WCA Releases New Paper on Schedule Loss of Use Costs

     Business and insurance groups including the Business Council of New York State have recently advocated for drastic reductions in workers’ compensation awards for “schedule loss of use.”  These awards are payable to workers who suffer from permanent loss or loss of use of limbs, vision, or hearing.  To justify their campaign, business and insurance interests contend that these awards are now “skyrocketing” as a result of the 2007 legislative reforms.

            To the contrary, however, a review of cost trends in schedule loss cases from 1992 through 2015 shows that costs related to these cases were flat from 1992 to 2007.  There were moderate increases from 2007 through 2012 that affected an ever-smaller portion of the workforce.  Since 2012, however, costs in schedule loss cases have again been essentially flat.  The data showing that there has been virtually no change in schedule loss costs for the past four years casts serious doubt on the validity of industry claims.

 

    The WCA has just released a new paper analyzing the data and proving that the schedule loss of use costs have increased less than one-half of one percent in the past four years.  You can read the paper here.

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WCA Opposes 9.3% WC Rate Hike; Business Council Supports It

On June 28, 2016, the New York State Department of Financial Services held a public hearing on the Compensation Insurance Rating Board’s request for a 9.3% hike in workers’ compensation costs.  The WCA, NYCOSH and others submitted testimony opposing the request, and WCA Chair Robert Grey appeared to testify against the insurer group’s request.

 

The bulk of CIRB’s filing was based on supposed increases in insurer costs related to permanent partial disability and schedule loss cases.  The WCA pointed out that the facts show that PPD costs have plummeted because of the PPD caps that were part of the 2007 reforms.  The WCA also showed that schedule loss awards have not increased for the vast majority of workers in five years.  For the past several years, only 25% of workers have seen increases in their schedule loss awards as a result of increases in the maximum benefit rate – and those increases have been small and incremental.

 

NYCIRB contends that indemnity claims are 40% of the claims in the system, and that 28% of indemnity claims involve schedule loss.  This means that schedule loss cases are about 11% of the cases in the system (.40 x .28 = 11.2).  Only 25% of those cases have seen increases in the past four years, which is 2.8% of the claims in the system.  Those increases have averaged about 2%.  As a result, cost increases in schedule loss cases are about one-half of one percent (2.8 x. 02).

 

The WCA’s written testimony can be found here.

 

Meanwhile, the Business Council of New York State also appeared at the hearing and testified in favor of increasing its own member's insurance costs.  Ken Pokalski stated that "the system costs what it costs," and that employers' rates should be increased to account for those costs.  Pokalski also advocated for drastic reductions in awards for schedule loss and in payment for temporary disability from work, claiming that employers' rates can always be scaled back later, after benefits are taken away from injured workers.

 

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WCA, NYCOSH Release State of the System 2016

On June 21, 2016 the WCA and the New York Committee for Occupational Safety and Health released Workers' Compensation in New York State:  State of the System 2016.  This is the fourth in a series of white papers released by the two organizations in the past decade.


State of the System 2016 is based primarily on data obtained from the Workers' Compensation Board in several areas, although there were many data points about which the Board declined to provide information.


The conclusions and recommendations of the paper are:


            1.         It appears that workers are generally able to file claims, although the Board’s inclusion of extraneous forms in its FOIL response precludes an accurate assessment of how many individual claims are being filed.  It is clear from the data, however, that workers who are not fluent in English face significant obstacles in claim filing.

            Recommendation:  The Board should review its compliance with the Governor’s Executive Order regarding language access.  Printed and electronic forms should be more readily accessible in multiple languages.  Outreach efforts to immigrant communities and worker centers should be significantly expanded to increase the visibility and accessibility of the workers’ compensation system to workers who are not fluent in English.

            2.         The Board’s division of its file creation process into “assembly” and “indexing” sows confusion among injured workers and delays insurer response to claims.  It seems likely that the Board is simply not indexing many of the claims that are filed, notwithstanding its regulation to the contrary.  This defers the insurer’s obligation to accept or contest claims.  An additional issue is presented by the Board’s issuance of these complex notices in English, without regard to the injured worker’s language or literacy issues.

