Workers’ Compensation insurance carriers face a variety of employer schemes intended to defraud them out of insurance premiums in one way or another. After briefly discussing the requirements of New York’s Workers’ Compensation Law (WCL), this column explores some of the methods disreputable companies sometimes use to avoid their obligations. It concludes with a discussion of a recent decision by the Appellate Division, Third Department, that illustrates how the courts seek to balance the harm stemming from Workers’ Comp fraud to limit burdens being placed on employees.
The System in New York
The WCL requires employers to pay benefits to workers who are injured or disabled during the course of their employment, regardless of fault.1 These benefits include medical care, replacement of lost wages (“indemnity payments”), and death benefits.2 To assure that these payments are made, the WCL requires employers to obtain insurance coverage in one of the following ways: by purchasing Workers’ Compensation coverage from an approved insurance carrier; by securing coverage from the state’s insurance fund; or by obtaining approval from the New York State Workers’ Compensation Board to act as a self-insurer.3
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