Employer Reimbursement for a Salary Continuation Plan

New York State Workers’ Compensation Law (WCL) Section 25 governs how compensation is paid under a workers’ compensation claim. WCL Section 25(4)(a) was designed to encourage employers to continue wage payments to workers during periods of work-related disability by providing the employers with a statutorily protected source of repayment. Landgrebe v. County of Westchester, 453 N.Y.S.2d 413 (1982). WCL Section 25(4)(a) allows an employer to recover reimbursement for payments made to an employee during a period of disability even if the payment was not expressly designated as advance payments of compensation. An employer can be reimbursed for compensation paid to a claimant even if that compensation was paid in accordance with a contract or a collective bargaining agreement. Under the statute, an employer is entitled to reimbursement of these wages unless such reimbursement would achieve a disproportionate result, either to the employer or employee. Matter of Houda v Niagara Frontier Hockey, 16 AD3d 926 (2005).

In conjunction with WCL Section 25(4)(a), an employer may be required to file specific documentation pursuant to section 25(4)(c) in order to be entitled to reimbursement. In Matter of Eastman Kodak Co, 2012 NY Wrk Comp 70510426, an employer had a contractual plan in place which provided that an eligible employee who is disabled will be paid full salary for the first 13 weeks of disability and 70 percent of his or her salary thereafter, until such benefits are exhausted. However, the plan provided that, if the disability is the result of work-related injury, the employee would, pursuant to the plan, receive the “difference between the statutory workers’ compensation rate payable for an employee’s absence” and the benefit the employee would otherwise be entitled to under the plan (either 100 percent or 70 percent of the employee’s salary).

The Board Panel found that the plan in question was plainly governed by the provisions of WCL Section 25(4)(c). The Board reasoned that the plan provided for the payment of benefits to employees while disabled and limited the amount of benefits an employee would receive under the plan if the disability was work-related and the employee was entitled to workers’ compensation benefits. The Appellate Division affirmed the Board Panel’s decision. The Appellate Division found that WCL Section 25(4)(c) requires that an employer seeking reimbursement for benefits paid to an employee under an employee benefits plan must file proof of the plan before an award of compensation is made when the plan limits the amount of benefits or payments made if the employee is entitled to workers’ compensation benefits. Matter of Dobney v Eastman Kodak Company, 122 AD3d 1145 (2014).

In order to seek reimbursement under a workers’ compensation claim for payments made under a salary continuation plan, the following steps must be taken:

  1. Prior to a hearing or any formal decision awarding compensation to the injured worker, the employer should file a DB-470. Carriers and Board-approved self-insurers may contact the Board’s Forms Department to obtain this form. You can send a form request to [email protected]. In order to preserve your right to reimbursement, we would recommend filing an initial DB-470 immediately following the first payment of benefits pursuant to a salary continuation plan.
  2. When filing the DB-470, not only should the form be filed with the Workers’ Compensation Board, but copies should also be sent to the workers’ compensation carrier, the claimant, and the claimant’s representative, if any.
  3. The employer should file an updated DB-470 periodically and be sure to file an updated DB-470 immediately preceding to any hearing or formal decision.
  4. Once benefits pursuant to a salary continuation plan have been exhausted, the employer should file a final claimant for reimbursement for the total benefits paid via a DB470.
  5. The judge can then direct reimbursement from any future awards, such as a schedule loss of use award.

However, it is important to note that reimbursement will not be applicable to all workers’ compensation claims. The amount of supplemental money paid under a salary continuation plan, if any, will be dependent upon the employee’s base salary and the amount of overtime worked and/or bonuses received. The Workers’ Compensation Statutory maximum rate will also play a role in determining the amount paid out under a salary continuation plan.

Obtaining reimbursement will save an employer a significant amount of money in the grand scheme of things. It is extremely important that we quickly identify those employees who would be paid under a salary continuation plan in addition to their compensation benefits. This way we can be sure to file the DB-470 as soon as possible. If you are ever unsure which claimant would be subject to reimbursement or when a document should be filed, please do not hesitate to contact a Goldberg Segalla attorney.

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