Workers compensation defense upheld again

Devonshire Surgical Facility, L.L.C. v Hereford Ins. Co., 2010 NY Slip Op 52297(U)(2d Dept. 2010)

“Therefore, resolution of the factual question presented on this record “is best suited for determination by the [Workers’ Compensation] Board, given its expertise in the area” (Arvatz, 171 AD2d at 269), and the parties’ respective summary judgment motions should have been held in abeyance pending a determination by the Workers’ Compensation Board as to the applicability of the Workers’ Compensation Law to plaintiffs’ claim”

Workers Compensation dismissal

B.Y., M.D., P.C. v American Tr. Ins. Co., 2010 NY Slip Op 51902(U)(App. Term 2d Dept. 2010)

“[d]efendant’s cross motion [is] remitted to the District Court to be held in abeyance pending a prompt application to the Workers’ Compensation Board for a determination of the parties’ rights under the Workers’ Compensation Law. In the event plaintiffs fail to file proof with the District Court of such application within 90 days of the date of the order entered hereon, the District Court shall deny plaintiffs’ motion and grant defendant’s cross motion dismissing the complaint unless plaintiffs show good cause why the complaint should not be dismissed.”

“Defendant’s proof was sufficient to raise a question of fact as to whether plaintiffs’ assignor was acting as an employee at the time of the accident.  Accordingly, the order is reversed and plaintiffs’ motion and defendant’s cross motion are remitted to the District Court to be held in abeyance pending Board resolution. A prompt application to the Board, as set forth above, is required in order to determine the parties’ rights under the Workers’ Compensation Law.”

Again, we see that the remedy for failing to make a prompt application to the board within 90-days following a successful summary judgment motion is a dismissal of the matter on the merits.

Dismissal with prejudice is a viable disposition in a workers compensation primacy case

AR Med. Rehabilitation, P.C. v American Tr. Ins. Co., 2010 NY Slip Op 50708(U)(App. Term 2d Dept. 2010)

“…reversed without costs, the provision denying without prejudice defendant’s motion for summary judgment is stricken and defendant’s motion for summary judgment is remitted to the Civil Court to be held in abeyance pending a prompt application to the Workers’ Compensation Board for a determination of the parties’ rights under the Workers’ Compensation Law. In the event plaintiff fails to file proof with the Civil Court of such application within 90 days of the date of the order entered hereon, the Civil Court shall grant defendant’s motion for summary judgment dismissing the complaint unless plaintiff shows good cause why the complaint should not be dismissed.”

“In the instant case, contrary to plaintiff’s contention, defendant proffered sufficient evidence in admissible form of the alleged facts which gave rise to its contention that plaintiff’s assignor was acting as an employee at the time of the accident and that therefore workers’ compensation benefits were available (see e.g. Response Equip., Inc. v American Tr. Ins. Co., 15 Misc 3d 145[A], 2007 NY Slip Op 51176[U] [App Term, 2d & 11th Jud Dists 2007]; see also A.B. Med. Servs., PLLC v American Tr. Ins. Co., 24 Misc 3d 75 [App Term, 9th & 10th Jud Dists 2009]; cf. Westchester Med. Ctr. v American Tr. Ins. Co., 60 AD3d 848 [2009]). This issue must be resolved in the first instance by the Board (see O’Rourke v Long, 41 NY2d 219, 225 [1976]; see also Infinity Health Prods., Ltd. v New York City Tr. Auth., 21 Misc 3d 136[A], 2008 NY Slip Op 52218[U] [App Term, 2d & 11th Jud Dists 2008]; Response Equip., Inc. v American Tr. Ins. Co., 15 Misc 3d 145[A], 2007 NY Slip Op 51176[U]).

Defendant’s motion should not have been denied without prejudice but, rather, should have been held in abeyance pending Board resolution. A prompt application to the Board, as set forth above, is required in order to determine the parties’ rights under the Workers’ Compensation Law (see LMK Psychological Serv., P.C. v American Tr. Ins. Co., 64 AD3d 752). Accordingly, we reverse the order, insofar as appealed from.”

Note that the remedy for failure to apply to the board is dismissal with prejudice.  This is a very severe remedy.

