GOVERNOR PROPOSES COMPREHENSIVE WORKERS’ COMPENSATION REFORMS

Challenges in Manufacturing Sector Emphasizes Need for Dramatic Reforms Plan Strikes Balance by Reducing Costs for Businesses and Increasing Benefits for Injured Workers Governor George E. Pataki today proposed a comprehensive plan to reform New York’s Workers’ Compensation system by reducing costs for businesses while increasing benefits for injured workers. The new measures proposed by the Governor would further improve New York’s business climate, expand the State’s job-creation efforts and keep New York business -- especially manufacturing-based business -- competitive in the global marketplace. The Governor’s plan would reduce Workers’ Compensation costs for businesses by more than 15 percent, while increasing benefit levels for injured workers by 25 percent. The new reforms come on top of the historic workers’ compensation reforms the Governor fought to achieve in 1996 that have already reduced costs by 25 percent on average. The Governor proposed a series of additional reforms to the workers’ compensation system in 2004, but the Legislature failed to act on them. “Whether it’s cutting taxes, eliminating unnecessary regulations or reducing workers’ compensation costs, we know that lowering the cost of doing business is a proven way to create new jobs and that’s exactly what we’ve done in New York during the past 11 years,” Governor Pataki said. “In 1996, we worked together to achieve historic and long overdue reforms to the Workers’ Compensation system, which have already reduced costs for businesses by 25 percent. But Workers’ Compensation is one of the biggest costs for businesses and if left unchecked can be an impediment to creating new jobs.” “We’re working hard to help manufacturing-based businesses, such as Delphi in Western New York, stay competitive in the global economy and protect thousands of New York jobs, and these new reforms mark another step in those efforts,” the Governor said. “These new reforms strike a balance between controlling costs for those who create jobs – businesses -- with the needs of workers who risk their health and safety to provide for their families and keep New York’s economy growing. “The time to act is now. I urge the Legislature to work with me to enact these important reforms so that we can help New York businesses better compete, protect tens of thousands of jobs across the State and ensure benefits for injured workers,” the Governor added. The Governor’s plan would reduce workers’ compensation costs for businesses by 15 percent by creating a system of tiered benefit levels for injuries that are not currently scheduled under the law, reducing litigation, better coordinating anti-fraud efforts and authorizing comprehensive fee schedules for medical goods and pharmaceuticals. It would also increase benefit levels for workers injured on and off the job, increasing the maximum weekly indemnity benefits paid to injured workers by 25 percent from $400 to $500 per week. Daniel Walsh, President of the Business Council of New York State said, “We welcome this new initiative by Governor Pataki to craft a comprehensive workers' compensation package which recognizes the many inequities in the current comp system. Taken as a whole, this initiative will help employers of all sizes and types, particularly those in New York's manufacturing community. We look forward to working with the Governor and the Legislature in a good faith effort to bring the comp system more in line with that of our competitor states.” Randy Wolken, President of the Manufacturing Association of Central New York said, “It is imperative that New York realizes the impact workers comp costs truly have on employers, and our competitiveness with other states. The recent premium increase particularly impacts manufacturers; with MACNY members reporting increases of 15-29% since October 1st. Last year closed without a resolution to New York’s workers comp crisis. Now, more than ever, it is crucial to resolve this issue, and move forward on meaningful reform. We look to work with the Governor, the Legislature, labor, and others on this crucial issue to preserve high-paying manufacturing jobs in New York.” Andrew J. Rudnick, President & CEO, Buffalo Niagara Partnership, said, “For upstate employers, especially in manufacturing, workers comp costs are a particularly heavy burden. The Governor's proposed reforms go a long way to relieve that burden, and increased investment and jobs should be a direct result.” Mark Alesse, New York State Director of the National Federation of Independent Business said, "Governor Pataki’s exciting new Workers’ Compensation reform bill is welcomed news for the state’s 1.5 million small businesses and their workers. If the Legislature passes this initiative, worker benefits will rise, and overall Workers Comp costs will drop, fostering new employment growth.” Workers’ Compensation Board Chairman David P. Wehner said, “These reforms strike a balance between controlling costs and the needs of workers --addressing the major concerns of both the business and labor community. The Governor clearly understands that while New York must support injured workers, we must also keep our economy strong. We can fulfill and balance these obligations without piling unnecessarily high workers’ compensation rates on our