Amd Work Comp L, generally; amd SS406, 107, 308, 2304, 2305, 2339, 2313 & 2316, Ins L; amd S697, Tax L; amd
S537, Lab L; amd SS3 & 60, Vol Amd Wkr Ben L; amd SS3 & 60, Vol Ffs Ben L; add S1680-l, Pub Auth L; amd S17
Pub Off L
Relates to workers' compensation reform; relates to the administration of the special disability fund and authorizes the closing of the special disability fund to new claims and the establishment of the special disability fund advisory committee.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6163 REVISED 3/13/07
SPONSOR: Silver (MS) TITLE OF BILL: An act to amend the workers' compensation law, the
labor law, the insurance law, the tax law, the volunteer ambulance work-
ers' benefit law, the volunteer firefighters' benefit law, and the
public officers law, in relation to increasing benefits, setting maximum
benefit weeks for receiving payments on certain claims, providing
enhanced return to work services and expedited medical services for
claimants, increasing penalties and enforcement against fraud, imple-
menting cost-savings, providing for premium discounts, authorizing the
closing of the special disability fund to new claims; and to amend the
public authorities law, in relation to the issuance by the dormitory
authority of revenue bonds secured by debt service assessments in
connection therewith
PURPOSE:
This bill establishes comprehensive reforms to New York's workers'
compensation law by: (1) increasing maximum and minimum benefits for
injured workers and indexing the maximum to New York's average weekly
wage; (2) dramatically reducing costs in the workers' compensation
system, making hundreds of millions of dollars available annually to be
translated into premium reductions; (3) establishing enhanced measures
to combat workers' compensation fraud; (4) replacing the Special Disa-
bility Fund with enhanced protections for injured veterans; (5) prevent-
ing insurance carriers from transferring costs to New York employers by
closing the Special Disability Fund to new claims; and (6) creating a
financing mechanism to allow for settlement of the Fund's existing
liabilities.
SUMMARY OF PROVISIONS:
Provisions relating to benefits
Section 1 of the bill adds new subdivisions 16 through 23 to section 2
of the Workers' Compensation Law to define certain terms.
Section 2 of the bill amends section 15(6)(a) of the Workers' Compen-
sation Law to increase the maximum weekly benefits for permanent or
temporary partial disability and permanent or temporary total disability
from $400 to: (1) $500 for an accident or disablement that occurs on or
after July 1, 2007; (2) $550 for an accident or disablement that occurs
on or after July 1, 2008; (3) $600 for an accident or disablement that
occurs on or after July 1, 2009; and (4) two-thirds the New York state
average weekly wage each year thereafter. This section of the bill also
raises the minimum benefits for permanent or temporary partial disabili-
ty and permanent or temporary total disability from $40 per week to $100
per week.
Section 3 of the bill amends section 16(5) of the Workers' Compensation
Law to increase the maximum amount of weekly compensation to be taken
into account in calculating the death benefits from $600 to: (1) $750
for an accident or disablement that occurs on or after July 1, 2007; (2)
$825 for an accident or disablement that occurs on or after July 1,
2008; (3) $900 for an accident or disablement that occurs on or after
July 1, 2009; and (4) the New York state average weekly wage, each year
thereafter.
Section 4 of the bill amends section 15(3)(w) of the Workers' Compen-
sation Law to create a maximum number of weeks that a permanent partial
disability recipient may receive indemnity payments. There is no maximum
for medical services. The maximum benefit weeks range from 225 weeks
where the loss of wage-earning capacity is 15 percent or less, to 525
weeks where loss of wage-earning capacity is greater than 95 percent.
This section of the bill also seeks to protect claimants after their
indemnity payments expire by creating a presumption that medical
services will continue, and placing the burden on the carrier in any
application to discontinue or suspend such services.
Section 5 of the bill adds a new section 35 to the Workers' Compensation
Law to establish a safety net for permanent partial disability claimants
who surpass their number of maximum benefit weeks. Section 35 requires
the Commissioner of Labor to survey and recommend best practices for
return-to-work programs. In addition, this section incorporates existing
case law on total industrial disability. For those with loss of wage
earning capacity of 80 percent or greater, the bill additionally allows
claimants to seek an exemption on extreme hardship grounds. This
provision provides an exemption for extreme financial hardship, while
allowing judges to take into account factors in addition to claimants'
income and other available resources. Finally, the Commissioner of Labor
is directed to track those who are classified as permanently partially
disabled over time.