    Evidence that claimant was affiliated with "car service dispatch base" divests court of subject matter jurisdiction

    The issue of what must be demonstrated in order to divest a court of subject matter jurisdiction when there is a workers compensation issue present has been the matter of significant debate over the last few years.  The appellate decisions in this area of law have been somewhat inconsistent.  Most of these appellate decisions, along with my thoughts, may be found on this blog.

    But for carriers that write certain segments of the livery business, this case might be significant.  I say the word “might” because recourse to the record on appeal is necessary to answer the many questions I have on this issue.  Of course, if someone would be nice enough to email me the motion papers in this case, I would be most appreciative.

    Dunn v American Tr. Ins. Co., 2010 NY Slip Op 01757 (2d Dept. 2010)

    “In this case, the defendant’s motion presented factual questions as to the plaintiff’s “status as either an independent contractor, as he claims he is, or as an employee of” a car service dispatch base, as the defendant claims (Arvatz v Empire Mut. Ins. Co., 171 AD2d 262, 269). Resolution of these questions “is best suited for determination by the [Workers’ Compensation] Board, given its expertise in the area” (id. at 269). Accordingly, prior to rendering a determination on the motion, the Supreme Court should have referred the matter to the Workers’ Compensation Board for a hearing and determination as to whether the plaintiff is relegated to benefits under the Workers’ Compensation Law.”

    Evidence that claimant was affiliated with “car service dispatch base” divests court of subject matter jurisdiction

    The issue of what must be demonstrated in order to divest a court of subject matter jurisdiction when there is a workers compensation issue present has been the matter of significant debate over the last few years.  The appellate decisions in this area of law have been somewhat inconsistent.  Most of these appellate decisions, along with my thoughts, may be found on this blog.

    But for carriers that write certain segments of the livery business, this case might be significant.  I say the word “might” because recourse to the record on appeal is necessary to answer the many questions I have on this issue.  Of course, if someone would be nice enough to email me the motion papers in this case, I would be most appreciative.

    Dunn v American Tr. Ins. Co., 2010 NY Slip Op 01757 (2d Dept. 2010)

    “In this case, the defendant’s motion presented factual questions as to the plaintiff’s “status as either an independent contractor, as he claims he is, or as an employee of” a car service dispatch base, as the defendant claims (Arvatz v Empire Mut. Ins. Co., 171 AD2d 262, 269). Resolution of these questions “is best suited for determination by the [Workers’ Compensation] Board, given its expertise in the area” (id. at 269). Accordingly, prior to rendering a determination on the motion, the Supreme Court should have referred the matter to the Workers’ Compensation Board for a hearing and determination as to whether the plaintiff is relegated to benefits under the Workers’ Compensation Law.”

    Why does a Malella defense surive an untimely disclaimer, while a workers compensation defense doesn’t?

    In New York First Acupuncture, P.C. v. State Farm Mut. Auto Ins. Co., 2009 NY Slip Op 52217(u), the Appellate Term in the context of an improper incorporation defense stated again that:

    “Plaintiff’s contention, that the defense of fraudulent incorporation must be asserted in a timely denial of claim form, is without merit (Multiquest, P.L.L.C. v Allstate Ins. Co., 17 Misc 3d 37, 38-39 [App Term, 2d & 11th Jud Dists 2007]).”

    What is interesting, and I have stated this before, is that it seems illogical that a Workers Compensation defense requires a timely disclaimer in order to be preserved (Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 (2d Dept. 2009), while a Mallela styled defense is exempt from the timely disclaimer requirement of Ins. Law 5106(a).  Both of these defenses do not implicate coverage.  Rather, these defenses are based upon whether a party has standing to prosecute an action.  Compare 11 NYCRR 65-3.16(a)(12), with, 11 NYCRR 65-3.16 (a)(9).

    A little consistency would be nice.

    Why does a Malella defense surive an untimely disclaimer, while a workers compensation defense doesn't?

    In New York First Acupuncture, P.C. v. State Farm Mut. Auto Ins. Co., 2009 NY Slip Op 52217(u), the Appellate Term in the context of an improper incorporation defense stated again that:

    “Plaintiff’s contention, that the defense of fraudulent incorporation must be asserted in a timely denial of claim form, is without merit (Multiquest, P.L.L.C. v Allstate Ins. Co., 17 Misc 3d 37, 38-39 [App Term, 2d & 11th Jud Dists 2007]).”

