February 27, 2007
Spitzer, legislative leaders announce workers' comp reforms
Agreement follows weeks of negotiations
among Albany's leaders, Business Council, labor
Governor Eliot Spitzer and New York's legislative leaders have announced a landmark agreement to reform the state's workers' compensation system that will cut employers' costs by 10 to 15 percent, with more savings to follow, and increase benefits for injured workers.
“This is a remarkable win-win situation for both workers and employers,” Spitzer said. “Thanks to the cooperation of legislative leaders and staff, and with constructive input from business and labor, we've developed an approach that will achieve the twin goals of helping injured workers and improving the state's competitiveness.”
The announcement culminates three months of intensive negotiations among the Spitzer administration, legislative leaders, and the leadership of The Business Council and the state AFL-CIO.
Business Council President Kenneth Adams hailed the deal.
"This is a major step forward toward reducing the cost of doing business in New York State," Adams said. "It's a big win for improving our economic climate, especially Upstate."
"With this plan, we strike a balance by establishing a more effective and just compensation system for injured workers while also providing insurance premium savings to employers," said Assembly Speaker Sheldon Silver.
Senate Majority Leader Joseph Bruno said, "The agreement on workers' compensation reform is a tremendous victory for workers, who will receive increased benefits, and for businesses that will see a significant reduction in premiums."
Senate Minority Leader Malcolm Smith and Assembly Minority Leader James Tedisco also hailed the agreement.
This agreement will give New Yorkers the kind of changes to workers' compensation that Governor Spitzer promised when he spoke to The Business Council in September 2006 as a candidate for Governor.
In that address at the Council's Annual Meeting, Spitzer specifically called for limiting the duration of benefits in permanent partial disability cases, creating aggressive rehabilitation and retraining programs, attacking fraud, improving medical care in comp cases and cutting its cost, and reforming the Second Injury Fund.
The reform package, which the state Legislature is expected to vote on next week, would:
the number of years during which benefits would be available
in permanent partial disability cases, which now account
for a high percentage of costs in New York's comp system.
Current law allows for lifetime payment of cash benefits
in all such cases; the agreement would cap benefits at
eight years or less for more than 90 percent of cases.
The average PPD claimant would get 344 weeks of benefits
the maximum weekly benefit for injured workers from $400
to $600 over three years. In the fourth year, the maximum
weekly benefit would become two-thirds of the average
weekly wage in New York, with the maximum thereafter adjusted
annually beginning in the fifth year.
new programs designed to help injured workers get workers
prompt medical treatment and return to gainful employment.
strong new anti-fraud measures.
the Second Injury Fund, which is blamed for significant
recent increases in surcharges that are added to all employers'
workers' compensation bills.
At present, 44 states (plus the District of Columbia and the Virgin Islands) have "flexible maximum" benefits levels tied to the average weekly wage. Thirty-four of those states, along with the District of Columbia, put the maximum benefit level at 100% or more of the average weekly wage.
Under the agreement, medical services for workers whose benefits in PPD cases expire would continue, and a "safety net" would be established for cases determined to involve extreme hardship.
Governor Spitzer has directed the state's superintendent of insurance to ensure that projected savings are reflected in premium rate reductions that show up in the rate-setting cycle that concludes in July 2007, the Spitzer administration's press release said.
"As the reforms phase in, reductions in premiums and assessment related to the Second Injury Fund are expected to climb well into the double digits, providing significant relief to New York's business community, particularly small employers for whom such costs have been a major impediment," the release said.
The Governor has also directed the state's superintendent of insurance to pursue other key reforms administratively, including the design of an expedited hearing process, implementation of factual medical guidelines to determine accurately the degree of disability in comp cases, the design of new treatment guidelines, and new training for administrative law judges who hear workers' comp cases.
The Governor's press release is at www.ny.gov/governor/press/0227071.html.