Provisions relating to fraud prevention, detection, or punishment
Section 6 of the bill amends section 50(2) of the Workers' Compensation
Law to require employers to secure compensation for employees through a
policy issued under the law of New York.
Sections 7 and 8 of the bill amend sections 52 and 131 of the Workers'
Compensation Law to impose stricter criminal and civil penalties for
employers that fail to secure coverage for their employees. These
sections of the law are drawn from, among other sources, analogous
Florida statutes. Under section 7, failure to secure coverage for five
or more employees during a twelve-month period is a Class E felony, and
a second or subsequent conviction is a Class D felony. The section also
creates an affirmative defense to personal liability for corporate offi-
cers who take reasonable steps to insure that their corporation secured
compensation. It also defines failure to secure compensation to include
intentional misrepresentation or concealment of payroll or information
relevant to premium calculation. Section 8 specifies the records that
employers must keep, and creates civil penalties and enhanced criminal
penalties for failing to keep such records. Extremely important in the
enforcement scheme are provisions creating additional liability for
corporate officers, who are made liable if their corporation fails to
keep accurate records. This is intended to solve the frequent problem in
white collar law enforcement that high ranking officers - who have the
most to gain - escape liability, while middle managers or lower level
employees do not.
Section 9 of the bill amends section 114(4) of the Workers' Compensation
Law to allow prosecutors to charge a person pursuant to the provisions
of sections 52 and 131 of the Workers' Compensation Law, and in the same
accusatory instrument also with a violation of other laws. This section
of the bill also provides that those convicted of second or subsequent
offenses within a ten year time frame or those who knowingly violate any
provisions of this section with respect to two or more claimants are
guilty of a class D felony.
Section 10 of the bill adds a new subdivision 3 to section 114-a of the
Workers' Compensation Law to provide for the assessment of costs against
parties, and attorneys fees against attorneys or licensed workers
compensation representatives, who institute or maintain actions without
reasonable ground.
Section 11 of the bill amends section 141 of the Workers' Compensation
Law to allow the Chair of the Workers' Compensation Board to issue stop-
work orders as provided for in section 141-a of the Workers' Compen-
sation Law. This provision is a keystone to the civil enforcement
provisions in the bill, and has proved particularly effective in Flori-
da, on which the provision was modeled.
Section 12 of the bill adds a new section 141-a to the Workers' Compen-
sation Law to grant the Chair of the Workers' Compensation Board certain
investigative and enforcement powers, including the power to: (1) issue
subpoenas outside New York State and enforce such subpoenas in court;
(2) issue stop-work orders against employers who do not maintain cover-
age or pay penalties, and enforce those orders (and obtain other injunc-
tive relief) via a court action; and (3) recover attorneys' fees and
costs in a successful action brought under this section. This section of
the bill also allows a judgment obtained by the chair to serve as a lien
against the employer's property.
Section 13 of the bill adds a new section 141-b to the Workers' Compen-
sation Law to bar those who were subject to final assessments of civil
fines or penalties or a stop-work order, or those convicted of a misde-
meanor under sections 26, 52 or 131 of the Workers' Compensation Law,
and any substantially owned affiliated entity of such person from
bidding on public work contracts or subcontracts with the state, any
municipal corporation or any public body for one year from the date of
conviction. Those with felony convictions, or who violate the discrimi-
nation provisions of sections 125 or 125-a of the Workers' Compensation
Law, will be barred for a period of five years.
Section 14 of the bill adds a new section l41-c to the Workers' Compen-
sation Law to facilitate greater coordination and communication between
the Workers' Compensation Board, the Department of Labor, the Department
of Taxation and Finance, the Department of Motor Vehicles and the
Department of Insurance, in order to gather information helpful in iden-
tifying fraud.
Section 15 of the bill adds a new section 114-c to the Workers' Compen-
sation Law to impose additional penalties for second or subsequent
offenses where the prior offense was committed by a substantially owned
affiliated entity of the party subject to the penalty.
Section 16 of the bill amends section 136(5) of the Workers' Compen-
sation Law to allow for sharing of information between agencies investi-
gating insurance fraud.
Section 17 of the bill amends section 406 of the Insurance Law to extend
civil immunity to any person who, in the absence of bad faith, shares
information related to suspected fraudulent insurance transactions with
a state agency, including its employees and agents, investigating fraud
or misconduct relating to workers' compensation insurance law.
