Insurers Sue on NY Workers Comp Changes

MANHATTAN (CN) - Insurance companies claim the State of New York unconstitutionally altered its workers compensation law in 2007, to benefit the New York State Insurance Fund at the expense of private companies.

Lead plaintiff Liberty Mutual Insurance cites three major objections in its federal lawsuit.

It claims the state expanded insurers' obligations to make lump sum deposits into the Aggregate Trust Fund. Previously, insurers had to deposit money sufficient to cover "the net present value of benefits owed to injured workers or their survivors for death, permanent total disability, or permanent partial disability involving the loss of limbs or eyes." The 2007 amendments required additional deposits for "additional types of partial disability benefits," the insurers say. They say this obligation was unfairly imposed "only on insurers, not on employers who self-insure or on the New York State Insurance Fund, both of which are responsible for paying the same types of benefits. The new obligation violates the Equal Protection Clause of the Fourteenth Amendment because it does not serve any legitimate public purpose and because there is no rational basis for discriminating against insurers. The principal effect of the amendments is to confer a significant cost advantage on the NYSIF, the state0owned insurer that is the largest in the state and the principal competitor of Plaintiffs and other private carriers. The amendments thus serve only the parochial competitive interests of the NYSIF, not any public purpose."

Second, the insurers say, this obligation applies retroactively to claims arising before the 2007 amendments were adopted, which is unconstitutional.

And third, plaintiffs say, the 2007 amendments "authorize the ATF (Aggregate Trust Fund) to enter into settlements with claimants with respect to claims against insurers but without the insurer's consent," which violates due process.

Plaintiffs include Wausau General Insurance, Peerless Insurance, Excelsior, American, and others. The insurers are represented by Michael Miller with Steptoe & Johnson.

Lead defendants are the Commissioners of the New York State Insurance Fund.

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