            Recommendation:  All claims should be indexed immediately upon receipt of a claim or employer’s report of injury and the filing of a medical report.  The language used on a Notice of Indexing should be simplified, and the information about rights and benefits under the law should be expanded.  Notices should be issued in the language spoken by the injured worker as indicated on his or her claim form.

            3.         The Board’s use of Administrative and Proposed Decisions is instrumental in denying benefits to injured workers.  These documents do not provide adequate information to injured workers either about the benefits being awarded or their entitlement to further benefits.  They also suffer from the same deficiency as Notices of Assembly and Indexing, in that they use complex language and are issued only in English.  This has a significant impact on access to benefits by workers with language or literacy issues.  These issues are exacerbated by the Board’s recently adopted policy to issue no decision at all in certain cases and its apparent disregard of the statutory requirement that it schedule conciliation meetings prior to issuing Proposed Decisions.

            Recommendation:  The use of Administrative and Proposed Decisions should be discontinued.  Injured workers should be afforded a hearing before a WCL Judge in every case so that information about their rights and available benefits can be communicated to them in a meaningful fashion and in an appropriate language.

            4.         The Medical Treatment Guidelines have resulted in a flood of variance requests, creating an enormous administrative burden for health care providers, employers, carriers, attorneys and the Board, while causing the widespread delay and denial of medical care. 

            Recommendation:  The use of the Medical Treatment Guidelines should be restricted to the purpose outlined in the law, which is to “pre-approve” medical care.  The MTG should not be used to pre-determine or pre-deny the need for treatment, which is governed by existing statutory provisions.  This interpretation of the law would eliminate the extensive bureaucratic procedure created by the current regulations, and would enable workers to receive needed treatment while preserving the ability of employers and carriers to contest medical bills.

            5.         Despite increases in the maximum weekly benefit rate and periodic one-time increases in the minimum benefit rate, wage replacement benefits remain inadequate.  Workers who are injured on the job suffer from significant uncompensated wage loss due to the inadequacy of workers’ compensation benefits, especially in cases of permanent partial disability under the caps.

            Recommendation:  The minimum benefit rate should be set at 25% of the maximum benefit rate.  This will reduce uncompensated wage loss for low wage workers.

            6.         Schedule loss of use awards have not increased since 1992 for workers who earn less than $600 per week, and have not increased since 2009 for workers who earn less than $900 per week.  From July of 2015, the value of schedule loss awards will only improve for the 25% of workers who earn more than $1,200 per week.  Meanwhile, payments for time lost from work are deducted from these awards.  This includes wage payments that are returned to employers out of the injured worker’s award.

            Recommendation:  Schedule loss awards should be payable additional to wage loss benefits, as is currently the case under the Longshore and Harbor Workers Compensation Act and in many other states.

            7.         The PPD caps have slashed payments to injured workers by 70% or more.  The impact of this was intended to be assessed by the issuance of an annual Safety Net Report to consider the impact of the PPD caps on return to work.  Regrettably, the Safety Net Report has not been publicly issued since 2008, the recommendations of the Return to Work Task Force have never been implemented, and the Board declined to provide any information on its policies or implementation of the statutory safety net provision.

            Recommendation:  The Safety Net Reports for the years 2009 through 2015 should be issued.  The recommendations of the Return To Work Task Force should be implemented.  The threshold for safety net eligibility should be reduced to 50% loss of wage earning capacity, and the Board should issue meaningful guidelines for safety net eligibility as suggested in the 2014 White Paper.

            8.         The number of settlements under Workers’ Compensation Law § 32 is increasing for private carriers, especially as a percentage of PPD claims.  This creates savings for insurers as injured workers settle their claims out of economic necessity created by the PPD caps.  However, this trend does not apply equally to the State Insurance Fund and self-insured employers, who settle relatively few claims.  This is likely due to their exemption from liability to the Aggregate Trust Fund.