Sections 18 and 19 of the bill amend section 697 of the Tax Law to allow
for enhanced sharing of information between the Department of Taxation
and Finance and the Department of Labor, and redisclosure of information
by the Department of Labor.
Sections 20, 21, 22, 23 and 24 of the bill amend various subdivisions of
section 537 of the Labor Law to: (1) prohibit the disclosure of informa-
tion gathered from employers or employees pursuant to the Labor Law or
the use of such information in any court unless the action or proceeding
involves information provided pursuant to section 537(3)(g); (2) provide
that if a person discloses information in violation of the confidential-
ity provisions of section 537, then, upon conviction, such person will
be guilty of a misdemeanor; (3) provide that the Commissioner of Labor
shall make certain information available, upon request, to any federal,
state or local agency entitled to such information under the Social
Security Act, any other federal law, or its implementing regulations;
(4) provide for a mechanism for the disclosure of information between
the Department of Labor and the Department of Taxation and Finance and
certain federal, state and local agencies, including the Workers'
Compensation Board, and set forth certain procedures that must be
followed and conditions that must be met for such disclosure to take
place; and (5) provide for use by the Department of Labor of wage
reporting information obtained from the Department of Taxation and
Finance pursuant to section 171-a(4) of the Labor Law.
Provisions to achieve greater efficiencies or costs savings in the Work-
ers' Compensation system
Section 25 of the bill amends section 13(a) of the Workers' Compensation
Law to add dental care and prosthetic devices to the list of covered
treatments and covered devices and apparatus, respectively, which
employers must provide to injured employees. This section of the bill
would further expand the schedule of fees and services to be established
by the Chair to include all medical, dental, surgical, optometric or
other attendance or treatment, nurse and hospital service, medicine,
optometric services, crutches, eyeglasses, false teeth, artificial eyes,
orthotics, prosthetic devices, functional assistive and adaptive devices
and apparatus.
Section 26 of the bill adds a new subdivision (i) to section 13 of the
Workers' Compensation Law to: (1) require employers and/or carriers to
pay, within 45 days, the scheduled fee for prescription drugs in all
cases, unless the liability of the employer for the claim is not estab-
lished, or the prescribed medicine is not for a causally related condi-
tion; and (2) where the liability of the employer for the claim is not
established, or the prescribed medicine is not for a causally related
condition, require the carrier to pay any undisputed portion of the
claim and also notify the claimant within 45 days that the claim is not
being paid and the reasons for such decision, or the employer or carrier
may request additional information reasonably needed to determine the
employer or carrier's liability. The section would require payment plus
interest for claims not paid by the employer in violation of this
section. This section also authorizes carriers, self-insureds and the
State Insurance Fund to contract with a pharmacy to supply prescription
medicine to claimants and require claimants to use such pharmacies if
within a reasonable distance, except in the case of a medical emergency.
Carriers and employers that require the use of the pharmacy with which
it contracts would be required to notify claimants.
Section 27 of the bill adds a new section 13-o to the Workers' Compen-
sation Law directing the Chair of the Workers' Compensation Board to
adopt a pharmaceutical fee schedule establishing maximum pharmaceutical
fees. This section would also allow mail order supply, and provide for
use of generic drugs where appropriate. Under this section, the schedule
may be modified annually on April 1.
Section 28 of the bill amends subdivision (5) of section 13-a of the
Workers' Compensation Law to raise from $500 to $1,000 the maximum cost
of specialist treatments for which an employer is automatically liable
without prior authorization from the carrier, the State Insurance Fund
or an employer. In addition, the Board, with the approval of the Super-
intendent of Insurance, shall issue and maintain a list of preauthorized
procedures. The purpose of both provisions is to remove impediments to
prompt diagnostic and treatment measures and to better reflect current
medical service costs. The provision permitting the creation of a pre-
authorized list allows the Board appropriate regulatory flexibility to
add or remove procedures depending on best practices, increases or
decreases in costs, or opportunities presented by managed care
approaches. The provision requiring the approval of the Superintendent
focuses consideration on the effect that pre-authorizing any specific
procedure may have on premiums.
Section 29 of the bill adds a new subdivision (7) to section 13-a of the
Workers' Compensation Law authorizing carriers, self-insureds and the
State Insurance Fund to contract with a network or networks to perform
diagnostic tests, x-ray examinations, magnetic resonance imaging, or
other radiological examinations or tests of claimants and require claim-
ants to use a provider or facility within the network with which it
contracts and which is within a reasonable distance of the claimant,
except in the case of emergency. Carriers, self-insured employers and
the State Insurance Fund that require the use of such network affiliated
providers or facilities would be required to notify claimants and their
providers, at specified times, that they require the use of a provider
or facility within the network with which they contract. Results of the
special diagnostic test, x-ray examination, magnetic resonance imaging
or other radiological test or exam would be required to be provided to
the physician who requested the test or exam immediately upon completion
of the report.
