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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.

Insurance Company Scandal Raises Employer Workers’ Compensation Costs in NY

If employers in New York State ever needed more evidence that the real enemy to rising workers' compensation costs is insurance companies, not injured workers, they need look no further than the recent 1.6 billion dollar AIG bid rigging settlement with Attorney General Eliot Spitzer.

Bottom Line - besides rigging bids to boost their exorbitant profit margins at the expense of employers, AIG cheated the New York Workers' Compensation Board out of millions of dollars that had to then be made up higher employer premiums. All the while, AIG's now ousted CEO Maurice "Hank" Greenberg collected a tidy $29,000,000 compensation package in 2003. As of 2005, Greenberg has a net worth of 3.2 billion. If I'm a New York employer with AIG as my workers' comp carrier, I'm mad as hell. Guess what? The other workers' compensation insurance company CEO's are not too far behind.

Funny - Governor Pataki and the Business Council of New York State don't mention these facts when they complain about employer workers' compensation costs. They always blame the injured worker. Do New York employers know that the Business Council has it's own side business as a workers' compensation "third party administrator" - First Cardinal? How much does the First Cardinal CEO make? How much money does the Business Council make on this cozy little relationship? Hmm...

Hopefully, employers in New York State will wake up to the fact that workers' compensation insurance companies are making money hand over foot in New York. Every day, more workers' compensation insurance companies enter the New York market because of the lucrative profits. It's gotten so ridiculous that even State Funds from other states are coming into the New York market. Does the New York State Business Council have a response? I'd like to see it.

The only thing more ridiculous is the Governor's assertion that rising workers' comp costs had something to do with the demise of Delphi upstate. No credible business analyst would back such a silly proposition. The fact is, Delphi was cooking the books and was tanking with it's parent, General Motors. Iowans may fall for silly charades like this, but not New Yorkers, or our State Senators. Insurance company profiteering in the New York workers' compensation market is the big problem for employers in New York State. Period!

Workers’ Compensation Alliance Leaders to Participate in Senate Roundtable

Workers' Compensation Alliance Legislative Co-Chairs John Sciortino and Troy Rosasco will travel to Albany tomorrow to take part in the second of a series of Roundtable Discussions hosted by Senator George Maziarz, New York State Senate Labor Committee Chair, regarding Workers' Compensation Reform. Since Workers' Comp Reform was recently detached from the Governor's budget bill, it appears that workers' compensation reform will continue to be on the Albany radar screen for the rest of the year.

Also scheduled to participate in the Roundtable are: Randall Wolken, President, Central New York Manufacturing Association; Cecelia Norat, Director of State Operations for AIG; William Melchionni, Nationwide Insurance; Mark Alesse, New York State Director, National Federation of Independent Business; and Ted Potrikus, Executive Vice President, Retail Council of New York State. Members of the Senate Labor Committee are also expected to be in attendance.

Of course, the Workers' Compensation Alliance will be advocating for a long overdue benefit increase, no caps on PPD's (permanent partial disabilities), and expediting needed medical care for injured workers. Yet we will also be proposing a fair pharmacy benefit schedule that should save employers significant amounts of money by mandatory use of generic drugs. Surrounded by all these insurance and employer lobbyists, it looks like John and Troy have their work cut out for them!

WCA Opposes Extension for CIRB and WC Premium Increase

The WCA opposes A10160/S6978, which would extend the term of the New York Compensation Insurance Rating Board (CIRB) as the rate service organization for setting workers’ compensation insurance rates for an additional five-year period.

            The CIRB is an entity authorized by State law to propose Workers Compensation rates for private carriers. CIRB is trusteed and funded by private carriers.  The 2007 amendments to the Workers’ Compensation Law included provisions that were intended to sunset CIRB’s authorization by 2012.  In the course of the 2007 reform process it became clear that CIRB was unable to provide policymakers with accurate and reliable data.  The Insurance Department rejected CIRB’s rate application in 2006 due to a lack of reliability, and reduced CIRB’s application in 2011 because it could not account for the disparity in CIRB’s claim experience as compared to that of the State Insurance Fund.

