Once a penalty for late payment pursuant to an approved settlement agreement is assessed under N.Y. Workers’ Compensation Law § 25 (3) (f), it is automatic, mandatory, and self-executing. This means that virtually no excuse will get you out of paying the hefty fine of 20 percent of the overall settlement agreement and an additional $50 fine due to the state treasury.
An office error or clerical mistake will not be sufficient to reverse the penalty. For example, a carrier inadvertently sent a check to an incorrect mailing address, causing it to be returned, a delay of 18 days. The NY Appellate Court affirmed the Board’s decision to assess a 20 percent penalty because the carrier did not mail the settlement check to the correct mailing address within the 10 days.
While the Board can exercise its discretion to suspend the application of the rule’s timely payment requirement, it rarely does. The carrier must prove that exceptional circumstances caused the late payment. The standard for proving exceptional circumstances is extremely high as demonstrated by the following case:
In Anderson v. Cent. N.Y. Developmental Disabilities Serv. Office, 2 A.D.3d 1011 (N.Y. App. Div. 3d Dep’t 2003), the board imposed a 20 percent late fee on the carrier because the carrier issued a settlement check four days after the 10 day allotted time. The reason for the four-day delay? The carrier issued checks from an office, located in New York City, which was closed after the attacks on the World Trade Center. Despite the unique circumstances, the Law Judge assessed a penalty on the carrier which was affirmed by the Board and Supreme Court. The appellate court remanded the case back to the Board to consider whether the carrier’s short delay in complying with payment requirements should be excused. The Board, upon a finding that exceptional circumstances caused the late payment, can exercise its discretion to suspend the application of the rule’s timely payment requirement pursuant to 12 NYCRR 300.30, and find that no WCL § 25(3)(f) penalty is assessed.
The Anderson case demonstrates the carrier’s burden to prove “exception circumstances” and the costly appellate process seeking excusal of late payment. We have included a short list of do’s and don’ts list to avoid a 20 percent penalty on a settlement agreement:
- Confirm the claimant’s address with the NY WCB Electronic Case Folder;
- Confirm the claimant’s address matches with the NY WCB ECF at the Section 32 approval hearing;
- Set a reminder to check for Notice of Approval 13 days following a 32 hearing;
- Mail the check to the address in the ECF;
- Issue the check within 10 days of the Notice of Approval, which is located at the bottom right hand corner of the notice;
- Mail the check the same day that it is issued.
- Rely on claimant’s attorney’s office to provide the correct mailing address for the claimant;
- Mail the check to claimant’s counsel to forward to the claimant;
- Mail the check to your defense counsel to forward to the claimant.