Section 30 of the bill amends section 21-a of the Workers' Compensation
Law to authorize employers to initiate temporary payments for prescribed
medicine for injured employees in contested cases without such payment
being viewed as an admission of liability. This provision is intended
to expedite treatment for injured workers, thus helping speed return to
good health and gainful employment.
Section 31 of the bill amends section 54-b of the Workers' Compensation
Law to allow claimants and medical providers to file a judgment for
unpaid awards of compensation and awards for medical care issued pursu-
ant to section 13-g of the Workers' Compensation Law against carriers
and self-insured employers. This is designed to solve the serious prob-
lem of carriers frequently failing to pay medical bills and indemnity
even after being ordered to do so by the Board.
Section 32 of the bill amends subdivision 1 of section 354 of the Work-
ers' Compensation Law to require preferred provider organizations to
provide at least two providers in every medical specialty from which the
employee may choose and at least two hospitals from which the employee
may choose in the event that hospitalization is necessary while allowing
the Commissioner of Health to waive the requirement if the geographical
area does not allow the requirement to be met.
Section 33 of the bill amends section 134 of the Workers' Compensation
Law to require the Commissioner of Labor to promulgate rules and regu-
lations for the implementation of safety, drug and alcohol prevention,
and "return to work" incentive programs. Employers who implement these
programs will receive premium credits in an amount set by the Super-
intendent of Insurance.
Section 34 of the bill amends section 23 of the Workers' Compensation
Law to allow for a party to take an appeal within 30 days after notice
of the redetermination review decision by the chair pursuant to section
131 and 141-a, in addition to section 52(5) of the workers' compensation
law. This section of the bill also provides that an appeal shall not
operate as a stay of the payment of the cost of medical, dental, surgi-
cal, optometric or other attendance, treatment, devices, apparatus or
other necessary items the employer is required to provide pursuant to
section 13 of the Workers' Compensation Law. This section of the bill
also doubles the penalty for an employer or carrier who serves a notice
of appeal for the purpose of delay or on frivolous grounds from $250 to
$500. This provision is designed to eliminate carriers' financial incen-
tive to appeal solely in order to stay payment of benefits and the
provision of medical care. The Workers' Compensation Board has concluded
that the current structure has led to a high number of frivolous and/or
unsuccessful appeals by carriers. This will lead to finality in more
cases sooner.
Section 35 of the bill would amend section 26-a(2)(b) of the Workers'
Compensation Law to increase the assessment imposed upon employers who
have been found liable for a workers' compensation claim but failed to
secure compensation for their employees from $250 to $1000 for each
ten-day period of non-compliance, or two times the cost of compensation
for its payroll for the period of such failure.
Section 36 of the bill adds a new subdivision 3 to section 13-n of the
Workers' Compensation Law to allow the Chair of the Worker' Compensation
Board, upon finding that an entity that derives income from independent
medical examinations has materially altered an independent medical exam-
ination report, or caused a report to be materially altered, to revoke
the registration of such entity, impose a penalty of up to $10,000 and
refer the matter to the Attorney General for prosecution.
Section 37 of the bill would add a new subdivision 4 to section 10 of
the Workers' Compensation Law to deem ineligible for all benefits under
the Workers' Compensation Law those persons incarcerated upon conviction
of a felony. After release from custody, these individuals may apply to
the board for reinstatement of their benefits. This provision codifies
existing case law.
Sections 38 and 39 of the bill amend section 13-d of the Workers'
Compensation Law to allow the chair to remove from the list of physi-
cians authorized to render medical care those physicians who have been
found guilty of professional or other misconduct or incompetence in
rendering medical services under the law or whenever the Department of
Health shall conduct an investigation with respect to charges of profes-
sional or other misconduct by a physician which results in a report,
determination or consent order that includes a finding of professional
or other misconduct or incompetency.
Sections 40 and 41 of the bill amend section 25 of the Workers' Compen-
sation Law to reduce the time in which the board must schedule a pre-
hearing conference in a controverted case from 60 days to 45 days after
receipt of a notice of controversy and a medical report referencing an
injury. The bill also provides that if issues in a case have not been
resolved within one year after such issues have been raised before the
board, or if a notice of controversy is filed, the chair may order that
the case be transferred to a special part for expedited hearings.
