William Held Jr. v. State Workers' Comp. Bd.

• Decision Date: 21 April 2011
• Citation: 2011 N.Y. Slip Op. 03155,85 A.D.3d 35,921 N.Y.S.2d 674
• Parties: William HELD Jr., as Chairman of Contractors Compensation Trust, et al., Respondents–Appellants,v.STATE OF NEW YORK WORKERS' COMPENSATION BOARD et al., Appellants–Respondents.
• Court: New York Supreme Court — Appellate Division

85 A.D.3d 35

921 N.Y.S.2d 674

2011 N.Y. Slip Op. 03155

William HELD Jr., as Chairman of Contractors Compensation Trust, et al., Respondents–Appellants,

v.STATE OF NEW YORK WORKERS' COMPENSATION BOARD et al., Appellants–Respondents.

Supreme Court, Appellate Division, Third Department, New York.

April 21, 2011.

Eric T. Schneiderman, Attorney General, Albany (Paul Groenwegen of counsel), for appellants-respondents.Patterson, Belknap, Webb & Tyler, L.L.P., New York City (Stephen P. Younger of counsel), for respondents-appellants.Fulbright & Jaworski, L.L.P., New York City (Glen Banks of counsel), for Business Council of New York Workers Compensation Trust Manufacturers Group, amicus curiae.Murtagh, Cohen & Byrne, Rockville Centre (Edward T. Byrne of counsel), for Electrical Employers Self Insurance Safety Plan, amicus curiae.Before: CARDONA, P.J., ROSE, KAVANAGH, McCARTHY and EGAN JR., JJ.ROSE, J.

(1) Cross appeals from an order, amended order and second amended order of the Supreme Court (O'Connor, J.), entered April 20, 2010, May 5, 2010 and May 21, 2010 in Albany County, which, among other things, partially granted plaintiffs' motion for summary judgment, and (2) appeal from the judgment entered thereon.

I.

Our Workers' Compensation Law requires employers to secure the payment of compensation to their employees either through the State Insurance Fund, by purchasing an insurance policy or by self-insurance ( see Workers' Compensation Law § 50). The option of self-insurance has long been available to individual employers whose financial resources are large enough for them to qualify ( see Workers' Compensation Law § 50[3] ). In 1966, the Legislature added subdivision 3–a to Workers' Compensation Law § 50 to permit smaller employers in similar fields to exercise the privilege of self-insurance by joining together as members of group self-insured trusts ( see L. 1966, ch. 895, § 2; ch. 896, § 2). Plaintiffs are a number of such groups. They commenced this action in 2008 to challenge the constitutionality of certain annual assessments against them by defendant State of New York Workers' Compensation Board, including assessments imposed pursuant to Workers' Compensation Law § 50(5) (former [f] ) and (g) to cover the cost of the Board's payment of the compensation liabilities of defaulted groups.¹ Workers' Compensation Law § 50(5) (former [f] ) authorized the Board to levy assessments “against all private self-insured employers” whenever it was determined that workers' compensation benefits “may be unpaid by reason of the default of an insolvent private self-insured employer” ( Workers' Compensation Law § 50[5] [former (f) ] ). These assessments were levied in accordance with the Board's authority to assess all self-insurers for the total amount of its costs and expenses incurred in carrying out the self-insurance provisions of the Workers' Compensation Law ( see Workers' Compensation Law § 50[5][c], [e] ).

During the pendency of this action, the Legislature amended the Workers' Compensation Law by, among other things, relabeling Workers' Compensation Law § 50(5) (former [f] ) as (g) and confirming the Board's authority to impose assessments pursuant to that provision against group self-insurers by expressly including them within the meaning of the term “self-insured employers” ( see L. 2008, ch. 139, § 3). The Legislature also amended the Workers' Compensation Law by altering the formula used to determine each active and inactive group's share of assessments ( see L. 2008, ch. 139, § 3). Plaintiffs then amended their complaint to add a challenge to the constitutionality of the amended statutes, and the parties cross-moved for summary judgment. Supreme Court granted plaintiffs' motion for summary judgment as to their claim that the assessments under Workers' Compensation Law § 50(5) (former [f] ) and (g) violated the Takings Clauses of the State and Federal Constitutions, and otherwise granted defendants' cross motion for summary judgment dismissing the complaint as to all of the other challenged provisions of the Workers' Compensation Law. Supreme Court also entered a judgment requiring defendants to repay the assessments collected from plaintiffs. Defendants appeal from that judgment and from Supreme Court's ruling that the application of Workers' Compensation Law § 50(5) (former [f] ) and (g) results in an unconstitutional taking, and plaintiffs cross-appeal from all other aspects of the orders.

II.

