Liberty Mutual’s suit claims amendments made to the law, which will require insurers to make lump-sum deposits to the Aggregate Trust Fund to cover types of permanent partial disability benefits, violate contract, takings, equal protection and due process clauses of the U.S. Constitution.
According to the suit, the amendments impair the property, contractual, and procedural rights of Liberty Mutual and its subsidiaries' property, contractual and procedural rights.
This condition only applies to insurers—not employers who self-insure or the NYSIF—which Liberty Mutual says is a violation of the equal protection clause of the Fourteenth Amendment "because there is no rational basis for discriminating against insurers." Liberty Mutual also says the amendment creates a "significant cost advantage" for the NYSIF, one of Liberty Mutual’s competitors.
Also in contention is an amendment that allows the Aggregate Trust Fund to enter settlements with claimants in regard to claims against insurers without insurer consent, an action that Liberty Mutual says violates the due process clause.
Liberty Mutual also finds the lump sum deposit obligation, which according to the suit applies retroactively to claims arising from workers compensation insurance policies issued before the 2007 amendments, violates the contract clause of Article I of the Constitution, the takings clause of the Fifth Amendment as made applicable to New York by the Fourteenth Amendment, and the due process doctrine.
All told, Liberty Mutual says that it will incur a substantial loss of investment income as well as a variety of additional costs associated with the changes. Ironically, a spokesman for Liberty Mutual said the insurer participated in New York's workers compensation reform discussions and that while the company "likes much about the reforms, we are troubled with the regulations dealing with the ATF.”