| Matter of Held v State of N.Y. Workers' CompensationBd. |
| 2013 NY Slip Op 01308 [103 AD3d 1063] |
| February 28, 2013 |
| Appellate Division, Third Department |
| In the Matter of William Held Jr., as Chair of ContractorsCompensation Trust, et al., Appellants, v State of New York Workers' CompensationBoard et al., Respondents. |
—[*1] Eric T. Schneiderman, Attorney General, Albany (Paul Groenwegen of counsel), forrespondents.
Rose, J. Appeal from a judgment of the Supreme Court (O'Connor, J.), entered July22, 2011 in Albany County, which dismissed petitioners' application, in a proceedingpursuant to CPLR article 78, to vacate certain assessments made pursuant to Workers'Compensation Law § 50 (5).
Petitioners are group self-insured trusts (hereinafter GSITs) formed pursuant toWorkers' Compensation Law § 50 (3-a). They commenced this proceeding tochallenge assessments levied upon them by respondent Workers' Compensation Boardpursuant to Workers' Compensation Law § 50 (5). The assessments are leviedquarterly based upon the Board's estimate of its expenses for the current fiscal year andare designed to allow the Board to continue to pay workers' compensation benefits forGSITs that have become insolvent (see Workers' Compensation Law § 50[5] [c], [e], [g]). A "fifth quarter" or "true-up" assessment is issued later to reconcile theestimated quarterly assessments with actual expenses (see Workers'Compensation Law § 50 [5] [e]). In an earlier proceeding commenced bypetitioners, Supreme Court vacated the assessments for the first two quarters of 2008 onthe ground that the Board levied them without first satisfying certain statutoryprerequisites (Matter of Held v New York State Workers' Compensation Bd., 58AD3d 971, 972 [2009]). We later denied petitioners' [*2]challenges to the constitutionality of the statute and theBoard's authority to impose the assessments (Held v State of New York Workers' Compensation Bd., 85AD3d 35 [2011], appeal dismissed and lv denied 17 NY3d 837 [2011],cert denied 566 US —, 132 S Ct 1906 [2012]). On March 10,2009, petitioners commenced this proceeding challenging the Board's assessments for2007, 2008 and 2009. They also sought discovery pursuant to CPLR 408. Supreme Courtdenied petitioners' request for discovery, determined that certain of petitioners'challenges were time-barred and otherwise concluded that the Board did not violate anystatute or regulation in levying the assessments and did not act in an arbitrary andcapricious manner. Petitioners appeal and we affirm.
Supreme Court properly determined that discovery pursuant to CPLR 408 was notneeded here because of the predominately legal nature of petitioners' challenges and theirreceipt of sufficient information from respondents. Respondent Chair of the Board andthe Board's Director of Financial Administration provided detailed affidavits in responseto the petition. Additional information was provided to petitioners in response to theirlengthy notice to admit and their Freedom of Information Law request (seePublic Officers Law art 6). Under these circumstances, Supreme Court did not abuse itsbroad discretion by denying petitioners' motion for disclosure (see Matter of Morris Bldrs., LP vEmpire Zone Designation Bd., 95 AD3d 1381, 1385 [2012], lv denied19 NY3d 812 [2012]; Matter ofDallio v Goord, 15 AD3d 803, 804 [2005], lv denied 5 NY3d 709[2005]; Matter of Grossman v McMahon, 261 AD2d 54, 57 [1999]).
Nor did Supreme Court err in finding that petitioners' challenges to the quarterlyassessments for 2007 and for the third quarter of 2008 were time-barred. Whilepetitioners do not dispute that this proceeding was commenced more than four monthsafter these quarterly assessments were levied (see CPLR 217 [1]; Matter of Best Payphones, Inc. vDepartment of Info. Tech. & Telecom. of City of N.Y., 5 NY3d 30, 34 [2005];Matter of North Dock Tin BoatAssn., Inc. v New York State Off. of Gen. Servs., 96 AD3d 1186, 1187 [2012]),they argue that these assessments can be timely challenged by commencing a proceedingwithin four months of the later "true-up" assessment. We disagree. Inasmuch as thequarterly assessments were each final and binding when levied, any subsequentadjustment or credit received as part of the "true-up" assessment would not alterpetitioners' obligation to pay the quarterly assessments when issued (see Workers'Compensation Law § 50 [5] [c], [e]; see e.g. Matter of Best Payphones, Inc. vDepartment of Info. Tech. & Telecom. of City of N.Y., 5 NY3d at 34). To the extentthat petitioners also challenge the validity of the Board's regulation defining insolvency(see 12 NYCRR 317.20), that challenge is time-barred as well because it was notbrought within four months of when the regulation became effective (see Via Health Home Care, Inc. vNew York State Dept. of Health, 33 AD3d 1100, 1101-1102 [2006]).
We also disagree with petitioners' claim that the remaining 2008 assessments areaffected by an error of law. As Supreme Court correctly held, they do not violate its priororder vacating the assessments for the first two quarters of 2008. The first twoassessments were vacated because the Board did not establish that the GSITs wereinsolvent as required by the statute (see Workers' Compensation Law § 50[5] [former (f)]). As explained by the Chair, the Board then made a new determination asto which GSITs were insolvent by applying a newly promulgated definition andconsidering the most recent financial records reflecting the GSITs' liabilities, assets,available security and the monthly costs of their anticipated workers' compensationliabilities (see 12 NYCRR 317.20). Petitioners offer no basis to disturb thedetermination that the new definition was met and, as such, their challenge to theassessments as [*3]affected by an error of law wasproperly denied.[FN*]
Although petitioners also argue that the assessments were arbitrary because the firstquarterly assessment for 2009 matched the first quarterly assessment for 2007 and therevised 2008 annual assessment was exactly one half of the original estimate, the Boardprovided a rational explanation for those results. Specifically, the Board used funds madeavailable by the Legislature in the "uninsured employers fund" (Workers' CompensationLaw § 50-a [2]) to reduce the 2008 and 2009 assessments. Further, Supreme Courtproperly rejected petitioners' claim that the Board was required to exhaust the uninsuredemployers fund before levying any assessments for defaulted GSITs. We agree that theamount withdrawn from the fund was within the Chair's discretion, and petitioners havefailed to establish any abuse of that discretion.
We have considered petitioners' remaining contentions and find them to beunpersuasive.
Mercure, J.P., Lahtinen and Garry, JJ., concur. Ordered that the judgment isaffirmed, without costs.
Footnote *: We also note thatpetitioners' argument that the Board improperly used the collected funds to pay for itemsother than compensation and benefits is not preserved as it was not raised by petitionersuntil their reply papers and was not addressed by Supreme Court (see Matter of E.W. Tompkins Co.,Inc. v State Univ. of N.Y., 61 AD3d 1248, 1252 [2009], lv denied 13NY3d 701 [2009]).