2010 New York Code
WKC - Workers' Compensation
Article 9 - (200 - 242) DISABILITY BENEFITS
213 - Non-compliance or default.

§  213. Non-compliance or default. 1. Whenever a covered employer does
  not comply with this article by providing for the payment of  disability
  benefits to his employees in one or more of the ways provided in section
  two  hundred  eleven  or  whenever  a  carrier fails to pay the benefits
  required by this article to employees of a covered employer,  then  such
  employer shall be fully and directly liable to each of his employees for
  the  payment  of  benefits  provided  by this article. The amount of the
  benefits to which employees of such employers are  entitled  under  this
  article  and  attendance fees of their attending physicians or attending
  podiatrists fixed pursuant to subdivision two  of  section  two  hundred
  thirty-two  shall,  on  order  of  the chairman, be paid out of the fund
  established  under  section   two   hundred   fourteen.   In   case   of
  non-compliance of the employer, such employer shall forthwith pay to the
  chairman, for credit to the fund, the sum so expended or one per cent of
  his  payroll  for  his  employees  in  employment  during  the period of
  non-compliance, whichever is greater;  provided,  however,  that  if  it
  shall  appear  to  the  satisfaction of the chairman that the default in
  payment of benefits or the non-compliance of the employer otherwise with
  his obligation under this article was inadvertent, the chairman may  fix
  the sum payable in such case for non-compliance or default at the amount
  paid  out  of the fund and a sum less than one per cent of such payroll,
  and in addition the penalties  for  non-compliance  imposed  under  this
  article. In case of failure of the carrier to pay benefits, the employer
  shall  forthwith pay to the chairman, for credit to the fund, the sum so
  expended.
    2. Where a carrier authorized by the superintendent of insurance to do
  business in this state has failed  to  pay  benefits  on  behalf  of  an
  employer   pursuant   to   this  article  solely  because  an  order  of
  rehabilitation, conservation or liquidation has been issued by  a  court
  of  competent  jurisdiction  of this or any other state or jurisdiction,
  the provisions of subdivision one of this section  shall  not  apply  as
  they relate to: (a) the payment of benefits to an employee if the policy
  of  the  employer's carrier is subject to the protection afforded by any
  guaranty fund pursuant to the insurance law; or (b) the reimbursement to
  the fund, created under section two hundred fourteen of this article, by
  an employer whose carrier has failed to pay benefits.