            Based on dissatisfaction with  CIRB’s performance, the Legislature and Governor  public members were added to its Board in 2007 as an interim step to transferring its data collection and rate-making functions to the Insurance Department, now the Department of Financial Services (DFS).

            In 2007 and 2008, CIRB recommended reductions in workers’ compensation insurance rates of almost 25%.  These recommendations were made based on factors including (1) the imposition of time limitations on permanent partial disability benefits (PPD caps); (2) projected increases in the maximum weekly benefit rate; (3) the creation of a mandatory deposit of PPD benefits into the Aggregate Trust Fund (ATF) for private insurers; (4) the elimination of the Second Injury Fund; and (5) other anticipated administrative and regulatory forms related to insurer diagnostic test and pharmacy networks and Medical Treatment Guidelines (MTG).

            From 2009 through 2011, CIRB retracted its recommendations, requesting increases in workers’ compensation insurance rates of more than 22%.  It has now submitted an additional rate increase application of 11.5%.  In essence, CIRB now contends that the impact of the 2007 reforms was not to decrease costs by 25%, but to increase them by 9.5%.

            CIRB accounts for this reversal by claiming that the 2007 reforms have proceeded at a slower pace than it anticipated.  This claim is unjustified.  CIRB and all actors were aware in 2007 that the PPD caps would not result in significant benefit termination until 2015, and the impact of the caps on settlements is already being realized.  CIRB was also aware in 2007 that the maximum weekly benefit rate would double in the five-year period after the reform legislation was enacted.  Department of Labor data has demonstrated that increases in the maximum weekly benefit rate after July 1, 2008 have had limited impact on workers’ compensation costs, as two-thirds of injured workers do not earn sufficient wages to obtain a benefits in excess of $550 per week.  Therefore, neither the PPD caps nor the increase in the maximum benefit rate present factors that were unaccounted-for in the 2007 and 2008 premium reductions, and cannot be responsible for the subsequent requests for increases in excess of 34%.

            The use of diagnostic and pharmacy networks was fully and quickly achieved, and while the implementation of Medical Treatment Guidelines did not occur until the end of 2010, data has demonstrated that the use of the MTG has increased, not decreased insurer costs.  Thus, the delay in implementing the MTG did not result in an increase in costs.

            There is therefore no valid basis in support of CIRB’s applications for increases in 2009, 2010, 2011 or 2012.  The state of the system in those years is unchanged from 2007 and 2008, when CIRB recommended substantial reductions. 

            It remains the case that CIRB is unable or unwilling to provide policymakers with accurate and reliable data upon which proper statutory, regulatory, or administrative decisions can be made.  It is the position of the WCA that CIRB’s authority to function as the exclusive rate service organization should not be extended for an additional five year period, and that DFS should assume data collection and rate-making functions in the workers’ compensation system. A better course would be to extend CIRB authority for for one year and to hold hearings on a better entity and process to propose comp rates.

         On June, 25, 2012, the WCA submitted oral and written testimony to the New York State Department of Financial Services opposing CIRB's request for an 11.5% hike in employer's workers' compensation insurance premiums.  A copy of that testimony can be found here.

 

 

WCA Hails DFS Decision on WC Insurance Premiums

The New York Workers’ Compensation Alliance, a coalition of injured workers and those committed to protecting the rights of injured workers, hailed a decision by the New York State Department of Financial Services to reject a request for an 11.5 percent increase in workers’ compensation premiums.

NYWCA called for full transparency of insurance carrier costs, claiming that the unverified numbers submitted by insurers are unnecessarily driving up costs for New York State businesses.

The 11.5 increase requested by insurers followed premium increases of nearly 23 percent between 2009 and 2011, and would have imposed an estimated $500 million in additional premium costs on employers in New York State.  The 2009 – 2011 increases, which WCA feels were unjustified, nearly eclipsed premium reductions of 25 percent that were achieved through workers’ compensation reforms enacted in 2007.

