Monday, September 19, 2011

Reimbursing the employer for certain Section 207-c benefits it paid to individual returned to part-time employment

Reimbursing the employer for certain Section 207-c benefits it paid to individual returned to part-time employment
Lynch v South Nyack/Grandview Police Department., 276 A.D.2d 63

The Lynch decision has two important elements, one of significance to employers; the other of significance to employees.

Insofar as employers are concerned, the Appellate Division ruled that employers are entitled to reimbursement for a portion of General Municipal Law [GML] Section 207-c benefits paid to an individual receiving workers' compensation benefits if the police officer returns to part-time work and continues to receive his or her full salary.

South Nyack/Grandview [South Nyack] police officer Bernard J. Lynch was injured in the line of duty on April 29, 1995 and he continued to receive his full salary pursuant to Section 207-c. Lynch returned to part-time duty, effective April 8, 1998. He returned to full duty on December 14, 1998.

During this entire period Lynch received workers' compensation benefits. In accordance with Section 25(4)(a)(1) of the Workers' Compensation Law [WCL], South Nyack was reimbursed by its workers' compensation carrier, the State Insurance Fund [SIF], for the amount of the workers' compensation benefits paid to Lynch through April 7, 1998.

South Nyack's request for reimbursement from April 8, 1998 through December 13, 1998 was rejected by SIF and the department appealed.

The Workers' Compensation Board ruled that South Nyack was not entitled to reimbursement for the April 8 - December 13 period because “there was no compensable lost time.” It rejected South Nyack's argument that “there was compensable lost time due to the fact that [Lynch] was working part time for a full salary and that it was entitled to reimbursement for that period at one half of the reimbursable rate.”

Significantly, the Board acknowledged that the payments made by South Nyack pursuant to Section 207-c qualified as payments made “in a like manner as wages within the purview of WCL Section 25(4).”

Notwithstanding this finding, the Board affirmed the WCL Judge's ruling that there was no “compensable lost time due to the fact that claimant was working and receiving payments equal to his full-time salary,” and thus “there was no ‘installment of compensation due’ from which the employer could be reimbursed....” South Nyack appealed the Board's ruling.

First, the Appellate Division said that it agreed with SIF's argument that Lynch's receiving Section 207-c benefits “by no means mandated a finding that he was entitled to workers' compensation benefits following his return to part-time service.”

Citing Balcerak v Nassau County, 94 NY2d 253, the Appellate Division said “the two statutory systems do not necessarily examine and determine the same issue, in the same way, and under the same protocols, procedures and conditions.”

The court next said it agreed with the Board's conclusion that the South Nyack is not entitled to reimbursement pursuant to Section 25(4)(a) of the WCL during periods “when claimant is not receiving compensation.”

Considering these determinations, the Appellate Division said:

We are bothered, however, by the apparent inconsistency in the Board's implicit holding that a police officer injured in the line of duty is eligible for compensation while receiving Section 207-c benefits so long as he or she does no work, but continuing to receive the very same benefits will render him or her entirely ineligible for compensation following his resumption of partial service, even if only for a small portion of each day.

Insofar as Lynch's employment was concerned, the term “wages” is statutorily defined as “the money rate at which the service rendered is recompensed under the contract of hiring in force at the time of the accident, including the reasonable value of board, rent, housing, lodging or similar advantage received from the employer,” quoting Section 2.9 of the WCL.

Significantly, the court observed that:

Although measured by the employee's salary, GML Section 207-c benefits do not constitute compensation for services rendered under a contract of hire; rather, they are in the nature of disability benefits paid under statutory compulsion in order “to compensate specified municipal employees for injuries incurred in the performance of special work related to the nature of heightened risks and duties;* i.e., they are analogous to ?sums paid or payable under any workers compensation, disability benefits or similar law."

After analyzing the statutory definition of “wages” for the purposes of the WCL, the Appellate Division decided that the term “wages” could not under any reasonable construction include disability benefits paid pursuant to statute.

The Appellate Division concluded that the “that the Board erred as a matter of law in equating claimant's GML Section 207-c benefits with actual earnings for the purpose of determining his wage earning capacity pursuant to Section 15(5-a) of the WCL.”

Reversing the Board's determination, the Appellate Division directed it to determine Lynch's wage earning capacity and an appropriate award of compensation for partial disability on the basis of that wage earning capacity from April 8, 1998. 

* N.B. "Heightened risks" is no longer a viable consideration.-- see Matter of Theroux v Reilly, 1 NY3d 232


General Municipal Law§§ 207-a and 207-c - a 1098 page e-book focusing on administering General Municipal Law Sections 207-a/207-c and providing benefits thereunder is available from the Public Employment Law Press. Click on for additional information about this electronic reference manual.


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