On March 13, 2007, Governor Spitzer signed into Law the 2007 NYS Workers' Compensation Reform Bill which was passed by both the NYS Assembly and Senate. This Law took effective immediately, unless specified otherwise.
The Reform Bill referenced above has a significant impact on the employers doing business in New York State, the Workers' Compensation Insurance carriers and the claimants.
For educational purpose, we will attempt to interpret some of the key changes and provisions of the new Law. It should be noted that the actual application and/or meaning of the Reform Bill is still not clear at this time. We expect that the NYS Workers' Compensation Board and ultimately the Court of Appeals will have the final say in this matter.
CAPS ON CLAIMS WITH PERMANENT PARTIAL DISABLITY CLASSIFICATION
Prior to the signing of the Reform Bill into Law, a claimant who had been classified by the NYS WCB as having a permanent partial disability would be entitled to receive indemnity benefits for life. The new Law places caps on all Workers' Compensation claims with permanent partial disability classification. For all claims with dates of accident or dates of disablement after 03/13/07, the number of weeks the claimants would be entitled to receive indemnity benefits are based on their percentage loss of wage earning capability, as indicated in the attached table. It should be noted that the self-insured employers and carriers continue to be responsible for the payments of the causally related medical treatments beyond the termination date:
| % Loss of Wage | Maximum Benefit | Number of |
| 1% - 15% | 225 | 4.33 |
| 16% - 30% | 250 | 4.81 |
| 31% - 40% | 275 | 5.29 |
| 41% - 50% | 300 | 5.77 |
| 51% - 60% | 350 | 6.23 |
| 61% - 70% | 375 | 7.21 |
| 71% - 75% | 400 | 7.69 |
| 76% - 80% | 425 | 8.17 |
| 81% - 85% | 450 | 8.68 |
| 86% - 90% | 475 | 9.13 |
| 91% - 95% | 500 | 9.62 |
| 96% - 99% | 525 | 10.10 |
The calculation of the cap for maximum indemnity benefits is triggered as of the date of the permanent partial disability classification. There is however no cap for the receipt of indemnity benefits in death claims or claims resulting in permanent total disability classification.
The cap for permanent partial disability claims is also subject to an Extreme Hardship Exception. If a claimant has a wage earning capacity of more than 80%, the claimant may claim hardship and petition the WCB for a reclassification within one year of the termination date of his or her indemnity benefits. The reclassification could result in either a permanent total or total industrial disability classification.
Unfortunately, the new statute does not clearly outline the criteria for an extreme hardship claim. The statute is also less than precise in defining percentage loss of wage earning capacity. The current Workers' Compensation Board Medical Guidelines, which has not been revised since 1996, seems grossly inadequate in providing the decision makers with the answers. Furthermore, the statue provides no clear guidance as to the rate of the weekly payments up to the cap. As a result, we expect an increase in litigation in this particular area of the law. It is also possible that the legislators will pass subsequent Amendments to address the problems identified herein.
Even though the self-insured employers or the carriers are required to pay causally related medical treatments after the termination of indemnity benefits, the employers or carriers may apply to the WCB to stop medical payments. If a carrier attempts to discontinue payments of medical care, the carrier must meet a substantial burden of proof. The WCB had been directed to promulgate regulations establishing an independent review of the decision of the Workers' Compensation Law Judge and the appeal. It should be noted that the claimant is still entitled to medical coverage during litigation.
INCREASE OF MAXIMUM AND MINIMUM STATUTORY RATES
For claims with the dates of accident or date of disablement of 07/01/07 or later, the maximum weekly indemnity benefits have been raised as follows:
- 07/01/07 to 06/30/08: Maximum rate is $500.00
- 07/01/08 to 06/30/09: Maximum rate is $550.00
- 07/01/09 to 07/01/10: Maximum rate is $600.00
- 07/01/10 into the future: 2/3 of the state average weekly wage (to be reported by the Commissioner of Labor to the Superintendent of Insurance)
For claims with the dates of accident or date of disablement of 07/01/07 or later, there is a one-time increase of the minimum weekly rate from $40.00 to $100.00. If a claimant's weekly wages are less than $100.00, the claimant is entitled to receive his or her full wages.
CHANGES IN SECOND INJURY FUND RELIEF (SECTION 15-8)
As of 07/01/07, the self-insured employers and the carriers can no longer file claims for reimbursement with the Special Funds Conservation Committee under Section 15-8. In other words, for claims with dates of accident or dates of disablement of 07/01/07 or later, the employers and carriers cannot look to the Special Funds Conservation Committee for reimbursement under Section 15-8 or Section 14-6, the concurrent employment provision.
The new Law also provides that no C-250 may be filed after 07/01/10, for claims with dates of accident or dates of disablement prior to 07/01/07, for the purpose of seeking 15-8 relief. Regardless of the filing dates of the C-250's, again for claims prior to 07/01/07, all written submission of evidence in support of a 15-8 claim must be filed prior to 07/01/10 for consideration by the Special Funds Conservation Committee.
