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Maynard, O'Connor, Smith & Catalinotto, LLP

April 7, 2014

Workers Compensation Board Sues Small Businesses in Self-Insured Trusts

Category: Uncategorized — admin @ 8:00 am

Over the past several years, the New York State Workers Compensation Board (WCB) has increasingly engaged in efforts to collect liabilities from members of self-insured trusts. Over the last decade, numerous employers joined group “self-insurance trusts”, in an effort to obtain lower premiums and save costs in Workers Compensation insurance. Those trusts tended to join together identical industries, such as trusts for manufacturing, trucking, and construction businesses.
Through principles of “joint and several” liability, each member agreed to be responsible for each other’s Workers Compensation claims. In principle, this concept should have provided businesses with significant savings in insurance costs. Unfortunately, many of those trusts were poorly managed, were underfunded, were unable to pay Workers Compensation claims, and defaulted. The WCB assumed control of those failed trusts and has been aggressively engaging in efforts to collect from trust members to resolve the trusts’ debts. In recent years, the WCB has commenced litigation against trust members, seeking to recover their share of their trust’s total debts. This often results in business being sued for significant sums and for an apparent disproportionate share of the trusts’ total debts. This firm has represented several businesses which had no prior claim history and diligently paid its premiums on time, but are now being pursued for tens of thousands of dollars or more. Unfortunately, this predicament has forced many defendants to close their businesses, to declare bankruptcy, or to move out of state.
If your business was a former member of a self-insured trust, and has been sued by the State, it is important to take immediate action to preserve your legal rights and to protect against a default. A failure to answer a lawsuit can have significant repercussions, including collections actions against your business. If you receive a Summons or notification that litigation has been commenced against your business, Maynard, O’Connor can provide you with legal assistance, guide you through the process, and defend you in this litigation.

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