A private boarding school for autistic students in Yorktown is suing to stop the state from cancelling a workers compensation policy for refusing to pay $2.2 million for coverage.
Shrub Oak International School accused New York State Insurance Fund and the New York Compensation Insurance Rating Board of misclassifying the nature of the school’s work and thereby overcharging for workers compensation, in an April 28 complaint filed in Westchester Supreme Court.
“If coverage is discontinued or interrupted,” the school says, “Shrub Oak and its community will suffer exceptional and devastating irreparable harm,” nearly 100 students will be jeopardized and more than 450 people will lose their jobs.
The school is on a 127-acre property near Mohegan Lake that once housed the Jesuits’ Loyola Seminary and later Phoenix House Academy drug treatment program for teens. Michael C. Koffler, of K3 Learning Inc., Manhattan, acquired the property for the school.
Shrub Oak claims it is one of a few schools in the United States that is capable of providing specialized education for diagnostically complex autistic students. Many of the students are referred by school districts that are unable to provide federally and state mandated special education services.
The school must provide workers compensation insurance to cover medical costs for employees who become injured or ill on the job. Private insurers that had provided workers compensation discontinued coverage, according to the complaint, and in 2023 Shrub Oak turned to the state as the “insurer of last resort.”
Insurance premiums are based on how work is classified, and initially Shrub Oak was classified as a school or college. In January 2025, the state reclassified Shrub Oak as a developmental organization similar to social service organizations such as halfway houses and drug rehabilitation centers, the complaint states. This past December, the state retroactively rebilled Shrub Oak for $1.4 million for 2025, based on the new classification, in effect doubling the insurance premium.
On March 1, the state invoiced Shrub Oak for nearly $3.6 million for past and current premiums, and demanded an immediate payment of more than $2 million, according to the complaint. On April 14, the state threatened to terminate workers compensation coverage unless Shrub Oak paid $2.2 million by the end of the month.
Shrub Oak sued to stop the state from cancelling its workers compensation policy and to establish the correct job classification.
The only explanation given for reclassifying its services, Shrub Oak claims, was that its “programs go beyond mere academics.”
That “turns the entire purpose of the school on its head,” Shrub Oak argues.
The classification for social service organizations that is being applied to Shrub Oak does not include schools, according to the complaint.
The previous classification as a school includes boarding schools and employes who are guidance counselors, social workers, therapists, and nurses.
All schools, Shrub Oak asserts, provide some services that are not strictly educational, such as nursing, counseling, athletics, meals, recreation and vocational training. And special education programs for autistic students are mandated by federal and state governments.
“Shrub Oak is focused on the education of autistic students,” the complaint states, “not charitable, welfare, or social services.”
Shrub Oak is asking the court to restore its status as a school; stop the state from cancelling the workers compensation policy; and make the state reassess the premiums.
Westchester Supreme Court Justice Robert J. Prisco has scheduled an Aug. 14 hearing.
David F. Wertheim, chief counsel for the state insurance fund, did not reply to a message that asked for the state’s side of the story.