businesses.” The Governor’s plan generates savings of more than 15 percent by reducing frivolous claims against the Second Injury Fund, expanding the Alternate Dispute Resolution program to include the unionized manufacturing sector and by joining 37 other states that have created a system of tiered benefit levels for permanent partial disabilities. Specifically, the Governor’s proposed legislation also addresses the following issues: PROTECTING INJURED WORKERS ● - Authorizes the phasing in of the first workers’ compensation benefit increases for workers injured on-the-job and their beneficiaries in New York State since 1992. ● - Authorizes a 100 percent increase in the maximum disability benefit for workers injured off-the-job (Disability Benefits) from the current $170 maximum to a maximum of $340. ● - Enables workers to protect themselves better by allowing for supplemental benefits in amounts up to two-thirds of their average weekly wages. ● - Allows claimants to receive non-emergency medical procedures costing less than $1,000 without prior insurer authorization. Currently injured workers must seek authorization before any non-emergency procedure over $500. ● - Requires employers to file an injury report (C2) to their carrier within 3 business days of notification of injury and to the Board within 5 days. ● - Requires that carriers or self insured employers provide the injured workers the option of a Section 32 settlement agreement on all claims. ● - All claims that are unresolved within one year or controvert will be transferred to the expedited hearing calendar giving this claim a higher priority status. ● - Requests for discretionary Full Board Review (Appeals) must be filed within 30 days and imposes a fine of $500 on employers, carriers or claimant representative for filing frivolous appeals. ● - Requires the Board to schedule a pre-hearing conference within 45 days upon learning that a claim is disputed. ● - Expands the successful “payment without prejudice” provision to include prescription medicines. Under this program, insurers may provide benefits for up to one year while a case is litigated, without admitting liability. ● - Accelerates the delivery of benefits to injured workers by enhancing the conciliation process to lessen potentially lengthy litigation. REDUCING COSTS FOR EMPLOYERS ● - Reduces employer assessment for the Second Injury Fund by more than $190 million by adjusting the calculation used to determine the assessments from 150 percent of the previous year’s disbursements to 115 percent. ● - Expands the Alternate Dispute Resolution (ADR) program to include the unionized manufacturing sector. Currently only unionized construction can utilize this cost savings program that enables employers to reduce litigation and trim costs by resolving claims outside of the workers’ compensation system under rules that are collectively bargained. ● - Establishes a Pilot Program to encourage the voluntary delivery of compensation and medical benefits to injured workers without intervention by the Board, but subject to the Board’s supervision. ● - Enacts savings by creating a tiered system with regard to the duration of benefits for permanent partial disabilities (PPD). This system would provide for benefits to be coordinated with the severity of an individual’s disability. (An independent study of New York’s workers’ compensation system conducted in 2001 by the Workers’ Compensation Research Institute concluded that New York’s average indemnity cost per PPD claim is 110 percent above the median state.) ● - Establishes a medical committee to develop objective medical criteria for determining the level of impairment sustained by injured workers. • Reduces the assessment for the Second Injury Fund by initiating a $250 filing fee for carriers or businesses seeking reimbursement from the Fund, of which $200 is returnable if the carrier/employer is successful in its claim for reimbursement. ● - Directs the Chair of the Workers’ Compensation Board to adopt a schedule of maximum fees allowable for prescription medicines and durable goods such as prosthetic devices, and requires that generic medicinal equivalents be used whenever possible. ● - Deems ineligible for benefits, all persons incarcerated and convicted of a crime. ● - Enables carriers or self-insured employers to contract with a network or networks to perform diagnostic tests, x-ray examinations, MRI’s or radiological exams and require claimants to use facilities within that network (except in emergency cases), giving employers greater control over medical costs. ● - Amends the Executive Law, the Insurance Law, requiring the Workers’ Compensation Board Fraud Inspector General, the State Insurance Department’s Insurance Fraud Unit and the State Insurance Fund’s fraud investigations unit to work with increased collaboration, including quarterly meetings to coordinate enforcement efforts. Workers' compensation is a no-fault wage replacement and health care benefit system that serves workers who are injured on the job. Payments of benefits are the responsibility of the injured worker's employer who is required by law to obtain insurance or self-insure to cover the costs of workers' compensation benefits. The Workers’ Compensation Board maintains permanent jurisdiction over injured worker claims whether they are opened or closed.