    What is interesting, and I have stated this before, is that it seems illogical that a Workers Compensation defense requires a timely disclaimer in order to be preserved (Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 (2d Dept. 2009), while a Mallela styled defense is exempt from the timely disclaimer requirement of Ins. Law 5106(a).  Both of these defenses do not implicate coverage.  Rather, these defenses are based upon whether a party has standing to prosecute an action.  Compare 11 NYCRR 65-3.16(a)(12), with, 11 NYCRR 65-3.16 (a)(9).

    A little consistency would be nice.

    Back to Workers Compensation

    One of the most intriguing things about this area of law is that in a matter of 6 months, the same court can make pronouncements that are apparently inconsistent with each other. Some of these inconsistencies are subtle. Some of them are more pronounced.
    An example of a sublte change is the pronouncement that an uncertified police report may under certain circumstances be considered admissible evidence in accord with CPLR 4518(a). People v. Hunter, 62 A.D.3d 1207 (3d Dept. 2009); Westchester Medical Center v. State Farm Mut. Auto. Ins. Co., 44 A.D.3d 750 (2d Dept. 2007) Compare, CPLR § 4518(c).
    Another subtle change involves the proof necessary to demonstrate intoxication in a civil case. A proper certified hospital record or police record will now suffice. Six months prior, it did not suffice. Compare, Westchester Medical Center v. Progressive Cas. Ins. Co., 51 A.D.3d 1014 (2d Dept. 2008)(“A blood alcohol test result, as set forth in a certified hospital record, constitutes prima facie evidence of the test result pursuant to CPLR 4518(c) Thus, the blood alcohol test results contained in a certified hospital record from Sound Shore would be sufficient to make a prima facie showing that Forthmuller was intoxicated at the time of the accident”), with Westchester Medical Center v. State Farm Mut. Auto. Ins. Co., 44 A.D.3d 750 (2d Dept. 2007)(“the defendant was unable to establish, prima facie, that Gjelaj was intoxicated at the time of the accident. The result of a blood alcohol test may be admitted on the issue of intoxication in litigation involving an exclusion in a no-fault policy provided that a proper foundation is laid. At bar, the defendant failed to lay a proper foundation for admission of the BAC report by proffering any evidence regarding the care in the collection of Gjelaj’s blood sample and its analysis.”)

    Then there is the question: what is a prima facie case? I will not even go there, but a NYLJ article that will be published next week will gloss on that issue.  Now we have the workers compensation defense issue. Specifically, is the workers compensation defense one of standing or is it an exclusion. Notice that I left out the word “coverage”. Coverage, as we learned in Fair Price, is only implicated in rare instances. Workers Compensation issues do not implicate coverage.

    Last month, the Appellate Division, Second Department, told us that the workers compensation defense is an exclusion that needs to be preserved in a timely denial. The Appellate Term, Second Department, followed suit under principles of stare decisis. I discussed this in prior posts.  The case that triggered this post is LMK Psychological Serv., P.C. v American Tr. Ins. Co. 2009 NY Slip Op 06004 (2d Dept. 2009). The pertinent portion of the opinion is as follows:
    “There has been no determination by the Workers’ Compensation Board as to whether the assignors are entitled to Workers’ Compensation benefits for their injuries. The Workers’ Compensation Board has primary jurisdiction to determine factual issues concerning coverage under the Workers’ Compensation Law. Where “a plaintiff fails to litigate that issue before the Board, the court should not express an opinion as to the availability of compensation but remit the matter to the Board'”
    It is not clear whether the Appellate Division has now decided that the compensation defense is now a standing issue (id), or is precludable as was set forth in Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 60 AD3d 1045 (2d Dept. 2009). Without resort to the record on appeal, it is hard to tell what exactly happened here.

    Workers Compensation defense

    I would be remiss if I did not thank Dave Barshay for the citation to this blog in his article. I also must thank David Gottlieb for posting Mr. Barshay’s citation to this article on his blog. While I am not sure it is really critical that you read this blog, despite what Mr. Gottlieb says to the contrary, I thank him for the compliment nonetheless. Now that the peremptory “thank yous” are out of the way, now onto the cases.