Section 42 of the bill amends subdivisions 1 and 2 of section 54 of the
Workers' Compensation Law to allow for an insurance policy providing
coverage for workers' compensation claims to be issued by more than one
insurance company authorized to transact workers' compensation insurance
in the state. In the case of a policy with more than one insurer, the
insurers shall share one hundred percent of the liability and one of the
insurers shall serve as the lead insurer for notice and cancellation
purposes.
Section 43 of the bill amends section 77 of the Workers' Compensation
Law to increase from 8 to 10 the number of commissioners who would
administer the State Insurance Fund. One of the two additional commis-
sioners will be appointed by the Governor upon recommendation from the
New York State American Federation of Labor-Congress of Industrial
Organizations and one upon recommendation of the Business Council of New
York State. As with other commissioners of the Fund, these appointees
would be policyholders insured in the State Insurance Fund.
Section 44 of the bill amends section 87 of the Workers' Compensation
Law to allow the State Insurance Fund to invest up to ten percent of its
surplus and reserve funds in certain securities.
Section 45 of the bill would amend section 351 of the Workers' Compen-
sation Law to authorize the State Insurance Fund to contract with a
preferred provider organization for the delivery of workers' compen-
sation benefits.
Section 46 of the bill amends section 27(2) of the Workers' Compensation
Law to mandate that carriers deposit awards pursuant to WCL § 15(3)(w)
into the aggregate trust fund.
Provisions relating to the compensation insurance rating board ("CIRB")
Sections 47 through 53, 55 through 62, 67 and 68 of the bill amend vari-
ous sections of the Insurance Law, Volunteer Ambulance Workers' Benefit
Law, Volunteer Firefighters' Benefit Law, and Workers' Compensation Law
to end New York State's exclusive reliance on the Compensation Insurance
Rating Board ("CIRB"), and to remove from CIRB certain statutory obli-
gations and powers, effective as of February 1, 2008. Section 57 directs
the Superintendent of Insurance to report to the Governor and Legisla-
ture by September 1, 2007 on how CIRB has performed tasks currently
designated to it by statute or regulation; whether any of those tasks
would more appropriately be performed by any other entity, including any
government agency; and on the ratemaking process for workers' compen-
sation insurance. Sections 67 and 68 bar rate service organizations for
workers' compensation insurance from filing rates or sharing statistical
information, as of February 1, 2008.
Further provisions relating to efficiencies and cost savings
Section 50 of the bill amends section 25-a(3) of the Workers' Compen-
sation Law to make technical corrections to the section in connection
with the fund for reopened cases.
Section 54 is intentionally omitted.
Section 56 of the bill amends section 151 (2) of the Workers' Compen-
sation Law to modify the method by which administrative expenses are
assessed upon group self-insurers.
Section 57-a of the bill amends section 27(4) of the Workers' Compen-
sation Law to change the rate of interest paid by an employer or insur-
ance carrier into the Aggregate Trust Fund in the event of a review or
appeal from three percent to the "industry standard rate" as determined
through regulation issued by the Superintendent of Insurance. This
section of the bill also requires that payments into the Aggregate Trust
Fund on claims for death benefits be based on the assumption that any
child between the age of 18 and 23 years will continue to be enrolled as
a full-time student in an accredited educational institution and thereby
retain eligibility for benefits, to provide for any appropriate refund
of such payment after all such children have reached 23 years of age,
and to make various interest provisions consistent with the "industry
standard rate" provided by this bill.
Section 57-b of the bill adds a new subdivision 8 to section 27 of the
Workers' Compensation Law to provide that in the case of a claim
concerning which the Aggregate Trust Fund enters a waiver agreement
pursuant to section 32, the insurance carrier that paid the present
value of the award of such claim is not entitled to a refund of any
portion of the award.
Section 63 of the bill amends section 143(1) of the Workers' Compen-
sation Law to allow the Workers' Compensation Board to use electronic
means to record and maintain public records.
Section 64 of the bill amends section 50(3) of the Workers' Compensation
Law to require the Board to report to the Governor and the Legislature,
on or before December 1, 2007, on the possibility of implementing a
statewide self-insured employer bond program and an improved individual
employer bond program.
Section 65 of the bill amends section 50(5)(c) of the Workers' Compen-
sation Law to provide for the apportionment of the assessment against
self-insurers and defines the term "pure premium calculation."
