnecessary to discuss penalties beyond this context. However, the WCB has exerted a great amount of resources in enforcing the coverage requirements against all employers. The enforcement arm of the WCB has engaged in a concerted effort pursuant to the 2007 Reform Legislation to thoroughly vet all employers, and is utilizing the informational resources made available by WCL § 136(5). Employers across the state are receiving inquiries concerning coverage and are being served with astronomical judgments for their non-compliance, regardless of the existence of a claim. WCL § 52 (5) permits the WCB to assess a penalty in the amount of $2000 for each ten-day period of non-compliance. Furthermore, WCL § 141-a permits the WCB to issue stop-work orders against recalcitrant employers and bars past offenders from bidding on public projects. WCL § 131 provides an additional deterrent by imposing stiff penalties for employers who fail to keep accurate payroll records.

The most difficult aspect presented by Albany’s enforcement campaign is the Board’s ability to enter sizeable judgments without formal legal proceedings. Although the aforementioned criminal penalties require formal charges, and uninsured claims are adjudicated by the WCB, many penalties are assessed without formal legal proceedings and thus without the active participation of the employer. This lack of due process is certainly an affront to most practitioners and expectedly gives pause to anyone considering involvement in such a matter. However, there is a light at the end of the tunnel. The WCB may reduce penalties for employers who provide reasonable explanations for non-compliance especially once coverage is secured. Your client must also be made to understand that ignoring WCB inquiries will only serve to compound the problem and will more likely than not increase any applicable penalties. Finally, there are instances where the WCB must be challenged as the lack of oversight will often lead to situations where the WCB will attempt to bully an employer even where it has incorrect information or has improperly evaluated that information. The sheer volume of employers in New York coupled with shoddy record-keeping and lack of procedural safeguards leave many small employers in a precarious position.

It is this writer’s hope that regular challenges to the Board will result in procedural safeguards. The reality of Albany and the flaws in this “reformed” statute lead me to believe otherwise.

As a general proposition, occupational disease claims have evolved from the earliest dust disease claims to the proliferation of repetitive stress and “sick building” claims. As technology and medicine advance, the bases for claims become more expansive and more complicated. However, the same overriding concept, based upon the remedial nature of the New York State Workers’ Compensation Law still remains; the law exists to provide compensation for workers injured not only as a result of identifiable accidents but for those injured as a result of the nature of their work and the environments in which they labor.

The purpose of this lecture is to explore the bases to file a claim for an occupational disease, with an emphasis on claims for pulmonary injury. Emphasis shall be placed on the necessary elements essential for a successful prosecution of these often insidious and latent diseases along with an analysis of the myriad of pitfalls awaiting the practitioner. Although we shall provide case citations to illustrate various points, please understand that the list is not exhaustive. Instead, these materials should be used as a starting point for a case by case analysis when presented with actual claims.

Finally, we shall provide a brief primer on the medical aspects of various diagnoses, which shall include a description of symptoms, an explanation of the various diagnostic tools available to the medical professional and a brief explanation of medical terminology used in the reports that you shall encounter during the prosecution of these claims. In addition, there shall be an explanation of the concept of causal relationship from a medical standpoint with emphasis on the difficulties facing the medical professional in arriving at these conclusions.

DEFINITION OF OCCUPATIONAL DISEASE

Workers’ Compensation Law Section 3 : Section 3 provides a list of various hazardous substances along with the diseases associated with those occupations. Paragraph 29 is the “catch-all” inasmuch as all potential “exposures’ are said to be contemplated by the statute.
Paider v. Park East Movers, 19 N.Y. 2d 373 (1967) – An occupational disease is an ailment which is the result of a distinctive feature of the kind of work performed by a claimant and others similarly employed and it is not an ailment caused by the peculiar place in which a particular claimant happens to work nor is it caused by ordinary contact with a fellow employee. See also Detenbeck v. General Motors Corp., 309 N.Y. 558 (1956) and Goldberg v. Marcy Corp., 276 N.Y. 13 (1938) (all employees of a class are subject to exposure.)

**Aggravation of Pre-Existing Condition as an Occupational Disease: As a general proposition, the aggravation of a pre-existing disease or condition by occupational factors is not a sufficient basis for the establishment of a claim. However, there is an exception: Ochsner v. New Venture Gear, 273 A.D. 2d 715 (2000) – pre-existing condition is aggravated to extent that it becomes disabling. See also Strouse v. Endicott Village, 50 A.D.2d 635 (1975). A helpful way to determine is if a dormant or asymptomatic condition becomes symptomatic and disabling.

** Do not confuse non-occupational conditions in a work place that aggravate pre-existing conditions as compensable. Mack v. Rockland County,71 N.Y.2d 1008 (1988) (cigarette smoke not an occupational factor.)
** Some of these claims may be treated as accidents (to be discussed.)

Workers’ Compensation Law Section 15 – This section contains criteria for payments of disability where claimant has sustained a partial/total loss of wage earning capacity. Recently, the significance that this section has played is the discussion of voluntary withdrawal from the labor market, where it has been significant in all claims for disability.

NOTICE AND STATUTE OF LIMITATIONS

As a general proposition, there are limited notice requirements as well as the standard two-year statute of limitations requirement that are applicable in accident cases. However, the insidious and long term effects of exposure to deleterious dusts, fumes and chemicals present problematic circumstances which cannot be dealt with without the flexibility that is inherent in the Workers’ Compensation Law.