            Recommendation:  The Board should enforce the statutory requirement for employers and carriers to make mandatory settlement offers.  The Aggregate Trust Fund deposit requirement should be expanded to the State Insurance Fund and to self-insured employers. 


The full paper can be found here.

 

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BUSINESS COUNCIL LAUNCHES NEW ASSAULT ON WORKER BENEFITS

In 2007, the Business Council of New York State finally achieved the goal it had sought for over a decade – putting time limits on payments for permanently disabled workers.  At the time, the Business Council and the state claimed the change would save employers over $1 billion.  Ten years later, employers’ workers’ compensation costs are still lower than they were before the “reforms.”

 

 Huge savings for employers came at huge expense to workers, especially the most vulnerable – low wage workers and immigrants.  Those who were permanently disabled as the result of workplace injuries and illness faced two certainties:  they would never be able to return to their jobs, and their wage loss benefits would be cut off as soon as four years and at most ten years after they were “classified.”  Many of these workers face a lifetime of disability without any income from their employer’s workers’ compensation insurance.

 

 Still not satisfied, the Business Council has threatened to renew its assault on benefits for injured workers - and implies that it has influenced the state’s Workers Compensation Board to participate in the campaign.  Lev Ginsburg, director of government affairs for the Business Council, was recently quoted as stating that despite the 2007 reforms “We have been calling for significant workers’ compensation reform almost daily for a number of years.”

 

 In particular, the Business Council wants to reduce benefits for permanently disabled workers even further by starting the time limitations “from the date of injury,” instead of the date of permanency.  Moreover, it wants to slash awards for accidents that result in amputated limbs, artificial joints, broken bones and more, known in the system as “schedule loss” cases.  According to Ginsburg, the state Workers’ Compensation Board has been working on new guidelines to reduce schedule loss awards.  Needless to say, the Business Council thinks this would be “a very significant and meaningful first step” in cutting worker benefits. 

 

 According to Ginsburg, the state’s existing guidelines are based on “1983 science” and changes are needed “to stymie the runaway costs of schedule loss of use awards.”  Both of these claims are false.

 

 The state’s current guidelines were issued in 2012, without objection from the Business Council.  The 2012 guidelines cover the calculation of awards for both permanent disability and schedule loss.  Ginsburg’s claim about “1983 science” is difficult to square with guidelines that were issued less than four years ago.

 

 In addition, because workers’ compensation benefits depend largely on the worker’s salary, schedule loss awards have not increased for workers who earn less than $600 per week since 1992, nearly a quarter-century ago.  These low-wage and largely immigrant workers suffer about one-third of all workplace accidents. 

 

 Moreover, for workers who earn up to $1,000 per week, schedule loss awards today are lower than they would have been if benefits had simply kept pace with inflation for the past twenty-five years, instead of remaining stagnant from 1992 until 2007.  Nearly two-thirds of injured workers fall into this category.

 

 If the Business Council gets its wish, low wage and immigrant workers, whose benefits were already slashed in 2007, would face a second round of benefit cuts.  Every one of these workers who suffers a permanent disability or schedule loss would receive less benefits in 2017 than they would have gotten in 1992.  Workers with higher wages, whose awards for temporary disability and schedule loss improved slightly in 2007 at the expense of drastic cuts in permanent disability benefits, would give back most of their limited gains.  In short, the Business Council once again seeks to enrich business at the expense of injured workers.

 

 The Governor, the Legislature, and the Workers’ Compensation Board should reject the Business Council’s campaign, and should instead seek to preserve and improve benefits for injured workers.

 

Data about schedule loss awards can be found here.

Lev Ginsburg's statements to WorkCompCentral can be found here.

 

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WCA Thanks the NYS Legislature

In the newly enacted budget for New York State’s 2016/17 fiscal year, the Legislature rejected proposals that would have reduced benefits for injured workers and deprived them of their fundamental right to due process.