Section 66 of the bill amends section 27(7) of the Workers' Compensation
Law to provide for the computation of the loss reserves for the Aggre-
gate Trust Fund and provides for a standard interest rate to be deter-
mined by the Superintendent of Insurance by regulation.
Sections 69 and 70 amend section 125 of the Workers' Compensation Law
and add a new section 125-a to the Workers' Compensation Law, to provide
that any employer or insurance carrier that discriminates against an
injured veteran shall be guilty of a Class A misdemeanor.
Section 71 of the bill amends section 27(5) of the Workers' Compensation
Law to provide that deposits in the Aggregate Trust Fund are credited
with interest at the industry standard rate.
Section 72 of the bill amends section 13-j(1) of the Workers' Compen-
sation Law to remove the prohibition on insurance carriers directing
medical treatment with respect to pharmacy and diagnostic networks.
Provisions relating to the Special Disability Fund
Section 73 of the bill amends section 32(a) of the Workers' Compensation
Law to make clear that the Aggregate Trust Fund and the Special Disabil-
ity Fund may enter into waiver agreements, and establishes procedures by
which the Special Disability Fund can enter into waiver agreements fund-
ed by bond proceeds. This section also includes protections for claim-
ants entering into such agreements, since such settlements are final and
conclusive once approved by the Workers' Compensation Board.
Section 74 of the bill adds new subdivisions (e), (f), (g), (h) and (i)
to section 32 of the Workers' Compensation Law to provide for settlement
of claims for which liability of the Special Disability Fund has been
established by: (1) establishing a Waiver Agreement Management Office
under the supervision of the Chair of the Workers' Compensation Board;
(2) making clear that any waiver agreement entered into by the fund
shall be conclusive on other potentially interested parties (such as
carriers and employers); (3) providing for notice of interested parties;
and (4) allowing for joint entry into waiver agreements by the Special
Disability Fund and other parties.
In an effort to limit the outstanding liability of the Special Disabili-
ty Fund efficiently and effectively, this section allows the Waiver
Agreement Management Office to contract with a third party to manage and
settle claims. It authorizes the Chair to conduct a procurement, subject
to provisions of State Finance Law, that might result in transfer of
liability and responsibility for management, administration and settle-
ment of all or a portion of claims in the Special Disability Fund to
private entities with demonstrated financial strength. Finally, this
section provides for the Director of the Budget to notify the Chairs of
the Senate Finance Committee and the Assembly Ways and Means Committee
of policies, procedures and plans to be employed in addressing the
outstanding liability of the Special Disability Fund, including those
involving management of claims, and financing.
Section 75 of the bill amends section 15(8)(ee) and (f) of the Workers'
Compensation Law to subject applications for reimbursement from the
Special Disability Fund for dust disease claims to the time limits on
seeking reimbursement set forth in subdivision (h) of that section.
Section 76 of the bill amends section 15(8)(h) of the Workers' Compen-
sation Law to close the Special Disability Fund to new claims as
follows: (1) no claim may be filed against the Special Disability Fund
for any injury or illness where the disablement or accident took place
after July 1, 2007; (2) no claim for reimbursement may be made against
the Fund after July 1, 2010; and (3) requests for reimbursement from the
Fund (where the Fund's liability has already been established), must be
filed by the later of one year after the expense was paid or one year
after this provision's effective date. To discourage attempts to trans-
fer unfounded liability for claims to the Special Disability Fund before
these deadlines, this section imposes a filing fee of $250, $200 of
which would be refundable upon ruling that the claim is eligible for
reimbursement from the Special Disability Fund.
To offset the costs of settling claims, and to manage the associated
costs for insurers and employers, this section of the bill allows for a
financing agreement among the Workers' Compensation Board Chair, the
Commissioner of Taxation and Finance, and the Dormitory Authority of the
State of New York. This section provides protection to ensure that funds
associated with the Special Disability Fund are used solely for their
intended purposes. The amendments to section 15(8)(h)(7) allow the
financing agreement to limit the Fund's investments, and allow the
Commissioner of Taxation and Finance, who will continue to hold proceeds
from the assessment in a sole custody account, to set up such accounts
as are necessary to manage the fund.
Further, this section provides for the Chair of the Workers' Compen-
sation Board to report annually to the Legislature the revenues and
expenses, financing plan, assets and liabilities, status of claims and
the amount of the remaining unfunded liability of the Special Disability
Fund.