Workers’ Compensation Law Sections 18 & 45 – Notice
Although an injured worker is required to give notice of an accident to his/her employer within 30 days of the accident pursuant to Section 18, Section 45 expands the time period within which notice is to be given. Specifically, in the case of an occupational disease, notice is to be given within 2 years after the disablement or after the claimant knew or should have known that the disease is due to the nature of employment, whichever is later.

**Last injurious exposure (if someone has ongoing exposure, then he/she can still sustain injury.)
**Along with the standard exceptions to late notice, Section 45 effectively negates any strict notice requirement.
**Nature of disease would otherwise make notice virtually impossible.

Workers’ Compensation Law Sections 28, 38 & 42 – Date of Disablement
Section 28 generally requires an injured worker to file a claim for compensation within two years of the date of accident. However, this section specifically expands the two year period to commence from the date that the claimant had or should have had knowledge of the nature of his/her condition as related to his/her occupation and date of disablement. This expansive language essentially leads to a limitless statute of limitations.

Section 38 – Disablement = Accident: Generally, disablement from an occupational disease is deemed equivocal to an accident. LaGattuta v. Baldwin Ehret-Hill, Inc., 36 A.D. 2d 887 (1971.)

Section 42 – permits the Board to exercise broad discretion in determining the date of disablement and is to be based upon substantial evidence. Patterson v. Long Island Jewish Medical Center, 296 A.D.2d 774 (2002.)

**Factors used to determine date of disablement are date of diagnosis, date of first treatment, last day worked.
**Liberal interpretation.
**Loss of time from work not necessarily same as disablement.

PRESUMPTIONS

The concept of the presumption plays a major role in the analysis of many compensation claims. Occupational disease claims rely on these presumptions as well as specifically defined presumptions. As previously discussed, Section 3 provides a list of occupations along with related diseases.

Workers’ Compensation Law Section 21 – An accident which occurs in the course of employment is also presumed to arise out of the employment. The presumption must be rebutted by substantial evidence.

Workers’ Compensation Law Section 47 – Section 3 Occupations + Section 3 Diseases = Presumption of Causal Relationship. Section 47 permits the presumption that the disease was due to the nature of the employment if the work process was the kind of work the employee did immediately before the disease. Stein v. New York Times, 78 A.D.2d 757 (1980.) – Continuing statutory presumption that disease is work-related.

**Sixty-Day Rule – Sixty days of exposure is presumed to be an injurious exposure.
**Medical opinion still required.
** Leggiero v. Kings Electronic Co., 2 A.D.2d 945 (1956) – Presmption exists even if others do not contract disease.

AWARDS

Although Section 15 of the Workers’ Compensation Law provides for awards for causally related disability, there is an additional statutory provision that provides for the loss of wage earning capacity an injured worker may encounter when disease forces the worker to find employment in a different environment.

Workers’ Compensation Law Section 39 – Where a claimant’s disease compels him/her to seek employment in a non-injurious or “healthful” environment, an award for reduced earnings is appropriate.

**Defense to claim of Voluntary Withdrawal.

DUST DISEASES V. NON-DUST DISEASES

The legal differentiation between dust diseases and non-dust diseases is based upon the pathological distinction between pneumoconiosis, which occur when the inhalation of dust particles cause injury/changes to the essential functioning aspects of the lungs (parenchyma) and those diseases which affect the lining (pleura) of the lungs.

Workers’ Compensation Law Section 15-8(ee) – Provides for relief from the Special Funds Conservation Committee for dust diseases (asbestosis v. asbestos-related pleural disease.) Fama v. P&M Sorbara (Decision rendered by the Third Department 3/16/06) – no requirement to file two separate claims.

**Dust diseases are generally more serious.

Workers’ Compensation Law Section 44 & 44-a – Last injurious exposure shall result in liability except in situation where the injury is a dust disease.

**Tremendous source of litigation.
**Apportionment permitted among subsequent employers for exposures that occur subsequent to the contraction of the disease.

OCCUPATIONAL DISEASE V. ACCIDENTAL INJURY

Workers’ Compensation Law Sections 2 & 48 – There are instances where a disease/injury is contracted based upon an injurious exposure that is not endemic to a workers’ employment environment. Engler v. U.P.S., 1 A.D.3d 854 (2003.) see also Martin v. Fulton City School District, 300 A.D.2d 901 (2002.) Furthermore, there are cases where the claim may be analyzed as an accident and an occupational disease. Farcasin v. PDG Inc., 286 A.D.2d 840 (2001.)

**A single exposure can still result in an occupational disease (uncommon in dust diseases.)
**History essential.
**Sick building claims – Dando v. Binghamton Board of Ed., 111 A.D.2d 1060 (1985.) (Claim by teacher exposed to construction dust not an occupational disease.)
**Beware of pre-existing conditions.
** Exposure to asbestos as Claim. Gerardi v. Nuclear Utility Services Inc., 566 N.Y.S.2d 1002 (1991.) No need to have injury to file (testing and history.)

Glenn Selig (SEE’-lihg) says the charge involves a gun seized after Stacy Peterson disappeared in October. He says police claim the gun’s barrel was too short under Illinois law.

Police are also investigating the death of Peterson’s third wife, Kathleen Savio. She was found dead in a bathtub in 2004. Her death was initially ruled an accident.

After Stacy Peterson disappeared, Savio’s body was exhumed and an autopsy determined she was the victim of a homicide.
2008-05-21 17:34:44 GMT