NY Board Abused Discretion in Failing to Allow Carrier’s Review Application
In a claim tangental to a highly-publicized 2019 indictment for alleged workers’ compensation fraud, a New York appellate court held that the state’s Workers’ Compensation Board abused its discretion when it denied Everest National Insurance Company’s untimely application for review where Everest presented strong evidence that the decision naming it as the responsible insurer had been based upon an inauthentic certificate of insurance and where, even after the entry of the Board’s document naming Everest as the responsible carrier, the Board continued to caption the claim indicating a different insurance company as the responsible carrier and further indicating that Everest was merely an “interested party” [Matter of Salinas v Power Servs. Solutions LLC, 2021 N.Y. App. Div. LEXIS 7187 (3d Dept., Dec. 23, 2021)].
Background
Claimant experienced a work-related accident in 2017, and a WCLJ subsequently established the claim for various injuries. Identification of claimant’s employer occurred over a series of hearings and through a number of ordered investigations. The WCLJ ultimately found that claimant was employed by Salvador Almonte, the owner and operator of, among other businesses, Power Services Solutions LLC, and that the accident occurred while claimant was performing work for Kingdom Associates Inc., which had a contract with Power Services.
There was a significant question regarding the responsible carrier. Starr Indemnity was the carrier for Kingdom. At some point, a certificate of insurance was submitted to the WCLJ indicating that Everest had provided coverage to Power Services at the time of the subject accident. By decision filed December 5, 2018, the WCLJ determined that Everest needed to be put on notice, and a copy of that decision was mailed to Everest. The WCLJ also issued a notice on January 23, 2019 indicating that a hearing had been scheduled for February 11, 2019.
As discussed below, due to a printing error, however, Everest’s name and address on the notice of hearing was obscured by a list of the dozens of other interested parties on the claim. Everest failed to appear at that hearing, and the WCLJ ultimately discharged several other would-be employers and carriers, finding that Power Services was the proper employer and that Everest was the proper carrier.
A copy of the February 14, 2019 decision memorializing those findings was mailed to Everest. That decision, however, continued to caption Kingdom as the employer and Starr Indemnity as the carrier; Everest was still listed only as an interested party. On March 7, 2019, the Board filed a corrected EC-1 form reflecting that Everest was the proper carrier for the subject claim.
Fraudulent Certificate of Insurance?
Everest appealed to the Board on May 23, 2019, arguing, among other things, that the notice sent to it for the February 11, 2019 hearing was deficient and that it had never provided workers’ compensation coverage for Power Services. In support of its claim, Everest proffered evidence that the policy number reflected in the certificate of insurance provided to the Board pertained to a different employer and had, in any event, been canceled by Everest for misrepresentation prior to the date of the subject accident. Everest urged that the certificate was fraudulent and requested that the Board exercise its discretion to entertain the belated appeal to correct that fraud.
A panel of the Board denied Everest’s appeal on the ground that it was untimely, finding that, although the notice issue could possibly excuse Everest’s absence from the February 11, 2019 hearing, no explanation was provided for its delay in appealing the February 14, 2019 decision, which Everest had not denied receiving. Everest sought discretionary full Board review, maintaining, in pertinent part, that the only proof that it was involved in this claim was a fraudulent document.
Meanwhile, in September 2019, Almonte was indicted for his alleged participation in an extensive insurance fraud scheme which, according to the indictment, involved the creation and issuance of false certificates of insurance. By decision filed October 28, 2019, the full Board denied Everest’s application, and Everest appealed.
Appellate Court’s Decision
Initially, the appellate court noted that, contrary to the Board’s findings, Everest had indeed supplied an explanation for its belated appeal. Everest, brought into the fold a year and a half after the claim was filed, missed the first six hearings and all of the investigations regarding claimant’s actual employer and issues of coverage. Correspondence sent to Everest, including the February 14, 2019 decision, continued to facially reflect that Kingdom and Starr Indemnity were responsible for this claim. It was only in the middle of a paragraph on the second page of that decision that Power Services was named as the employer and Everest as its carrier. Moreover, said the court, the Board did not update its own file to reflect the proper carrier until about one month after the February decision, and, although that may have given Everest several days in which to still file a timely appeal, there was no indication, or allegation, in the record before the court that the corrected notice of case assembly was also forwarded to Everest.
The court continued:
It is not difficult to understand why Everest, receiving either defective or facially misleading correspondence from the Board regarding this claim, was not immediately aware that a policy attributed to it—covering an employer with which it had never contracted—was at issue [Opinion, p. 6].
The appellate court said it was also significant that the proof submitted by Everest in support of its administrative appeal suggested that the certificate of insurance provided to the Board was not authentic. This was important since the certificate appeared to have been an important, if not the only, factor in the WCLJ’s decision as to Everest. The court added:
Everest has brought to the Board’s attention the strong possibility that it has issued a decision based perhaps entirely upon fraudulent documentation. Although we are cognizant of the fact that the Board has broad discretion as to this matter and will generally not be considered to have abused that discretion by strictly enforcing its own regulations, we can discern no rational reason why the Board would decline to investigate when presented with legitimate, presently uncontested evidence that a fraud was perpetrated upon it [Opinion, p. 7].
In a footnote, the court also noted that while Almonte’s criminal charges were not a part of the administrative record, the highly-publicized indictment was a matter of public record. The Board panel decision settling the record for the appeal had been issued more than a year after that indictment. The court added that the Board retained jurisdiction to make modifications to prior decisions upon its own motion; the source of information that prompted such review was immaterial.
Based upon the foregoing, the appellate court found that the Board had abused its discretion in denying Everest’s application for review. The Board’s order was reversed and the case remitted for further proceedings.