You know you’re not in a good place when high-level judges start giving your opponents explicit advice on how to defeat you in court. So it is with the State Insurance Fund.
For years, the Town of Amherst has been unsuccessfully fighting the state agency for reimbursement over a multimillion-dollar judgment it paid to the victim of a roofing accident who was left partially paralyzed more than a decade ago.
Last week, the Rochester Appellate Division of State Supreme Court denied the town’s latest attempt to recoup more than $30 million in principal and interest costs from the State Insurance Fund, dismissing two of its causes of action in an eight-page ruling. But the court didn’t stop there.
“Our inquiry, however, does not end at this juncture,” Judge Eugene Fahey stated, in a rare, signed decision.
The judges then devoted 30 lines of explicit legal instruction on how the town should compel the state insurance agency to pay the town the money it’s owed.
Town Attorney E. Thomas Jones said that shows the judges “understand that justice wasn’t being done.”
Joseph DeMarie, the lawyer representing the Town of Amherst in this case, called the instructions from the appellate court unusual.
“It’s pretty obvious that the court and Judge Fahey was disgusted with the State Insurance Fund,” he said.
The entire matter was sparked by the injury of a contractor who fell from the roof of a building at a state park in the town and broke his neck in 2002. The town paid $23.4 million to the injured worker because the town was maintaining the property and has spent more than five years in a long war against the state insurance agency to get reimbursed.
The potential impact on Amherst taxpayers will be enormous if the matter is not resolved. Already, the town has spent about half a million dollars in legal fees and bond costs related to this case, said Supervisor Barry Weinstein.
The legal nightmare known to most as the “Bissell case” has left town leaders supremely frustrated by what many consider to be legal subterfuge and ethical missteps by the State Insurance Fund. Piles of legal judgments against the amply funded state insurance agency and the roofing company it once insured have not produced a dime in payouts.
To appreciate the nature and scale of this financial drama requires some background.
Eleven years ago, Amherst contracted with McGonigle and Hilger Roofing Co. of Lockport to check for a roof leak at St. Mary of the Angels Motherhouse in Amherst State Park. Under an agreement with the state, the town is responsible for maintenance of buildings in the park.
The company sent Peter E. Bissell of Sanborn, who fell from a ladder during his inspection and broke his neck, leaving him partially paralyzed in both legs but still able to feel extreme pain in his limbs.
Multiple lawsuits and appeals by all parties followed. The first resulted in a $30.3 million jury award to Bissell in State Supreme Court in 2007. The amount was reduced to $18.3 million a year later. Because of accumulating interest, the town ended up paying the Bissell family $23.4 million.
The town’s insurance carrier covered $10 million of the judgment, and the town borrowed $13.4 million to pay for the rest. In 2011, the town began repaying that debt by borrowing money from its own reserves to the tune of $3.2 million a year.
“It’s a large deficit,” Weinstein said of the general fund’s draining reserves. “It’s very ugly.”
Because the town maintains Amherst State Park, the town was liable for Bissell’s injuries under the state’s Scaffold Law, which holds property owners responsible for any injury to workers on their property regardless of fault.
But the town then sued McGonigle & Hilger Roofing, and two courts held that the roofing company was ultimately responsible for Bissell’s injuries. In March 2011, the Court of Appeals, the state’s highest court, refused to hear the case.
Initially, town leaders thought that meant the town would be reimbursed $13.4 million plus interest right away because the now-defunct roofing company was insured by the State Insurance Fund, a state agency that is also the largest supplier of workers’ compensation insurance in New York.
They were wrong.
Instead of paying the claim, the State Insurance Fund paid for a lawyer to represent the roofing company’s owners and absolved the owners of any financial risks. In turn, the company owners resisted the town’s attempts to collect money from the State Insurance Fund by declining to ask their insurance agency to pay the claim.
“A logical mind would think that [the insurance fund] would have indemnified the Town and [the town’s excess insurance carrier], and this matter would have been resolved,” Judge Fahey stated, “Logic, however, did not prevail.”
The town subsequently sued the roofing company officers – Arthur Hilger and Sally Bisher – directly. Last week’s appeals decision was the latest outcome of that legal gambit, following a lower court victory in the same case a year ago.
The Appellate Division ruling essentially directs the town to fast-track the case in State Supreme Court and ask the judge to legally resurrect the defunct roofing corporation. The corporation could then be compelled to require the State Insurance Fund to satisfy Amherst’s claim.
“We remit the matter to Supreme Court for further proceedings in accordance with this opinion,” Fahey stated.
Representatives of the State Insurance Fund have said they do not comment on ongoing litigation. However, lawyers for the town say they hope the state agency is getting the message and will settle the claim soon.
“I just hope,” said Jones, the town attorney, “that the State Insurance Fund realizes that their legal gymnastics are coming to an end.”