When can exposure for a reopener case be shifted to the Special Fund in New York?

New York has a "Special Fund for Reopened Cases" to assume liability for reopener workers’ compensation claims. When a claimant moves to reopen a "stale" case, the employer/carrier requests relief from the "Special Fund for Reopened Cases." By shifting cases over to the Special Fund, the carrier/employer shifts the burden for paying compensation to the Special Fund.

Filing requirements.

There are forms available to the employee seeking “reopener” of the closed claim. A new medical record can be sufficient to reopen the case if it provides notice to the Worker's Compensation Board of the change in condition – in that case, Form C-27 (Medical Proof of Change in Condition in Support of Application for Reopening) should be used. The medical report must demonstrate a new condition and not merely the continuing effects of the original disability or injury.

Time factors.

There are time limitations for the shift of exposure to the Special Fund. These rules are as follows:

  • More than seven years from the date of a compensable injury or death and the claim has been disposed of without a compensation award being issued;
  • More than seven years has elapsed from the compensable injury or death which was compensated and also more than three years has elapsed from the last date of payment of compensation;
  • After death, occurring more than seven years from a compensable injury and either more than three years unless payment of compensation or from acclaimed disposed of without an award.
  • Payment for continuing medical care does not bar the transfer of liability under section 25–a (see Beder v Big Apple Circus, decided May 26, 2011, Appellate Division, Third Department).

This is important factor to consider – as the Worker's Compensation Board does not consider payments for medical services "compensation." Oftentimes in a reopener case, the claimant has been receiving ongoing medical care and indemnity benefits have ceased.

“Closed” status – not as simple as it could be.

In 2011 there were at least nine reported decisions on whether or not the workers compensation claim had been "truly closed” by the Worker's Compensation Board and the requisite amount of time had elapsed, thereby creating a viable claim for relief from the Special Fund for Reopened Cases.

Since 2001 the Board has been marking cases as "No Further Action" rather than stating a case is "closed." This "No Further Action" marking  confuses the issue as to whether or not a case is truly closed at the time of adjudication.

  • In the most recent case decided on this topic, Hosey v Central New York DDSO, decided January 5, 2012, the Appellate Division found that the underlying case had not been "truly closed" and therefore the employer could not get the benefit of reimbursement from Special Funds for what they were calling a "reopener claim." In the Hosey decision, the claimant had a 2000 back injury and returned to work in 2002. The claimant continued to work with no additional lost time but had some work restrictions and received ongoing payments for medical treatment. Although his treating physician in 2002 indicated the claimant had a permanent disability referable to the work injury, the issue of permanency was never formally addressed. Although seven years elapsed and the claimant returned to work, the Special Fund argued that the issue of permanent residual disability had remained unresolved and therefore the case was still "open." Despite the fact that no lost time benefits have been issued for the prior seven years, and after three years of litigation on this issue, the Appellate Division upheld the denial of reimbursement for reopener benefits to the employer.
  • In another case, Sauers v Kmart, decided December 1, 2011, the Appellate Division returned the case to the Worker's Compensation Board for review of a denial of reopener reimbursement. In this decision, the requisite seven year period had elapsed during which time the claimant had not received any medical treatment. Nor had any lost time benefits been issued. However, it was learned that approximately 2 weeks prior to the seven year anniversary of the injury the claimant had seen her treating doctor who recommended she undergo a surgery. The claimant did not want to pursue the surgery that time. Then, a few weeks later, but after the seven year period elapsed, the claimant decided to request the surgery. The employer argued that the case was closed and the appropriate seven-year period had elapsed. They argued that by the claimant decided not to pursue surgery, within the seven year period, the time period had elapsed and the employer should be reimbursed for further medical and lost time. However, the Appellate Division refused to follow that argument and instead referred the matter back to the Worker's Compensation Board for additional proceedings.
  • The Appellate Division considered whether the case of a claimant who had already pled guilty for fraudulently collecting workers comp benefits while working was “truly closed.” In that case, the claimant made an argument that her condition had worsened and that she was due further benefits. The claimant had a ready been disqualified from obtaining further indemnity (wage replacement benefits) as she had been deemed a fraud after trial pursuant to §114a of the Worker's Compensation Act. In this interesting case, the Appellate Division found because the claimant was a fraud and therefore not do any lost wage benefits the claim was truly closed at that time and that the only payments ongoing were for consequential medical treatment. Therefore, the employer in this case was able to shift responsibility for the alleged reopener or worsening of the claimant's underlying medical condition to the Special Fund for reopener cases. (Palermo v Primo Paint Corporation, decided October 6, 2011).

Practice tips for adjusters.

First, identify claims where significant time has elapsed from last payment of lost time or permanency benefits. The passage of time is critical to establishing Special Fund exposure.

Next, confirm the case was “truly closed” at a prior proceeding by settlement or by Order of the Workers’ Compensation Law Judge. This will usually involve reviewing old EC-23’s (decisions) in the electronic case file. Knowledge of these reopening rules in the instances where cases been "truly closed" can significantly reduce exposure for New York employers and carriers.

As this issue continues to be raised before the Board and continues to be a steady source of Appellate Division review, it is clear that the rules concerning whether or not cases "truly closed” are nuanced and require a close analysis of the facts and the applicable law in your case.

Greg Lois is the managing partner of LOIS LLC, a 21-attorney law firm dedicated to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 & 2017 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@lois-llc.com