 

The WCA thanks the Legislature for re-affirming the principle that those who are injured on the job have the right to fair and adequate compensation, the right to choose their own doctors and to participate in their own health care decisions, and the right to a fair hearing and a meaningful appeal when legal action is needed. 

 

For too long, too much of the conversation about workers’ compensation has centered around costs for employers and profits for insurers.  The truth is that employer costs are low and insurer profits are high.  It’s time to turn our attention to the injured workers who suffer the real cost of inadequate benefits and a broken system.

 

The WCA salutes the Governor, Assembly Speaker Heastie, Senate Majority Leader Flanagan, and the Legislature for their efforts on behalf of low wage and immigrant workers by increasing minimum wage and adopting paid leave.  Each of these initiatives helps New Yorkers while they are employed.  Now an equal effort must be dedicated to helping and protecting New Yorkers who are hurt on the job and lose their employment benefits.  Injured workers need more compensation, more health care options, and more access to a fairer, faster, and more transparent system.

 

The WCA looks forward to working with the Legislature and all who speak for injured workers in this campaign.

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WCA and NYCOSH Issue a New Report on Uncompensated Wage Loss

On February 1, 2016 the Workers' Compensation Alliance and the New York Committee for Occupational Safety and Health released a report showing the stark consequences of on-the-job injury for workers. 

The report outlines the consequences of the 2007 workers compensation "reforms" for injured workers.  Among its conclusions, the report finds that (1) the 2007 "reforms" offered no benefit to low-wage workers; (2) even workers who benefited from the 2007 reforms continue to suffer high rates of uncompensated wage loss; and (3) the workers' compensation system now replaces less than 10% of the lost wages of permanently disabled workers.  

The report further concludes that proposals made by the Business Council, some of which are included in the 2016 Executive Budget, would render the workers' compensation virtually meaningless as a source of wage replacement benefits for injured workers.

The report can be found here.

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WCA Releases White Paper on 2016 Executive Budget

On January 13, 2016, the Governor's office released the 2016 Executive Budget for New York State.  The Budget included a number of proposals that would make significant changes to the workers' compensation system. 

 

The WCA has reviewed the Executive Budget and is deeply concerned about the aspects of it that impact due process and benefits for injured workers.  In particular, the WCA believes that the following proposals would adversely affect injured workers:

 

1.  The elimination of the Aggregate Trust Fund.  The 2007 reform legislation slashed benefits for permanently partially disabled workers, but preserved their ability to obtain fair settlements of their now-limited benefits by requiring insurers to make deposits into the Aggregate Trust Fund.  The Budget proposal to eliminate the ATF deposit requirement would still further diminish benefits for these workers, and also undermine benefits for widows, dependent children, and those who are permanently totally disabled.

 

2.  The elimination of the right to hearings before a single judge.  The Budget proposes to allow the Workers' Compensation Board to re-assign any case at any time to any judge in the state.  This could result in judges in distant parts of the state deciding claims of workers they have never seen, based on the opinions of medical witnesses with whom they are totally unfamiliar.  This proposal raises serious concerns about due process for both injured workers and employers.

 

3.  The elimination of appeals heard by an appeals panel.  The Budget proposes to allow appeals from decisions of Workers' Compensation Law Judges to be heard by a single lawyer employed by the Board, or by a single Commissioner.  This proposal would deprive injured workers and employers of their right to a meaningful appeal, and again raises serious concerns about due process.

 

There are many other provisions of the Budget that would result in major changes to the workers' compensation system and the rights of those who participate in it.  The full WCA White Paper can be found here.

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Restore the Safety Net: 2016 WCA Legislative Agenda

Over the past two decades, the social safety net has been steadily eroded for working New Yorkers who are injured on the job.  The workers’ compensation system is the first – and many times the only – resource for lost wages and medical treatment caused by workplace injuries and illnesses.  Sadly, these protections have been drastically reduced as the result of past legislation, regulation, and administrative change.

