The NYWCA hailed budget provisions that will close the state’s Reopened Case Fund, which has been an agenda item for NYWCA for several years. Eliminating the fund will help create price transparency for employers by reducing the “hidden cost” of assessments and will create administrative efficiency by eliminating a duplicative agency. “We are very pleased that the budget includes closing the Reopened Case Fund. This step, combined with the previous closure of the Second Injury Fund, will reduce assessments for employers by 80 percent,” said Robert Grey, Chairman of NYWCA. “Not only will this save money for employers, it will make the workers’ compensation system more efficient.” Grey said: “This move will especially benefit employers with good safety and health programs, who should not have to subsidize employers with poor safety records.”

NYWCA also praised the budget’s increase in the minimum compensation rate from $100 per week to $150 per week. Grey said: “The Governor and the Legislature deserve a tremendous amount of credit for protecting low-wage workers in this budget. Increasing the minimum benefit is an important piece of the social safety net that helps save workers from falling into poverty.”

Other budget provisions were also favorably reviewed by NYWCA, including a requirement that the New York Compensation Insurance Rating Board transfer data to the Workers’ Compensation Board and the Department of Financial Services. “The budget takes an important step toward bringing clarity to workers’ compensation costs,” Grey noted. Although NYWCA has issued detailed reports showing a downward trend in workers’ compensation costs, CIRB’s rate filings on behalf of the insurance industry routinely seek double-digit increases from employers. 

NYWCA also supported the decision to retain the state’s Aggregate Trust Fund. “The ATF is very important,” said Gregory R. Connors, a NYWCA board member from Western New York. “It exists to protect permanently disabled workers, widows and children from insurance company insolvency, as Ullico declared only last week. In addition, it makes sure that workers who already have limited benefits get the full value of those benefits, instead of turning the money into profit for insurance companies.”

“Overall,” said Grey, “we think that the Governor and the Legislature did a terrific job on these issues in the budget.”

The New York Workers’ Compensation Alliance, a coalition of injured workers and those committed to protecting the rights of injured workers, has released its 2013 Legislative Agenda covering a host of issues ranging from Social Security Disability Presumption to Medical Treatment Guidelines.

“New York State has made significant strides in the past year to save money for responsible employers while continuing to deliver appropriate benefits to injured workers,” said NYWCA Chair Robert Grey.  “We are confident that our legislative agenda will further strengthen and streamline the workers’ compensation system.”

The NYWCA legislative agenda identifies four areas in which the law can be strengthened and improved.  NYWCA “top priorities” would:

·        reduce litigation by requiring the Workers’ Compensation Board to adopt findings made by the federal Social Security Administration;

·        reduce litigation by establishing a standard for labor market attachment by partially disabled workers;

·        strengthen the right to a hearing, preserving due process rights of workers and employers; and

·        restore workers’ rights to appropriate medical treatment.

In the area of indemnity benefits, the NYWCA agenda would streamline delivery of compensation to injured workers by:

·        ensuring full payment of awards for permanent injury to limbs;

·        instituting a cost-of-living adjustment for permanently totally disabled workers and beneficiaries in death cases so that their weekly benefit amounts do not fall into irrelevance;

·        correct an error in the law by unifying the dates for rate raises and caps on permanent partial disability benefits;

·        indexing the minimum benefit rate to coincide with existing indexing of the maximum benefit rate;

·        increasing so-called “no dependency” awards in death claims, which are unchanged since 1996;

·        eliminating discrimination against immigrant workers; and

·        expanding the Board’s discretion to use existing safety net provisions to keep permanently disabled workers from poverty and welfare.

In the area of administrative procedure, the NYWCA agenda would create efficiency by:

·        encouraging legal representation of injured workers in “medical only” cases;

·        establishing rules for legal representation in connection with appeals;

·        extending deadlines for World Trade Center responders to register for benefits;

·        eliminating wasteful and abusive litigation tactics;

·        expanding availability of mental health services;

·        creating oversight for alternative dispute resolution programs;

·        providing a framework for use of impartial specialists; and

·        developing data regarding use of “independent medical examinations.”

