The recent New York State budget includes $200 million in relief for members of defaulted or inactive workers compensation group self insurance trusts (GSIT).  These GSITs have been facing an estimated $800 million in unfunded liabilities.  Former members of defaulted or inactive GSITs will remain liable for their unfunded liabilities, but this relief will decrease the amount of assessments required.

In addition to this, the GSIT system was restructured to increase transparency and try to ensure the solvency of future trusts.  GSITs must now post a security deposit at least equal to their claims amount. Failure to do so will result in their takeover by the Board. In addition, every six months the Board will report to both the governor and legislature the total amount of claims liability of insolvent group trusts; the degree to which each qualifying group trust is fully funded; and the actions the Board has taken to extinguish outstanding liabilities thorough settlements, loss portfolio transfers, and collections from defaulted group trust members.

However, in a decision handed down by the Appellate Division, Third Department, on April 21, 2011, it was ruled that the assessments imposed to cover the loss of defaulted and inactive trusts, pursuant to WCL § 50, were constitutional.  The joint and several nature of liability for GSIT members means that even members that paid their premiums will remain liable for those that did not, and be forced to share in paying for the unfunded liabilities.  Thus, even with some relief in the recent state budget, many employers will still be seeing assessments far greater than anticipated.