EDI “L-With Liability” on Medical-Only FROI Does Not Waive Controversion; WCL § 25(2)(b)’s 25‑Day Preclusion Requires Indexing

Case: Matter of Shakil v. New York City Tr. Auth., 2026 NY Slip Op 02897 (3d Dep’t May 7, 2026)

Court: Appellate Division, Third Department

Context: Workers’ Compensation; eClaims/EDI filing; timeliness and effect of notice of controversy; stress-induced psychological injury

1. Introduction

This appeal arises from a subway station agent’s claim for workers’ compensation benefits based on anxiety, panic attacks, and alleged posttraumatic stress disorder following a January 2021 incident in which an emotionally disturbed person banged on her booth window, screamed, and threatened to kill her. The claimant, Mehwish Shakil, pursued benefits against her self-insured employer, the New York City Transit Authority, with the Workers’ Compensation Board as respondent.

The case presented three intertwined issues: (i) whether the employer’s Electronic Data Interchange (EDI) entries—particularly “L-With Liability” on a medical-only First Report of Injury (FROI) and Subsequent Report of Injury (SROI)—constituted a binding acceptance of liability that waived the right to controvert; (ii) whether the employer’s notice of controversy was untimely and, if so, what consequences followed under Workers’ Compensation Law (WCL) § 25; and (iii) whether the claimant proved a compensable stress-induced psychological injury under the then-governing “greater-than-normal” workplace-stress standard.

2. Summary of the Opinion

The Third Department affirmed the Board’s decision disallowing the claim. The court held:

  • The employer’s EDI entry “L-With Liability” on a medical-only FROI (and similar SROI entry) did not amount to a binding acceptance of the claim and did not waive the employer’s right to controvert, because EDI programming at the time required “L-With Liability” for medical-only claims.
  • WCL § 25(2)(b)’s 25-day deadline and its harsh preclusion/bar apply only when the Board has indexed the case; because the claim was never indexed, § 25(2)(b) did not apply. Although the employer incurred a $300 penalty under WCL § 25(2)(a) for failing to timely controvert or begin payments, § 25(2)(a) does not itself impose nonmonetary preclusion for late controversion.
  • On the merits, substantial evidence supported the Board’s finding that the incident did not expose claimant to stress “greater than that which other similarly situated workers experienced in the normal work environment,” as claimant acknowledged frequent interactions with emotionally disturbed individuals and that other station agents had similar experiences.

3. Analysis

3.1. Precedents Cited

Indexing and the WCL § 25(2)(b) 25‑day bar

  • Matter of Rydstrom v Precision Carpentry of Westchester, Inc., 150 AD3d 1602 (3d Dept 2017), lv denied 30 NY3d 902 (2017), and Matter of Enriquez v Home Lawn Care & Landscaping, Inc., 77 AD3d 1149 (2010): The court relied on these cases for the rule that where the Board never indexed the claim, WCL § 25(2)(b) does not apply. In Shakil, that principle was dispositive of claimant’s argument that the employer was barred from contesting key elements due to untimeliness under § 25(2)(b).

Standard of review and compensability framework

  • Matter of Flores v Wellwood Cemetery Assoc. Inc., 232 AD3d 1003 (3d Dept 2024), and Matter of Fernandez v New York City Tr. Auth., 224 AD3d 1066 (3d Dept 2024): These cases supplied the familiar proposition that whether a compensable accident occurred is a Board fact question reviewed for “substantial evidence,” underscoring the court’s deferential posture toward the Board’s factual evaluation of workplace stressors and job expectations.

Stress-induced psychological injury (“greater-than-normal” rule) and its evolution

