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In re Application of Nuara

Supreme Court, Albany County

February 11, 2010

Application of Frank Nuara, as Acting Chairman of Metropolitan New York College and University Workers' Compensation Group, and DAVID PASTORE, as Chairman of Building Exterior Services Trust of New York, Petitioners For Judgment Pursuant to New York CPLR Article 78
v.
State of New York Workers' Compensation Board, and ZACHARY S. WEISS, as Chairman of the Workers' Compensation Board, Respondents.

Phillips Lytle LLP Attorneys for Petitioners (Kenneth A. Manning and Craig R. Bucki, Esqs., of Counsel) (Kelly Mooney Lester, Esq., of Counsel).

Hon. Andrew M. Cuomo Attorney General of State of New York Attorney for Respondents (Richard Lombardo, Assistant Attorney General, of Counsel).

Kimberly A. O'Connor, J.

Petitioners Frank Nuara, as Acting Chairman of Metropolitan New York College and University Workers' Compensation Group, and David Pastore, as Chairman of Building Exterior Services Trust of New York, commenced the instant CPLR Article 78 proceeding, challenging the authority of respondent New York State Workers' Compensation Board ("Board") and respondent Zachary S. Weiss, Chairman of the Board, to levy certain monetary assessments against them pursuant to the Workers' Compensation Law ("WCL"). Respondents oppose the petition. Oral argument was held in connection with this proceeding on August 20, 2008, and post hearing submissions were received. The papers are fully submitted, and all issues have been briefed.

Petitioners comprise two terminated group self-insured trusts ("GSIT") that formerly provided workers' compensation insurance coverage for employer-members in their respective fields and industries. In December 1999 and May 2003, petitioners voluntarily terminated their status as GSITs, however, they continued to administer the workers' compensation liabilities incurred by their employer-members, which accrued during membership in the GSITs and prior to the GSITs' termination. Petitioners are presently administering nineteen workers' compensation claims of injured employees of their former employer-members. To secure their obligation to pay these remaining claims, petitioners collected and set aside reserve funds, pledged cash, surety bonds, and letters of credit to respondent Board, and purchased excess insurance coverage for claims that exceed a threshold amount.

Respondent Board is charged, inter alia, with administering the provisions of the WCL and its attendant rules and regulations pertaining to workers' compensation benefits. The WCL authorizes the Board to levy monetary assessments against GSITs, including an assessment to finance the special disability fund (see Workers' Compensation Law § 15 [8]) and the fund for reopened cases (see Workers' Compensation Law § 25-a), and an assessment to cover the costs and expenses associated with administering the Workers' Compensation Law (see Workers' Compensation Law § 151) and the self-insurance program (see Workers' Compensation Law § 50 [5]). The WCL also confers upon the Board the authority to assess all private self-insured employers, both individual self-insurers and GSITs, for the anticipated losses, liabilities, and expenses of defaulted GSITs (see Workers' Compensation Law § 50 [5] [f] [1]). [2]

Assessments levied by the Board against individual self-insurers and GSITs, pursuant to WCL § 15 (8), § 25-a, § 50 (5) and § 151, are determined using a "pure premium calculation" and allocated based upon a statutory formula [3] (see Workers' Compensation Law § 15 [8] [h] [4], § 50 [5] [c] & § 151 [2] [b]). The "pure premium calculation" is defined in the WCL as:

the New York state annual payroll as of December thirty-first of the preceding year by class code for each employer member of a group self-insurer multiplied by the applicable rate for each class code as determined by the workers' compensation rating board in effect on December thirty-first of the preceding year (Workers' Compensation Law § 15 [8] [h] [4] & § 151 [2] [b]; see Workers' Compensation Law § 50 [5] [c]).

The "pure premium calculation" is the result of 2007 amendments to the Workers' Compensation Law, which took effect on January 1, 2008, and changed the assessment methodology for self-insurers, both individual self-insurers and GSITs. Prior to the 2007 amendments, assessments imposed against individual self-insurers and GSITs were calculated based upon either indemnity (Workers' Compensation Law § 15 [8] [h] [4], § 25-a, & § 151 [2] [b]) or a security deposit (Workers' Compensation Law § 50 [5] [c]).

