Case # G0215259
Matter of James Kane Sr.
2014 NY Wrk Comp G0215259
By: Board Members Beloten, Paprocki and Higgins
The Full Board, at its meeting on November 18, 2014, resolved that the Memorandum of Decision filed on May 24, 2013, and amended on January 10, 2014, be rescinded and the matter returned to this Board Panel for further consideration.
The carrier requests review of the Workers' Compensation Law Judge (WCLJ) decision filed on July 10, 2012. The claimant filed a rebuttal.
The issues presented for review are:
- whether a claimant may be paid workers' compensation lost wage benefits and/or settlement proceeds by debit card; and
- whether the WCLJ properly imposed a late payment penalty on the carrier.
On February 27, 2010, claimant, a home health aide, was injured when she slipped and fell on water in front of a refrigerator during the course of her employment. This case has been established for injury to the claimant's low back.
On March 13, 2010, the carrier began making voluntary payments to the claimant. At this time, the claimant was unrepresented by counsel.
In an enrollment application supplied by the carrier and dated May 20, 2010, the claimant was told to select a payment option of either receiving payment by direct deposit to a bank account or receiving payment via a Chase Workers' Compensation Pay Card. The enrollment application states "PAYMENT OPTION INFORMATION Please select which payment method you prefer and complete the necessary information". The enrollment application advises the claimant that she will continue to receive payment of benefits by paper check until the debit card is activated. The enrollment application did not advise the claimant that she could continue to receive her payments by paper check. The claimant completed the enrollment application and elected to receive her benefit payments in the form of the Visa debit card issued by Chase. Pursuant to this arrangement, the claimant's weekly indemnity benefits were to be electronically transferred to the debit card account. The form stated that there would be daily limits on the amount that could be withdrawn from the account by way of an ATM or an over-the-counter withdrawal at a bank.
On July 13, 2010, the claimant retained her first attorney.
In a notice of decision filed on August 19, 2010, the WCLJ established the claimant's claim for injury to her lower back; set the claimant's average weekly wage at $375.49; found no medical evidence for the period from February 27, 2010, to March 3, 2010; awarded compensation from March 3, 2010, to June 30, 2010 at a rate of $250.00 per week, and from June 30, 2010, to August 16, 2010, at a rate of $175.17 per week; and directed the carrier to continue payments at a rate of $175.17 per week.
The claimant retained her second attorney in late September 2010 and her third attorney in February 2011. She retained her current counsel in January 2012.
During a Section 32 hearing on April 18, 2012, the WCLJ went over the settlement agreement with the claimant, and at one point stated, "The total value of the settlement is $75,000.00 and the $11,250 attorney fee will come out of the settlement money. You will receive a check for $63,750.00; is that acceptable to you?" The claimant answered, "Yes." The WCLJ also advised the claimant that there was a ten-day "cooling off" period, so that if she changed her mind, she could withdraw from the agreement by informing the Board in writing. The claimant and all of the attorneys present did not have any questions at that time.
In a notice of approval filed on May 8, 2012, the Board approved the WCL § 32 settlement which provided that the claimant was to receive a net lump sum payment in the amount of $63,750.00. The manner by which the payment to the claimant was to be made was not specified in either the Section 32 agreement or the notice of decision.
The carrier timely deposited $63,750.00 into the claimant's debit card account.
In a letter to her attorney filed with the Board on May 31, 2012, the claimant stated that she had been receiving her compensation payments on a debit card, but that for the settlement, a check was supposed to have been sent to her. Instead, the amount was deposited to the same card her payments had been sent to. The claimant stated that the amount that she could withdraw every day was limited. The claimant indicated that the last time she tried using the card an automatic hold was placed on the account, due to the unusual activities on the card, which triggered an alert for suspicious activities.
In a letter dated May 31, 2012, the claimant's attorney advised the Board that a problem had arisen regarding the payment of the settlement. She indicated that the debit card had a daily limit of $1,000.00, and that after the settlement amount had been deposited onto the card, the issuer had cancelled the card, indicating that "this card was compromised." The claimant's attorney alleged that the card was cancelled due to suspicious activity, "namely the $63,750.00 payment" to the claimant. The claimant's attorney stated that she immediately called the carrier, and when the carrier did not get back to her within a week, she called again on May 21, 2012. She argued that if the carrier had the capacity to create a debit card system, they should have the ability to "take back the money" and issue a new check.
During a hearing on July 5, 2012, the carrier's representative pointed out that the Section 32 agreement was prepared by the claimant's own attorneys, and that it did not include any direction that the settlement amount must be paid by check.
In a notice of decision filed on July 10, 2012, the WCLJ found that $62,750.00 of the $63,750.00 net amount was untimely paid, and assessed penalties under WCL § 25(3)(f), totaling $12,600.00; $12,550.00 was payable to the claimant and $50.00 to the Board.
