Landmark Workers’ Comp Accord Benefits Business And Labor

Thomas P. Morahan

March 26, 2009

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

initiatives include:

● 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

work; and

● 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.