Make the Other Guy Pay: Using Loss Transfer to Recover First-Party Benefits When Subrogation Just Won’t Do
The New York “No-Fault” insurance scheme gives persons injured in a motor vehicle accident the right to recovery for basic economic losses. In a situation where a person is injured at work in a motor vehicle accident, a Workers’ Compensation insurer becomes the first-party benefits provider. As the Workers’ Compensation insurer/self-insurer is now burdened with the payment of benefits that may have been caused by a negligent motorist insured by another entity, Loss Transfer provides some options for relief.
The New York State Department of Financial Services Office of General Counsel issued an opinion on January 03, 2003 which provided the framework for our modern understanding of Loss Transfer, in which it stated that Workers’ Compensation medical and lost wage benefits, paid by Workers’ Compensation insurers to injured employees, are recoverable in loss transfer arbitration, when (1) one of the vehicles involved weighs in excess of 6,500 pounds or (2) is used principally for transporting persons or property for hire.
In a situation such as this, where the Workers’ Compensation Carrier pays out indemnity and medical benefits for an Injured Worker who is involved in a motor vehicle accident while in the course of their employment, the Workers’ Compensation Carrier becomes the “primary” first-party insurer, supplanting any No-Fault or Automobile Insurance Carrier. The Workers’ Compensation primary insurer is responsible for the payment of basic economic losses including causally related and medically necessary medical treatment, loss of earnings from work, and reasonable and necessary expenses up to $25.00 a day. At that point, the Workers’ Compensation Carrier is responsible for up to $50,000.00 in first-party benefits. N.Y. INS. LAW Section 5102(b)(2).
As basic economic loss benefits are available regardless of fault, there is no corresponding right of subrogation for the carrier reimbursing an injured worker for items of basic economic loss. Condon v. Hathaway, 740 N.Y.S.2d 600, 603 (N.Y. Sup. Ct. 2002). Instead, these first-party benefits are recoverable under “Loss Transfer,” which allows for recovery from a negligent motorist’s vehicle insurer the first-party benefits that the Workers’ Compensation insurer became obligated to pay as a result of the accident.
The sole remedy for pursing Loss Transfer is arbitration N.Y. INS. LAW § 5105(b). The statute of limitations for Loss Transfer Arbitration is three years from each PIP payment. C.P.L.R. Section 214(2).
Separately, any benefits paid over the $50,000.00 threshold can be pursued through traditional subrogation and assertion of Section 29 lien rights under New York Workers’ Compensation Law.
While the basic outlines of Loss Transfer may be simple, the interplay between insurance law and arbitration forum rulemaking can become confusing. There are many nuances to the Loss Transfer scheme including definitions of “vehicle for hire”, what constitutes “involvement” in an accident, arbitration against self-insured registered vehicles, caps to wage loss recovery, and res judicata/collateral estoppel defenses. This is by no means an exhaustive list, and is meant only as an introduction to an area of law that is filled with specific rules and hidden exceptions.It is important to have an experienced attorney review your Loss Transfer claim to ensure that all rights of recovery are protected and timely filed. Goldberg Segalla LLP carefully investigates and aggressively pursues Loss Transfer recovery to achieve the best value recovery for our clients.