A recent amendment to the New York Workers Compensation Law (“the Law”) will present new challenges for employers in 2023 and beyond. 

The Bills Seeking to Change the Law

The New York Assembly passed three pro-employee bills in 2022 seeking to amend the Law. These three bills were recently presented to Governor Hochul. She vetoed two bills, but signed the third bill into law, Senate Bill S9149. This new law limits the use of what is called “collateral estoppel” as a defense to workplace related injury claims. 

Collateral estoppel precludes a claimant from re-litigating issues previously decided by a tribunal with jurisdiction over the claim. Collateral estoppel precludes a claimant that was unsuccessful in proving, for example, the cause or existence of a workplace injury, from then re-litigating that same issue in a subsequent action. With this change to the Law, an unsuccessful claimant will now have, in essence, a ‘second bite at the apple’ to prove, in subsequent proceedings, the cause or existence of a work-place related injury. This change is particularly relevant to what are known as “action over claims”.   These are lawsuits filed by employees against an upstream contractor or project owner alleging these parties also have liability to the employee for the same injury at issue in the earlier workers compensation case.

The amendment, in essence, states that a workers compensation decision in one forum won’t always stand in another forum. However, the issue of the employer-employee relationship is still subject to the collateral estoppel defense, as it is expressly carved out in the new Law.

What is the Impact on Employers?

A claimant’s opportunity to now re-litigate previously decided issues will have a significant impact on defense costs, especially for employers with high self-insured retentions or those utilizing other loss sensitive plans. This amendment to the Law also creates the risk of inconsistent outcomes on the same issue, which can impact indemnity obligations and coverage issues. Finally, the risk of additional litigation costs to carriers can also translate into greater premiums for all insureds.

Notably, Governor Hochul decided to veto two other bills, which could also have had a significant impact on employers. Senate Bill S6373 sought to lower an employee’s burden for proving job-related mental health/stress claims. Senate Bill S768 sought to re-define “temporary total disability.” Under that bill, an employee would have been eligible to receive benefits at the higher disability rate if unable to perform pre-injury duties upon a return to work. While the Governor vetoed both pieces of legislation in their current form, these issues may return in the coming legislative year.

In closing, Graham’s service intensive client program is well-positioned to guide clients through any changes. We know how to analyze, educate and mitigate these issues to support better client outcomes. If you have additional questions about these or other insurance questions, please reach out to Graham Company.