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Third Department Ruling Entitles Workers’ Compensation Claimants With Both Schedule and Nonschedule Permanent Impairments to Additional Benefits

July 17, 2018

On Thursday June 14, 2018, the New York State Supreme Court Appellate Division Third Department in Taher v. Yiota Taxi, Inc. found that a nonscheduled classified claimant who returns to work at pre-injury wages may still receive a schedule loss of use (SLU) award for scheduled injuries sustained in the same underlying work-related accident. This finding is a marriage of two separate ways to address permanent impairments for a rare class of claimants. Under New York Workers’ Compensation Law § 15(3), a schedule loss of use is awarded in one lump sum for presumed lost earning capacity based on permanent impairments to enumerated body parts. If a claimant does not have a permanent impairment to one of those enumerated body parts (i.e., a nonschedule classification), then a claimant is compensated for his or her actual loss of wage earning capacity (LWEC) caused by the disability. Upon classification, the claimant is entitled to collect benefits from permanent partial disability (PPD) caps weeks once he or she experiences reduced earnings caused by the established injuries. If a claimant has both a schedule and nonschedule permanent impairment, then both types of injuries are considered in calculating the claimant’s PPD caps weeks.

Prior to this decision, if a claimant had both types of injuries, then there would be no one lump sum payment, but only an entitlement to collect benefits from the PPD caps weeks upon experiencing reduced earnings caused by the established injuries. As a result of the Taher ruling, the Third Department opened the door for a claimant suffering both types of injuries and not experiencing any reduced earning to receive an advancement equal to the SLU they would have received for permanent injury to the enumerated body part. The Third Department’s reasoning appears to be based in finding this circumstance analogous to a scenario where a claimant receives an SLU award and is subsequently classified and receives an award for a nonschedule permanent partial disability. In that scenario, a self-insured employer or carrier would be entitled to a credit for payments made on the prior SLU awards. Under Taher, the Third Department has not provided any guidelines on how to implement this benefit, but reiterates that a claimant is not receiving both an SLU award and nonschedule award. Further analysis shows that this finding both rejects the established precedent that PPD caps weeks are a benefit that vest upon classification, and revives the 2016 Board Panel decision, Ground Services International, that may foreshadow how the board will address this windfall.

The Taher ruling effectively overturns a prior Full Board decision, Metropolitan Hospital. In Metropolitan Hospital, a claimant with both schedule and nonschedule permanent impairments arising out of the same accident returned to work at pre-injury wages. The Full Board found the claimant could not receive advanced indemnity benefits equal to an SLU award. The Full Board reasoned that a classified claimant is only permitted to collect benefits from PPD caps weeks once he or she experiences reduced earnings caused by the established injuries. The caps weeks do not run while a claimant has returned to work at full wages and therefore a claimant loses nothing. The Full Board concluded that this “virtual banking” of caps weeks is a real benefit and “it vests with the claimant upon classification.” However, Taher effectively rejects Metropolitan Hospital, and paves the way for the 2016 Board Panel decision that Metropolitan Hospital kept at bay.

In Ground Services International, again, a claimant with both schedule and nonschedule permanent impairments arising out of the same accident returned to work at pre-injury wages. However, the Board Panel found that that this claimant was permitted to receive an SLU award in a lump sum for her scheduled injury, because — contrary to the reasoning in Metropolitan Hospital — the claimant would not be entitled to any PPD caps until she suffers from causally related loss of income, which may never occur. The Board Panel reasoned that to rule otherwise would create an inequitable result: “The less severely disabled class of claimants with only schedulable injuries would receive full compensation, whereas the more severely disabled with both schedulable and non-schedulable injuries would receive nothing.” While this result may be inequitable, the board’s reasoning ignores both a matter of law and its underlying public policy: awards are made for loss of wage earning capacity, not physical disability (or pain and suffering).

With the finding in Taher v. Yiota Taxi, Inc., self-insured employers and workers’ compensation carriers should now expect these classified pre-injury wage earning claimants to argue their benefits are governed by the procedures outlined in Ground Services International:

  1. After development of the record, the WCLJ shall make a determination of any schedule losses of use and make a corresponding award in a lump sum if requested, as long as claimant continues to be employed in excess of pre-injury wages.
  2. The WCLJ shall also make a determination of claimant’s loss of wage earning capacity based on all established sites and relevant factors, and shall hold awards in abeyance if claimant continues to be employed in excess of pre-injury wages.
  3. If claimant is no longer working at pre-injury wages at the time of classification, the WCLJ shall implement the classification by making an award of indemnity benefits or reduced earnings in accordance with claimant’s LWEC.
  4. If claimant ceases to work at pre-injury wages after the SLU award, claimant may file an RFA-1 requesting implementation of the classification award, and the carrier is entitled to credit the schedule award towards the classification award at the full weekly indemnity benefit rate until the schedule award is exhausted.

For now, Taher opens the door for the equivalent of a PPD advancement that is equal to an SLU when there is a claimant with both schedule and nonschedule permanent impairments who then returns to work at pre-injury wages. It remains to be seen if Taher will remain law. Metropolitan Hospital emerged from the Full Board within six months of the decision in Ground Services International. Similar to Ground Services International, Taher runs contrary to existing law, undermines the public policy behind workers’ compensation law, and creates a windfall for claimants.

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