The Office of General Counsel issued the following opinion on April 17, 2003, representing the position of the New York State Insurance Department.
Re: No-Fault Insurance; Coordination with Workers Compensation
Would a no-fault insurer be acting properly if it takes credits for amounts paid by another insurer providing benefits in accordance with the New York Workers Compensation Law (McKinney 1992 and 2003 Supplement) in calculating whether its aggregate policy limits have been reached?
The insurers actions are in accordance with the No-Fault Law, New York Insurance Law Article 51 (McKinney 2000), as construed by the courts.
Mr. Doe was injured in a motor vehicle accident in the course of his employment. He is receiving benefits from his employers workers compensation insurer, pursuant to New York Workers Compensation Law Article 2 (McKinney 1992 and 2003 Supplement), to cover for both medical expenses and lost wages. In addition to having made a claim under the New York Workers Compensation Law, he has made a claim for no-fault benefits to the insurer, which is not the same insurer providing workers compensation benefits, which insured the motor vehicle he was occupying at the time of the accident.
The automobile insurance policy provides for no-fault wage loss reimbursement of $2,000 per month and has an aggregate limit of $50,000 for payments to one individual on account of a single accident. Mr. Doe has wage loss well in excess of $2,000 per month and the no-fault insurer does not dispute that, in the absence of payments pursuant to the New York Workers Compensation Law, it would have to pay Mr. Doe $2,000 per month.
The workers compensation insurer, in accordance with the New York Workers Compensation Law, is paying both Mr. Does $1,600 per month in wage loss and his medical expenses. The no-fault insurer is paying him $400 per month, representing the difference between its $2,000 per month obligation and the $1,600 being paid by the workers compensation insurer. The no-fault insurer has asserted that, after aggregating the actual payments it has made and payments made by the workers compensation insurer for medical expenses and wage loss, it has reached its aggregate policy limit of $50,000 and that no further payments are due from it to Mr. Doe.
This inquiry raises the issue of whether the no-fault insurer is correct in its calculations.
New York Insurance Law § 5103(a) (McKinney 2000) provides:
Every owner's policy of liability insurance issued on a motor vehicle in satisfaction of the requirements of article six or eight of the vehicle and traffic law shall also provide for . . . the payment of first party benefits to: (1) Persons, other than occupants of another motor vehicle or a motorcycle, for loss arising out of the use or operation in this state of such motor vehicle. . . .
New York Insurance Law § 5102 (McKinney 2000) provides, in pertinent part:
(a) "Basic economic loss" means, up to fifty thousand dollars per person of the following combined items . . . .
(1) All necessary expenses incurred for: (i) medical, hospital . . . surgical, nursing, dental, ambulance, x-ray, prescription drug and prosthetic services . . . .
(2) Loss of earnings from work which the person would have performed had he not been injured, and reasonable and necessary expenses incurred by such person in obtaining services in lieu of those that he would have performed for income, up to two thousand dollars per month for not more than three years from the date of the accident causing the injury. . . .
(3) All other reasonable and necessary expenses incurred, up to twenty-five dollars per day for not more than one year from the date of the accident causing the injury.
. . . .
(b) "First party benefits" means 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:
(1) Twenty percent of lost earnings computed pursuant to paragraph two of subsection (a) of this section.
(2) Amounts recovered or recoverable on account of such injury under state or federal laws providing . . . workers' compensation benefits . . . .
(3) Amounts deductible under the applicable insurance policy.
The above definitions are incorporated into the Mandatory Personal Injury Protection Endorsement (New York) promulgated by this Department, N.Y. Comp. Codes R. & Regs. tit. 11, § 65.12(e) (2001), for policies issued prior to September 1, 2001, and N.Y. Comp. Codes R. & Regs. tit. 1, § 65-1.1(d) (2001), for policies issued subsequent to September 1, 2001. Insurers must utilize the Mandatory Personal Injury Protection Endorsement (New York) in this State, unless this Department has granted specific permission for a deviation.
The use of amounts paid by workers compensation insurers, as well as other allowed offsets, to also reduce a no-fault insurers payments by crediting them against the $50,000 aggregate limit has been sustained in Normile v. Allstate Insurance Company, 87 App. Div. 2d 721, 448 N.Y.S. 2d 907 (3d Dept. 1982) affd, 60 N.Y. 2d 1003, 471 N.Y.S. 2d 550 (1983). In Normile, the court upheld the action of a no-fault insurer to include payments made by the federal government for social security disability in calculating whether it was liable for continued payments for medical expenses. Accordingly, under the logic of Normile, a no-fault insurer may take credit for medical payments in calculating whether the maximum aggregate policy limits have been reached.
For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.