Workers Comp: High Court Rejects City’s Argument to Recover $106,000 in Overpayments to Firefighter

New York’s highest court rejected a city’s efforts to claw back $106,000 in overpayments to an injured firefighter.

The New York Court of Appeals held that neither Workers’ Compensation Law Section 25(4)(a) nor Workers’ Compensation Law Section 30(2) allow reimbursement from workers’ compensation awards for payments made under General Municipal Law Section 207-a(2).

The provision that prevents firefighters from double recovery is General Municipal Law Section 207-a(4-a), but the court said whether that section provides a way for the city to collect on the overpayments was not properly before it because it was reviewing only a Workers’ Compensation Board decision, and the board does not have the authority to administer benefits under the General Municipal Law.

Adam Schulze injured his neck and back while working for the Newburgh Fire Department in April 2012. He stopped working immediately after the injury, and the city paid his full salary as required by General Municipal Law Section 207-a(1). He also received workers’ compensation benefits from May 2012 to December 2015.

Under Workers’ Compensation Law Section 30(2), the city was reimbursed for the salary continuation payments.

In February 2015, Schulze was classified as permanently partially disabled, and a workers’ compensation judge held that Schulze was eligible for up to 375 weeks of work comp payments. The payments were awarded in retroactive installments.

The parties were required to request an award before an installment payment could be ordered. Schulze regularly requested payments through December 2015. From December 2015 to July 2019, neither he nor the city requested another installment of work comp benefits.

In April 2016, Schulze applied for performance-of-duty retirement under Retirement and Social Security Law Section 363-c. His request was approved, and he received a 50% pension for life.

He was removed from the city’s payroll on April 30, 2016, at which point the city paid the difference between the pension and his salary as required by General Municipal Law Section 207-a(2).

In 2019, Schulze requested a hearing to determine his entitlement to work comp benefits for the periods from December 2015 to April 2016 and from April 2016 onward. The city requested reimbursement for both awards.

In December 2019, a comp judge awarded payments for both periods at $504.41 per week. The judge also granted the city reimbursement for the payments from December 2015 to April 2016 when Schulze was still on the payroll but denied reimbursement for payments after that.

“For the period from April 2016 to October 2019, the city made supplemental payments to Mr. Schulze pursuant to General Municipal Law Section 207-a (2),” the high court said. “Subsequently, in October 2018, Mr. Schulze was retroactively awarded workers’ compensation payments for that period. The delay resulted in Mr. Schulze receiving approximately $106,000 more than he should have received.”

The city appealed, and the Workers’ Compensation Board affirmed.

The high court said there are three sources of benefits for workplace injuries for firefighters employed outside of New York City:

• The Retirement and Social Security Law provides either performance-of-duty or accidental disability retirement benefits, which are paid by the state police and firefighters’ retirement system, not the firefighter’s employer.
• The General Municipal Law provides benefits paid by the employer.
• The Workers’ Compensation Law also provides benefits paid by the employer or its carrier.
• Similarly, the high court said a firefighter can fall into one of three scenarios:
• The firefighter can remain on the employer’s payroll, in which case General Municipal Law Section 207-a(1) requires the employer to pay full salary benefits until the period of disability ends. These payments are credited against any work comp benefits.
• A firefighter can retire and receive accidental disability benefits under the Retirement and Social Security Law, in which case General Municipal Law Section 207-a(2) requires the employer to pay the difference between the disability retirement benefits and the firefighter’s salary until the firefighter reaches mandatory retirement. Under Retirement and Social Security Law Sections 363(e)(3) and 364(a), accidental disability benefits are reduced by the amount of any work comp award.
• A firefighter can also receive performance-of-duty retirement benefits under Retirement and Social Security Law Section 363-c, in which case he is entitled to supplemental payments from the employer under General Municipal Law Section 207-a(2).

Schulze fell into the final category because he received performance-of-duty retirement benefits, supplemental benefits under General Municipal Law Section 207-a(2), and workers’ compensation benefits.

Instead of following the statutory scheme and reducing its General Municipal Law Section 207-a(2) payments by the amount of workers’ compensation benefits, the city requested an order directing that it receive the work comp benefits due to Schulze as reimbursement for the payments it already made.

The high court was not persuaded by the city’s argument that it was entitled to reimbursement under Workers’ Compensation Law Section 30(2) or 25(4)(a).

Workers’ Compensation Law Section 30(2) provides a credit against comp benefits for any salary or wages paid to a firefighter.

“Municipalities making payments under General Municipal Law Section 207-a(2) are not making payments of ‘salary or wages’ and may not receive reimbursement through Workers’ Compensation Law Section 30(2),” the court said.

Workers’ Compensation Law Section 25(4)(a) authorizes reimbursement for employers that make advance payments of compensation or other payments in like manner as wages during any period of disability. The court said payments under General Municipal Law 207-a(2) are not payments in a like manner as wages because they are calculated differently than wages and are properly understood as pension supplements.

Furthermore, General Municipal Law Section 207-a(2) payments are not made to employees because workers must be retired to receive benefits under this section of the statute.

The high court characterized the city’s argument as that the statutory remedies were not sufficient. Specifically, the court said the city’s position was that General Municipal Law Section 207-a(4-a) is inadequate in situations where payments under General Municipal Law Section 207-a(2) are made before a final workers’ compensation award.

“The city argues that it would be unfair to limit employers to the remedy set out in General Municipal Law Section 207-a(4-a) when a firefighter receives a retroactive workers’ compensation award for a period during which the employer has already made General Municipal Law Section 207-a(2) payments,”

the court said. “When that happens, the employer cannot go back in time to reduce its subdivision 207-a(2) payments in the first instance. Whether General Municipal Law Section 207-a(4-a) provides an employer with another way to recoup its prior payments, such as by reducing future General Municipal Law Section 207-a(2) payments to compensate for past double payments or bringing a plenary action against the firefighter to recover the overpayment, is not before us.”

The high court said the city could have avoided the overpayment by asking the work comp judge to award workers’ compensation benefits in April 2016 when Schulze retired.

“If the city had done so, it would have been entitled to reduce its General Municipal Law Section 207-a(2) payments by the amount of workers’ compensation finally determined,”

the court explained. “Instead, the city allowed years to pass without an award of workers’ compensation, thereby running the risk that Mr. Schulze would later receive a retroactive award covering that period of time. Having failed to avail itself of the proper remedy, the city now seeks to avail itself of a statutorily unavailable remedy.”

The court’s decision is filed in the matter of the claim of Adam Schulze v City of Newburgh Fire Department et al., No. 32, 04/10/2025. Article appeared originally in Workers Comp Central magazine.