  • Matter of McLaurin v New York City Tr. Auth., — NY3d —, 2025 NY Slip Op 06529 (2025): Shakil treated McLaurin as the authoritative statement that, at the time relevant to the Board’s decision, stress-induced psychological injury was “accidental” only if workplace stress was greater than that encountered by similarly situated workers in the normal environment. Shakil also noted McLaurin’s discussion of the later statutory amendment (WCL § 10[3][c]) that forbids disallowance of certain mental injury claims on that “greater-than-normal” factual basis, while leaving open retroactivity questions not briefed by the parties.
  • Matter of Waddy v Manhattan & Bronx Surface Tr. Auth., 234 AD3d 1141 (3d Dept 2025), lv denied 43 NY3d 906 (2025), and Matter of Spillers v Health & Hosp. Corp., 225 AD3d 1100 (3d Dept 2024): These cases guided the “normal work environment” inquiry—i.e., whether the stressor is one the claimant should reasonably and ordinarily be expected to encounter (non-accidental) or is unusual/unexpected/extraordinary (accidental). Shakil applied this framework to the realities of station-agent work in the NYC subway system.
  • Matter of Casey v United Ref. Co. of Pa., 194 AD3d 1300 (3d Dept 2021): Cited as additional support for affirming Board findings where the stressor is not “vastly different” from expected workplace stress in the occupation.

Issue preservation

  • Matter of Wagner v Bobley Publ. Corp., 245 AD3d 1048 (3d Dept 2026), and Matter of Muller v Square Deal Machining, Inc., 183 AD3d 992 (3d Dept 2020), appeal dismissed 35 NY3d 1100 (2020), lv denied 36 NY3d 909 (2021): These cases supported the court’s refusal to entertain claimant’s argument that the claim should not have been classified as “medical-only,” because that contention was not raised before the Board.

Law of the case / procedural posture

  • The court referenced its earlier decision in the same matter, 221 AD3d 1380 (3d Dept 2023), which had remitted the case to the Board to address controversion-propriety arguments. Shakil then reviewed the Board’s post-remittal determinations.

3.2. Legal Reasoning

(A) EDI mechanics: “L-With Liability” as a compelled data field, not an admission

A central contribution of Shakil is its practical, systems-aware interpretation of eClaims/EDI filings. The claimant argued that “L-With Liability” in the “Agreement to Compensate” field functioned as a binding acceptance, barring later controversion. The court rejected that characterization after tracing:

  • the Board’s adoption of national EDI standards and the 2014 mandate for electronic FROI submissions;
  • the “M-Medical Only” claim-type option (medical expenses covered, no indemnity paid); and
  • the 2016 EDI programming change that rejected “W-Without Liability” in the Agreement-to-Compensate field for medical-only claims, effectively forcing filers to use “L-With Liability” even when they were not conceding compensability.

On that record, the court held it was “reasonable” for the Board to conclude there was no waiver of controversion. Critically, Shakil treats the EDI “L-With Liability” designation (in this narrow medical-only configuration) as an artifact of mandatory coding rather than an employer’s voluntary, legally operative admission.

(B) Two timing regimes under WCL § 25: penalties vs. preclusion

Shakil distinguishes between WCL § 25(2)(a) and WCL § 25(2)(b):

  • WCL § 25(2)(a) sets early deadlines to controvert (18 days after disability or 10 days after knowledge, whichever is greater). The sanction for missing that deadline, as applied here, is a $300 penalty. Shakil emphasizes that § 25(2)(a) does not, by its terms, impose nonmonetary preclusion or prohibit late filing of a notice of controversy.
  • WCL § 25(2)(b) creates a separate 25-day deadline that runs from mailing of the Board’s notice that the case has been indexed. The consequence for missing this deadline is severe: the employer is barred from pleading certain fundamental defenses (employment relationship, accident, and “arose out of and in the course of employment”).

Because the Board never indexed the claim, Shakil holds that § 25(2)(b) never activated; thus, the employer avoided preclusion (while still being assessed the § 25(2)(a) monetary penalty).

(C) Indexing regulation (12 NYCRR 300.37) and “unlimited time” concerns

The claimant attacked the indexing framework, arguing that 12 NYCRR 300.37(c)(1) undermined legislative intent by allowing employers to prevent indexing and thereby avoid § 25(2)(b)’s preclusion clock. The court rejected the “no redress” premise by pointing to:

  • Workers’ Compensation Law § 21-a, which permits payments “without prejudice” for up to one year (but was not invoked on this record); and
  • the claimant’s ability to force progress through: (i) requesting a 45-day hearing under WCL § 25(2)(a) (which claimant did not specifically request), and (ii) submitting the required documents (C-3, medical report, authorization) that trigger indexing under 12 NYCRR 300.37(b)(1).

