PEOs, Pizza Sauce, and Penalties: New York Workers’ Compensation Appellate Roundup – May 29, 2025

Four workers’ compensation decisions came down from the Appellate Division Thursday,  May 29.  It was a mixed bag: two good for defense, two not so much.

Good for the defense:

• Alzate v. Quality Building Services Corp. Here, the 3^rd Dept. affirmed both mandatory and discretionary penalties pursuant to Sec. 114-a (willful misrepresentation/fraud) where a claimant denied having prior injuries. Claimant allegedly injured her neck, back, and right shoulder vacuuming in 2019. The carrier found prior record of being treated for her neck in Oct. 2012; then Nov. 2012 had an auto accident injuring her neck and right shoulder, of which records revealed back surgery in 2009. Additionally the carrier discovered accidents in 2018 and 2019 (prior to the claim) both with back and neck treatment. Claimant denied injuries on her C3 claim form, and then denied treatment at a hearing in 2021 and testified she did not recall most of the prior accidents. Fortunately, despite the Law Judge initially not finding 114-a was violated, the Board Panel had the sense to reject the “language barrier” argument.
• Fonseca v. Platinum Carpentry. This case hopefully will make it harder for the Board to hold PEOs liable for non-leased employees. In Fonseca, the claimant, a carpenter was working for an otherwise uninsured employer, Platinum Carpentry. Platinum used a PEO to cover leased employees. But claimant was not on the PEO payroll. The Law Judge found the PEO liable (likely relying on the unreported Chateau decision although not indicated in this decision). The Board Panel reversed, and found the PEO not liable. The 3^rd Dept. affirmed, by recognizing the following evidence was substantial enough to discharge the PEO: 1. Name not on payroll; 2. PEO agreement specified that names must be submitted with required paperwork 48 hours prior to employee’s start date; 3. Admission by Platinum they did not submit claimant’s name; and 4. Admission that Platinum paid claimant directly. The 3^rd Dept. did not address the Chateau Board Panel decision, which is being used by the Board to find PEOs liable in most every case. It is important to note that if the Board reached an opposite conclusion, it is possible the 3^rd Dept. would have affirmed it that way too. But this is still a great case to use favorably for our position.

Bad for the defense:

• Ramales v. Frank and Nino’s Pizza Corp. The intoxication defense loses again. Here, a pizza shop worker had a .281 blood alcohol level. (Not in the decision, but that is a dangerous level. Associated with severe confusion, and loss of consciousness. For reference, .08 is the legal limit for driving.) Here the worker took a pot of hot tomato sauce down a staircase to the basement to cool. Because the claimant testified that weight and balance of the large pot caused him to wobble, that was enough for the Board to find the intoxication was not the sole cause of the accident. The Appellate Division affirmed.
• Juncal v. Maspeth Remodeling. The 3^rd Dept. held that the employer could not retroactively reduce temporary benefits from Total to 50% despite the Board not scheduling a hearing within 20 days of the RFA pursuant to 12 NYCRR 300.23. Here, the Board did not schedule a hearing to reduce benefits until after 20 days, but the 3^rd Dept. recognized that this regulation is “directory or aspirational rather than mandatory.” That would be nice if other deadlines where carriers are penalized for failing to satisfy could be viewed as “directory or aspirational rather than mandatory.”