In a unanimous decision issued April 10, 2025, the New York Court of Appeals held that a municipality cannot recover overpaid disability supplements from a retired firefighter’s workers’ compensation benefits. The ruling in Matter of Schulze v. City of Newburgh Fire Department affirms the limits of employer reimbursement rights under the state’s workers’ compensation and municipal disability laws.
The case centered on Adam Schulze, a firefighter with the City of Newburgh who sustained serious neck and back injuries while responding to a fire on April 30, 2012. Despite surgery, Schulze was unable to resume duty and was classified as permanently partially disabled in February 2015, at age 39.
Initially, Schulze received his full salary from the city under General Municipal Law § 207-a(1), which mandates that municipalities continue paying wages to disabled firefighters who remain on payroll. From May 2012 through December 2015, he also received workers’ compensation, and the city was reimbursed for its § 207-a(1) salary payments under Workers’ Compensation Law § 30(2).
In April 2016, Schulze was granted performance of duty (POD) retirement benefits under Retirement and Social Security Law § 363-c, making him eligible for a pension equaling 50% of his final average salary. At that point, he left the city’s payroll. Under General Municipal Law § 207-a(2), the city became responsible for paying him the difference between his POD pension and his full salary until he reached mandatory retirement age.
The issue arose years later, in 2019, when Schulze requested a hearing before the Workers’ Compensation Board to claim unpaid workers’ compensation benefits for two periods: December 2015 to April 2016 (pre-retirement), and April 2016 onward (post-retirement). The City of Newburgh did not dispute Schulze’s entitlement to the compensation but sought reimbursement from both awards for prior payments it had made under General Municipal Law § 207-a(1) and § 207-a(2).
A Workers’ Compensation Law Judge granted reimbursement only for the pre-retirement period—when Schulze was still on payroll and receiving § 207-a(1) benefits. The judge denied reimbursement for payments made after Schulze retired, finding that § 207-a(2) benefits did not qualify as “wages” for purposes of Workers’ Compensation Law §§ 25(4)(a) and 30(2). That decision was upheld by the Workers’ Compensation Board and the Appellate Division.
On appeal, the Court of Appeals agreed. Writing for a unanimous court, Chief Judge Rowan D. Wilson explained that § 207-a(2) payments are not “salary or wages,” but rather “pension supplements” intended to bridge the gap between a retired firefighter’s POD pension and their prior salary. Because these payments are made to retired individuals who are no longer employees, the court concluded they fall outside the definitions used in the workers’ compensation statutes that authorize reimbursement.
Section 30(2) of the Workers’ Compensation Law allows municipalities to receive credit for “salary or wages” paid under § 207-a(1), but not for § 207-a(2) payments. Likewise, § 25(4)(a) permits reimbursement only for payments made “in like manner as wages” to employees—criteria that do not apply once the firefighter has retired.
The court also declined to interpret General Municipal Law § 207-a(4-a), which allows employers to reduce § 207-a(2) payments once workers’ compensation is awarded, as authorizing retroactive reimbursement via the Workers’ Compensation Board. That provision is forward-looking, the court said, and it was the city’s responsibility to seek workers’ compensation awards in a timely manner to apply that offset.
In this case, the City of Newburgh allowed several years to pass before requesting an award for the post-retirement period. As a result, Schulze received both § 207-a(2) payments and retroactive workers’ compensation for the same time, totaling about $106,000. But the court made clear that the city’s remedy was not through the workers’ compensation system, and whether the city might pursue other avenues—such as a plenary action to recover overpayments—was not addressed in this decision.
“Our decision is consistent with the Appellate Division’s longstanding precedent,” the court wrote, citing Matter of Harzinski v. Village of Endicott, a 1987 decision holding that § 207-a(2) payments are not subject to workers’ compensation reimbursement.
For insurance professionals working in municipal liability, public sector risk, or workers’ compensation claims, this ruling confirms that reimbursement rights are strictly limited to statutorily authorized categories. The case also illustrates the risks of administrative delay in coordinating overlapping benefit systems. Municipal employers and their insurers must ensure timely action under the correct legal mechanisms or risk financial exposure with no statutory remedy.
The case was argued by Lars P. Mead for the City of Newburgh, Dustin Brockner for the Workers’ Compensation Board, and Richard T. Cahill Jr. for Adam Schulze.
The Court of Appeals affirmed the Appellate Division’s decision, with costs.
