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Tricks of the Carrier's Trade

 Carrier's Failure to Respond to RFA No Bar to Transfer of Liability:



A New York appellate court ruled that an insurance carrier who failed to respond to a request for authorization for surgery for a former police officer could shift liability for the cost of the procedure to the Special Fund for Reopened Cases.


Case: Ercole v. New York State Police, No. 517827, 06/19/2014, published.


Facts: Steven Ercole worked for the New York State Police as an investigator. After he suffered compensable injuries to his knees in 1996, he received a schedule loss-of-use award with respect to both legs. Ercole's case closed in 2000.


As the years passed, his condition deteriorated, and his doctor requested authorization to perform a bilateral total knee replacement in 2011.


The comp carrier for Ercole's employer did not respond to his request, and the chair of the Workers' Compensation Board issued an order stating that the request was deemed to have been denied. Ercole underwent the surgery anyway.


A day after the chair issued his order, the carrier requested that liability for Ercole's claim be shifted to the Special Fund for Reopened Cases.


A workers' compensation judge ordered that liability be transferred effective Nov. 2, 2009. However, the judge said the carrier remained liable for the cost of Ercole's surgery since it had failed to properly administer the request for authorization.


The Workers' Compensation Board upheld the transfer order, but said the Special Fund had to pay for Ercole's surgery as well.


Analysis: Pursuant to Workers' Compensation Law Section 25-a (1), where seven years have passed from the date of a claimant's injury and three years have passed from the date of the last payment of compensation, liability for any new awards goes to the Special Fund, the Appellate Division's 3rd Department explained.


The court noted that the Board had previously expressed concern that a carrier with a pending application to shift liability may be tempted to delay in approving necessary medical expenses in order to avoid the complications of paying for them and later seeking reimbursement from the Special Fund. The Board accordingly developed case law holding that in some instances, a carrier can be held liable for medical expenses that would otherwise be the responsibility of the Special Fund if it had engaged in dilatory tactics.


In this case, the Board discussed its precedent at length and decided to overrule it. The court said this was within the Board's rights to do, so long as it set forth its reasons for doing so. The Board met this burden, and regardless, the court said it agreed with the Board's interpretation of Section 25-a as not permitting a carrier to be held liable for medical expenses incurred after liability has been shifted to the Special Fund.


Disposition: Affirmed.


To read the decision, click here.

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