Court Decisions

Appellate Division Issues Decision Clarifying How To Calculate Schedule Loss of Use For Shoulder Injuries

Court Decisions Permanency Schedule Loss of Use (SLU)

Case: Matter of Maloney v Wende Correctional Facility

Issue
In determining the Schedule Loss of Use (SLU) percentage applicable to a shoulder injury, whether it is appropriate to assign separate loss of use values for deficits in anterior flexion and abduction or if this is duplicative and results in an inflated SLU percentage.

Facts of Case
Claimant was a Correctional Officer who injured himself while working in July 2013. The claim was established for a right shoulder injury. At permanency, the claimant’s treating physician opined claimant had 90% SLU of the right arm while an IME opined the claimant had 50% SLU of the right arm. Following litigation of the issue, the law judge credited the IME opinion over that of the treating physician and found claimant to have 50% SLU of the right arm. The Workers’ Compensation Board affirmed the Law Judge’s finding and the claimant appealed to the Third Department.

Decision
Board decision is affirmed, finding claimant to have 50% SLU of the right arm. The Court noted “the Board is vested with the authority to resolve conflicting medical opinions concerning the SLU percentage to be assigned to aspecific injury.” Additionally, the Court noted “judicial review is limited, and the Board’s determination will not be disturbed as long as it is supported by substantial evidence.”

The Court reviewed how each of the medical experts came to their conclusion under the 2012 “New York State Guidelines for Determining Permanent Impairment and Loss of Wage Earning Capacity.” Both the treating physician and IME had assigned a 10% value due to claimant’s rotator cuff tear as required by a special consideration in the guidelines. The IME assigned a 40% loss of use for the decrease in range of motion in anterior flexion and abduction to 90 degrees under table 2.11, resulting in a total SLU finding of 50%. The treating physician also assigned a 40% loss of use for the decrease in range of motion in anterior flexion to 90 degrees under table 2.11.  However, in addition to this and the 10% loss of use attributable to the rotator cuff, the treating physician assigned another 40% loss of use for the decrease in range of motion in abduction to 90 degrees under section 2.5 (3) of the guidelines, resulting in a total SLU of 90%.

The Court noted the 2012 permanency guidelines do not address whether it is appropriate to assign separate loss of use values for deficits in anterior flexion and abduction. The Court ruled the Board has rendered multiple recent decisions that “concluded that separate values should not be assigned for anterior flexion and abduction deficits indetermining an SLU award for a shoulder injury.  Significantly, the Board noted that adding together separate values for anterior flexion and abduction deficits could produce an entirely illogical result.  Specifically, the combined value could exceed 80%, the SLU percentage that under the guidelines is applicable to a claimant with ankylosis – an impairment of the shoulder restricting the range of motion to zero degrees – and a claimant with a lesser injury and greater range of motion might actually obtain a more favorable SLU award.”

Commentary
This decision clarifies how Schedule Loss of Use issues should be resolved when there are deficits in anterior flexion and abduction under the 2012 permanency guidelines. As of January 1, 2018 the Board implemented new SLU guidelines. The new guidelines do not leave this issue up to the interpretation of the Court, instead the guidelines specifically state “if a defect of both flexion (forward elevation) and abduction are documented, the greater of the two defects must be utilized, not both. However, if the defect in both ranges of motion are moderate or higher, and the measures are within 10 degrees of each other, up to 10% may be added to the overall schedule loss of use, not to exceed ankylosis.”

Additionally, under the new SLU guidelines the claimant would not be entitled to the automatic 10% value for the rotator cuff tear, this special consideration has been removed from the 2018 SLU guidelines.

This decision makes perfect sense. If under the 2012 guidelines a claimant with zero range of motion in their shoulder (ankylosis) is not entitled to greater than an 80% SLU of the arm then it would not make sense for an individual with significantly better range of motion findings to be found to have a greater SLU.

 If you wish to have monthly NY workers’ compensation updates sent to your inbox, feel free to sign up for our monthly newsletter here. 

New York Court of Appeals Rules Amendment to §25-a Is Constitutional

Court Decisions In The News

 

What is the Fund?
As a background, §25-a provides for a Special Fund to be set up especially to administer and pay claims arising from the reopening of closed cases. The primary purpose of §25-a is to transfer liability for awards from self-insured employers and insurance carriers to the Special Fund where the claim has become “stale.” Under §25-a, claim is “stale” if it meets certain criteria:

  1. more than seven years has elapsed from the date of the injury or death, and;
  2. where more than three years has elapsed after the last payment of compensation.

