State Insurance Fund penalized for unilaterally discontinuing claimants workers’ compensation benefits

State Insurance Fund penalized for unilaterally discontinuing claimants workers’ compensation benefits

Matter of Gillan v New York State Dept. of Corrections, 2011 NY Slip Op 06959, Appellate Division, Third Department

Dennis Gillan, correction officer employed by the New York State Department of Corrections suffered a work-related injury and was receiving workers’ compensation benefits from the State Insurance Fund [SIF], the Department’s workers' compensation carrier based on a determination that he had a “permanent partial disability.”

SIF, however, subsequently unilaterally stopped paying compensation benefits to Gillan on the basis that a "fraud referral" concerning Gillan had been submitted by the Orange County District Attorney's office. It is undisputed that all criminal charges stemming from this referral were dismissed.

Gillan, alleging that SIF had improperly suspended compensation payments without following proper procedures, was awarded back benefits by a Workers’ Compensation Law Judge and the SIF was penalized the Fund for the unilateral suspension. Ultimately the Law Judge scheduled a hearing on the issue of whether Gillan had fraudulently filed claims for workers’ compensation benefits and found that he had not violated Workers' Compensation Law §114-a. The Workers’ Compensation Board affirmed the Law Judge’s decision and both the Department and SIF appealed that ruling.

In response to the Department’s and SIF’s appeal from the Board’s decision, the Appellate Division held that the Board’s decision regarding an alleged violation of Workers’ Compensation Law §114-a “will not be disturbed if substantial evidence supports it” and dismissed the appeal.

The court found it “significant that the Board, which ‘is the sole arbiter of witness credibility’ credited both [Gillan’s] testimony and the extensive medical proof in the record establishing his partial disability.”

The Appellate Division then examined the Department’s and SIF’s remaining arguments, including their contention that the Board erred in not finding that Gillan voluntarily withdrew from the workforce and their challenge to the denial of the Department’s application for full Board review and found them “to be unpersuasive.”

The court also noted that although SIF was provided with an opportunity to have Gillan reexamined by an independent medical examiner, it did not do so and instead chose to have the medical practitioner review Gillan’s medical file and videotaped surveillance footage. In the absence of an actual physical examination, the Worker’s Compensation Board specifically found the resulting report “to be of little weight” and declined to credit it.