For the past two years, NYWCA has testified before DFS against rate increases, and this year it was joined by a host of businesses testifying against the increase request, which was based on unverified cost increases submitted by the very insurance carriers that stand to benefit from the overall rate increases.

Rate increase requests are submitted by the New York Compensation Insurance Rating Board, a statutory rate service organization that until 2007 was comprised solely of private insurers.  The cost increases reported by insurance carriers as the basis for rate increases are not independently verified.  Nor are the numbers broken down to reveal insurance company profits, expenses and costs.

“The NYWCA represents injured workers and we strongly object to unnecessary premium increases whose only beneficiary is private insurance companies,” said Robert Grey, chair of NYWCA.  “The costs for the increases fall unfairly on businesses and the blame falls unfairly on injured workers.”

 

Grey said that the DFS decision and the vocal opposition by employers to the unnecessary increases is a tremendous victory for injured workers. “When rates go up it becomes extraordinarily difficult to advance good legislation that benefits workers’ health.  It is critical for businesses to know that claim costs are not the primary driver of increased workers’ compensation costs – insurer profits are.”

 

Grey said that stronger supervision and regulation of insurers is needed.  Ironically, the only part of the 2007 workers’ compensation reforms yet to be implemented is a provision intended to replace NYCIRB with a transparent, accountable entity to set workers’ compensation insurance rates. 

“When a group of unregulated insurers is permitted to propose rates and the state remains unwilling or unable to call for data and accountability, employers and injured workers suffer,” Grey said.

Assessments: The Facts, Not the Fiction

            On February 22, 2012, an arm of Public Employers Risk Management Association (PERMA) released a “report” claiming that workers’ compensation assessments are a “tax” that is dramatically increases employer costs.  This “report” was filled with misleading statistics and misinformation, to which the WCA responded on March 16, 2012.

            On September 10, 2012, PERMA released a “new” report that simply repackages its prior claims, perpetuating the same factual and legal inaccuracies.

            The WCA believes that sound public policy must be based on accurate information, and not mischaracterizations of the facts and misstatements of the law.  As a result, the WCA has again responded to PERMA’s release and set the record straight.

            The key points of the WCA report are:

-           Assessments are not a “tax.”  To the contrary, most assessments are a reinsurance system that benefits employers and insurance carriers.  According to PERMA’s own report, nearly 80% of assessments relate to the Special Funds, which reimburse money to employers and carriers.  Almost 98% of the money employers and carriers pay in assessments related to the Special Funds is returned to those same employers and carriers. 

 

             -           Assessments are not skyrocketing, and have historically fluctuated in a narrow range.  In fact, based on Governor Cuomo’s action, assessments went down between PERMA's February, 2012 and September, 2012 releases.

 

                      The 2007 reform legislation will ultimately result in a substantial reduction in assessments through the elimination of the Second Injury Fund.  The WCA calls for the elimination of the Reopened Case Fund in order to further reduce assessments.  It is notable that PERMA has not called for the same action.

 

 Read the full report here.

WCA Responds to PPI “Revisiting the Reforms”

The “Public Policy Institute of New York State, Inc.” (PPI), an arm of the Business Council, recently released a report titled “Revisiting the Reforms.”  The report contends, in essence, that workers’ compensation is a high cost for employers and that the 2007 reforms increased those costs.  The report refuses to acknowledge the role of the Business Council in developing the 2007 legislation, fails to mention to gross inadequacy of benefits for the fifteen preceding years, and mischaracterizes the cost of workers’ compensation.

            The PPI report is not based on relevant facts or data, and is indeed refuted by information available from CIRB and other sources.  Time after time, the PPI report selectively extracts a specific fact, strips it of all relevant context, and advocates for radical policy changes that would dismantle a primary resource for New York State workers.  When all of the available data is considered in proper context, however, it becomes apparent that employer workers’ compensation costs were declining prior to the 2007 reforms, and have subsequently continued to decline.  In short, the PPI report is a transparent attempt to paint a picture of a crisis that does not actually exist.  What is required instead is greater transparency and accountability on the part of insurers and their representatives, so that proper public policy decisions can be made.

