New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following informal opinion on November 22, 2002, representing the position of the New York State Insurance Department.

RE: Recovery of Workers’ Compensation Loss Award Under No-Fault

Question Presented:

Does a workers’ compensation insurer, or a company that is a self-insurer with respect to providing workers’ compensation benefits to its employees, have a right to recover workers’ compensation schedule awards made to such employees from the No-Fault insurer of the vehicle in which the employee has suffered injuries as a result of an accident involving such vehicle, during the course of their employment, pursuant to Section 5105(a) of the Insurance Law?

Conclusion:

No. There is no right of recovery through inter-company loss transfer for schedule awards made by a workers’ compensation insurer that is authorized under Section 5105(a) of the Insurance Law.

Facts:

A municipal employee is involved in a motor vehicle accident, while in the course of his employment, with a motor vehicle weighing in excess of 6,500 pounds. The municipal employer, a self-insurer, thereafter paid workers’ compensation benefits in lieu of No-Fault benefits. The Workers’ Compensation Board rendered a decision that contained a schedule loss award to the employee. The self-insured employer seeks to initiate a loss-transfer arbitration against the No-Fault insurer of the tortfeasor’s vehicle, seeking reimbursement recovery for their payment of the workers’ compensation schedule award.

Analysis:

Pursuant to N.Y. Ins. Law § 5103(a)(McKinney 2002), every owner’s policy of liability insurance issued on a motor vehicle in New York must maintain the minimum amount of No-Fault coverage required under the Insurance Law (i.e., basic economic loss (first party benefits) of up to $50,000), which includes medical and health expenses, loss of earnings from work and all other reasonable and necessary expenses, as mandated by N.Y. Ins. Law § 5102(a)(1)(2) and (3)(McKinney 2002), which covers an eligible injured person who is injured as a result of a motor vehicle accident. However, under N.Y. Ins. Law § 5102(b)(2), No-Fault coverage is not primary when an employee receives injuries as a result of a motor vehicle accident, while in the course of their employment. In that instance, coverage is provided under the Workers’ Compensation Law, which coverage is primary in lieu of No-Fault benefits.

N.Y. Ins. Law § 5105(a)(McKinney 2002) provides that in two specific instances, "any insurer liable for the payment of first party benefits to or on behalf of a covered person and any compensation provider paying benefits in lieu of first party benefits….has the right to recover the amount paid from the insurer of any other covered person…", when the other covered person was at fault for the accident, and would have been liable to pay damages in a lawsuit to the injured party. The provision provides that "… the right to recover exists only if at least one of the motor vehicles involved is a motor vehicle weighing more than six thousand five hundred pounds unloaded or is a motor vehicle used principally for the transportation of persons or property for hire…". Section 5105(b) states that the sole remedy of an insurer to recover, when authorized under Section 5105(a), is "…mandatory arbitration pursuant to procedures promulgated or approved by the superintendent…".

In enacting the loss transfer provisions of Section 5105, the Legislature made it clear that in the two limited instances where a No-Fault insurer has a right to recover amounts paid from the No-Fault carrier of the tortfeasor vehicle, when either vehicle weighs over 6,500 pounds or is used "principally for transporting persons or property for hire", recovery for amounts paid is strictly limited to "the payment of first party benefits" made for basic economic loss, as described above. The term "first party benefits" is defined in N.Y. Ins. Law § 5102(b)(McKinney 2002) to mean payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle, less certain deductions, including amounts recovered or recoverable on account of such injury from workers’ compensation benefits (in which case workers’ compensation coverage is primary). The term "non-economic loss" is defined under N. Y. Ins. Law §§ 5102(c) (McKinney 2002) as "pain and suffering and similar non-monetary detriment." Payments for pain and suffering may be due when a vehicle occupant suffers "serious injury" as defined by N.Y. Ins. Law Section § 5102(d)(McKinney 2002) and therefore is permitted to sue tortfeasors in the other vehicle(s) involved in the accident, under their third party liability coverage, for non-economic loss.

Under N. Y. Workers’ Comp. Law §§ 15 (McKinney 2002), loss awards are made to injured employees for temporary or permanent, total or partial disabilities, based upon monetary schedules. The Section 15 awards are separate and apart from payments made by workers’ compensation carriers for medical benefits and are akin to "pain and suffering" damages when eligible under the No-Fault law.

When workers’ compensation coverage is primary, the limited right to Section 5102 loss transfer is given to "any compensation provider paying benefits in lieu of first party benefits (emphasis added)…" so that benefits paid pursuant to Section 5105(a) by workers’ compensation insurers are limited to benefits which are the equivalent of first party benefits reimbursable under No-Fault basic economic loss. Consequentially, payments made for Section 15 workers’ compensation awards which encompass pain and suffering are excluded from loss transfer in the same way that recovery for No-Fault serious injury damages which encompass pain and suffering are also excluded from loss transfer under Section 5105. Accordingly, it must be concluded that workers’ compensation loss awards, paid by workers’ compensation insurers to injured employees, are not recoverable in loss transfer arbitrations.

For further information you may contact Supervising Attorney Lawrence M. Fuchsberg at the New York City Office.