As a starting point, plaintiffs contend that Workers' Compensation Law § 50(5) (former [f] ) did not authorize the Board to levy assessments against them for the unpaid compensation and benefits owed by defaulted group self-insurers. They argue that former paragraph (f) refers to “private self-insured employers,” and groups are not included in that term because, while groups are self-insurers whose members are employers, they are not themselves employers. Plaintiffs note that the undisputed purpose of group self-insurance is to allow employers who are too small to self-insure individually to take advantage of the savings offered by self-insurance by forming groups of employers in related fields, and that each employer-member of a group agrees to be jointly and severally liable for the obligations of the group. They claim that this purpose is defeated by defendants' interpretation of the statute because it would permit the Board to assess solvent groups for its costs incurred by paying the compensation liabilities of defaulted groups in unrelated fields. Plaintiffs also claim that the Board never previously applied the statute in this manner, that they had no notice that they would be liable for the benefits owed by defaulted groups and that the Board's interpretation will result in groups being unable to afford to continue to self-insure in the future. Given these contentions, the nature of the constitutional arguments made and the parties' request, we first determine the proper construction of Workers' Compensation Law § 50(5) (former [f] ).

“It is a well settled principle of statutory construction that a statute or ordinance must be construed as a whole and that its various sections must be considered together and with reference to each other” ( People v. Mobil Oil Corp., 48 N.Y.2d 192, 199, 422 N.Y.S.2d 33, 397 N.E.2d 724 [1979] [citations omitted]; see McKinney's Cons. Laws of N.Y., Book 1, Statutes §§ 97, 98, 130). Also, when determining the meaning of an ambiguous statute, we will look to the practical effect given to the law by those charged with the duty of enforcing it and, if that construction is not irrational or unreasonable, it should be upheld ( see Matter of Village of Scarsdale v. Jorling, 91 N.Y.2d 507, 516, 673 N.Y.S.2d 32, 695 N.E.2d 1113 [1998]; Matter of Lezette v. Board of Educ., Hudson City School Dist., 35 N.Y.2d 272, 281, 360 N.Y.S.2d 869, 319 N.E.2d 189 [1974]; Matter of Aides At Home, Inc. v. State of N.Y. Workers' Compensation Bd., 76 A.D.3d 727, 727–728, 907 N.Y.S.2d 84 [2010] ). In our view, a fair reading of Workers' Compensation Law § 50(5) (former [f] ), within the context of the related provisions and the legislative history, leads to the conclusion that group self-insurers were intended to be included among those to be assessed to provide the funds to cover the defaults of all private self-insurers, including groups.

Since its enactment in 1966, Workers' Compensation Law § 50(3–a) has made group self-insurers part of the self-insurance program-which then consisted of large individual self-insured employers only-by subjecting groups to the same statutory provisions governing self-insured employers. As argued by defendants, the new statute accomplished this by specifically providing that “[a]ll the provisions of this chapter relating to self-insurance and the rules and regulations promulgated thereunder shall be deemed applicable to group self-insurance” (Workers' Compensation Law § 50[3–a] [former (6) ], [8] ). Among the provisions relating to self-insurance and, therefore, deemed applicable to group self-insurance is Workers' Compensation Law § 50(5) (former [f] ). It was enacted in 1976, prior to the formation of any of the plaintiffs, and its legislative history persuades us that it was intended to apply to all self-insurers ( see L. 1976, ch. 942, § 1). The statute was proposed by the Board, and its purpose, as stated in the Board's memorandum in support, was to establish “a method for paying claims which are the liability of an insolvent self-insurer out of administrative assessments to be levied against all private self-insurers” (Mem. of Workmen's Comp. Bd., Bill Jacket, L. 1976, ch. 942, 1976 N.Y. Legis. Ann., at 311).

Further, the legislative history of the 2008 amendments to the Workers' Compensation Law confirms that group self-insurers were always intended to be included among the self-insured employers against whom assessments could be imposed pursuant to Workers' Compensation Law § 50(5) (former [f] ). The Governor's Program Memorandum makes clear that the amendment to former paragraph (f) was intended to clarify the fact that the Board was always authorized to impose assessments with respect to both individual and group self-insurers ( see Governor's Program Mem., L. 2008, ch. 139, 2008 N.Y. Legis. Ann., at 103). Contrary to plaintiffs' assertion, this memorandum indicating the purpose of the 2008 legislation is relevant and we may consider it in interpreting former paragraph (f) ( see Matter of OnBank & Trust Co., 90 N.Y.2d 725, 731, 665 N.Y.S.2d 389, 688 N.E.2d 245 [1997]; see also Majewski v. Broadalbin–Perth Cent. School Dist., 91 N.Y.2d 577, 585, 673 N.Y.S.2d 966, 696 N.E.2d 978 [1998] ). Plaintiffs' reliance on Matter of New York Times Co. v. New York State Dept. of Health, 243 A.D.2d 157, 160, 674 N.Y.S.2d 826 [1998] is misplaced, as we are not presented here with judicial review of an administrative determination ( see e.g. Matter of...