          It is vitally important that the social safety net, and particularly the workers’ compensation system, be restored to protect vulnerable injured and disabled workers.  These workers are entitled to due process of law and to meaningful compensation for their lost wages, medical treatment.  And because the workers’ compensation system no longer provides an adequate remedy for their loss of other legal remedies, the system must be reformed to permit these workers to be made whole where their employer broke the law or was grossly negligent.

          We therefore propose eight meaningful legislative reforms that will help to restore the safety net for working New Yorkers who are injured on the job.

 

1.       Reduce the threshold for safety net eligibility.  The threshold for safety net consideration should be reduced from loss of wage earning capacity in excess of eighty percent to loss of wage earning capacity in excess of fifty percent.  Workers who have been determined to lose more than half of their pre-accident wage earning capacity and have been unable to return to work should be eligible for safety net evaluation.

 

2.       “Voluntary withdrawal from the labor market” should be defined.  The statute should be amended to define the circumstances in which an injured worker must demonstrate that he or she is “attached to the labor market” as a condition of receiving benefits. 

 

3.       Index the minimum weekly rate to the maximum weekly benefit rate.  The failure to index the minimum benefit rate ensures that it will become inadequate in the intermediate or long term absent continued legislative oversight and statutory correction.  This can be obviated by fixing the minimum rate at 25% of the maximum rate.

 

4.       The Medical Treatment Guidelines should be eliminated.  The existing statutory procedure makes more treatment available to injured workers with less administrative process and at a lower expense than that directed by the Medical Treatment Guidelines.  The WCA supports A3356.

 

5.       Schedule loss awards should be in addition to awards for temporary disability.  The current schedule loss evaluation system should be preserved, but schedule loss awards should be paid in addition to compensation for temporary disability (as under the Longshore & Harbor Workers’ Compensation Act), rather than having such compensation deducted from the schedule loss award.

                  6.       The Board should hold an initial hearing in every case.  Participants in the system are in substantial agreement that holding an initial hearing is more efficient than the use of non-hearing determinations.  More importantly, an initial hearing ensures that unrepresented workers are given adequate information about their claim, their rights, and system benefits, and that they have a meaningful opportunity to be heard by the Board.

 

7.       Limit “exclusive remedy” protection for employers.  The law prohibits injured workers from suing their employer, on the theory that the workers’ compensation system offers an adequate replacement.  Given the caps on permanent partial disability benefits, this is no longer true in cases where the worker is significantly disabled.  There is also no justification to insulate employers from liability where the worker is injured because the employer violated a statute or regulation. 

 

8.       Adopt a presumption that workers deemed totally disabled by the Social Security Administration are totally disabled in the workers’ compensation system.  The Workers’ Compensation Board issued guidelines for awarding benefits in cases of permanent injury.  These guidelines require consideration of the injured worker’s medical impairment, functional loss, and vocational factors.  The Board’s guidelines envision prolonged and substantial litigation regarding these issues in each permanent disability case.

 

Most workers who are permanently disabled apply for Social Security Disability benefits.  On applications for disability benefits, the Social Security Administration considers the same medical, functional, and vocational factors that the Board has included in its new guidelines.  If a worker has been approved for Social Security Disability benefits based primarily on the compensable injury, then re-litigation of the same issues in the workers’ compensation case serves little or no purpose.  Instead, adoption of the Social Security decision will streamline the process and avoid needless litigation costs that burden injured workers, employers, and the Board.

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WORKERS' COMP COSTS REMAIN STABLE, CONSISTENT WITH IMPROVING ECONOMIC CONDITIONS

New York, NY – July 16, 2015 – The New York State Department of Financial Services (DFS) has approved a 5.9% increase in workers’ compensation premiums.  The DFS approval is consistent with improving economic conditions in New York State and stable workers’ compensation claim costs.

