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March 5, 2007

Summary of key provisions of workers' compensation reform agreement

Governor Eliot Spitzer signed this legislation into law on March 13, 2007 -- Chapter 6 of the Laws of 2007


The bottom line is a projected savings for employers of 10 to 15 percent at the outset with more to follow

Here is a summary of the key provisions of a package of workers' comp reforms that was announced February 27 by Governor Eliot Spitzer and legislative leaders. The announcement followed nearly three months of negotiations among Spitzer and key players in his administration, the state Legislature, Business Council President Kenneth Adams, and Denis Hughes of the state AFL-CIO.

The legislation – S.5322 (Bruno) / A.6163 (Silver) passed both houses unanimously on Tuesday, March 6.

I. Maximum benefit weeks

The maximum number of weeks that Permanent Partial Disability (PPD) claimants can receive indemnity payments is set forth in the schedule below. The Maximum Benefit Period is calculated from the date that the claimant is classified as being permanently partially disabled.

These maximums affect indemnity only, not medical benefits.

    % Disability Maximum Benefit Weeks
    1% - 15% 225
    16% - 30% 250
    31% - 40% 275
    41% - 50% 300
    51% - 60% 350
    61% - 70% 375
    71% - 75% 400
    76% - 80% 425
    81% - 85% 450
    86% - 90% 475
    91% - 95% 500
    96% - 99% 525

II. Safety net

There are four components: (1) the Commissioner of Labor produces a report by 12/1/07 as to how to get workers back to gainful employment; (2) the Total Industrial Disability case law is incorporated by reference; (3) there is an extreme hardship redetermination option for those with 80% or greater disability; (4) the Commissioner issues annual reports as to the status of the PPD claimants.

III. Benefits

1. Maximum benefit is raised to 2/3 average weekly wage in steps. Year 1 to 500, Year 2 to 550, Year 3 to 600, and Year 4 to 2/3 AWW in perpetuity. The 2/3 AWW calculation will be based on the four quarters of the previous calendar year. The effective date of the increase, both for the step-up years and for the annual AWW indexing, will be July 1.

2. Minimum weekly benefit is raised to $100 from the current $40. A claimant who makes less than $100 will receive only the amount of their wages.

IV. Miscellaneous Cost-Saving Provisions

1. Establishes a fee schedule for prosthetic and other medical devices. Pharmacy fee schedules. Allows use of generics when available. Allows negotiated networks for imaging, labs and other medical tests.

2. Claimants who are incarcerated are not entitled to receive WC benefits.

3. Creates a discount programs for maintaining a safe workplace, return to work programs and drug and alcohol rehab programs.

V. Elimination of the Second Injury Fund

The proposal will establish a management and financial structure to provide for elimination of the Second Injury Fund, settlement of existing cases and necessary financing mechanisms to manage the Fund's liabilities while providing less costly assessments for the business community.

VI. Mandates to the Superintendent of Insurance and Work Groups

The Superintendent of Insurance will perform the following functions in consultation with the Workers' Comp Board and the Commissioner of Labor:

1. Ongoing data collection by Superintendent of Insurance.

2. Committee to develop streamlined regulations – “Rocket Docket”.

3. Committee to develop guidelines. (a) Updated New York guidelines for treating doctors. (b) A “best practices” document for health care professionals for treatment, managed care, vocational rehabilitation, and use of imaging. (c) Guidelines, protocols, and training for Administrative Law Judges.

4. Rate setting inquiry.

VII. Return to Work Program

The Commissioner of Labor will issue a report to the Governor and the Legislature on or before December 1, 2007, making recommendations as to how to assure that workers categorized by the Board as permanently partially disabled return to gainful employment to the greatest extent practicable. The report will examine the best practices of and the laws of other jurisdictions.

The Commissioner will be assisted by a six person advisory council with one representative recommended by The Business Council, one by the AFL-CIO, one by the Senate Majority Leader, one by the Speaker of the Assembly and two by the Governor.

VIII. Anti-Fraud

Numerous provisions to detect and thwart fraud by employers and employees, including penalties, fines and stop-work orders.

IX. Other provisions

Numerous provisions, including:

1. Raises threshold for prior authorization for radiology imaging and testing to $1,000 and keeps physical therapy at $500.

2. The manner in which assessments are determined for self-insured trusts will be amended.

3. Makes it easier for an employer to create a PPO network.

4. Sunsets, as of 2/01/08, CIRB's designation as the special agent to the Insurance Department for rate-making purposes.

5. Creates a study to be done by the Workers' Comp Board on the methodology for establishing bonding requirements on self-insured employers.