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N.Y.: Spitzer Signs Workers' Comp Reform Bill

New York Gov. Eliot Spitzer March 13 signed workers' compensation reform legislation that aims to reduce employer costs by 10 to 15 percent while increasing benefits for injured workers for the first time in more than a decade.

The legislation, which passed with unanimous support in the New York state Senate and Assembly, “is a critical component of restoring the state's competitiveness,” Spitzer said. New York’s workers’ compensation premiums have been among the highest in the nation, despite low weekly benefits – a maximum of $400 per week – for injured workers.

Spitzer noted that he made workers' compensation reform a top priority after taking office in January.

“ ... New York is reversing a trend that hampered business growth for years and we are better protecting workers in the event of job-related injury,” Spitzer said.

Maximum Weekly Benefit Will Increase Over Next 4 Years

Among the major provisions of the legislation:

  • The maximum weekly benefit for injured workers will be increased from $400 to $600 in three annual steps until 2010. (In the first year it will increase to $500, in the second year it will increase to $550 and in the third year it will increase to $600). In 2010, the maximum weekly benefit will increase to two-thirds of the average weekly wage in New York state. Once the maximum benefit reaches two-thirds of the average weekly wage, the maximum benefit will be indexed annually.
  • In July, the minimum weekly benefit will increase from $40 to $100.
  • In an effort to save hundreds of millions of dollars, the state will set a maximum number of years that a small population of claimants -- those classified as being permanently partially disabled -- can receive cash benefits. Those maximums will be based on the claimants’ degree of disability. Medical services will continue, and a safety net will be established to help these workers return to gainful employment and to intervene in cases of extreme hardship.
  • New programs will be established to deliver prompt medical treatment, vocational rehabilitation and training and return-to-work assistance. The law offers employers reduced premiums for creating post-injury back-to-work programs, worker safety programs or drug and alcohol programs.
  • The law eliminates the insurance-industry-dominated Compensation Insurance Rating Board, which recommends workers’ compensation rates upon which employer-paid premiums are based. The commissioner of insurance, who is appointed by the governor, is required to develop new premium-setting procedures. The aim of the change is to create a transparent method of setting premiums and collecting data about insurance company performance.
  • A fee schedule for pharmaceuticals, tests and equipment will be established.
  • Strong anti-fraud measures will be in place, including the ability to stop work on a job site where a company has failed to purchase workers’ compensation insurance for its workers, higher criminal penalties for violators and debarment provisions.
  • A fund known as the Special Disability Fund, which is now financed by assessments passed to employers, will be closed to new claims. The fund was initially set up to help injured workers. But, according to the Spitzer administration, it now is used by some insurance carriers “as a costly loophole by which they transfer claim costs to the entire industry.”

Spitzer also announced that he has asked Acting Superintendent of Insurance Eric Dinallo to ensure that savings in the workers’ compensation system are translated into reductions in insurance premiums. As part of this process, the superintendent, with assistance from Commissioner of Labor Patricia Smith and Workers’ Compensation Board Chairwoman Donna Ferrara, will:

  • Collect and assess data relating to worker-related injuries and claims.
  • Streamline the claims review process.
  • Design new diagnostic and treatment protocols for medical professionals.
  • Develop training materials that will assist administrative law judges in making consistent case determinations.

The legislation only applies to new injuries and illnesses. It leaves unchanged the benefits and regulations that apply to existing cases.

Reform Package Received Broad Support

The reform legislation, which was sponsored by Republican Majority Leader Sen. Joseph Bruno, received support from state Democrats and Republicans, New York State AFL-CIO and the Business Council of New York State Inc., among other groups.

“This is the first time comprehensive change within the workers' compensation system has taken place,“ New York State AFL-CIO President Denis Hughes said March 13. “This is truly an historic day. Injured workers in this state, the business community and all New Yorkers are winners today.”

Scott Stevens, president of Dimension Fabricators, a Schenectady, N.Y.-based manufacturer of steel products, called workers' compensation costs in New York state “one of our great burdens for years.”

“Even with a good safety record, this cost is right behind health insurance in our expense column,” Stevens said. “These reforms will reduce one of New York’s historically high business costs, helping us compete with our rivals in other states and countries.”

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