N.Y. Gov. Pataki Proposes Workers’ Comp System Reforms…Again

November 3, 2005

New York Governor George E. Pataki has proposed a plan to reform New York’s workers’ compensation system that he says will reduce costs for businesses while increasing benefits for injured workers.

Pataki said his plan would reduce costs for businesses by more than 15 percent, while increasing benefit levels for injured workers by 25 percent.

This is not the first time Pataki has waded into the workers’ comp waters. These latest reforms come on top those he fought for in 1996 that are credited with cutting costs by 25 percent on average. He proposed a series of additional reforms in 2004, but the Legislature failed to act on them.

Pataki said that “workers’ compensation is one of the biggest costs for businesses and if left unchecked can be an impediment to creating new jobs.”

He cited the situation of auto parts manufacturing company Delphi, which has filed for Chapter 11. The company is deciding whether to keep open its plants in the state and the CEO recently criticized the state’s high costs of workers’ comp.

“We’re working hard to help manufacturing-based businesses, such as Delphi in western New York, stay competitive in the global economy and protect thousands of New York jobs, and these new reforms mark another step in those efforts,” Pataki said. “These new reforms strike a balance between controlling costs for those who create jobs – businesses — with the needs of workers who risk their health and safety to provide for their families and keep New York’s economy growing.

The Governor’s plan promises to reduce costs for businesses by 15 percent by creating a system of tiered benefit levels for injuries that are not currently scheduled under the law, reducing litigation, better coordinating anti-fraud efforts and authorizing comprehensive fee schedules for medical goods and pharmaceuticals.

His plan would also increase benefit levels for workers injured on and off the job, increasing the maximum weekly indemnity benefits paid to injured workers by 25 percent from $400 to $500 per week.

Pataki officials said the reforms would help reduce claims against the Second Injury Fund, expanding the Alternate Dispute Resolution program to include the unionized manufacturing sector and by joining 37 other states that have created a system of tiered benefit levels for permanent partial disabilities.

The Governor’s office rounded up business leaders willing to speak up in support of the reforms.

Daniel Walsh, president of the Business Council of New York State said, urged lawmakers to act quickly. “We welcome this new initiative by Governor Pataki to craft a comprehensive workers’ compensation package which recognizes the many inequities in the current comp system. Taken as a whole, this initiative will help employers of all sizes and types, particularly those in New York’s manufacturing community. We look forward to working with the Governor and the Legislature in a good faith effort to bring the comp system more in line with that of our competitor states.”

Randy Wolken, president of the Manufacturing Association of Central New York, applauded the Governor’s efforts. “It is imperative that New York realizes the impact workers’ comp costs truly have on employers, and our competitiveness with other states,” Wolken said in a statement. He said manufacturers have experienced rate hikes of between 15 percent and 19 percent since Oct. 1

Specifically, the Governor’s proposed legislation also addresses the following issues:

Authorizes the phasing in of the first workers’ comp benefit increases for workers injured on-the-job and their beneficiaries in New York State since 1992.

Authorizes a 100 percent increase in the maximum disability benefit for workers injured off-the-job (Disability Benefits) from the current $170 maximum to a maximum of $340.

Enables workers to buy supplemental benefits in amounts up to two-thirds of their average weekly wages.

Allows claimants to receive non-emergency medical procedures costing less than $1,000 without prior insurer authorization. Currently injured workers must seek authorization before any non-emergency procedure over $500.

Requires employers to file an injury report (C2) to their carrier within 3 business days of notification of injury and to the Board within 5 days.
Requires that carriers or self insured employers provide the injured workers the option of a Section 32 settlement agreement on all claims.

All claims that are unresolved within one year or controvert will be transferred to the expedited hearing calendar giving this claim a higher priority status.

Requests for discretionary Full Board Review (Appeals) must be filed within 30 days and imposes a fine of $500 on employers, carriers or claimant representative for filing frivolous appeals.

Requires the Board to schedule a pre-hearing conference within 45 days upon learning that a claim is disputed.

Expands the successful “payment without prejudice” provision to include prescription medicines. Under this program, insurers may provide benefits for up to one year while a case is litigated, without admitting liability.

Accelerates the delivery of benefits to injured workers by enhancing the conciliation process to lessen potentially lengthy litigation.

Reduces employer assessment for the Second Injury Fund by more than $190 million by adjusting the calculation used to determine the assessments from 150 percent of the previous year’s disbursements to 115 percent.

Expands the Alternate Dispute Resolution (ADR) program to include the unionized manufacturing sector. Currently only unionized construction can utilize this program.

Establishes a pilot program to encourage the voluntary delivery of compensation and medical benefits to injured workers without intervention by the Board, but subject to the Board’s supervision.

Enacts savings by creating a tiered system with regard to the duration of benefits for permanent partial disabilities (PPD). This system would provide for benefits to be coordinated with the severity of an individual’s disability. (An independent study of New York’s workers’ compensation system conducted in 2001 by the Workers’ Compensation Research Institute concluded that New York’s average indemnity cost per PPD claim is 110 percent above the median state.)

Establishes a medical committee to develop objective medical criteria for determining the level of impairment sustained by injured workers.

Deems ineligible for benefits, all persons incarcerated and convicted of a crime.

Enables carriers or self-insured employers to contract with a network or networks to perform diagnostic tests, x-ray examinations, MRI’s or radiological exams and require claimants to use facilities within that network (except in emergency cases), giving employers greater control over medical costs.

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