Workers comp reform agreement reached

Workers comp reform agreement reached

Senator George Maziarz (R-C, Nefane), chairman of the Senate Labor Committee, Governor Eliot Spitzer and leaders from the legislature, the labor community, and the business community applaud a major agreement reached to fix a broken workers compensation system.

"We have known for some time that the workers compensation system wasn't working for anyone," Senator Maziarz said. "Businesses were shutting down or leaving the state because they couldn't afford insurance premiums, and injured employees were getting insufficient and outdated benefits. Now, thanks to healthy discussions between differing interests, to compromise, and to leadership, we can proudly say that we've reached a solution to move us forward."

"Every New Yorker can point to this agreement as a landmark accomplishment in the ongoing effort to make our state better for businesses and better for workers," Senator Maziarz added. "It has taken a lot of hard work to get us to this point, and I'm extremely glad that we can build upon our renewed commitment to accountability and results."

Elements of the comprehensive reform package include:

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 annually.
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 hardship;
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 World 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, a Task Force will be created to develop further ways to streamline regulations and the compensation process, as well as to update workers compensation program guidelines and rehabilitation programs. Senator Maziarz has advanced this provision legislatively (S.1620 of 2007).