Essentially, insurance carriers and self-insured employers could potentially shift liability to the Special Fund in claims that met the criteria of §25-a. Whether a case has been officially closed so as to shift liability to the Special Fund is a decision for the Board to make. Upon transfer to the Special Fund, the carrier or self-insured employer is no longer responsible for payment or management of the claim.

The Law was changed in 2013 to close the Fund to new claims.
In an effort to phase out the Special Fund/Fund for Reopened Cases, the Business Relief Act of 2013 created an amendment to §25-a that no application by an employer or insurance carrier to transfer liability to the Fund for Reopened Cases would be accepted by the Board on or after January 1, 2014. In short, the amendment to be addressed in American Economy Ins. Co. v State of New York closed the reopened case fund to newly reopened claims as of January 1, 2014. Following the amendment to §25-a, any claims that were reopened that previously would have transferred to the Fund became the obligation of the carrier, liability would not shift to the Special Fund.

On October 24, 2017, the Court of Appeals ruled that retroactive closure of the Fund for Reopened Cases was not unconstitutional.

Insurance carriers and self-insured employers have been waiting anxiously for the Court of Appeals to render a decision of the appeal filed by The State of New York and will not be happy with the ruling.

The New York Appellate Division previously ruled that a 2013 amendment to New York Workers’ Compensation Law §25-a which closed the Special Fund for Reopened Cases (the Fund) to new applications after January 1, 2014 was unconstitutional as applied to policies issued before October 1, 2013.

In yesterday’s decision, the Court of Appeals (highest state court) ruled Workers’ Compensation Law § 25-a (1-a) as applied to policies issued before October 1, 2013 is not unconstitutional. The Court of Appeals held the amendment’s retroactive impact is constitutionally permissible and any retroactive impact of the legislation is justified by a rational legislative purpose

Impact of this new decision
For now, the Fund remains closed. I anticipate further litigation, the next step will be the United States Supreme Court, presuming they agree to hear the case.

 

NY Workers’ Compensation Amendment Found Unconstitutional; How It Affects Fund for Reopened Cases

Court Decisions In The News

On April 14, 2016, the Appellate Court ruled that retroactive closure of the Fund for Reopened Cases was unconstitutional.

The New York Appellate Division First Department last week addressed the validity and constitutionality of a 2013 amendment to New York Workers’ Compensation Law §25-a.

What is the Fund?
As a background, §25-a provides for a Special Fund to be set up especially to administer and pay claims arising from the reopening of closed cases. The primary purpose of §25-a is to transfer liability for awards from self-insured employers and insurance carriers to the Special Fund where the claim has become “stale.” Under §25-a, claim is “stale” if it meets certain criteria:

  1. more than seven years has elapsed from the date of the injury or death, and;
  2. where more than three years has elapsed after the last payment of compensation.

Essentially, insurance carriers and self-insured employers could potentially shift liability to the Special Fund in claims that met the criteria of §25-a. Whether a case has been officially closed so as to shift liability to the Special Fund is a decision for the Board to make. Upon transfer to the Special Fund, the carrier or self-insured employer is no longer responsible for payment or management of the claim.

The Law was changed in 2013 to close the Fund to new claims.
In an effort to phase out the Special Fund/Fund for Reopened Cases, the Business Relief Act of 2013 created an amendment to §25-a that no application by an employer or insurance carrier to transfer liability to the Fund for Reopened Cases would be accepted by the Board on or after January 1, 2014. In short, the amendment to be addressed in American Economy Ins. Co. v State of New York closed the reopened case fund to newly reopened claims as of January 1, 2014. Following the amendment to §25-a, any claims that were reopened that previously would have transferred to the Fund became the obligation of the carrier, liability would not shift to the Special Fund.

