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Work Comp Insurers Agree to Pay State of New York $120 Million

In recent workers' compensation defense news, four of the nation's larger insurance groups have all agreed to pay a combined total of nearly $120 million to the state of New York.

The reason?

According to the New York Attorney General's Office, the four insurance groups - ACE, Pennsylvania Manufacturers, Zurich and CNA - all accumulated an excess of workers' compensation surcharges over a ten-year span.

Specifically, the New York State Workers' Compensation Board requires all workers' compensation insurers to pay annual fees. In turn, workers' compensation insurers fund these annual fees via surcharges on premiums paid by policyholders.

However, starting in 2000, the Workers' Compensation Board changed the calculation it used to establish these annual fees, resulting in the four aforementioned insurance groups collecting an excess of surcharges from policyholders.

Interestingly enough, under changes to the law made in 2009 and 2010, the state of New York is entitled to any excess funds collected by workers' compensation insurers.

"These four groups of insurance companies have done the responsible thing by agreeing to resolve their disputes with the State," said former Attorney General and newly sworn-in Governor Andrew Cuomo. "Other insurers who still retain excess funds should follow their lead or they will be brought to justice."

The payment of the $120 million among the four insurance groups breaks down as follows:

  • ACE companies will pay the state $70 million
  • Pennsylvania Manufacturers will pay the state $5.9 million
  • Zurich will pay the state $37.5 million
  • CNA will pay the state $5.75 million

Stay tuned for further developments in the area of workers' compensation defense ...

This post was provided for informational purposes only and is not to be construed as legal advice.

Related Resources:

Insurers to Pay Nearly $120 Million Workers Comp Overcharge (Westlaw News & Insight)

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