N.Y. Gov. Pataki Offers WC Reform Package

March 23, 2004

Governor George E. Pataki, at the Business Council’s Small Business Day in Albany, unveiled a plan to reform New York’s Workers’ Compensation system.

Pataki’s plan would reduce workers’ compensation costs for businesses by more than 15 percent, while increasing benefit levels for injured workers by 25 percent, according to the administration.

“We know that enacting tax cuts and lowering the cost of doing business is a proven way to create new jobs and that’s exactly what we’ve done in New York during the past nine years,” Pataki said. “In 1996, we worked together to achieve historic and long overdue reforms to the workers’ compensation system which have already reduced costs for businesses by nearly one-third on average. But workers’ compensation costs are one of the biggest costs for businesses and if left unchecked can be an impediment to creating new jobs. That’s why we are taking the next step and advancing dramatic new reforms that will further reduce these costs for New York’s employers.”

Pataki said his plans are a compromise, one he he hopes both labor and business can support.

“Most importantly, these new reforms strike a balance between controlling costs for those who create jobs — businesses, with the needs of workers who risk their health and safety to provide for their families and keep New York’s economy growing. These new reforms will increase the maximum benefits provided to injured workers by 25 percent while taking other steps to protect the men and woman of New York’s workforce. I look forward to working together with the Legislature, the business community, labor organizations and others to enact these new reforms and make the workers’ compensation system even stronger.”

The legislation unveiled by the governor – which was drafted with input and advice from the business community, labor organizations and other interested parties — is a key component of the five-point plan to assist New York’s manufacturers that Pataki unveiled in January. Other aspects of the plan include: new targeted tax reduction for manufacturing based-businesses; creation of two new job-training programs to assist employees of manufacturing-based businesses; and providing additional low-cost power to New York’s manufacturers.

The governor’s new plan generates savings of as much as 15 percent by creating a system of tiered benefit levels for injuries that are not currently scheduled under the law, reducing litigation, and authorizing durable medical goods and pharmaceutical fee schedules.

The proposal also increases the maximum weekly indemnity benefits paid to injured workers from $400 to $500 per week.

Specifically, the package addresses the following issues:

• Authorizes the first benefit increase for injured workers in New York State in more than a decade, increasing the standard of living for hard-working New Yorkers who have been injured while performing work related duties.
• Enacts savings of up to 15 percent by expanding the types of injuries for which benefit levels are scheduled in accordance with the severity of the disability. This bill also accelerates the delivery of benefits to injured workers by enhancing the conciliation process to lessen potentially lengthy litigation.
• Provides employers and workers in the unionized manufacturing sector with the freedom to negotiate benefits and case resolutions by expanding the successful Alternate Dispute Resolution (ADR) program. Under ADR, employers and labor unions are permitted, through collective bargaining, to incorporate alternative administrative methods for providing workers’ compensation benefits. Currently ADR applies only to the unionized construction industry.
• Authorizes the Workers’ Compensation Board to initiate a pilot program designating a geographic location or employer to process undisputed claims separate of board intervention.
• Makes New York the 24th state to authorize a pharmaceutical fee schedule. In recent years the cost for pharmaceuticals rose more rapidly than any other type of medical costs, including an alarming increase of 15.7 percent nationally in 2001.
• Reduces employer assessments for the Second Injury Fund by adjusting the calculation used to determine the annual assessments from 150 percent of the previous year’s disbursements to 125 percent. Applying this formula to the 2003 disbursements would have reduced the overall assessment by up to $108 million.
• Allows claimants to receive non-emergency medical procedures costing less than $1,000 without seeking prior insurer authorization. Currently injured workers must seek authorization before any non-emergency procedure costing more than $500.
• Expands the successful “payment without prejudice” provision to include prescription medicines. Under this program, insurers may initiate benefits prior to litigation without admitting liability.
• Guarantees claimants’ continued access to prescribed medicines and prosthetics while their cases are being litigated under appeal.
• Enables high wage earners the option to supplement workers’ compensation benefits by purchasing additional insurance.
• Requires insurers to reimburse claimants for out-of-pocket expenses related to prescription drugs within 45 days.

The legislation denies benefits to claimants who are injured while in the act of committing a crime. It also enacts into law an insurer’s right to discontinue benefits for a claimant convicted and incarcerated for a crime.

Workers’ Compensation Chairman David P. Wehner said, “The governor’s legislation is responsible and fair. Injured workers deserve a benefit adjustment and New York needs a plan that does not needlessly add to the costs of doing business and creating jobs. This proposal clearly strikes a balance with the concerns of injured workers and business owners.”

President/CEO of the Business Council, Daniel B. Walsh said, “In 1996, Governor Pataki said reducing costs on employers allows them to invest in their employees and in their businesses. That’s still the case today. Governor Pataki led the way to real workers’ comp reform in 1996, and it paid off in a stronger New York. We look forward to working with the governor and the legislature to achieve real reform again this year.”

Randy Wolken, president of the Manufacturers Association of Central New York (MACNY) said, “It is critical that we reduce the cost of workers’ compensation for manufacturers throughout New York. Governor Pataki initiated needed reforms in 1996 that lowered workers compensation costs and helped spur job growth. His latest proposal promises similar outcomes. We look forward to working with the Governor, the Senate Majority Leader and the Speaker of the Assembly as New York crafts a balanced reform bill that both lowers costs and provides a benefit increase for workers.”

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