New York Self-Insurance: Chicken Stew
Monday, June 3, 2013 | 0
The folks at Murray Bresky Consultants are just trying to scratch out a living by raising chickens
Unfortunately for the company, they secured workers' comp insurance through New York Compensation Managers, the now defunct operator of a dozen self-insurance groups in New York. NYCM claimed to offer favorable rates, strict underwriting standards and exemplary claims services. They ended up with egg on their face with their inadequate rates, suspect underwriting and rampant under-reserving of claims. In retrospect, the operation ran around like a chicken with its head cut off. By the time the problems emerged (in 2006), it was too late to shake a feather and correct the problems.
Following the SIG's failure, Murray Bresky Associates was hit with a $1.2 million assessment to make up their share of the SIG's deficit. That ain't chicken feed.
A Game of Chicken
Murray Bresky is not chickening out of a fight. Indeed, the chickens have come home to roost in the form of a lawsuit filed against NYCM and its board of trustees. The lawsuit seeks to recover the $1.2 million and then some, alleging breach of contract and breach of fiduciary duty. The case worked its way up to the New York Supreme Court, Appellate Division, where the motion by the defendants to dismiss the lawsuit was, for the most part, dismissed.
Now the defendants are walking on egg shells, facing the prospect of personal liability for the failures of the SIG. Where they once feathered their nests with the proceeds of the operation, their financial security has flown the coop. This is a legal mess perhaps best described by the late Lyndon Baines Johnson: "Boys, I may not know much, but I know chicken poop from chicken salad."
Roles and Irresponsibilities
One of the former trustees of the SIG is squawking that he was not aware that he was, in fact, a trustee. He may have signed off on a few trustee documents, he may have performed some of the functions of a trustee, but he insists that he had no memory of being appointed. He insisted that he was not a bad egg and claimed that he had no place in the pecking order. The court, however, ruled otherwise.
As the saying goes, you have to break eggs to make an omelet. Quite a few more eggs will be broken before this particular concoction is served up. Hard-boiled attorneys will parse the details to figure out who, if anyone, owes Murray Bresky Consultants and exactly how much they owe.
Pecking Orders
The courts now rule the roost. They have upheld Murray Bresky's right to sue, with the exception of some actions that are time-barred. There may well be a sunny side up in the chicken company's quest for justice. We look forward to the final resolution of this stew, the chicken scratch of a judge's signature that will put a final number on the liability of an insurance operation that flaps my wattles (i.e., annoys me).
Here's a little unsolicited advice to Murray Bresky Consultants: Don't count your chickens before they hatch. This one has a long way to go before the company can feather its nest with the proceeds of a complex litigation. In the meantime, their free range chickens have the run of the coop, enjoying their cage-free, stress-free lives right up to the very end. Bon appetit!
Jon Coppelman is a principal with Lynch Ryan & Associates, a Massachusetts-based employer consulting firm. This column was reprinted with permission from the firm's Workers' Comp Insider blog.
Comments