The Statute also requires that all requests for reimbursement for cases with established 15-8 or 14-6 finding be submitted to the Special Funds Conservation Committee within one year from the date of the expenditure or one year from the effective date of this legislation, 03/13/07, whichever is later. The reimbursement request would be deemed waived if the emplo9yers or the carriers do not comply with this provision.
There will be a filing fee associated with the filing of a C-250 subsequent to 03/13/07, again for claims prior to 07/01/07. A check in the amount of $250.00, made payable to "Special Disability Fund," must be sent along with a C-250 to WCB Finance Office, 20 Park Street, Room 301, Albany, New York 12207. The Law allows a refund of $200.00 to the employer or carrier when Section 15-8 is found applicable by the Board.
AGGREGATE TRUST FUND
As of 07/01/07, the deposit into the Aggregate Trust Fund (ATF) will be mandatory for all cases with permanent partial disability classification. This provision requires a carrier to pay the present value of a claim to the ATF when a claimant is classified as having a permanent partial disability by the WCB and remains out of work. The mandatory deposit does not apply to the self-insured employer or the State Insurance Fund. It should be noted that the carrier remains liable for the payments of medical treatments, even after the ATF deposit is completed.
The carriers are not required to deposit into the ATF in claims where Section 15-8 apply. In cases where either a third-party action or a 15-8 claim is still pending, the carriers also are not required to make the payments to the ATF.
MEDICAL AUTHORIZATION AND MEDICAL COSTS CONTAINMENT MEASURES
Section 13 pf the Workers' Compensation Law, pre 03/13/07, requires a provider to obtain advance authorization for special treatments or diagnostic tests costing more than $500.00. Section 13 has been amended to increase the cost of the medical service to be provided without prior authorization from the carriers from $500.00 to $1,000.00.
Section 13 of the Workers' Compensation Law was also amended to allow the employers or carriers to direct care with respect to diagnostic procedures. Upon proper notification and subject to a location within a "reasonable" distance, a carrier can require the claimant to have the diagnostic tests done with a specific vendor(s) or network(s). There is however an exception. In an emergency situation, a medical provider can order the procedure without going through the carrier's vendor of choice.
The amendment of Section 13 also allows the Chair of the Workers' Compensation Board to adopt Pharmaceutical Fee Schedule as well as fee schedules for other services such a prosthetic devices and dental care.
NEW SANCTIONS AND PENALTIES
WCL Section 114-a has been expanded to include sanctions and penalties for "frivolous" claim or defense. This provision provides that if the Board determines that a proceeding either has been instituted or continued without reasonable ground, the cost of the proceeding shall be assessed against the party instituting said proceeding (typically a carrier) and the attorney's fees would be assessed against the attorney representing that party (i.e. the defense counsel.) This provision also prohibits the attorney to recoup the penalty assessed from the client.
There is also an increase of penalty for an Application for Board Review found by the WCB to be frivolous from $250.00 to $500.00.
SECTION 32 SETTLEMENTS
Section 32 of the Workers' Compensation Law has been amended to make settlement offers mandatory on the part of the carriers. A carrier must offer the claimant the opportunity to settle within tow years from the date of index of the claim by the WCB or within six months after the WCB classifies the claimant as having a permanent disability, whichever is later. The settlement offer must be made within six months from the establishment of the claim and award of benefits to the beneficiary in death claims. A settlement offer by a carrier must differentiate portions of the settlement specifically for indemnity award, medical treatments as well as attorney's fee.
The Aggregate Trust Fund (ATF) can also enter into a Section 32 settlement with a claimant. In the event that the ATF settles a case for less than the amount deposited by the carrier, that carrier would not be entitled to receive the difference. The carrier may still be liable for medical treatments if the Section 32 settlement only closes the indemnity aspect of a claim.
The amendment of Section 32 also allows the Special Funds Conservation Committee to negotiate a Section 32 settlement with a claimant without the approval of the carrier. In an attempt to close out as many established 15-8 claims as possible, the Waiver Agreement Management Office (WAMO) will be created to initiate and negotiate settlements. The Special Funds Conservation Committee or WAMO however must provide written notice to the self-insured employer, the carrier or the State Insurance Fund within 14 days of the submission of the settlement agreement to the WCB for approval.
Unfortunately, the new Workers' Compensation Law reform seems to present more questions than answers to most of the problems facing employers and carriers in New York State. It is difficult at this time to ascertain how the employers and carriers can realize up to a 15% savings, especially in the short term. As indicated above, the impact of the reform will only be seen after it is tested by the WCB and ultimately the Courts.
By Daniel J. Falge, Esq.
Falge & McLean, P.C
To see the New York Workers' Compensation Reform Bill click here.