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Appellate Division Decision Clarifies Issues Concerning Attachment to the Labor Market Defense

On 5/4/17, the Appellate Division, Third Department, decided McKinney v. United States Roofing Corporation, which contains several holdings clarifying issues commonly seen at hearings concerning labor market attachment and lost time awards. This decision is of interest given the contradictory Board Panel decisions on the attachment to labor market defense and the recent 2017 amendments to the Workers’ Compensation Law eliminating the need for permanently partially disabled claimants entitled to benefits at the time of classification to produce proof of labor market attachment.

 

The McKinney decision confirms that a total disability opinion does not shield the claimant from a suspension of awards when the Board rejects that total disability opinion and finds the claimant to have a partial disability. This is not a new concept. The Appellate Division previously addressed this issue in both Testani v. Aramark Services, 306 A.D.2d 709 (3d Dep’t 2003) and Browne v. Medford Multi-Care, 89 A.D.3d 1173 (3d Dep’t 2011). Nevertheless, the decision in McKinney reinforces prior rulings on this issue by holding that when the Board rejects a total disability opinion and awards benefits of a partial disability rate, there is an implicit finding that the claimant must produce evidence of the attachment to labor market.

 

Second, the McKinney decision affirms that the labor market attachment defense is merely a subset of the requirement that awards to a claimant are not appropriate where there is no causal connection between the claimant's reduction in earnings and the claimant's work injury. Even though the 2017 amendments to the Workers' Compensation Law eliminated the need for permanently partially disabled claimants entitled to benefits at the time of their classification to produce proof of labor market attachment, there is no bar against carriers arguing that the same claimants are not eligible for awards if they are self-limiting their earnings, or if there is no causal connection between the reduction in earnings in the work injury for any reason other than failure to prove labor market attachment. Nor do we believe that the 2017 change in the law prevents carriers from arguing that the claimant has voluntarily withdrawn from the labor market as we have previously discussed in our article above.

 

Finally, the McKinney decision resolves, somewhat, the question of when indemnity awards should be suspended where the claimant is found not attached to labor market. In McKinney, the Court agreed with the Board’s suspension of the claimant's benefits prior to the hearing at which the claimant was scheduled to testify on the labor market attachment issue based on the claimant's failure to produce proof of labor market attachment prior to that hearing.

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