Workers Compensation from the First Department

Workers Compensation Defense Strategy in No-Fault Insurance Cases

The intersection of workers’ compensation law and no-fault insurance creates complex coverage questions that frequently arise in personal injury litigation. When an injured person was potentially acting in the course of employment at the time of an accident, determining which insurance system provides coverage—workers’ compensation or no-fault—becomes critical. New York law generally provides that workers’ compensation coverage is exclusive when an employee is injured during the scope of employment, potentially barring recovery under no-fault insurance systems.

Insurance companies defending no-fault claims sometimes raise workers’ compensation availability as a coverage defense, arguing that if the injured person was acting in the course of employment, no-fault benefits are not payable. However, determining whether someone was actually in the course of employment at the time of an accident requires factual findings that insurance companies cannot make unilaterally. Only the Workers’ Compensation Board has authority to make binding determinations about whether particular injuries fall within the workers’ compensation system.

This creates procedural questions about how courts should handle no-fault cases where workers’ compensation coverage remains disputed but undetermined. Should courts grant summary judgment based on unresolved workers’ compensation issues, or should they hold cases in abeyance pending formal Board determinations? The First Department’s decision in AEE Medical Diagnostic provides important guidance on this procedural question.

AEE Med. Diagnostic, P.C. v Travelers Prop. Cas. Co. of Am., 2017 NY Slip Op 51209(U)(App. Term 1st Dept. 2017)

Case Background

In AEE Medical Diagnostic, the defendant insurance company moved for summary judgment to dismiss a first-party no-fault action, arguing that workers’ compensation benefits might be available to the injured person. The defendant’s motion included a statement from the plaintiff’s assignor that raised triable issues about whether the assignor had been acting in the course of employment at the time of the accident.

The plaintiff argued on appeal that the assignor’s statement was defective and inadmissible, but this argument was raised for the first time on appeal and therefore unpreserved. The Civil Court had granted the defendant’s motion for summary judgment, and the plaintiff appealed, arguing both that the workers’ compensation defense was improperly substantiated and that even if coverage questions existed, the court should not have granted summary judgment without a Workers’ Compensation Board determination.

Jason’s Analysis

“Defendant’s submissions in support of its motion for summary judgment dismissing this first-party, no-fault action, including the statement of plaintiff’s assignor, raised triable issues as to whether the assignor had been acting in the course of his employment at the time of the accident and that, therefore, workers’ compensation benefits might be available (see Dunn v American Tr. Ins. Co., 71 AD3d 629 ; Great Health Care Chiropractic, P.C. v Lancer Ins. Co., 42 Misc 3d 145, 2014 NY Slip Op 50340 ). Plaintiff’s present argument that the assignor’s statement is defective and inadmissible, is unpreserved, as it is improperly raised for the first time on appeal (see Jordan v City of New York, 126 AD3d 619 ). The defects now alleged by plaintiff could have been corrected by defendant before the motion court, if raised at an earlier time (see DeJesus v Tavares, 140 AD3d 433 )”

“he parties’ respective summary judgment motions should have been held in abeyance pending a determination by the Board as to the applicability of the Workers’ Compensation Law to plaintiff’s claims ”

This is the standard non livery W/C case. Here, the EIP must have said to someone he was going to work, worked as a travelling salesperson or something else. This is contrasted to the usual ATIC case where the driver seeks NF benefits, the driver is on a commercial policy and this fact in and of itself is sufficient to raise an issue of fact.

Considering the ease of which someone can seek a WC determination, I think the ATIC position may very well be meritorious. However, should the drivers all seek a board determination and it is found that they were not in the course of employment, guess who is eating all the denied bills? Double edged sword.

Legal Significance

The AEE Medical Diagnostic decision establishes an important procedural principle: when workers’ compensation coverage availability is genuinely disputed in a no-fault case, courts should not grant summary judgment for either party but instead hold the motions in abeyance pending a Workers’ Compensation Board determination. This approach recognizes that the Board has exclusive jurisdiction to determine whether particular injuries fall within the workers’ compensation system, and courts should not usurp that administrative authority by making such determinations through summary judgment motions.

The decision also reinforces preservation requirements in appellate practice. Even meritorious arguments about defects in evidence will not be considered if raised for the first time on appeal, particularly when the alleged defects could have been corrected by the opposing party if timely raised below. This encourages thorough motion practice at the trial level and prevents parties from strategically withholding objections to create appellate issues.

Practical Implications

For insurance companies defending no-fault claims with potential workers’ compensation defenses, this decision provides a roadmap: raise triable issues about course of employment through admissible evidence, but recognize that obtaining summary judgment may not be possible without a Board determination. Instead of seeking immediate dismissal, defendants may need to pursue Workers’ Compensation Board proceedings to obtain definitive coverage determinations.

Healthcare providers pursuing no-fault claims should challenge workers’ compensation defenses by identifying defects in the defendant’s evidence at the trial level. Waiting until appeal to raise evidentiary objections will result in those arguments being deemed unpreserved. Additionally, providers should consider whether seeking their own Board determination might resolve coverage questions more favorably than waiting for the defendant to initiate such proceedings.

The decision also highlights strategic considerations for both sides. While the ease of obtaining Board determinations makes workers’ compensation defenses attractive, defendants pursuing this strategy accept the risk that Board rulings may go against them, potentially leaving them liable for denied claims plus interest and attorneys’ fees that accrued during the Board proceedings.

Related Articles

• Workers Compensation Defense in No-Fault Cases: Standing vs. Exclusion Analysis
• Strategic Decision-Making in Appeals: When Not to Fight Workers’ Compensation Rulings
• Workers Compensation Defense in No-Fault Cases: Specialized Expertise Required
• Why does a Malella defense survive an untimely disclaimer, while a workers compensation defense doesn’t?