Recently, PIANY members have asked the association questions about default judgments from group self-insured trusts. When asking their questions, they tend to state: I thought those were behind us.
The current issue
When the New York State Workers’ Compensation Board took over myriad GSITs (with members paying one-time payments), many trusts opted to file lawsuits against the state. While these legal challenges snaked through New York’s court system, the required payments from former members accrued interest. Now, the trusts that filed lawsuits have exhausted their legal options, and the WCB has sent notices to employers informing them that they are liable for paying the default judgments against the GSITs.
These judgments are divided amongst a number of defendants—if your client has been sent a letter from the WCB regarding a default judgment on one of these outstanding cases, your client should contact the WCB for more information.
A brief history
Several decades ago, New York employers that were in similar industries set up group self-insured trusts as a cheap alternative to workers’ compensation insurance. As part of the process of joining a GSIT, an employer assumed joint and several liability for the funding of the GSIT. However, the GSITs were not adequately funded, and they created issue for funding workers’ compensation claims (e.g., massive costs to employers that belonged to the GSITs, and the employers shared joint and several liability for funding the claims).
As a result of assuming joint and several liability upon joining a GSIT, all members shared liability for the claims and subsequent insolvency of the trust. To stabilize the situation, legislation allowed the WCB to assume liability for the claims and required each GSIT member to pay a one-time assessment.
The WCB files reports on the progress of resolving the insolvent GSITs. The most recent report from December 2019 lists the GSITs from which the WCB continues to collect funds.
How to help your clients
If your clients receive information regarding a default judgment, the report highlighted in this article can provide more information on the trust and the number of defendants.
Additionally, it provides further information on the WCB collections procedures.
For more information on group self-insured trusts, see the following PIA Northeast resources:
- Group self-insured trusts current summary of funding status in the PIA QuickSource library
- Self-insured programs–employers’ liability in the Ask PIA library