Appeals court upholds decision in favor of Herkimer County in regard to Workers Compensation

By NEWSChannel 2 Staff

HERKIMER, N.Y. (WKTV) - An appeals court has unanimously upheld a decision in favor of Herkimer County against three local municipalities in regard to Workers Compensation.

According to Steven R. Billings, the Herkimer County Personnel Officer and Administrator of Herkimer County Workers' compensation self-insurance plan, the decision was released by the Appellate Division of the Supreme Court of the State of New York on February 1.

The decision upheld a court ruling on August 10, 2011, following seven years of litigation brought forth by the villages of Herkimer and Ilion and the Town of Frankfort against Herkimer County over the operation of the Workers' Comp self-insurance plan. That ruling awarded the county damages an interest totaling $6 million.

It stems from when the worker's comp self-insurance plan ended in December 2005 and Herkimer County created what was called "an abandonment plan," which allowed the municipalities to pay a withdrawal fee or pay their share on an annual basis. Several municipalities sued and the county then allowed them the option to pay just 75 percent of their withdrawal fee. All but three did; the villages of Herkimer and Ilion and the Town of Frankfort.

In the August ruling, the respective liabilities of the three local municipalities were as follows:

*Village of Herkimer - $2,451,108.87

*Village of Ilion - $1,667,704.09

*Town of Frankfort - $2,074,711.44

In addition, the local municipalities were responsible for paying statutory interest of 9% per year until such a time as the municipality was fully paid.

The Workers ' Compensation Self-Insurance Plan was formed back in 1956. Under the plan, Herkimer County and all participating municipalities elected to band together in a self-insurance plan to cover the cost of workers' compensation coverage for municipal employees throughout the county. After nearly 50 years in existence, the plan was terminated effective December 31, 2005. As a result of the plan's termination, all participants in the plan were responsible for paying their proportionate share of the future liabilities of the plan which, at the time of its termination, included more than 200 open workers' compensation cases for employees of the participating members.

Billings states that initially, in addition to the villages of Herkimer and Ilion and the Town of Frankfort, the village of Frankfort, the village of Newport, the Town of Webb and the Town of Salisbury sued Herkimer County, alleging that the county mismanaged the plan over its nearly 50 years of operation. As litigation moved forward, the Villages of Newport and Frankfort, along with the Towns of Webb and Salisbury settled their obligations to the plan and withdrew from the litigation.

Following an eight day trial, an Oneida County Jury unanimously found against the villages of Herkimer and Ilion and the Town of Frankfort, dismissing all of their claims and found in favor of Herkimer County. After that, a Supreme Court Justice ruled that, in addition to the more than $4 million sought by Herkimer County to fund the local municipalities' obligations to the plan, the municipalities were required to pay roughly $2 million of interest, resulting a combined $6 million.

In the August 2011 ruling, the judge stated that many attempts were undertaken to "amicably and reasonably" resolve the issue, stating that the local municipalities "steadfastly resisted and refused to accept any reasonable compromise." The judge stated that they did not find credible evidence that the plan had been mismanaged, Billings stated.

The Village of Herkimer appealed the judgement against it, resulting in this latest ruling from the appeals court.

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