N.Y. Workers' Compensation Law § 26-a: Procedure and payment of compensation in claims against uninsured defaulting employers

§ 26-a. Procedure and payment of compensation in claims against

uninsured defaulting employers. 1. (a) Notwithstanding any other

provision of this chapter, when a claim for compensation is filed by an

employee, or in case of death by the employee's dependents, and the

employer has failed to secure the payment of compensation in accordance

with section fifty of this chapter, to make deposit of security in

accordance with section twenty-six of this chapter and to make payment

of compensation into the fund created under this section according to

the terms of any award including, without limitation, awards made

pursuant to subdivision five of section thirteen-g, subdivision two of

section thirteen-f, subdivision five of section thirteen-k, subdivision

five of section thirteen-l and subdivision six of section thirteen-m of

this article, payment of the award shall be promptly made from the fund

created under this section in accordance with the terms thereof and the

provisions of subdivision three of this section. The employer shall be

liable with the fund for payment of the award. Where the employer is a

corporation the president, secretary and treasurer thereof shall also be

personally, jointly and severally liable with the corporation for

payment of the award. The employer shall pay the award into the fund, in

accordance with the time limitations contained in section twenty-five of

this article.

(b) No such award, however, for any service specified in subdivision

five of section thirteen-a of this article requiring advance

authorization of the employer in accordance with the provisions of such

subdivision, shall be payable from the fund unless advance authorization

therefor was secured from the representative of the fund or is

determined by the board to be necessary. Notwithstanding any other

provision under this section, awards made pursuant to section fourteen-a

of this article shall not be the liability of the fund and shall not be

payable therefrom nor shall payment of the present value of benefits be

required to be paid into the aggregate trust fund pursuant to section

twenty-seven of this article in any case in which the uninsured

employers' fund is liable.

2. Uninsured employers' fund. (a) There is hereby created a fund

which shall be known as the "uninsured employers' fund" to provide for

the payment of awards against uninsured employers in accordance with the

provisions of this section and shall be available only for the purposes

stated in this subdivision, and the assets thereof shall not at any time

be appropriated or directed to any other use or purpose, except as set

forth in section fifty-a of this chapter.

(b) For the purpose of establishing and maintaining this fund, the

board, upon rendering a decision with respect to any claim for

compensation under this chapter that the employer liable therefor has

failed to secure the payment of compensation with respect thereto in

accordance with section fifty of this chapter, shall impose an

assessment in the sum of one thousand dollars for each ten day period of

non-compliance or a sum not in excess of two times the amount of the

cost of compensation for its payroll for the period of such failure

against the employer and direct its payment into the fund in connection

with each such claim wherein injury shall have occurred on or after the

first of May, nineteen hundred fifty-nine, or in death cases where death

as the result of injury shall have occurred on or after said date.

(c) If the employer shall fail to pay these assessments into the fund

within ten days after date of mailing of notice thereof to him or her,

such default shall constitute a default in payment of compensation due

pursuant to the provisions of section twenty-six of this article and

judgment therefor shall be entered in accordance therewith, all other

provisions of said section to be deemed applicable with respect thereto,

except to the extent that said provisions may be clearly inconsistent

with the provisions of this section. All sums collected from an

uninsured employer with respect to any claim for compensation referred

to in this section but not payable from the fund, except fines collected

from such employer pursuant to section fifty-two of this chapter whether

such collection is made prior or subsequent to entry of judgment against

such employer, shall be deemed in payment of an applicable first in

satisfaction of any compensation and benefits due from such employer

with respect to such claim and security demand, if any, in connection

therewith and only when such obligations are satisfied in full shall the

balance of said sums collected, if any, be deemed payment in

satisfaction of and applicable to the assessments above prescribed in

this section.

(d) All sums recovered from uninsured employers on judgments entered

for failure to pay assessments as hereinbefore provided and for failure

to pay compensation and benefits which were paid from the fund herein

created, shall upon such recovery be paid into said fund.

(e) All awards made on or after July first, nineteen hundred

sixty-nine for every case of injury causing death for which there are no

persons entitled to compensation, and where there are persons entitled

to compensation but the total amount of such compensation is less than

two or five thousand dollars as the case may be exclusive of funeral

benefits, pursuant to the provisions of subdivision three of section

twenty-five-a of this article shall be paid into the uninsured

employers' fund.

(f) As promptly as practicable after July first, nineteen hundred

ninety-one and annually thereafter as soon as practicable after January

first in each succeeding year, the chair shall ascertain the condition

of the uninsured employers' fund. The chair shall transfer to the fund

out of the moneys collected pursuant to subdivision two of section one

hundred fifty-one of this chapter an amount which will raise the net

cash assets of the fund to the level of either the amount spent by the

fund in the prior year, or the amount estimated to be expended by the

fund in the succeeding year, whichever is greater, except that such

requirement shall not apply between August first, two thousand eight and

August first, two thousand fifteen to the extent that section fifty-a of

this chapter permits the fund to be at a different level.