On February 11, 2008, March 10, 2008, April 10, 2008, and May 12, 2008, respondents sent petitioners notices of assessment, demanding the first and second quarterly installments of the § 151 assessments and the § 50 (5) assessments, comprising both the § 50 (5) (c) assessment and the § 50 (5) (f) assessment, and the § 15 (8) and § 25-a annual assessments ("2008 administrative assessments"). Petitioners paid these assessments. This proceeding followed.

Shortly after this proceeding was commenced, new legislation was enacted amending the Workers' Compensation Law (see L 2008, ch 139). This new legislation, which was signed into law by the Governor on June 30, 2008, includes amendments to provisions of the WCL that are at issue in this proceeding (see L 2008, ch 139, § 3, § 7, & § 15). Specifically, section 3 of the new legislation amends WCL § 50 (5) (c), adding a new subparagraph (3), which reads: "[p]ure premium for assessments made prior to January first, two thousand nine against individual and group self-insurers who ceased to self-insure shall be based on payroll at the time the individual or group self-insurer has ceased to self-insure, reduced by a factor reflecting the reduction in the group or individual self-insurer's self-insurance liabilities since ceasing to self-insure." Section 7 amends the "pure premium calculation" set forth in WCL § 15 (8) (h) (4) "for a group or individual self-insurer who has ceased to self-insure" and provides that the "pure premium calculation" for these self-insurers "shall be based on payroll at the time the group or individual self-insurer ceased to self-insure reduced by a factor reflecting the reduction in the group or individual self-insurer's self-insurance liabilities since ceasing to self-insure." Section 15 amends WCL § 151 (2) (b) and provides that "[p]ure premium for assessments made against individual and group self-insurers who ceased to self-insure shall be based on payroll at the time the individual or group self-insurer has ceased to self-insure, reduced by a factor reflecting the reduction in the group or individual self-insurer's self-insurance liabilities since ceasing to self-insure."

Respondents argue that the new legislation is remedial in nature and was intended to clarify the Executive's and the Legislature's intent that "inactive" [4] group self-insurers continue to be subject to assessments, and further that WCL § 50 (5) (f) applies to GSITs, including those which have ceased to self-insure. Thus, respondents submit that the Court should apply the amended legislation retroactively in determining whether the Board has correctly interpreted the words "the preceding year" in calculating the 2008 administrative assessments levied against petitioners and the applicability of WCL § 50 (5) (f) to GSITs, including "inactive" GSITs. Petitioners maintain that retroactive application of the amended legislation is inappropriate in this case because the Legislature did not expressly state that it would apply retroactively, and because the new legislation imposes liabilities rather than benefits upon petitioners.

The Court of Appeals has recognized two axioms of statutory interpretation in determining whether a statute should be given retroactive effect (Matter of Gleason [Michael Vee, Ltd.], 96 N.Y.2d 117, 122 [2001]). The first is that "[a]mendments are presumed to have prospective application unless the Legislature's preference for retroactivity is explicitly stated or clearly indicated (Matter of Gleason [Michael Vee, Ltd.], 96 N.Y.2d at 122). The second is that "remedial legislation or statutes dealing with procedural matters" (Becker v Huss Co., 43 N.Y.2d 527, 540 [1978]) "should be applied retroactively to better achieve [their] beneficial purpose" (Matter of OnBank & Trust Co., 90 N.Y.2d 725, 730 [1997]). Notably, however, neither of these axioms are determinative (see Matter of OnBank & Trust Co., 90 N.Y.2d at 730). Rather, they "are merely navigational tools to discern legislative intent" (Majewski v Broadalbin-Perth Cent. Sch. Dist., 91 N.Y.2d 577, 584 [1998]), and "should not be abused as talismanic" (Becker v Huss Co., 43 N.Y.2d at 540; Matter of Mills v Staffking [Hidden Valley], 271 A.D.2d 146, 148 [3d Dept 2000]).

Indeed, the key in determining the temporal reach of a statute lies in ascertaining the intent of the Legislature (see Brothers v Florence, 95 N.Y.2d 290, 298-299 [2000]). Since "the clearest indicator of legislative intent is the statutory text, the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof" (Matter of Price Chopper Operating Co. v New York State Liquor Auth., 52 A.D.3d 924, 925-926 [3d Dept 2008], citing Majewski v Broadalbin-Perth Cent. Sch. Dist., 91 N.Y.2d at 583; see Matter of Kern v New York State Dept. of Civ. Serv., 288 A.D.2d 674, 676 [3d Dept 2001]). However, "where a statute does not expressly address the issue [of retroactivity, ] the reach of the statute ultimately becomes a matter of judgment made upon review of the legislative goal" (Brothers v Florence, 95 N.Y.2d at 299 [internal quotation marks and citations omitted]), and factors such as "whether the Legislature has made a specific pronouncement about retroactive effect or conveyed a sense of urgency; whether the statute was designed to rewrite an unintended judicial interpretation; and whether the enactment itself reaffirms a legislative judgment about what the law in question should be" may be considered, where applicable (Matter of Gleason [Michael Vee, Ltd.], supra; see also Brothers v Florence, supra at 299 & Matter of OnBank & Trust Co., supra at 730).