    A.B. Med. Servs., PLLC v American Tr. Ins. Co., 2009 NY Slip Op 29271 (App. Term 2d Dept. 2009)

    A.B. Med. Servs., PLLC v American Tr. Ins. Co., 2009 NY Slip Op 51262(U)(App. Term 2d Dept. 2009)

    A.B. Med. Servs., PLLC v American Tr. Ins. Co., 2009 NY Slip Op 51263(U)(App. Term 2d Dept. 2009)

    Inwood Hill Med., P.C. v Metropolitan Prop. & Cas. Ins. Co. 2009 NY Slip Op 51264(U)(App. Term 2d Dept. 2009)

    The day after the no-fault wrap up, the Appellate Term, Second Department issued a slue of opinions regarding the Workers Compensation defense, which was consistent with what Mr. Barshay’s article stated. Again, I discussed this issue on a previous blog post.

    However, when the issue is phrased in light of the “exceptional” circumstance of non-coverage, as recently opined upon by the Court of Appeals in Fair Price, the Workers Compensation defense is waivbale.

    However, when this issue is evaluated through the prism of “standing”, the Appellate Division’s conclusion may not be correct. As the law stands right now, a service rendered by an independent contractor or an improperly formed medical corporation is not subject to the “preclusion” sanction, through the failure to timely or properly deny a claim. This is because an independent contractor and an improperly formed corporation lacks standing to prosecute a no-fault claim. It thus follows that based upon 65-3.19, the Workers Compensation defense, in relation to a claim for medical benefits, should not be subject to the 30-day pay or deny rule. This follows from the simple conclusion that an injured person and his or her assignee lack standing to prosecute such a first-party no-fault claim for medical benefits.

    The above standing analysis in no way applies to wage benefits, since the regulations explicitly state that no-fault wage coverage is secondary to Workers Compensation wage coverage.

    It is a two way street

    In reading the Westchester Med. Ctr. v Lincoln Gen. Ins. Co., 2009 NY Slip Op 02589 (2d Dept. 2009) case that involved the validity of a denial based upon workers compensation primacy, it appeared (at first blush) that the providers obtained a true victory against the carriers. Whereas compensation is somewhat consistent with managed health care, no-fault is the exact opposite. Furthermore, the scope of medical services compensated under no-fault is far greater than the services reimbursed under Workers Compensation. One only needs to ask a certain bunch of attorneys who are fighting this exact issue in the context of whether a Licensed Massage Therapist may receive compensation under no-fault for rendered services inasmuch as the same services are not compensable under Workers Compensation. This same battle arises in the realm of acupuncture that an L.AC performs and services a chiropractor renders outside the chiropractor fee schedule.

    But, does this also mean that “priority of coverage” issues may also be subject to the 30-day pay or deny rule? Let me rephrase this statement. Does this mean that a primacy of coverage defense may be adjudicated in court or arbitration against a Claimant, because another insurance carrier might be primary?

    Here are two examples. 1) John Doe, a Geico insured, is involved in a motor vehicle accident while occupying an Elrac rental vehicle in New York. Or, 2) John Doe, while in a Elrac vehicle is in an accident in Montana.

    Under scenerio “1”, Elrac is primary. Under scerio “2”, Geico is primary. Simply put, the rule in New york is that coverage follows the vehicle, except that when the accident occurs outside NEw York, it follows the person.

    Medical provider submits bills to Geico under scenerio #1 and Elrac in scenerio #2. Both of the carriers the bills were submitted to are not the first in line under a priority of payment analysis. Geico in example #1 and Elrac in example #2 timely denies the bills. Now what?

    Under conventional wisdom, issues involving primacy of payment must be adjudicated in 5105 mandatory arbitration. See, 65-3.12; SZ Medical, P.C. v. Lancer Ins. Co., 7 Misc.3d 8 (App. Term 2d Dept. 2005). In other words, the secondary carrier must adjust the claim in the normal and ordinary course of business and then seek reimbursement against the primary carrier through intercompany arbitration. The SOL would be three years from the payment, so it cannot be said that the carrier should be too unhappy with this result. Motor Vehicle Acc. Indemnification Corp. v. Aetna Cas. & Sur. Co. 89 N.Y.2d 214 (1997).

    Under the current system, money from the secondary insurer would have to be paid out on the front end, but may be recovered on the back end.

    Now, because of the Westchester Case, it appears that priority of payment issues may be raised and defended at any time through a timely denial. Thus, next time I receive a denial when there is a primary of payment issue, maybe I actually have a defense? So, you can say this is the other side of the two-way street…

    Be careful what you wish for.