The plaintiffs in American Economy, private insurance companies that underwrite workers’ compensation insurance policies in New York, challenged the validity and constitutionality of the 2013 amendment to Workers’ Compensation Law § 25-a to the extent it imposes liability on them with respect to policies issued before October 1, 2013. The plaintiffs successfully argued the existence of the Special Fund meant that reopened workers’ compensation claims were not included when insurers’ premium rates were calculated by the New York Compensation Insurance Rating Board (CIRB) and approved by the New York State Department of Financial Services (DFS). The plaintiffs also argued that because reopened claims were handled and paid by the Special Fund rather than by insurers, insurers did not maintain reserves to cover future reopened claim losses. The plaintiffs argued that policies written on or after October 1, 2013, DFS approved an increase in premiums to address the additional liability resulting from the closure of the Fund to future reopened cases; however, that premium increase would not cover policies issued before October 1, 2013. Therefore, as a result of the amendment closing the Special Fund, the amendment will impose on the insurer a liability that was not contemplated when the premium for the pre-October 1, 2013 policy was calculated.

The court in American Economy ruled “the central question here is whether closing the Fund to new applications and requiring the insurers to handle and pay on reopened claims arising out of accidents that occurred before October 1, 2013 impermissibly ‘attache[d] new legal consequences to events completed before its enactment.” [Link]

The court ruled the 2013 amendment:

violates the Contract Clause of the US Constitution because it retroactively impairs an existing contractual obligation to provide insurance coverage “[w]here *** the insurer does not have the right to terminate the policy or change the premium rate” (Health Ins. Assn. of Am. v Harnett,44 NY2d 302, 313 [1978] [internal quotation marks omitted] [asterisks in original]; see US Const, art I, § 10, cl 1). Defendants failed to show that the impairment is “reasonable and necessary to serve” “a significant and legitimate public purpose *** such as the remedying of a broad and general social or economic problem” (19th St. Assoc. v State of New York, 79 NY2d 434, 443 [1992] [internal quotation marks omitted] [asterisks in original]). Indeed, the legislation’s stated purpose of preventing a windfall to insurance carriers was based upon the erroneous premise that premiums already cover this new liability.

Retroactive application would also constitute a regulatory taking in violation of the Takings Clause (see US Const Amend V; NY Const, art I, § 7[a]; Eastern Enterprises, 524 US at 528-529 [“it imposes severe retroactive liability on a limited class of parties that could not have anticipated the liability, and the extent of that liability is substantially disproportionate to the parties’ experience”]).

The court ruled “that Workers’ Compensation Law § 25-a(1-a) as retroactively applied to policies issued before October 1, 2013 is unconstitutional.”

Impact of this new decision
As a result, New York workers’ compensation claims that meet the criteria from policy years prior to October 1, 2013 should now be able to apply for relief under §25-a.

Have Questions?
Join me for a live Q & A session, led by Lois LLC attorneys, on Friday April 22, 2016 at 12:00PM EST. To register for the live event (webinar), click here: https://attendee.gotowebinar.com/register/1979996515284456451

Are Claims For Work-Related Stress Stemming From A Personnel Decision Compensable?

Court Decisions FAQs

New York Workers’ Compensation law does allow for stress related mental injuries to be found compensable in certain situations. It is a very fact specific area of the law.

In general, Workers’ Compensation Law §2(7) precludes claims for mental injuries based upon work-related stress “if such mental injury is a direct consequence of a lawful personnel decision involving a disciplinary action, work evaluation, job transfer, demotion, or termination taken in good faith by the employer.”

A recent Appellate Division case, Matter of Haynes (Catholic Charities), (N.Y. App. Div. 3d Dep’t Jan. 28, 2016) presented this very issue. In that matter, the claimant alleged a psychological condition was the result of being assaulted by a client at work. The employer argued the claimant’s mental condition was instead related to two warning letters issued to the claimant in good faith. The employer’s argument being the psychological condition was due to the disciplinary action and therefore not a compensable condition/injury under the law. The claimant asserting the psychological condition pre-existed the disciplinary action, due to a specific work incident, and therefore was a compensable mental injury.

“Whether an employer’s actions constitute a lawful personnel decision undertaken in good faith is a factual issue to be resolved by the Workers’ Compensation Board.” Miles v. State Ins. Fund, 267 A.D.2d 511 (N.Y. App. Div. 3d Dep’t 1999). Under the specific circumstances of this case, the Court affirmed the Board’s ruling. The Board found the claimant’s mental injury stemmed from work-related stress (assault at work) and was being treated for her condition prior to the issuance of the two employment related warning letters. Had the Board found the claimant’s psychological condition was instead related to the warning letters the outcome of this case would have been significantly different.

If you wish to have monthly NY workers’ compensation updates sent to your inbox, feel free to sign up for our monthly newsletter here.