 

An employer’s workers’ compensation costs depend largely on payroll, although industry type and loss history also play a role.  Last month, the New York State Department of Labor's Research and Statistics Division announced that the New York State Average Weekly Wage for 2014 was $1,266.44, a 4.3% increase over the 2013 figure of $1,212.98.  Today, the Department of Labor announced that New York’s private sector job count has reached an all-time high, while unemployment is at its lowest level in eight years.

 

“It is clear that the DFS approval of a small increase in workers’ compensation premiums is consistent with the improved economic conditions reflected in more jobs, increased wages, and less unemployment,” said Robert Grey, chair of the New York Workers’ Compensation Alliance.  “It also demonstrates that there has been no increase in workers’ compensation claim costs, which remain stable as previously reported by the WCA.”

 

A letter confirming the 5.9% increase can be found here:  http://go.nycirb.org/tr_rcb/rcb/rc2395.pdf

 

The Department of Labor reports can be found here:

http://labor.ny.gov/stats/pressreleases/pruistat.shtm

http://www.labor.ny.gov/stats/avg_wkly_wage.shtm

 

The WCA report on workers’ compensation costs can be found here:

http://www.nyworkerscompensationalliance.org/CostsWhitePaper.pdf

 

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The Demolition of Workers' Compensation

The WCA has issued the following press release regarding the ProPublica series on The Demolition of Workers' Compensation:

 

WORKERS’ COMP COSTS DOWN ACCORDING TO NEW ANALYSIS BY PROPUBLICA / NPR

 

Despite Reduced Costs, Insurers and Business Interests

Seek to Slash Protection for Injured Workers

 

New York, NY – March 6, 2015 – Workers’ compensation costs are down nationally and in New York State, according to a dramatic new analysis from ProPublica and NPR.

 

The New York Workers’ Compensation Alliance, a coalition of injured workers and those committed to protecting the rights of injured workers, hailed the analysis, which reveals a system in which insurers and business interests are seeking to slash injured worker benefits despite reduced costs.

 

“For years, insurers have promoted a false narrative that workers’ comp costs are out of control and that they have to reduce benefits to maintain competitiveness,” said Robert Grey, Chair of NYWCA.  “This is simply not the case.  New York is not a high-cost state and costs are at a 25-year low nationally.  Nonetheless, insurers and business interests are attempting to destroy the safety net for injured workers.”

 

Meanwhile, a new report from OSHA reveals that the cost for workplace injures has been shifted from employers onto the backs of taxpayers and injured workers. According to the report, 50 percent of the costs for worker injuries come from the injured workers themselves, while 29 percent comes from federal, state and local governments, and only 21 percent is paid by workers’ compensation insurance.

 

“Workers gave up their right to sue employers for personal injury in exchange for medical coverage and speedy and adequate wage replacement benefits,” said Grey. “This basic ‘bargain’ has been broken, and the system has been twisted to create profits for insurance companies at the expense of injured workers.”

 

Workers’ compensation costs in New York State have declined dramatically in the past two decades and workers’ compensation is also a declining portion of overall employer costs.  Employers’ workers’ compensation premiums were cut nearly 25% in 2007 and 2008 as a result of 2007 legislation. After moderate increases from 2009-2011, there have been no further increases in premiums in two of the past three years. Meanwhile, since 2011, employers’ workers’ compensation assessments have dropped more than a third from 20.2% to 13.2%.

As employer costs have been reduced, however, benefits for lost wages have remained inadequate for both the maximum and minimum rates. Nevertheless, business and employer interests continue their efforts to further cut worker benefits, pursuing employer managed care and attempting to cut benefits for permanent injury.

 

To read full copies of the reports: http://www.propublica.org/article/the-demolition-of-workers-compensation http://www.dol.gov/osha/report/20150304-inequality.pdf.

 

http://www.propublica.org/article/how-much-is-your-arm-worth-depends-where-you-work

 

These and other workers’ compensation issues have been covered in detail in a recent NYCWA white paper: http://www.nyworkerscompensationalliance.org/STATE%20OF%20THE%20SYSTEM%202014%20-%20Release.pdf

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