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We have a short issue this month, as Santa doesn't have any toys or goodies for employers in his sleigh. So what follows is just a brief discussion of a recent Appellate Division case on the penalty for fraud and a change to the Volunteer Firefighters' Benefit Law and Volunteer Ambulance Workers' Benefit Law that may be of interest to our municipal clients.
Court Sets Minimum Level of Conduct for Full Disqualification of Benefits After Fraud Finding
In Kodra v. Mondelez International, Inc., decided on 12/1/16, the Appellate Division appears to set a minimum threshold level of conduct for imposition of the discretionary penalty of disqualification from all indemnity awards when a claimant has violated the fraud statute under WCL §114-a.
The claimant owned and operated a lawn care and plowing business separate from his work with the employer of record. He suffered a compensable injury with the employer of record and underwent shoulder surgery in May 2013. He returned to work approximately 5 months later in October 2013. Surveillance showed claimant working for his lawn care business in July and August 2013 when he was allegedly totally disabled. The Board made a fraud finding and imposed a discretionary disqualification from all future indemnity awards.
The legal standard for imposition of a discretionary disqualification penalty is that it must not be disproportionate to the claimant’s misconduct. The court stated, “[i]n cases where this very significant sanction has been approved, the underlying deception [by the claimant] has been deemed “egregious or severe, or there was a lack of mitigating circumstances.” The court held that the Board failed to articulate a rationale for imposing the discretionary disqualification penalty, but, more importantly, also held that even if a rationale had been articulated, the facts in the record would not support the discretionary disqualification penalty.
The court’s decision can be interpreted as holding that a discretionary disqualification penalty would not be appropriate under similar circumstances where a claimant fails to disclose a very limited period of work when totally disabled. However, the court’s decision would not foreclose imposition of a discretionary penalty for a fixed period of time as opposed to a discretionary forfeiture from all future indemnity awards.
Amendment to VFBL and VAWBL Increases Permanent Total Disability Rate
Recent amendments to Section 8 of the Volunteer Firefighters’ Benefit and Volunteer Ambulance Workers' Benefit Laws increase the rate for claimants with permanent total disabilities (PTD) from $400 per week to $600 per week. The legislation that implemented the change stated that the increase would apply to “weekly benefit periods that commence after January 1, 2017.”
We interpret this to mean that the benefit rate for PTD claimants under the VFBL and VAWBL will be increased to $600 per week, regardless of the date of injury or the date of classification with a PTD.
Of note, the Legislature did not increase the benefit rate for VFBL and VAWBL claimants in any other class of disability, i.e, PPD, TTD, or TPD.
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