On November 8, the day after Election Day, Governor Spitzer began meetings with Denis Hughes of the AFL-CIO and Ken Adams of the Business Council and legislative leaders to make good on an important campaign promise – to reform New York’s workers’ compensation system in a balanced way. These negotiations would actively continue for twelve weeks. On March 6, the New York State Assembly and Senate passed the workers’ compensation package unanimously in both houses. On March 13, the governor signed the bill into law with legislative leaders and representatives of many chambers of commerce present.

The reform package enacted is very comprehensive, balanced with a very common sense and inclusive approach to implementation. Employers will realize a 15 percent premium reduction, with additional savings in assessments and administrative streamlining. Injured workers will see benefits rise significantly over the next three years, with eventual indexing to two thirds of the state average wage and experience quicker medical treatment and approvals. Permanent partial benefits are reformed to be more comparable to other states and provide a safety net for workers who have not be able to return to employment. These cases, while only thirteen percent of the cases, constitute more than 75 percent of claims paid out.

We share with you the summary below prepared by The Business Council of New York.

I. Maximum benefit weeks
The maximum number of weeks that Permanent Partial Disability (PPD) claimants can receive indemnity payments is set forth in the schedule below. The Maximum Benefit Period is calculated from the date that the claimant is classified as being permanently partially disabled. These maximums affect indemnity only, not medical benefits.

II. Safety net
There are four components:

1. The Commissioner of Labor produces a report by 12/1/07 as to how to get workers back to gainful employment;
2. The Total Industrial Disability case law is incorporated by reference;
3. There is an extreme hardship redetermination option for those with 80 percent or greater disability;
4. The Commissioner issues annual reports as to the status of the PPD claimants.

III. Benefits

1. Maximum benefit is raised to 2/3 average state weekly wage (AWW) in steps. Year 1 to $500, Year 2 to $550, Year 3 to $600, and Year 4 to 2/3 AWW in perpetuity. The 2/3 AWW calculation will be based on the four quarters of the previous calendar year. The effective date of the increase, both for the step-up years and for the annual AWW indexing, will be July 1.
2. Minimum weekly benefit is raised to $100 from the current $40. A claimant who makes less than $100 will receive only the amount of their wages.

IV. Miscellaneous Cost-Saving Provisions

1. Establishes a fee schedule for prosthetic and other medical devices. Pharmacy fee schedules. Allows use of generics when available. Allows negotiated networks for imaging, labs and other medical tests.
2. Claimants who are incarcerated are not entitled to receive WC benefits.
3. Creates discount programs for maintaining a safe workplace, return to work programs and drug and alcohol rehab programs.

V. Elimination of the Second Injury Fund
The proposal will establish a management and financial structure to provide for elimination of the Second Injury Fund, settlement of existing cases and necessary financing mechanisms to manage the Fund’s liabilities while providing less costly assessments for the business community.

VI. Mandates to the Superintendent of Insurance and Work Groups
The Superintendent of Insurance will perform the following functions in consultation with the Workers’ Comp Board and the Commissioner of Labor:

1. Ongoing data collection by Superintendent of Insurance.
2. Committee to develop streamlined regulations – “Rocket Docket”.
3. Committee to develop guidelines. (a) Updated New York guidelines for treating doctors. (b) A “best practices” document for health care professionals for treatment, managed care, vocational rehabilitation, and use of imaging. (c) Guidelines, protocols, and training for Administrative Law Judges.
4. Rate setting inquiry.

VII. Return to Work Program
The Commissioner of Labor will issue a report to the governor and the Legislature on or before December 1, 2007, making recommendations as to how to assure that workers categorized by the Board as permanently partially disabled return to gainful employment to the greatest extent practicable. The report will examine the best practices of and the laws of other jurisdictions.

The Commissioner will be assisted by a six person advisory council with one representative recommended by The Business Council, one by the AFL-CIO, one by the Senate Majority Leader, one by the Speaker of the Assembly and two by the Governor.

VIII. Anti-Fraud
Numerous provisions to detect and thwart fraud by employers and employees, including penalties, fines and stop-work orders. Among the specifics are increased penalties for employers who fail to secure payment of compensation coverage. For “five or less employees within a twelve month period” it is now a misdemeanor and a fine of not less than $1,000 nor more than $5,000. If the failure to secure payment of compensation is for more than five employees within a twelve month period, it is a Class E felony and between $5,000 and $50,000 in additional to other penalties allowed by law. If an employer has been previously convicted of a failure to secure payment within the past five years, the violation is a Class D. felony with fines of $10,000 to $50,000. A third conviction will add $7,500. Penalties are also increased for employers who fail to maintain adequate records, which are also being expanded.

IX. Other provisions
Numerous provisions, including:

1. Raises threshold for prior authorization for radiology imaging and testing to $1,000 and keeps physical therapy at $500.
2. The manner in which assessments are determined for self-insured trusts will be amended.
3. Makes it easier for an employer to create a PPO network.
4. Sunsets, as of 2/01/08, CIRB’s designation as the special agent to the Insurance Department for rate-making purposes.
5. Creates a study to be done by the Workers’ Comp Board on the methodology for establishing bonding requirements on self-insured employers.

If you would like more information on a specific section of law, or the entire package, contact Chamber Director of Government Affairs Deb Warner at dwarner@syracusechamber.com.

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