Lump Sum Payments for Pending Workers’ Compensation Claims Made by Municipalities Choosing to Withdraw from a Workers’ Compensation Self-Insurance Fund Must Be Discounted to Present Value

The Court of Appeals, in a full-fledged opinion by Judge Lippman, over a partial dissent, determined that the lump sum to be paid by municipalities for pending workers' compensation claims when withdrawing from a workers' compensation self-insurance fund should be discounted to present value.  The court noted that the lump sum was to be used to pay out workers' compensation benefits for years to come:

Generally, discounting future damages to their value at some point in the past is appropriate because it takes into account the time value of money. “[W]hen an amount intended to compensate for a future loss is discounted back to a particular time, the discounted amount represents the sum which, if invested at that time at reasonable rates of return, would theoretically produce the intended amount at the future time when the loss is incurred” .. . We are perhaps most familiar with discounting in wrongful death, personal injury, and medical malpractice actions, where discounting is required by statute (see CPLR 5031; 5041). In those contexts, it is often the future earning power of the injured party, or a similar measure of future damages, that must be reduced to its value on the date of injury. However, there is no material difference between the value of a decedent's future income in a wrongful death case and the value of workers' compensation benefits to be paid out over the life of a disability claim. In both cases, some or all of the losses will be incurred in the future. Here, the injury in question is a breach of contract, and the future losses manifest themselves in the form of contract damages. Village of Ilion v County of Herkimer, 2014 NY Slip Op 02873, CtApp 5-1-14