Workers Compensation defense substantitated

The intersection of workers’ compensation law and no-fault insurance presents one of the more complex coverage questions in New York practice. Under Insurance Law § 5102(b)(2), no-fault benefits are not available for injuries arising out of the use or operation of a motor vehicle where the injured party is entitled to workers’ compensation benefits. This exclusion serves to prevent double recovery and to channel workplace injury claims into the workers’ compensation system.

For livery drivers and taxi operators, the question of whether an employer-employee relationship exists is often dispositive. If the injured driver was an employee of a car service or taxi company at the time of the accident, workers’ compensation is the exclusive remedy and no-fault benefits are unavailable. If the driver was an independent contractor, no-fault coverage applies. This case addresses the evidentiary standard for raising the workers’ compensation defense and explores when a livery base will be deemed an “employer” under Workers’ Compensation Law § 2(3).

Case Background

In Chiropractic Testing Servs. of N.Y., P.C. v American Tr. Ins. Co., the plaintiff chiropractic provider, as assignee of the injured party, brought an action in Richmond County Civil Court to recover first-party no-fault benefits. American Transit Insurance Company raised the workers’ compensation defense, arguing that the assignor was an employee of a cab company at the time of the accident and was therefore excluded from no-fault coverage.

A critical factual distinction set this case apart from earlier precedent: the assignor did not own the vehicle involved in the accident. Instead, American United Transportation—the cab company—owned the vehicle and was the named insured on the automobile insurance policy. This ownership structure strengthened the inference of an employer-employee relationship.

Jason Tenenbaum’s Analysis:

Chiropractic Testing Servs. of N.Y., P.C. v American Tr. Ins. Co., 2018 NY Slip Op 28052 (Civ. Ct. Richmond Co. 2018)

“This case is distinguishable from Global Liberty, however, because Assignor did not own his vehicle. Here, American United Transportation (hereinafter, “the cab company”) owned the vehicle and was named as the insured on the automobile insurance policy.

According to Workers Compensation Law § 2 (3), a livery base shall be deemed the “employer” of a driver if it must register with the Taxi & Limousine Commission (TLC) and is [*2]not an “independent livery base” as defined in § 18-c . Even in cases where the driver owned the vehicle and paid for its fuel and maintenance, the Board has found an employer-employee relationship because the vehicle carried the dispatcher’s sign and telephone number, the dispatcher provided his radio, and the dispatcher exerted control over which calls he would pick up and how much he could charge (See Olistin v Wellington, 3 AD3d 618 ).”

“Defendant need not prove that Assignor was employed by the cab company at the time of the accident, but merely show “potential merit” to its claim so as to trigger a determination by the Board (A.B. Med. Servs. PLLC v Am. Transit Ins. Co., 8 Misc 3d 127 ).”

Legal Significance

This decision is notable for its analysis of the employer-employee relationship in the livery and taxi industry. The court applied Workers’ Compensation Law § 2(3), which provides that a livery base shall be deemed the employer of a driver if it must register with the Taxi and Limousine Commission (TLC) and is not an “independent livery base” as defined in § 18-c. The court also drew on Olistin v Wellington (3 AD3d 618 [2004]), where the Third Department found an employer-employee relationship even when the driver owned his own vehicle, because the dispatcher provided the radio, controlled which calls the driver could take, and dictated fare amounts.

Importantly, the court applied the lower evidentiary standard from A.B. Med. Servs. PLLC v Am. Transit Ins. Co. (8 Misc 3d 127[A] [2005]), holding that the insurer need not prove an actual employment relationship at this procedural stage—only demonstrate “potential merit” sufficient to trigger a determination by the Workers’ Compensation Board. This threshold is considerably lower than proving the defense on the merits, and it reflects the policy preference for having employment status disputes resolved by the specialized agency rather than by the civil courts.

Practical Implications

For no-fault insurers defending claims involving livery drivers, this case provides a roadmap for establishing the workers’ compensation defense. Vehicle ownership is a significant factor: when the cab company owns the vehicle and holds the insurance policy, the inference of an employer-employee relationship is substantially stronger than in cases where the driver owns the vehicle independently.

For healthcare providers and their attorneys, the decision highlights the need to investigate the assignor’s employment status early in the litigation. Understanding the ownership structure of the vehicle, the relationship between the driver and any dispatch or transportation company, and whether the base is TLC-registered can be critical in assessing the viability of the claim before investing significant litigation resources.

Key Takeaway

In no-fault cases involving livery or taxi drivers, vehicle ownership and the relationship between the driver and the transportation company are critical factors in determining whether the workers’ compensation exclusion applies. Insurers need only demonstrate “potential merit”—not conclusive proof—of the employer-employee relationship to trigger referral to the Workers’ Compensation Board, making this a relatively accessible defense when the factual predicate is present.

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