            Accordingly the WCA has issued a response, which available here.

WCA Questions Agenda to Expedite Permanency Determinations

 

New York, NY, 06/04/2013 -- The New York Workers’ Compensation Alliance today released a letter to the New York State Workers' Compensation Board expressing concern over the Board’s plan to expedite the classification of permanent partial disability (PPD) cases, ultimately terminating benefits for thousands of permanently disabled workers.

The WCA stated that the agency’s plan represents a troubling departure from its proper role as an impartial adjudicator. “It isn’t the Board’s job to decide what claims the parties should be making,” said WCA Chair Robert Grey. “It’s the Board’s job to make fair and impartial decisions about the claims the parties bring before it.”

WCA Board Member Brian Mittman added that the Board’s plan appears to be designed for the benefit of insurance companies. “The carriers could have asked for classification any time in the last six years,” said Mittman. “Now the Board is stepping in to do their work for them. That’s simply unfair to injured workers.”

At issue are permanency classifications, which as a result of the 2007 reforms work for the benefit of insurers by imposing time limits for payment of benefits. As Mittman observed, insurers have chosen not to pursue this aspect of the reforms, and the Board has now taken on the task for them.

The WCA expressed particular concern about the threatening nature of the plan. “They have made it clear that they will prevent the parties from offering evidence, ignore the fact that someone needs surgery, and sanction attorneys if anything ‘hinders’ classification,” said Western New York WCA Board Member Greg Connors. “This is a rush to judgment, with no concern for whether that judgment is fair.”

The WCA contends that the Board does not have, nor should it have, any interest whatsoever in the outcome of any individual case, or of cases generally. “We are very concerned about the underlying principle here,” said Grey. “This plan puts the Board clearly on the side of the insurance industry, at the expense of permanently disabled workers. If anything, it is the Board’s obligation under the statute and nearly a century of case law to protect injured workers.”
 

The WCA letter can be found here.

NYWCA APPLAUDS GOVERNOR CUOMO FOR REDUCING EMPLOYER WORKERS’ COMPENSATION COSTS BY $300 MILLION

On August 15, 2013, the Workers’ Compensation Board announced a “business process re-engineering” initiative “designed to significantly improve the experience of injured workers and employers in the New York workers' compensation system.”  The Board has asked “stakeholders” (injured workers, employers, doctors, lawyers, insurance carriers and others) for their views of the system.

 

The WCA believes that that some of the basic components of a good workers’ compensation system would be:

 

1.             Clear communication to injured workers about the existence of the workers’

compensation system, availability of benefits, rights (including the right to counsel) and obligations.

 

2.             Timely delivery of indemnity benefits to injured workers; consistent and effective

penalties for non-compliance.

 

3.             Strict enforcement of injury reporting and filing requirements.

 

4.             Medical reporting that transmits necessary claim information without imposing

 undue burdens on health care providers.

 

5.             Initial formal hearings that ensure worker access to benefits in all cases.

 

6.             Access to high-quality medical care resulting from outreach, regulation, and fee

schedules that encourage provider participation.

 

7.             Consistent interpretation and enforcement of statutory and regulatory provisions.

 

8.             Discouragement of frivolous litigation.

 

9.             Timely scheduling of hearings when required.

 

10.         Testimony before the trier of fact to enhance credibility determinations.

 

11.         Timely decision of claims at the hearing level and on appeal.

 

12.         Data collection to inform public policy, legislation, regulation and administration.

  

13.         Professional and respectful communication among the agency, injured workers,

 employers, insurers, and attorneys.

 

When we compare those components to the current workers’ compensation system, a number of specific concerns emerge.

 

1.      The number of claims indexed or assembled by the Board declined from 174,802 in 2001 to 123, 245 in 2011.  Although there is a long-term trend in declining frequency of claims, it is unlikely that this accounts for the extraordinary decline in indexed/assembled claims.  It is probable that there is a significant lack of information and access to benefits by low-wage workers, and that the decline in claims is partially representative of a loss of benefits by this population.

