Worker’s Running in Red $300 per Month doesn’t Show ‘Extreme Financial Hardship’

Case File

A New York worker couldn't make ends meet, but as Simply Research subscribers know from the full text of her case, that didn't mean she fit the bill for "extreme financial hardship" in the Empire State.

Case

Brown v. Plans Plus Ltd., No. CV-23-0250 (N.Y. App. Div. 10/10/24).

What Happened

An enrollment specialist performing data entry and telephone services at her desk was injured in a work-related accident when she bent forward in her chair and fell to the floor and sustained back injuries.

She was classified with a permanent partial disability and an 80% loss of wage earning capacity, entitling her to 425 weeks of indemnity benefits. Prior to the expiration of her indemnity benefits, the specialist filed an extreme hardship redetermination request, which is form C-35, seeking reclassification to permanent total disability.

The Workers' Compensation Law judge denied the request, finding that the specialist did not show extreme financial hardship. the Workers' Compensation Board affirmed.

The specialist appealed to court, arguing that the WCB misinterpreted the statutory meaning of "extreme hardship."

Rule of Law

Under New York law, in cases where the loss of wage-earning capacity is greater than 75%, a claimant may request, within the year prior to the scheduled exhaustion of indemnity benefits, that the board reclassify the claimant to permanent total disability or total industrial disability due to factors reflecting extreme hardship.

"Extreme hardship" is not defined in a New York statute, but legislative history indicates that the provision was intended to provide an exemption for claimants under extreme financial hardship. In Davis v. Hutchings Children Servs., 213 A.D. 3d 1111 (N.Y. App. Div. 2023), the court turned to a dictionary definition to hold that claimants seeking reclassification based on extreme hardship "must demonstrate financial hardship beyond the ordinary and existing in a very high degree."

What the Court Said

The court affirmed the WCB's decision, agreeing that the specialist did not have any unusual or unexpected expenses for a person on a fixed income and that, under the "specific circumstances presented," the fact that her monthly expenses exceeded her income by approximately $300 did not, by itself, constitute an extreme hardship.

Workers' Comp 101: In evaluating applications for the extreme hardship exception, the board considers the claimant's assets, monthly household income, monthly expenses, and "any other relevant factor."

Looking to the specialist's claim, the court noted her testimony established that she lived alone in a three-bedroom house on which she took a $150,000 equity loan prior to the work accident, the proceeds of which were not accounted for, and leases a luxury vehicle costing $300 to $400. The court also highlighted that the specialist did not provide documentation of her monthly credit card payment of $300 to $400 and conceded that her monthly Social Security payment increased about $70 per month.

"The board's determination is supported by substantial evidence," the court wrote.

Takeaway

"Extreme financial hardship" in New York requires a showing of more than bills exceeding income.

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