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July 10, 2003

Council: Despite '96 reforms, comp costs remain too high; more reforms would help

Despite real savings created by reforms in 1996, New York's workers' compensation costs remain far above the national average and a significant competitive disadvantage for the state, The Business Council has told state officials in testimony.

"The cost pressures have risen for businesses, municipalities, and not-for-profits and the need for another round of fundamental reforms has increased," The Council said in testimony submitted to the state Insurance Department July 9. The testimony was offered in response to an increase in workers' compensation rates proposed by the New York Compensation Insurance Rating Board (CIRB).

The reforms championed by Governor Pataki "brought real savings to the system" in 1996, the testimony noted. But overall comp costs have been increasing nonetheless.

The testimony cited a 2002 study by the Workers' Compensation Research Institute, which identified New York as a high-cost state. That report blamed New York's high costs and far-above-average costs of claims for which benefits are not prescribed by statutory schedules.

These claims account for 71.6 percent of all comp costs in the system, but represent only 12.4 percent of claims, the testimony noted. The discrepancy stems from the fact that the duration of these benefits is unlimited.

"This is far outside the norm of virtually every other state in the country," the testimony said.

The testimony also cited other cost drivers:

The Council's testimony praised a bill (S.5320-Libous, A.8862-Schimminger) that would change the handling of these cases. It would: