OGC Op. No. 03-01-05

The Office of General Counsel issued the following opinion on January 3, 2003, representing the position of the New York State Insurance Department.

Re: Recovery of Workers’ Compensation Loss Transfer

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 medical and loss wage benefits 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?


Yes. There is a right of recovery through inter-company loss transfer for payment of medical and loss wage benefits made by a workers’ compensation insurer authorized under Section 5105(a) of the Insurance Law.


None presented.


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), covering an eligible injured person who is injured as a result of a motor vehicle accident. However, pursuant to 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).

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. Accordingly, it must be concluded that workers’ compensation medical and loss wage benefits, paid by workers’ compensation insurers to injured employees, are recoverable in loss transfer arbitration when one of the vehicles involved weighs in excess of 6500 pounds or is used principally for transporting persons or property for hire.

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