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

Eliot Spitzer
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on October 11, 2007, representing the position of the New York State Insurance Department.

RE: Right of Recovery for Used Sick Leave Credits under No-Fault Law

Question Presented:

Is a party who receives the maximum loss of earnings amount from his automobile insurer under the no-fault law entitled to recover in a personal injury action the monetary value of sick leave credits used because of injuries sustained in the automobile accident?

Conclusion:

Yes. A party who receives the maximum loss of earnings amount permitted under the no-fault law from his automobile insurer is entitled to recover in a personal injury action the value of sick leave credits used because of injuries sustained in the automobile accident. However, if the party’s employer provides additional sick leave credits as replenishment of the sick leave time used, there is no right of recovery.

Facts:

An attorney with a client who was absent from work for three months because of injuries he sustained in an automobile accident has two jobs from which he earns a combined salary of $6,635 per month. The client received maximum first party benefits of $2,000 per month from his automobile insurer under the no-fault law and received his full salary from his employers during his three-month absence, in which he used his accumulated sick leave credits. The attorney questions whether, in a personal injury action, his client may recover the value of the sick leave credits that he used.

Analysis:

The no-fault law permits a party injured in an automobile accident to receive prompt payment for medical expenses and loss of earnings, up to a combined maximum amount of $50,000, from his own automobile liability insurer, regardless as to fault. These expenses are defined as “basic economic loss” in Insurance Law § 5102(a). Loss of earnings are further defined in Insurance Law § 5102(a)(2) as follows:

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. An employee who is entitled to receive monetary payments, pursuant to statute or contract with the employer, or who receives voluntary monetary benefits paid for by the employer, by reason of the employee's inability to work because of personal injury arising out of the use or operation of a motor vehicle, is not entitled to receive first party benefits for "loss of earnings from work" to the extent that such monetary payments or benefits from the employer do not result in the employee suffering a reduction in income or a reduction in the employee's level of future benefits arising from a subsequent illness or injury. (Emphasis added.)

Sick leave credits are a form of future benefits, provided that the employer does not allot the employee additional credits as replenishment for those sick days used because of injuries sustained in the automobile accident. Using one’s sick leave credits reduces the level of future benefits in the event of a subsequent injury or illness. Indeed, in Cady v. Aetna Life & Cas. Co., 113 Misc.2d 1080 (Sup. Ct. Broome Co. 1982), the court held that where a no-fault beneficiary receives his regular salary during his absence from work, which is due to the injuries sustained in the automobile accident, he has a right to recover the value of the sick leave time taken because using sick leave credits reduces his future benefits.

Insurance Law § 5104 provides the basis upon which a no-fault beneficiary may institute a personal injury against the negligent user or operator of the motor vehicle that caused the plaintiff’s injuries. Insurance Law § 5104(a), which applies when the action is instituted by one “covered person” against another “covered person” (as is the case in the facts presented) states in relevant part:

Notwithstanding any other law, in any action by or on behalf of a covered person against another covered person for personal injuries arising out of negligence in the use or operation of a motor vehicle in this state, there shall be no right of recovery for non-economic loss, except in the case of a serious injury, or for basic economic loss.

A no-fault beneficiary may bring an action to recover loss of earnings to the extent that they exceed the maximum $2,000 per month payable under Insurance Law § 5102(a)(2). Amounts over the $2,000 maximum do not come within the definition of basic economic loss. See Watkins v. Bank of Castile, 172 A.D.2d 1061 (4th Dep’t 1991); McDonnell v. Best Bus. Co., Inc., 97 A.D.2d 433 (2nd Dep’t 1983); Pascente v. Stoyle, 116 Misc.2d 641 (City Ct. Rochester 1982).

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.