3. The commissioner of taxation and finance shall be the custodian of

the uninsured employers' fund and shall invest any surplus moneys

thereof in securities which constitute legal investments for savings

banks under the laws of this state and in interest bearing certificates

of deposit of a bank or trust company located and authorized to do

business in this state or of a national bank located in this state

secured by a pledge of direct obligations of the United States or of the

state of New York, or in accordance with the provisions of section

ninety-eight-a of the state finance law, in an amount equal to the

amount of such certificates of deposit, and may sell any of the

securities or certificates of deposit in which such fund is invested, if

necessary for the proper administration or in the best interest of such

fund. Disbursements from such fund as provided by this section shall be

paid by the commissioner of taxation and finance upon vouchers signed by

the chairman.

The commissioner of taxation and finance, as custodian of such fund,

as soon as practicable after August first, nineteen hundred sixty-two

and annually thereafter, shall furnish to the chairman of the board a

statement of the fund, setting forth the balance of moneys in the said

fund as of the time of the preceding statement, the income of the fund,

a summary of payments out of the fund on account of compensation ordered

to be paid therefrom by the board, medical and other expenses, and all

other charges against the fund in the interim and setting forth the

balance of the fund remaining to its credit as of the end of the period

being reported. Such statement shall be open to public inspection in the

office of the chairman, and a copy thereof shall be transmitted by the

chairman to the superintendent of financial services. The superintendent

of financial services may examine into the condition of such fund at any

time on his own initiative or on request of the chairman. He shall

verify the receipts and disbursements of the fund, and shall ascertain

the liability of the fund upon all cases in which awards of compensation

have been made and charged against said fund and shall render a report

of such facts to the chairman. Such report shall also be open to public

inspection in the office of the chairman.

4. Upon notice to the representative of the fund, the board, if in its

discretion it deems the interests of the fund will be best served

thereby, may compromise the amount for which judgment has been entered

against an employer pursuant to this section and the judgment entered

may be modified accordingly. Such compromise shall be effective without

the necessity of obtaining the approval of any other state official

thereto, but shall not reduce the amount of benefits payable to or on

behalf of any claimant under this section.

5. The chairman of the workmen's compensation board shall appoint an

employee of the board who is an attorney at law duly admitted to

practice in the state of New York to serve as the representative of the

fund created under this section and shall assign to assist him in the

discharge of his duties as such representative under the provisions of

this section, such other employees of the board as the chairman deems

necessary for this purpose. Such representative may apply to the

chairman for authority to hire such medical and other experts and to

defray the expense thereof and of such witnesses as are necessary to a

proper defense of the claim within an amount in the discretion of the

chairman and, if authorized, such amount shall be a charge against said

fund. The representative of the fund may appear for and represent the

interest of the fund in any case in court involving the rights of the

fund against another not in the same employ as the employee who received

benefits under this chapter and whose injury or death was caused by the

negligence or wrong of such other.

6. Whenever it appears, in a claim for benefits under this chapter,

that the employer may have failed to secure the payment of compensation

in accordance with section fifty of this chapter, the fund shall be

given notice of all proceedings in the claim. In such event, the

provisions of this chapter with respect to procedure, the right to be

heard and the right to apply to the board for review of a referee's

decision and to appeal to the courts shall be reserved to the claimant,

to the uninsured employer, and to the fund. Upon the application of the

representative of the fund for a modification or rescission or review of

an award, the board may review any award, decision or order and, on such

review, may affirm, reverse, or modify any decision or award as the law

and the facts may require, or take such other action as may be in the

interest of justice. An appeal to the appellate division of the supreme

court, third department, or to the court of appeals shall not operate as

a stay of the payments by the uninsured employer or by the fund of the

compensation required by the terms of the award or of the payment of the

doctor's bills found to be fair and reasonable. Where such award is

reduced or rescinded upon appeal, the uninsured employer or the fund,

whichever made payment, shall be entitled to reimbursement in a sum

equal to the compensation in dispute paid by such party to the

respondent pending adjudication of the appeal, and, if the claim for

workers' compensation is disallowed, to a sum equal to the amount of the

doctor's bills paid by such party pending adjudication of the appeal.

Such reimbursement shall be paid from administration expenses as

provided in section one hundred fifty-one of this chapter upon vouchers

approved by the chair. To the extent of any reimbursement to the fund,

the uninsured employer shall be entitled to reimbursement from the fund

for payments made into the fund in accordance with subdivision one of

this section.

