One of the most basic and well-settled tenets of New York law is that the Workers’ Compensation Board maintains exclusive subject matter jurisdiction over all work-related claims and collection disputes. However, in 2015, a small law firm based out of Westbury, New York sought to disrupt the system by commencing several hundred lawsuits in Civil Court, Bronx County on behalf of out-of-state pharmaceutical and durable medical equipment providers arising out of payment disputes involving numerous insurance carriers. The firm touted its effort on its website as “pioneering a radical and explosive collections strategy to ensure your bills are adequately represented throughout the Worker’s Compensation process.” The crux of the plaintiffs’ arguments was as follows:
- Prosecuting these actions in New York City Civil Court promoted the express legislative goals of the Workers’ Compensation laws by lessening the likelihood such providers would pursue collection actions against the injured workers for payment;
- The injured worker would not have to make upfront payments for such items and would not have to petition the Workers’ Compensation Board to resolve such a claim; and
- Most significantly, the Workers’ Compensation laws provided no process to settle these disputes before the Workers’ Compensation Board or any other court.
All defendant insurance companies filed pre-answer motions to dismiss (and in many cases, motions for sanctions against the plaintiffs’ counsel). In an interesting procedural development, Justice Laura Douglas ordered each insurance company to submit one motion on behalf of all lawsuits which it was named in, presumably to reduce the sheer number of motions filed with the court. However, she did order all defendants to refrain from filing sanctions motions.
The defendants’ motions were largely similar and straightforward, all setting forth the general principle that contentions of late payments and denial of approvals for medical treatment are clearly subject to the method of redress set forth in the Workers’ Compensation Law. Kirkup v. American Int’l Adj. Co., Inc., 160 A.D.2d 676, 553 N.Y.S.2d 454 (2d Dep’t 1990). Simply, the plaintiffs’ sole remedy would have been to seek administrative action by the Workers’ Compensation Board.
All pre-answer motions to dismiss were fully-submitted as of January 2016. Following the submissions, the plaintiffs’ counsel requested oral argument on all motions, which was denied over Goldberg Segalla’s objection. Further, after submissions, both the Workers’ Compensation Board and the American Insurance Association submitted their own Affidavits and amicus curiae briefs in further support of the defendants’ positions.
Eighteen months later, Justice Douglas issued her order granting all defendants’ motions and dismissing all plaintiffs’ complaints. Justice Douglas initially noted jurisdiction over Workers’ Compensation claims lies exclusively with the Workers’ Compensation Board pursuant to Workers’ Compensation Laws §11 and §23. She then addressed several instances in which similar attempts to circumvent the Workers’ Compensation Board have been rebuffed by civil courts for nearly-identical reasons. Finally, Justice Douglas held the plaintiffs’ arguments they had no mechanism to challenge their denials unavailing as they are able to pursue collection efforts by way of the remedies set forth in 12 NYCRR 440.3(d).
With her decision, Justice Douglas reaffirmed the Workers’ Compensation Board’s exclusive subject matter jurisdiction over work-related claims and adopted Goldberg Segalla’s argument: “To the extent that the plaintiffs content that the current scheme is inefficient, those challenges should be addressed to the Legislature and/or WCB.”
We anticipate the Appellate Division, First Department will soon be chiming in on this “radical and explosive collections strategy.”