State Deal Will Boost Workers' Comp Payments; Maximum Benefit To Rise to $650 By 2009

State Deal Will Boost Workers' Comp Payments;
Maximum Benefit To Rise to $650 By 2009


Governor Spitzer joined with legislative leaders and State AFL-CIO President Denis Hughes Feb. 27 to announce a landmark agreement that will overhaul New York's Workers' Compensation system, while raising the maximum weekly benefit from $400 to $500 later this year, progressing to $650 by 2009.

BREAKTHROUGH AFTER 15 YEARS: Governor Spitzer (left) and legislative leaders have reached a deal that would significantly increase Workers' Compensation benefits, which have been stagnant for the past 15 years. State AFL-CIO President Denis Hughes called the accord 'a tremendous improvement,' particularly one portion that, beginning in 2010, will index benefits so that they equal two-thirds of the average weekly wage. The measure, which would increase benefits for injured workers for the first time in a decade and would reduce employer costs by 10 to 15 percent, was introduced in the State Legislature last week and is expected to be voted on no later than March 7.

Tie It to Average Pay

Mr. Hughes said the Governor would sign it into law shortly after its expected passage.

"After 15 long years, injured workers will receive an immediate benefit increase this year. In four steps, the benefit will eventually reach two-thirds of the average weekly wage, and be indexed thereafter," Mr. Hughes said last week after the pact was revealed.

"In addition, this agreement more than doubles the minimum benefit received by injured workers, from $40 per week to $100 per week," he stated. "The AFL-CIO is deeply indebted to Governor Spitzer, Senate Majority Leader [Joseph] Bruno and Assembly Speaker [Sheldon] Silver for their leadership and determination throughout this process. I'd [also] like to thank the Business Council for its willingness to negotiate in good faith."

What Will Change

According to the framework agreement, the 90-year Workers' Compensation system will undergo several key changes:

- The maximum weekly benefit for injured workers will be increased from $400 to $500 in the first year, $600 in 2008 and $650 a year later, and to two-thirds of the average weekly wage in New York in 2010. Once the maximum benefit reaches two-thirds of the average weekly wage, the payout will be indexed annually to average earnings;

- Cost savings worth hundreds of millions of dollars will be achieved by setting a maximum number of years that a small population of claimants can receive cash benefits. Medical services will continue, however, and a safety net will be established to help these workers return to gainful employment and to intervene in cases of extreme hardship;

- Programs will be established to get workers prompt medical treatment and to help them return to work;

Fraud Safeguards

- Strong anti-fraud measures will be in place, including the ability to stop work on a job site where a company has failed to purchase Workers' Compensation insurance for its employees, higher criminal penalties for violators and debarment provisions;

- An expensive fund known as the Second Injury Fund that is now financed by assessments passed through to employers will be closed. The fund was initially set up to help injured Word War II veterans, but is now used by some insurance carriers as a costly loophole to avoid paying claims; and

- The Compensation Insurance Rating Board, which helps determine Workers' Comp costs for employers, will sunset as of Feb. 1, 2008. The Superintendent of Insurance will make a recommendation to the State Legislature this September as to what, if anything, should replace it. As part of the negotiated reform package, the Governor and legislative leaders directed the Superintendent of Insurance to create system savings through premium rate reductions, beginning in the next rate-setting cycle that concludes in July.

Added Reforms

Additionally, Mr. Spitzer has directed the Superintendent of Insurance and legislators, in tandem with business and labor appointees, to work with the Workers' Compensation Board, the Department of Labor and legislative task forces to pursue a number of additional reforms administratively and to make recommendations about additional legislation. These initiatives include:

- Gathering data on system finances so legislators and the public can understand the costs and the outcomes of Workers' Compensation;

- Designing an expedited hearing process to reduce litigation and speed the time it takes for workers to receive treatment and return to work; and

- Designing by year-end new fact-based medical guidelines to replace the state's current system. Also, in conjunction with the Workers' Compensation Board, the Superintendent will design treatment guidelines and training for law judges.

Mr. Hughes said the accord was eight years in the making and many of its initiatives had been stymied before.

Under the Pataki administration, he said, there was a lack of desire to put everything on the table.

'A Comprehensive Look'

"We wanted an overall look at the system, not just the benefits and how you deliver the benefits. We wanted to know what the insurance industry concerns were, how to get better access to the system, how to move people through it better, and there wasn't a lot of interest in doing it in a comprehensive way," he said.

The State AFL-CIO will be part of several task forces charged with tracking how Workers' Comp data is collected, redefining light-duty and back-to-work claims and improving ways people navigate the system.

"We still have a lot of work to do in participation with the Legislature," Mr. Hughes remarked. "But this is a tremendous improvement. I'm very happy." He was most thrilled, he said, with the indexing system that had been worked out. Attaching future benefit increases to raises in the average weekly worker salary alleviated the need to return to Albany for more increases.

"Never again will injured workers have to endure the indignity of waiting 15 years for a benefit increase," Mr. Hughes noted.