Section 77 of the bill amends section 14(6) of the Workers' Compensation
Law to apply time limits on applications for reimbursement from the
Special Disability Fund by an employer who must pay additional compen-
sation as a result of its employee's concurrent employment, under
section 14(6) of the Workers' Compensation Law.
Section 78 of the bill adds a new section 1680-1 to the Public Authori-
ties Law to provide for the Special Disability Fund financing through
the issuance of bonds by the Dormitory Authority. This section of the
bill: (1) provides definitions of terms used in the new section 1680-1;
(2) clearly segregates the assets and liabilities associated with the
Special Disability Fund financing from all other assets and liabilities
of the Dormitory Authority; and (3) sets forth the public benefit of the
closing of the Special Disability Fund and the issuance of bonds to pay
for waiver agreements and other liabilities and expenses of the fund.
Under this section of the bill, the Dormitory Authority, the Commission-
er of Taxation and Finance, and the Chair of the Workers' Compensation
Board would be authorized to enter into a financing agreement. The
agreement would include terms intended to preserve the bonds' tax exempt
status. This section of the bill also sets forth the purposes for which
bond proceeds may be used, authorizes the Dormitory Authority to issue
bonds, and provides the Dormitory Authority with certain powers regard-
ing the issuance of the bonds, to support the closing of the Special
Disability Fund.
New section 1680-l of the Public Authorities Law further provides that
neither any bond issued pursuant to this section, nor any ancillary bond
facility of the Dormitory Authority shall constitute a debt or moral
obligation of the state or a state-supported obligation. The bonds and
associated costs will be funded entirely by an assessment on insurance
carriers and self-insurers, on which bondholders are granted a statutory
lien. In addition, it establishes certain remedies for bondholders in
case of default of principal and interest payments by the authority.
This section also sets forth requirements for depositing the bond
proceeds.
New section 1680-l of the Public Authorities Law further provides that
the Dormitory Authority is acting for a public purpose and that the
bonds issued to fund its operations will be exempt from federal tax.
This section of the bill also sets forth the State's other covenants to
the bondholders. This section also provides that the bonds of the
authority are made securities.
Section 79 of the bill amends section 17(1) of the Public Officers Law
to include in the definition of "employee," members of the board, offi-
cers and employees of the authority for purposes of carrying out section
1680-l.
Section 80 of the bill provides that the Superintendent of Insurance and
the Chair of the Workers' Compensation Board may each, in consultation
with each other, promulgate regulations to implement provisions of this
act.
Section 81 of the bill contains a severability clause.
Section 82 of the bill contains the effective date provisions of the
bill.
EXISTING LAW:
Section 15(6) of the Workers' Compensation Law establishes the maximum
weekly benefits for workers' compensation at $400 per week and the mini-
mum benefits at $40 per week. In addition, section 16(5) of the Workers'
Compensation Law provides that weekly wages in excess of $600 are not to
be considered in calculating death benefits.
Section 15 of the Workers' Compensation Law provides for a schedule of
benefits for certain injuries classified as "permanent partial disabili-
ties" but not for other injuries in the same classification, resulting
in a set duration of benefits for some claimants and lifelong benefits
for others. Furthermore, the Workers' Compensation Law currently
provides only limited support for vocational rehabilitation for injured
workers to enable them to return to work as soon as possible.
Section 50 of the Workers' Compensation Law requires employers to secure
compensation coverage for their employees. Sections 52, 114, 114-a and
131 of the Workers' Compensation Law currently govern fraud and failure
to secure compensation, and provide for criminal and civil penalties.
Failure to secure compensation for employees, for example, constitutes a
misdemeanor under section 52 of the Workers' Compensation Law and is
punishable by a fine between $500 and $2000, and may subject the viola-
tor to certain civil penalties.
Section 141 of the Workers' Compensation Law provides the Chair of the
Workers' Compensation Board with limited enforcement power. The Chair
cannot issue "stop-work orders" to employers who fail to provide cover-
age for their employees, or issue subpoenas for documents and testimony
outside New York State. In addition, confidentiality laws hamper coordi-
nation and the sharing of information between state agencies investigat-
ing fraud, thus making it difficult for agencies to coordinate efforts
to combat fraud effectively.
The Special Disability Fund, which was created to encourage employers to
hire workers who had been previously injured or had an existing disabil-
ity, including veterans, is currently financed through assessments on
insurance companies. These assessments, which are in the hundreds of
millions of dollars, are passed on to employers.