6-a. In the event that the board is unable to determine the identity

of the responsible insurance carrier for the employer within thirty days

of the filing of a new claim, the board shall:

(a) appoint the uninsured employers' fund as the responsible party

until such time as the identity of the responsible insurance carrier for

the employer is determined. Upon such appointment, the uninsured

employers' fund shall immediately commence payments and provide medical

care in accordance with the provisions of this chapter;

(b) schedule a hearing to determine the identity of the responsible

insurance carrier for the employer and to determine such claim for

compensation in accordance with the provisions of subdivision one of

this section; and

(c) provide notice of such claim and hearing to the employer by

certified mail, return receipt requested, with a direction that the

employer provide proof of having insurance in effect as provided by

section ten of this article.

7. All the rights, powers, and benefits of the employer under section

twenty-nine of this chapter shall become the rights, powers and benefits

of the fund in any case in which the fund has paid or is paying

compensation to an injured employee or his dependents under this

section. If the employer has also paid compensation to or on behalf of

the injured employee or his dependents in such case any recovery by the

fund pursuant to subdivision one of section twenty-nine shall first be

applied to repayment of any awards paid by the fund to or on behalf of

the injured employee or his dependents in such case, the balance then

applied to any outstanding unsatisfied demand for security in said case

and assessments imposed against the employer pursuant to the provisions

of this section, the remainder, if any, to be returned to the employer.

If the employer has also paid compensation to or on behalf of the

injured employee or his dependents in such case, that portion, if any,

of a recovery by the fund pursuant to subdivision two of section

twenty-nine which is in excess of the total amount of compensation

awarded to or on behalf of such injured employee or his dependents and

the reasonable and necessary expenditures incurred in effecting such

recovery shall be apportioned between the injured employee or his

dependents and the fund in the manner provided in said subdivision two.

The balance of said recovery shall first be applied to reimburse the

fund for its reasonable and necessary expenditures in effecting such

recovery and the remainder shall be applied to repayment of any award

paid by the fund to or on behalf of the injured employee or his

dependents in such case. If there still remains a balance it shall first

be applied to the outstanding unsatisfied demand for security, if any,

in said case and assessments, if any, imposed against the employer

pursuant to the provisions of this section; the remainder, if any, to be

returned to the employer.

7-a. Notwithstanding any other provision of section twenty-nine of

this article to the contrary, a compromise by the claimant of his or her

cause of action as set forth in said section twenty-nine of this

article, in an amount less than the sum paid to or on behalf of the

claimant from the uninsured employers' fund, shall be made only with the

written consent of the chair.

8. The provisions of this section with respect to the liability of the

uninsured employers' fund to pay awards against uninsured defaulting

employers shall apply only to claims wherein the injury shall occur on

or after the first day of October, nineteen hundred sixty-two, or

wherein death shall occur as the result of an injury sustained on or

after the aforesaid first day of October.

9. The chairman may make reasonable regulations for the processing and

payment of compensation out of the uninsured employers' fund.

10. The liability of the chairman, the commissioner of taxation and

finance, the fund and the state of New York with respect to payment of

any compensation, benefits, expenses, fees or disbursements properly

chargeable against the uninsured employers' fund shall be limited to the

assets in said fund and they shall not otherwise in any way or manner be

liable for the making of any such payment.

11. All assessments payable pursuant to the provisions of this section

shall be liens against the assets of the employer liable therefor

without limit of amount, subordinate, however, to claims for unpaid

wages and prior recorded liens.

12. Whenever the term employer is used in this section it shall be

deemed to include without limitation a contractor liable for the payment

of compensation pursuant to section fifty-six of the workmen's

compensation law.

13. Notwithstanding any other provision of this chapter, in any case

of injury or death to the president, secretary, treasurer or any other

officer charged with the obligation of obtaining workers' compensation

insurance, of a corporation, any awards of compensation or medical

expenses payable to or on behalf of such officer or to his surviving

spouse, children and dependents as defined by section sixteen of this

article made against the corporation as an uninsured employer solely

because of the injury or death of such officer, shall in no event be the

liability of the uninsured employers' fund and shall not be payable

therefrom.

14. Notwithstanding any other provision of this chapter, in any case

of injury or death to a self-employed person or to a partner of a

partnership as defined in section ten of the partnership law, any awards

of compensation or medical expenses payable to or on behalf of such

self-employed person or partner of a partnership or to his surviving

spouse, children and dependents as defined by section sixteen of this

article made against the self-employed person or partnership as an

uninsured employer solely because of the injury or death of such

self-employed person or partner, shall in no event be the liability of

the uninsured employers' fund and shall not be payable therefrom.