Legal Insights: New York Court of Appeals Decision on Firefighter's Disability Supplements

On April 10, 2025, the New York Court of Appeals delivered a landmark ruling concerning the reimbursement of overpaid disability supplements to retired municipal employees. This unanimous decision clarified that municipalities cannot reclaim excess disability payments from a retired firefighter's post-retirement workers’ compensation benefits. The case, known as Matter of Schulze v. City of Newburgh Fire Department, highlights the limitations placed on employer reimbursement rights under New York’s workers’ compensation and municipal disability laws. The situation involved retired firefighter Adam Schulze, whose severe work-related injuries resulted in permanent partial disability, affecting his subsequent financial entitlements from the City of Newburgh.

Adam Schulze’s journey toward the court's decision began on April 30, 2012, after suffering debilitating neck and back injuries while on duty. Following surgeries and recovery efforts, he was declared permanently partially disabled by February 2015. Under General Municipal Law § 207-a(1), Schulze was entitled to his full salary during disability, lasting from May 2012 to December 2015, along with workers’ compensation in tandem. The City of Newburgh was reimbursed for these wage payments under Workers’ Compensation Law § 30(2). Upon retirement in April 2016, triggered by his disability, Schulze received performance of duty (POD) retirement benefits, as stipulated under Retirement and Social Security Law § 363-c. These benefits provided him with a pension equating to 50% of his final salary, while General Municipal Law § 207-a(2) required the city to cover the shortfall between his pension and former salary up to his mandatory retirement age.

The conflict arose years later when Schulze claimed unpaid workers’ compensation benefits for periods post his 2016 retirement. While the City did not challenge these entitlements, it pursued reimbursement for prior payments made under the municipal law. The Workers’ Compensation Law Judge allowed reimbursement only for pre-retirement payments, asserting that § 207-a(2) payments were not classifiable as 'wages' under Workers' Compensation Law sections, leading to the denial of the city's claim for post-retirement periods. Upholding this decision, the Workers’ Compensation Board and the Appellate Division set the groundwork for an appeal to the Court of Appeals.

The Court of Appeals, in a decisive opinion penned by Chief Judge Rowan D. Wilson, clarified that § 207-a(2) payments are pension enhancements rather than 'wages' and thus do not fall under reimbursement statutes for workers’ compensation. Contrary to the City of Newburgh's interpretation, these supplements are specifically designed for retired individuals outside the employment category, making statutory recoveries in applicable cases unattainable. Furthermore, the court noted that the provision under General Municipal Law § 207-a(4-a) did not permit backdated reimbursements post workers’ compensation awards, indicating the necessity for municipalities to ensure prompt and precise legal proceedings. This resolution reaffirms the longstanding legal precedent seen in Matter of Harzinski v. Village of Endicott, emphasizing the critical need for timely action by municipal employers and their insurers. Legal representatives Lars P. Mead for the City of Newburgh, Dustin Brockner for the Workers’ Compensation Board, and Richard T. Cahill Jr. for Adam Schulze presented compelling narratives that shaped the Court of Appeals’ decision, ultimately fortifying the intricacies of municipal liability law.