STATEMENT IN SUPPORT:
This landmark legislation reforms the state's workers' compensation
system by significantly increasing benefits for injured workers and
eliminating hundreds of millions of dollars of system costs, monies that
will be passed through to employers in the form of premium reductions
overseen by the Superintendent of Insurance. For too long, despite the
high costs paid by New York employers, injured workers have failed to
receive sufficient benefits.
Since 1992, weekly benefits for workers' compensation have been capped
at a maximum of $400 per week. Minimum benefits remain at one-tenth of
that -- a mere $40 per week. These benefits fall far short of what
claimants in other comparable states receive. This legislation seeks to
increase the benefits of claimants so that they may be adequately
compensated for their loss of wage earning capacity, receive the prompt
medical services that they deserve, and receive vocational counseling to
return to work in an expedited manner.
Under this bill, maximum benefits for injured workers will be increased
from the current level of $400 per week to $500 per week for injuries
occurring after July 1, 2007. Benefits would continue to increase
significantly on an annual basis until July 1, 2010, when the weekly
benefit would be indexed to two-thirds the average weekly wage in New
York. By indexing wages, claimants are assured that their benefits will
not suffer real-dollar benefit reductions due to inflation.
The bill also enacts a number of reforms that will result in hundreds of
millions of dollars of additional savings. These reforms include: (1)
establishing maximum benefit years on workers' compensation payments for
a small group of claimants classified as non-schedule "permanently
partially disabled," to whom cash benefits would otherwise continue for
life; (2) establishing stricter criminal and civil penalties to combat
workers' compensation fraud and facilitating greater communication
between state agencies investigating fraud; and (3) implementing a vari-
ety of efficiency measures, such as requiring fee schedules to manage
costs for pharmaceuticals and durable goods.
One critical component of the bill supported strongly by both business
and labor is a new emphasis on returning permanent partial disability
claimants to work. This requires study of vocational rehabilitation and
training programs, so that New York will become a leader in the field.
This will benefit both workers and businesses.
In addition, the bill closes the Special Disability Fund to new claims.
The Special Disability Fund is an antiquated fund paid for by annual
assessments passed through to New York State's employers. Designed more
than a half century ago to serve as an antidiscriminatory tool to
protect injured veterans, it no longer serves that purpose due to statu-
tory amendments that allow an employer to recover from the fund even
when unaware that the individual it is hiring is disabled, and as a
result of civil rights laws that make such discrimination illegal in any
case. Insurers, with the assistance of private firms, have become
successful at identifying claims that may be eligible for reimbursement
from the Special Disability Fund. In these cases, after five years of
payment by the carrier, the costs of the claims are paid through assess-
ments passed on to employers throughout the State. Annual liabilities
have grown from $45 million in 1980 to $1.3 billion in 2001. Assessments
on employers have increased almost 200% since 1995. The bill will limit
the long term liability of the Special Disability Fund by closing the
Fund to new claims, instituting a process for settling existing claims,
and using financial tools to both cover the costs of the settlements and
smooth the effect on assessments. This initiative is part of the compre-
hensive plan to reduce workers' compensation costs for employers.
BUDGET IMPLICATIONS:
This bill is expected to result in savings to the State and local
governments as reductions in costs are achieved through the implementa-
tion of maximum benefit weeks, anti-fraud measures and various efficien-
cy provisions. The State and many local governments, as self-insured
entities, may in the near term experience a modest increase in costs
associated with increased benefit amounts. All fiscal impacts of this
legislation will depend on the number of State workers who suffer inju-
ries on the job once the bill takes effect. To offset these anticipated
costs, the State will continue to pursue various initiatives to promote
safe and healthy workplaces.
EFFECTIVE DATE:
This bill takes effect immediately, except that: (a) section 4 only
applies to accidents and dates of disablement occurring on or after such
effective date; (b) sections 6 and 8 take effect 180 days after the bill
becomes a law; (c) sections 7, 9, 13, 15 and 70 take effect 30 days
after the bill becomes a law, and apply to offenses committed on or
after such date; (d) sections 10, 35, 40 and 41 apply to claims or
appeals filed after the effective date; (e) sections 11, 12, 25, 26, 27,
28, 33, 43, 46 and 66 take effect 120 days after the bill becomes a law;
(f) section 34 applies to appeals filed after the effective date; (g)
sections 56 and 65 take effect on January 1, 2008; and (h) section 68
takes effect February 1, 2008.
