New York State Senator Thomas P. Morahan (R,C,I, New City)announced a landmark agreement between state legislative leaders and Governor Spitzer to reform the state’s workers’compensation system.
Under the agreement, benefits for injured workers will be increased for the first time in more than a decade, and employer costs, which are among the highest in the nation, will be reduced by 10 to 15 percent with savings to grow over time.
"This agreement protects workers and reduces the costs to businesses.The agreement establishes a positive environment for economic development and will encourage job creation throughout New York State," said Senator Morahan.
Key elements of the comprehensive reform package are as follows:
● The maximum weekly benefit for injured workers will be increased from
$400 to $500 in the first year, $550 in the second year, $600 in the
third year, and to two-thirds of the average weekly wage in New York
in the fourth year. Once the maximum benefit reaches two-thirds of
the average weekly wage, the maximum benefit will be indexed
● The minimum weekly benefit will be increased from $40 to $100;
● Cost savings worth hundreds of millions of dollars will be achieved
by setting 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
● Innovative programs are being established to get workers prompt
medical treatment and to help them return to work;
● 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 workers, 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 instead 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 February 1,
2008. The Superintendent of Insurance will make a recommendation to
the State Legislature in September 2007 as to what, if anything,
should replace it.
As part of the negotiated reform package, the Governor, and legislative
leaders have directed the Superintendent of Insurance to ensure that
these system savings are captured in premium rate reductions, beginning
in the next rate setting cycle that concludes this July. This will
require the Superintendent to engage the insurance industry on this
subject in a way never done before. As the reforms phase in, reductions
in premiums and assessments related to the Second Injury Fund are
expected to reach double digit levels, providing significant relief to
New York’s business community, particularly small employers for whom
such costs have been a major impediment.
In addition, after close consultation with the legislature, the Governor
has directed the Superintendent of Insurance along with appointees of
the legislature, business and labor 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 important
● Gathering data on system costs. For years, the legislature and the
public has had to struggle to understand the costs and the outcomes
of the workers compensation system. There will now be transparency;
● Designing an expedited hearing process to reduce litigation and speed
the time it takes for workers to receive treatment and return to
● Designing by year-end new fact-based medical guidelines to replace
New York’s current outdated system. In addition, in conjunction with
the Workers’ Compensation Board, the Superintendent will design
treatment guidelines and training for law judges.