The carrier filed an application for Board review and attached a document outlining the specifics of the claimant's debit account. The claimant's account had withdrawal limits of $1,025.00 per day through an ATM and $7,500.00 per day through an over-the-counter withdrawal at any bank featuring the VISA logo. The claimant's debit card could also be used as a standard VISA card or as a debit card, and the cardholder could get cash back with purchases. The claimant could have closed the account at any time for a fee of $12.00, and all funds would have been immediately forwarded to the claimant.
According to correspondence between the carrier and a representative from J.P Morgan Chase, the claimant reported her card stolen on May 18, 2012, and the card was closed. The claimant was sent a new card via overnight delivery, and the account was frozen pending activation of the new card by the claimant.
Payment by Check unless Requested by Claimant
Workers' Compensation Law (WCL) § 25(1)(a) provides " The compensation herein provided for shall be paid periodically and promptly in like manner as wages, and as it accrues, and directly to the person entitled thereto…"
"[T]o meet the stringent time requirements for the payment of compensation awards, the industry standard is to pay by check delivered through the US mail (cf. Malone v Bob Bernhardt Paving, 2 NY3d 756 ). It has always been the custom and practice for workers' compensation benefits to be paid by mail. The only other payment option authorized by the WCL is direct deposit into a bank account in the name of the injured worker provided the injured worker makes a written request for such deposit and the employer has elected to permit such deposits (WCL § 25). If there is a disagreement about the method and manner of payment, resolution is within the exclusive jurisdiction of the Board (see Collier v Simmonds Precision, Inc., 122 AD2d 399 )" (Matter of Erie County Correctional, 2010 NY Wrk Comp 89612335)(emphasis added).
WCL § 25(9)(a) provides "Compensation payments or any portion of compensation payments may be allowed, upon the written request from an injured worker..., to be deposited directly in a bank for any purpose to an account in the name of such injured worker..., on forms provided by the board." The form provided by the Board for direct deposit is the DD-1 "Direct Deposit Authorization Form."
As the Full Board previously held in Erie, supra:
"[P]rompt payment...mean[s] that it is immediately accessible to the claimant for his/her use. The compensation law was enacted to assist claimants at a time of hardship, not add to their burdens unnecessarily...To insure that compensation payments are speedy, certain, and easily accessible to the injured worker, the Board finds that compensation checks should be mailed to the claimant's place of residence or, whenever appropriate, directly deposited into claimant's bank account."
While payment to a debit card may be a form of direct deposit when associated to a bank account in the claimant's name, a debit card may only be used as a form of payment upon the written request of the claimant. The carrier has the obligation to make it abundantly clear to the claimant, that a claimant may be paid by paper check mailed to him or her at home and that the claimant may discontinue receipt of payment by direct deposit or debit card upon notice to the carrier. Furthermore, there may be no limit on the claimant's ability to access the proceeds of Section 32 funds, such as limits on the amount of withdrawals or the frequency of withdrawals associated to a carrier issued debit card, unless these limitations are clearly set forth in the Section 32 agreement, agreed to by the claimant and approved by the Board.
In this instance, no evidence has been presented that the carrier gave the claimant the option to receive payment by paper check. The sole evidence in this matter is the carrier's enrollment application that required the claimant to choose between two payment options: payment by debit card or direct deposit. Because the enrollment application did not expressly permit payment by check, it violates the requirements of WCL §25(9) and the claimant's right to prompt payment in like manner as wages.
Nor did the Section 32 agreement indicate that payment would be other than the industry standard of payment by check mailed to the claimant or that the claimant would not have immediate access to all of her funds.
Under these circumstances, where the claimant did not specifically request payment by direct deposit using the Board's DD-1 form and where the claimant did not have immediate access without restriction to all of her settlement proceeds within the statutory time frame, the carrier must pay a late payment penalty on the $62,750 not timely paid.
Permissible Use of Debit Cards
It is noted that a carrier may adopt a program for payment of workers' compensation benefits by debit card when: 1) the claimant elects such payment method in writing as a form of direct deposit; 2) the claimant is advised of his or her right to receive payment by paper check in the mail; 3) the debit card is associated to a bank account in the claimant's name and fully insured; 4) the claimant may cancel such payment method and the terms for such cancellation are plainly disclosed to the claimant in the enrolment form; and 5) all other terms and conditions that may apply to payment and use of the debit card are disclosed to the claimant at the time of enrollment.
When a carrier obtains proper consent and provides proper disclosure to the claimant, payment by debit cards should offer advantages to the claimant over traditional payment by check. These advantages include ensuring timely payment due to electronic loading of the card, elimination of check cashing fees for claimants without bank accounts, and the ability to pay for purchases directly using the card.
ACCORDINGLY, the WCLJ decision filed on July 10, 2012 is AFFIRMED in its entirety. No further action is planned by the Board at this time.