OGC Op. No. 08-10-10
The Office of General Counsel issued the following opinion on October 27, 2008, representing the position of the New York Insurance Department.
RE: No-Fault Lost Earnings Claim
May an individual who receives a stipend under the federal Foster Grandparent Program, and is subsequently injured in a motor vehicle accident, receive compensation for the stipend through a lost earnings claim under the no-fault coverage of the vehicle in which she was a passenger, or may the claim be denied by the no-fault insurer based upon the Domestic Volunteer Services Act of 1973, 42 U.S.C. § 5058?
An individual receiving a stipend under the federal Foster Grandparent Program who is injured in a motor vehicle accident may receive compensation for the stipend through a lost earnings claim made under the no-fault coverage of the vehicle in which the inquirer was traveling. The federal statute, 42 U.S.C. § 5058, is not applicable and does not preempt the New York no-fault law with respect to reimbursement of the lost earnings claim.
The inquirer represents a client who participated in the federal Foster Grandparent Program, administered under 42 U.S.C. § 5011(a), through which the client worked with disadvantaged children and earned a stipend of $2.65 per hour. The client worked year round and received accrued leave. She was injured in a motor vehicle accident in New York, and consequently is no longer able to participate in the program or receive the stipend. She has submitted a no-fault lost earnings claim to the insurer of the vehicle in which she was a passenger when she was injured, but the claim was denied by the insurer based on 42 U.S.C. § 5058.
The New York no-fault law, enacted by the New York Legislature as Article 51 of the Insurance Law, is a mechanism through which individuals who are injured in automobile accidents may receive prompt compensation for substantially all resulting economic losses without regard to fault.>1
The lost earnings claim for the stipend which the Foster Grandparent Program affords was initially denied based on the Domestic Volunteer Services Act of 1973, 42 U.S.C. § 5058. That statute provides:
Notwithstanding any other provision of law, no payment for supportive services or reimbursement of out-of-pocket expenses made to persons serving pursuant to subchapter II of this chapter shall be subject to any tax or charge or be treated as wages or compensation for the purposes of unemployment, temporary disability, retirement, public assistance, workers’ compensation, or similar benefit payments, or minimum wage laws. This section shall become effective with respect to all payments made after October 1, 1973.
“Subchapter II” in this context refers to the subchapter which enacts the Foster Grandparent Program. Whether the federal statute is applicable to the New York no-fault law, and therefore preempts the New York no-fault law with respect to the availability of lost earnings for stipends under the program, is thus determinative of whether the lost earnings claim for lost stipends may be denied. Since no-fault reparations payments are not referenced directly in the statutory definition, the question therefore turns on whether the New York no-fault law is deemed to be subject to the federal statute with respect to the term “similar benefit payments.”
It is the Department’s view that the federal statute does not preempt coverage for lost stipends in this instance, given the no-fault law’s distinction from the “similar benefit payments” provision enumerated in the federal statute. Insurance Law § 5102(a)(2) (McKinney 2000) specifically enumerates loss of earnings for reimbursement as:
(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. 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.)
Pursuant to this provision, no-fault reimbursement for loss of earnings would include stipends for work performed had the person not been injured. The federal statute creating the Foster Grandparent Program exempts stipends earned from specifically enumerated programs providing other types of benefits, such as workers’ compensation payments, and other non-specified programs that would provide “similar benefit payments.” But the New York no-fault law was enacted with a broad mandate to provide reparations for a more comprehensive range of earnings than the programs referenced in the federal statute.2 The concept of basic economic loss defined in Insurance Law § 5102 addresses a broad spectrum of losses for which the no-fault law provides compensation, and the statute does not limit earnings reparations to employees’ wages alone. The second sentence of Insurance Law § 5102(a)(2) distinguishes certain “monetary payments” to which an “employee” is entitled, indicating that the language of the previous sentence refers to loss of earnings from broader sources than employment alone. The wording of Insurance Law § 5102(a)(2) thus makes clear that loss of earnings is to be compensated without regard to the kinds of limitations and exemptions described in the federal statute at issue.
Therefore, because the term “similar benefit payments” under the federal statute is silent as to whether such payments under the no-fault law would be “similar” so as to exclude reimbursement for lost stipends under the federal program, it is the view of the Department that the no-fault coverage is not a similar benefit to any of the benefits specified in the federal act, and that the no-fault law’s intent to provide reimbursement for a loss of earnings logically and naturally encompasses the loss of stipends under the federal statute. Accordingly, the insurer here should honor the claim.
For further information you may contact Principal Attorney Lawrence M. Fuchsberg at the New York City office.
1 See Montgomery v. Daniels, 340 N.E.2d 444 (1975).
2 See Oberly v. Bangs Ambulance Inc., 751 N.E.2d 457 (2001).