 

2.      There are significant obstacles to claim filing.  These obstacles disproportionately impact the group of workers that is most likely to require access to the system.  The cumbersome C-3 form and the hypertechnical requirements for case assembly/indexing are significant factors.   The lack of direct outreach by the state agency to injured workers, as well as the absence of a requirement that employers distribute information are also relevant.

 

3.      Communication about worker rights in the system is ineffective.   The use of non-hearing determinations is problematic as they cannot and do not effectively provide information to injured workers due to language, literacy and other obstacles.

 

4.      There is inadequate access to medical care in the workers’ compensation system.  From 2004 to date the Board has removed 330 doctors from its provider lists (through suspension and voluntary resignation).  306 of the 330 have been removed since 2007.  There is a clear relationship between the loss of providers and the mushrooming of the number, length, and content of medical reporting forms.  The Board’s web site currently lists 37 forms for use by health care providers, virtually all of which are multi-page forms.

 

5.      Benefits remain inadequate despite the increase in the statutory maximum rate.  From 1992 -2006 the minimum rate of $40 was 10% of the maximum rate of $400.  The increase of the minimum rate to $100 in 2007 made it 20% of the maximum rate of $500.  However by 2012 it had declined to 12% of the maximum rate of $792.07 due to the failure to index the minimum rate.  The 2013 increase to $150 has restored the minimum rate to 18% of the maximum rate (still short of its 2007 percentage).  However, it will inevitably sink back into irrelevance until it is indexed to the maximum rate.

 

6.      The standard for temporary disability must be revisited.  The general principle of total disability is that a worker must be unemployable.  However, in cases of temporary disability a worker’s hypothetical ability to perform other work is largely irrelevant.  As a matter of practicality, it is unreasonable to expect a temporarily disabled worker to seek out other employment or to engage in vocational retraining when that worker has a reasonable expectation of returning to his or her previously employment (and employer) and in fact may be prohibited from seeking other employment due to a collective bargaining agreement, employer policy, or employment contract.  A temporarily disabled worker should be paid for total disability as long as they are unable to return to their former employment or any modified duty position reasonably offered by the employer.

 

7.      Data must be collected and oversight brought to the use of so-called “independent medical examiners” by insurers.  The frequency and extent to which IMEs report disability and need for treatment should be tracked, as well as the frequency with which their opinions are accepted following litigation.

 

8.      Administrative inefficiency must be eliminated.  Hearing requests must be processed in a timely manner.  Litigation should be discouraged in the absence of a “joined issue,” as should duplicative or “investigatory” testimony.  Depositions should be eliminated in favor of in-person testimony, or restricted to extraordinary circumstances.  To the extent that depositions are retained, regulatory guidance must be provided as well as real-time access to a WCL Judge to obtain rulings on disputed matters.  Reserved decisions should be issued within 30 days.  Appeals should be decided within 60 days. 

 

9.      A worker-friendly culture consistent with the intent of the statute should be encouraged on the part of Board personnel, including WCL Judges.  In the current environment RFA-2 forms are treated as credible, while RFA-1 forms are treated with skepticism.  Insurer lack of compliance is routinely excused.  Current statutory and regulatory provisions are inconsistently enforced. 

 

10.  The Medical Treatment Guidelines should be withdrawn.

 

11.  The 2012 Guidelines should be applied as intended, and supplemented with a consistent mechanism that creates predictability of claim values and which can be effectively implemented by WCL Judges and attorneys. 

 

There are many subsidiary issues that must be considered in correcting the systemic problems that obstruct access to benefits for injured workers; our list is not intended to be comprehensive.  Any initiative to “re-engineer” the system must restore its original purpose:  protecting and compensating those who are injured or become ill in the course of their employment.  Over the past twenty years, this purpose has been obscured by disingenuous and well-orchestrated campaigns to boost insurer profits at the expense of worker benefits.  It is time for the system to “get back to basics” and take care of injured workers.