PROVIDENCE -- Lawyers for the owners of The Station nightclub have asked the state Workers' Compensation Court to wait until after their clients' appeal is heard before attempting to enforce payment of a $1.06-million penalty leveled by the state for failure to carry workers' compensation insurance.
Unless the court allows the penalty to be stayed pending the appeal, the company that owns The Station, Derco LLC, could be ordered to immediately pay the $1,066,000.
Lawyers for brothers Jeffrey and Michael Derderian have said repeatedly that their clients do not have the money to pay a penalty of that size.
A hearing on the matter before Workers' Compensation Court Judge Bruce Q. Morin is scheduled for Aug. 25.
The $1.06-million penalty imposed by the state Department of Labor and Training -- $1,000 per day for each day the nightclub was without coverage -- is the maximum allowed by state law and the largest ever imposed by the state in a workers' compensation case.
Last month, the Derderians appealed the $1.06-million penalty to the Workers' Compensation Court, which upheld the order. Morin also ruled that state law allows the labor department to assess a penalty personally against the Derderians.
The Derderians have appealed, saying the penalty is excessive and violates their constitutional rights.
Four of the 100 people killed in the fire at The Station on Feb. 20 were working at the nightclub. None of the workers or their families are entitled to workers' compensation benefits because the Derderians did not carry the mandatory coverage.
In their petition for a stay of the penalty, filed yesterday, lawyers Jeffrey B. Pine and Kathleen M. Hagerty wrote that decrees of the Workers' Compensation Court normally are "final" and "enforcement of the decree is not stayed pending appeal." However, they argued, "a stay is reasonable in this case" because any payment their clients would make would be "to the state general fund, not to any injured claimant or employee, and thus there is no hardship to any person in the granting of a stay."
Bernard Healy, associate attorney for the state Department of Labor and Training, said the lawyers' statement is not entirely accurate.
The $1.06-million penalty, like all those assessed for workers' compensation insurance violations, would not go into the state general fund, Healy said, but rather the Workers' Compensation Administrative Fund. That fund finances, among other things, the state Division of Workers' Compensation and the Workers' Compensation Court.
The fund's projected revenue for the most recent fiscal year is about $18.5 million, according to Natalie H. Gray, the unit claims manager for the state Division of Workers' Compensation. A small portion of the fund -- about $118,266 as of the end of last month -- comes from penalties collected by the labor department for violations of the workers' compensation law.
None of the money from those penalties, however, has ever gone to victims of on-the-job accidents, such as The Station workers, whose employers did not carry workers' compensation coverage, Gray said.
The Derderians' appeal of the $1.06-million penalty will be heard by the Workers' Compensation Court's appellate division, which comprises three judges.
Last week, Pine, who represents Jeffrey Derderian, and Hagerty, who represents Michael Derderian, filed a motion for a stay in the state Supreme Court, Healy said, but the court refused to hear it, saying the matter must first be heard by the Workers' Compensation Court's appellate division.
If the stay is denied, Healy said, "the state will have to press for collection" of the $1.06 million.
Lynn Arditi, a Journal staff writer, can be reached at larditi@projo.com
