Workers comp controversy grows as more business owners complain of bills from the state
Fri, 07 Nov 2014 21:49:22 GMT —
The growing controversy over a mismanaged workers compensation insurance system has taken a new turn as more small businesses come forward to CNY Central.
Last month, we reported the owner of an auto repair shop in Auburn was billed $21,184 to help bail out the auto repair trust set up by the state in 2005. It was one of dozens of self-insured trusts set up for specific industries approved the New York Workers Comp Board to provide low cost workers comp insurance to small businesses.
Now other small business owners have contacted CNYT Central to complain they too have been forced to shell out tens of thousands of dollars to pay off the debts of a failed self insurance system.
Potter Heating and Air Conditioning of Syracuse purchased workers comp insurance through the Contractors Trust which ran up a debt of $30 million . Potter Heating & AC has been billed by the state Workers Comp Board for $30,000. The company's president, Suzanne DeFuria knew there was a risk involved in joining a self insured trust, but she says she investigated and felt it had the backing and approval of the state. She says she never anticipated the trust would be mismanaged. "Never thought about it. I figured New York State was there to take care of whatever they had to take care of."
Manager Dan Hanks says the $30,000 could be better spent replacing some equipment in his shop, buying vehicles or hiring new employees. "What's the difference between this and what Bernie Madoff did?" Hanks asked.
He's not the only one who feels that way. Michael T. Berns, former Commissioner on the State Workers Comp Board, now runs a website critical of the way the Board operates. He blames the Board for allowing the self-insured trusts to run up multi-million dollar debts. "The State of New York allowed what I would call a Ponzi scheme to take place and therefore the State of New York should take the responsibility of making these people whole." Berns said.
The Worker's Compensation Board issued a statement pointing out that the Workers Comp Fund assumed the debts of the trusts. It says the Board is now allowing "group trust employers to manageably fulfill their obligations over long repayment periods at low cost. The statement claims the Board has "moved aggressively against many trusts' malfeasance."
Van Slyke Trucking of Nedrow was on the hook for $47,000 because the Transportation Trust set up by the state also went bust. Pat Jonas said she was shocked when she received an intimidating letter earlier this year from the Workers Compensation Board demanding payment.
"Being a small business with all these expenses $47,000 is a lot of money." Jonas told CNY Central's Jim Kenyon.
The Workers Comp Board has since reduced their debt to $11,000 but has warned the trucking company it could get more bills in the future.