Applying these principles and upon review and analysis of the statutory text and legislative history of the new legislation, the Court finds that the Legislature intended the amendments to the Workers' Compensation Law at issue in this proceeding to apply prospectively. Initially, the Court notes that the Legislature did not expressly state that the subject amendments were to have retroactive effect. Rather, it stated that those provisions "shall take effect immediately" (L 2008, ch 139, § 16). "While the fact that a statute is to take effect immediately evinces a sense of urgency, ' the meaning of the phrase is equivocal' in an analysis of retroactivity" and "[i]dentical language in other [statutes] has not been enough to require application to pending litigation" (Majewski v Broadalbin-Perth Cent. Sch. Dist., 91 N.Y.2d at 583, citing Becker v Huss Co., 43 N.Y.2d at 541; see Matter of Mills v Staffking [Hidden Valley], 271 A.D.2d at 148).

Furthermore, "the significance of the effective date upon [the Court's] analysis of the reach of the subject provisions is further obscured because the Legislature explicitly designated prospective... application for other provisions of the [amended legislation] not at issue here" (Majewski v Broadalbin-Perth Cent. Sch. Dist., supra at 583; see L 2008, ch 139, § 16). Additionally, while section 3 of the new legislation, which amends WCL § 50 (5) (c), contains language regarding the pure premium calculation applicable to GSITs that have ceased to self-insure which could be characterized as retroactive, that provision has an immediate effective date, and the trigger date for the application of such provision is six months after the effective date of the new law. This language coupled with the immediate effective date does not, in this Court's opinion, evince a sense of urgency that would support retroactive application of the legislation.

Moreover, "[i]n an analysis of retroactive application, " the Court of Appeals has "found it relevant when the legislative history reveals that the purpose of the new legislation is to clarify what the law was always meant to say and do" (Brothers v Florence, supra at 299, quoting Majewski v Broadalbin-Perth Cent. Sch. Dist., supra at 585; Matter of OnBank & Trust Co., supra at 731). "However, labeling the legislation as remedial'... is not dispositive in light of other indicators of legislative intent"(Majewski v Broadalbin-Perth Cent. Sch. Dist., supra). Here, both the sponsor's memorandum and the Governor's program bill memorandum in support of the new legislation state, inter alia, that section 3 of the legislation "adds language to clarify the Executive's and Legislature's intent that individual and group self-insurers that have ceased to self-insure are subject to the assessments provided in WCL § 50" and further that sections 7 and 15 of the legislation are intended "to clarify the assessment methodology... for employers who have ceased to self-insure." [5] In addition, the bill jacket includes a post-passage opinion from the Board addressed to the reach of the new statute. While these statements and this opinion may be considered in an analysis of legislative history and statutory purpose and accorded some weight in that regard, such statements and opinion do not establish that the new legislation is remedial in this case.

First, the only aspect of the new legislation which could be classified as clarifying "what the law was always meant to say and do" lies in the applicability of WCL § 50 (5) to both individual and group self-insurers, including GSITS that have ceased to self-insure, with regard to liability for the anticipated losses, liabilities, and expenses of defaulted GSITs (see L 2008 ch 139, § 3). In Held v Workers' Comp. Bd. (Sup Ct, Albany County, July 7, 2008, index No. 2957-08), this Court found that the plain language of WCL § 50 expressly confers upon the Board the authority to assess all private self-insurers, including GSITs, for the anticipated losses, liabilities, and expenses of defaulted GSITs (see Workers' Compensation Law § 50 [5] [f]). [6] In addition, administrative assessments levied pursuant to WCL § 50, including § 50 (5) (c) and § 50 (5) (f) assessments, "shall be assessed against all self-insurers including for this purpose employers who have ceased to exercise the privilege of ...


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