ISSUE IN BRIEF: Workers' Comp Reform
Workers' compensation costs in New York remain significantly above national averages - even with its relatively low maximum benefits - and continue to be a major factor affecting the state's competitiveness.
The Business Council supports legislation to fundamentally reduce costs. There are four major changes which need to be made:
- durational limits for permanent partial disabilities;
- implementation of objective medical guidelines;
- old age social security and employer-sponsored pension benefit offsets;
- changing scheduled loss of use awards.
Business Council Priorities
New York State is often cited as a high-cost and low-benefit state. Permanent partial disabilities are a category of injured workers who can still perform work, although potentially different work from what they were doing. The maximum benefit for permanent partial disabilities is $400 a week. While lower compared to other states, New York claimants collect benefits for a vastly longer period of time. Permanent partial benefits are frequently awarded for a lifetime. Thirty-seven states have a durational limit on the number of weeks that claimants can collect for permanent partial disability. New York has no limit.
Data on permanent partial disabilities in New York shows that such claims account for approximately 13.6 percent of the claims in the system. However, these same disabilities account for over 77 percent of the costs because the benefits are often paid as a lifetime award. A defined schedule of 500 weeks would put New York in line with the rest of the country.
Objective medical guidelines are written guidelines that spell out the conditions needed to meet certain criteria to determine medical impairment. Forty-two other states use a form of objective medical guidelines to determine medical impairment. Thirty-nine of those states use the AMA guidelines. New York does have objective medical guidelines published by the Workers' Compensation Board in 1996. However, the guide's use is not formally adopted in statute and is not required to be used in evaluating the degree of medical impairment. The guides are designed to eliminate the possibility of radically different conclusions by different medical professionals. Even the Workers' Compensation Research Institute noted, in a study of New York's system, that the state's guidelines for rating non-scheduled partial injuries "provide general guidance at best."
Under current law, if an employee is injured and receives a schedule loss of use award for 20 weeks and remains out of work for only eight weeks they are still entitled to collect benefits for the entire 20 weeks at the maximum partial disability rate irrespective of degree of disability or wages paid after return to work. The legislation calls for scheduled loss of use awards that do not relate to actual lost time from employment to be paid at one half the maximum weekly benefit.
Workers' compensation was never intended to be a wage supplement for retirement or to replace general health insurance. However, more and more employers are finding that employees are using the workers' compensation system to provide supplemental wages when they retire. We support an offset provision when a person becomes eligible for "old age" social security benefits. Fifty percent of the benefits commonly referred to as "old age" social security benefits will be credited against the amount of workers' compensation benefits due. Benefits from an employee pension benefits plan that has been funded fully by the employer should also be credited against workers' compensation benefits.
The Business Council will vigorously oppose any measure that seeks to increase workers' comp benefits without reforms.