There was a time when employers who were unsure whether a claim is compensable would not want to pay any benefits to the claimant for fear that it would be considered an acceptance of the claim, or constitute an “advance payment of compensation.” Oftentimes, they would ultimately be stuck with the claim because they had insufficient information to properly deny it and prevail at trial. However, the 1996 workers’ compensation reform legislation implemented a change to assist employers with this problem: New York Workers’ Compensation Law (NY WCL) § 21-a. This statute has addressed and resolved this concern for many employers, especially those in the construction industry.
§ 21-a permits a carrier to take up to a year to determine whether it will accept or deny a claim, as long as certain conditions are met, and the proper forms are filed.
What Does § 21-a Say?
“…[I]n any instance in which the employer is unsure of the extent of its liability for a claim for compensation by an injured employee…,such employer may initiate compensation payments and payments for prescribed medicine and continue such payments for one year, without prejudice and without admitting liability, in accordance with a notice of temporary payment of compensation, on a form prescribed by the Board.”
See NY WCL 21-a.
What are the conditions that must be met?
The employer must make timely payments during the period in which it is still deciding whether to accept or deny a claim. In addition, the claimant and the Board must be notified that such payments are being made without liability. The Employer can stop temporary benefits by:
- Giving a five-day notice of termination of the temporary payments to the employee and the Board. The notice must be sent within one year or the employee’s claim will then become undisputed and the carrier will be officially liable for the claim.
- If the employer decides to contest the claim for compensation within the year.
- The Board makes a decision or award on the claim within the year (and it is not disputed by the carrier)
- At the end of the one year period, which will result in either a conversion of the dispute to the claim being compensable, or if the five-day notice was provided, awaiting a decision of the Board on the compensability of the claim.
Which Forms Need to be Filed?
- Accept the case: An L filing after the first SROI with a W. The carrier should make this filing using a SROI-02.
- Controvert the case: A carrier that wishes to controvert the case after a W filing, must file a SROI-SJ before filing the SROI-04.
- Accept the case by allowing a year to pass: When the insurance carrier’s initial SROI has a W designation, and 365 days have passed from the first benefit payment issue date, and the carrier has not properly controverted the case, the case is deemed accepted. The carrier must file a SROI-02 with the L designation.
How can § 21-a Benefit Construction Employers?
Construction claims are complex and they occur on very organic, ever-changing jobsites, which can create some difficulty with investigation. With the Board’s requirements for filing of a denial within 21 days of the Notice of Indexing (EC-84), and an expedited trial within 30 days of the pre-hearing conference, in many instances, there is simply not enough time to complete an investigation and line up witnesses for a trial. In addition, many construction workers have histories of prior injuries that need to be investigated, or they have occupational injuries that may have manifested during a prior employment, which also need to be investigated. As a result of these circumstances that can be unique to construction claims, employers can use the provisions of NY WCL Section 21-a to complete their investigation before deciding whether to accept or deny the claims.
The downside to making payments without liability under NY WCL Section 21-a is that the employer would not be able to recoup the payments made if the claim is ultimately determined to be non-compensable. However, in construction claims, where the potential exposure could be exorbitant, especially with many of the claims having companion general liability claims, the cost of making payments while completing an investigation could be worth avoiding much more were the claim to be found to be compensable because of an incomplete investigation.
However, employers should also keep in mind that while this statute can be of its benefit, they must ensure that tabs are kept on the timelines and the proper notice and forms that must be filed.