In the area of personal injury litigation, the NYWCA agenda would reduce complexity by:

·        unifying the definition of “basic economic loss” for No-Fault and workers’ compensation purposes;

·        preventing windfalls to workers’ compensation carriers from personal injury recoveries by injured workers, while preventing double-recoveries by workers; and

·        clarifying the law regarding insurer liens and credits for personal injury recoveries

Grey said: “These steps -- supported by stronger oversight of the Compensation Insurance Rating Board, existing downward trends in workers’ compensation costs, and the Governor’s recent proposals to increase the minimum benefit rate, close the Special Funds, streamline assessments and resolve the group self-insurance trust crisis -- will continue to establish New York as a national leader in delivering benefits to injured workers while preserving efficiency for employers.”

New York, NY – Jan. 9, 2013 -- The New York Workers’ Compensation Alliance, a coalition of injured workers and those committed to protecting the rights of injured workers, today praised actions to streamline the Workers’ Compensation system outlined by Governor Andrew Cuomo in his State of the State address.

In particular, NYWCA hailed Cuomo’s call to close the 25-a Fund, or Reopened Case Fund, which has been an agenda item for NYWCA for several years.  Eliminating this fund will reduce assessments on employers by 25 percent. 

“We are very pleased that the Governor’s agenda includes closing the Reopened Case Fund, which would reduce workers’ compensation assessments for New York employers by 25 percent, in addition to the more than 50 percent reduction that will ultimately be achieved through the previous closure of the Second Injury Fund,” said Robert Grey, Chairman of NYWCA.  “This has long been an agenda item of the WCA because we want appropriate benefits for injured workers at the lowest cost to employers, and closing these Special Funds will reduce assessments on employers by nearly 80 percent.”

Grey said: “This move will especially benefit employers with good safety and health programs.  The Governor’s commendable proposal will save money for responsible employers while continuing to deliver benefits to injured workers.”

NYWCA recently released a report revealing that workers’ compensation costs in New York State have declined dramatically in the past two decades and that workers’ compensation is also a declining portion of overall employer costs.  The report shows that workers’ compensation reforms in 2007, combined with other administrative and regulatory initiatives, reduced worker access to benefits while also reducing claim costs. The report shows that costs have actually declined by a full 30 percent during the past 18 years.

The report also demonstrates that the cost of workers’ compensation is comparable to similarly situated states, such as Connecticut, California, Illinois and New Jersey, and that costs could be even lower if insurance companies were required to be transparent and verify the projected costs that they use to justify rate increases. At present, insurance carriers submit unaudited “projected cost increases” as a basis for premium increases that unfairly impact employers.

The NYWCA report -- which features raw data and charts from the New York Compensation Insurance Rating Board, the National Council on Compensation Insurance and the NYS Department of Labor, among other sources -- demonstrates that workers’ compensation employer costs, as a percentage of total compensation, have dropped from 1.6 percent in 2001 to 1.5 percent in 2011.

Business and insurance interests have repeatedly claimed that workers’ compensation is a “high cost” to employers, that it saps New York’s economic competitiveness, and that the system must be “reformed” to reduce costs. 

            None of these claims are true.  To the contrary, workers’ compensation costs in New York have declined dramatically in the past twenty years, and workers’ compensation is a small and declining portion of employer costs.  Trends in the law, accelerated by statutory changes in 2007 and a host of administrative and regulatory initiatives, have reduced worker access to benefits and have reduced claim costs across the board.  Overall, the cost of workers’ compensation in New York is slightly lower than other costs in the state, and is comparable to similarly situated states.

Invariably, the target of these cost reduction efforts is benefits for injured workers, whose claims are portrayed as driving increased costs.  However, the driving factor in the debate about workers’ compensation is not claim costs, but insurer profits.  The simple fact is that insurers benefit from greater system costs.  As more money flows through the system, insurer profits increase.  To deflect attention from this fact, insurers blame the claims of injured workers when attempting to increase their charges to employers.

            The WCA has taken an in depth look at the issues and prepared a White Paper to set the record straight.  A copy of the White Paper is available here.

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.

            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.

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.

           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.