The court also noted that the Board later changed the EDI system to eliminate the requirement at issue (citing the Board’s July 2024 “Case Indexing Initiative”), reinforcing that the disputed “L-With Liability” requirement was a transitional systems problem rather than a substantive liability rule.

Even assuming arguendo that the Board erred by treating the “L-With Liability” entry as an acceptance for indexing purposes, the court found no reversible prejudice because a notice of controversy was filed and a full hearing on the merits was ultimately held.

(D) Merits: station-agent stress and the then-governing accidental-injury test

Applying the pre-amendment standard for stress-induced psychological injury, the court affirmed the Board’s finding that the January 2021 incident—though serious—was not “greater than” normal stress experienced by similarly situated station agents. The claimant’s own testimony that such interactions with emotionally disturbed individuals were common in the job and experienced by other station agents supported the Board’s conclusion by substantial evidence.

Shakil includes an important temporal qualifier: after the Board’s administrative decision, the Legislature amended the WCL to provide that the Board “may not disallow” claims for PTSD, acute stress disorder, or major depressive disorder on a finding that stress was not greater than normal (WCL § 10[3][c]). The court did not resolve retroactivity because the parties did not brief it.

3.3. Impact

  • Clarifies the legal effect of compelled EDI coding. Shakil protects against transforming mandatory EDI field values—specifically “L-With Liability” on medical-only FROIs under the former programming—into inadvertent admissions of compensability. This reduces the risk of “waiver by software design.”
  • Reinforces indexing as the trigger for § 25(2)(b) preclusion. The decision underscores a procedural reality: without indexing, the employer faces a monetary penalty for late controversion (§ 25[2][a]) but avoids the defense-barring consequences of § 25(2)(b).
  • Signals claimant-side procedural strategies. The court highlights available tools to avoid procedural limbo—completing the document set that mandates indexing under 12 NYCRR 300.37(b)(1) and requesting a 45-day hearing under WCL § 25(2)(a).
  • Foreshadows litigation under WCL § 10(3)(c). Although Shakil applies the older “greater-than-normal” standard (because of timing and briefing posture), it flags a major doctrinal shift for PTSD/acute stress/major depressive disorder claims and leaves retroactivity as an open issue likely to recur.

4. Complex Concepts Simplified

  • FROI / SROI: The First Report of Injury is the employer/carrier’s initial electronic filing reporting a claimed workplace injury; a Subsequent Report updates claim status.
  • EDI / eClaims: A standardized electronic data system the Board requires for reporting claims. Some entries may be constrained by the system’s validation rules.
  • “Medical-Only” claim: A claim status indicating the payer is covering medical treatment but not paying wage-replacement (indemnity) benefits.
  • “L-With Liability” field value: In ordinary language it sounds like an admission, but Shakil holds that, for medical-only claims at the relevant time, it could be a required coding value rather than a voluntary concession.
  • Indexing: The Board’s administrative step of formally opening/indexing a case against an employer. In New York, indexing is what triggers the strict 25-day controversion/preclusion rule in WCL § 25(2)(b).
  • Notice of controversy: The employer’s formal statement that it disputes the claim and why.
  • WCL § 21-a “without prejudice” payments: A mechanism allowing payment for up to one year without admitting liability, preserving the right to later controvert.
  • “Substantial evidence” review: Appellate courts do not reweigh facts; they uphold the Board if the record contains enough evidence that a reasonable factfinder could reach the Board’s conclusion.

5. Conclusion

Matter of Shakil v. New York City Tr. Auth. establishes a practical rule for New York workers’ compensation procedure in the EDI era: a compelled “L-With Liability” designation on a medical-only FROI/SROI does not, by itself, bind an employer to acceptance or waive the right to controvert. The decision also reiterates that WCL § 25(2)(b)’s powerful preclusion penalty depends on the Board indexing the case; absent indexing, late controversion yields a monetary penalty under § 25(2)(a) but not defense preclusion.

On the merits, the court affirmed denial under the then-applicable “greater-than-normal” stress test for psychological injury, while expressly noting the Legislature’s subsequent shift away from that test for specified diagnoses—setting the stage for future disputes over the amendment’s reach and retroactivity.