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Special Alert: Court of Appeals Closes Section 25-a Fund in American Economy Decision

In a 32-page unanimous decision issued yesterday (10/24/17), the Court of Appeals (New York’s highest court) closed the Section 25-a fund by reversing the Appellate Division, First Department’s 2016 decision in American Economy v. State of New York, 139 A.D.3d 138 (1st Dept. 2016). The Court, in a decision authored by Judge Eugene Fahey, was unconvinced by the constitutional arguments raised by the dozens of insurance carrier plaintiffs and found that the closure of the 25-a fund, despite its retroactive impact which imposed unfunded costs upon those plaintiffs, was nevertheless constitutionally permissible.

While technically the plaintiffs may have a right to petition the U.S. Supreme Court for relief, we view success on such a petition to be highly unlikely.  Accordingly, the hope of transferring any cases on which applications for 25-a relief were not made before 1/1/14 is now lost.  Carriers can expect that the Board will dismiss any pending requests for transfer of claims to the 25-a fund. The Board had previously held in abeyance applications for transfer of claims to the 25-a fund during the pendency of this appeal.

Those interested in reviewing the specifics of the Court’s reasoning are welcome to review the decision by clicking on this link. Please do not hesitate to contact any of our attorneys to discuss the decision and its impact on your claims.

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