Earlier this week the Oregon Department of Consumer and Business Services released an analysis of workers’ comp rates across the country. Not surprisingly, New York, with a cost rate of $2.83 per $100 in payroll (almost a dollar more than the median rate), is near the bottom of the pack. In fact, our rate went from the fourth highest in the nation to the third highest.
From the Insurance Journal: “The authors of the report compared each state’s rates to the national median rate of $1.84 per $100 of payroll, which is a drop of less than 1 percent from the $1.85 median in the last report.
Rates ranged from a low of 89 cents in North Dakota to a high of $3.24 in California. California’s rates were 188 percent above the national median, according to the report.
The report is based on methods that put each state’s workers’ comp rates on a comparable basis by using a constant set of risk classifications.
The study used classification codes from the National Council on Compensation Insurance. To control for differences in industry distributions, each state’s rates were weighted by 2010 to 2012 Oregon payroll to obtain an average manual rate for that state.”
While each study of this nature computes costs differently, one thing is for certain, New York’s move from fourth most expensive in the nation to now third at $2.83 per $100 in payroll, paints a picture of a state with an enormously expensive comp system that is unquestionably detrimental to job growth and economic development.
The time for comprehensive workers’ compensation reform in NYS is now!
This morning, the Albany Times Union reported something that employers around the state have known for far too long, workers’ compensation costs are terribly high and continue to rise. New York consistently ranks within the top four most expensive states in the nation for comp costs. While the article quotes the administration as saying that they are open to ideas on cost-controlling reform, The Business Council has endlessly advocated to the board and the administration not only the need for reform, but the specific remedies that would cut costs while guaranteeing the best care for injured workers.
From the article: “Despite a recent drop following the 2007 reforms, costs quickly went back up and are now 20 percent higher than before the changes. And while the average workers’ compensation cost per employee was 40 percent higher than the national average before 2007, it is now projected to be even higher at 2.5 times the national average.
On average, the cost of sustaining the system, which is financed largely by assessments on employers, will run $1,000 per employee each year. What happened? While there are lots of factors, critics like Ginsburg place much of the blame on the way claimant lawyers have been able to use the reforms to their advantage. One of the big changes was an increase in payments to injured workers.
While they used to be capped at $400 per week, that was raised to $840. In exchange, workers gave up lifetime payments and instead get money for a fixed period of time which maxes out at 10 years, with some exceptions. But the timetable doesn’t start until a case is fully resolved, or the injury is “scheduled” in workers comp parlance. Payments, however go out during this negotiating period and these can easily run for years due to the various appeals mechanisms in place. Final determinations can now take six or more years.
Unfortunately, the demands of the special interests of unions and trial lawyers have ruled the day. It appears that, for now, their zealous protection of the status quo (which earns them hundreds of millions of dollars annually), will continue to balloon costs until lawmakers decide that enough is enough.
It’s one thing to say Worker’s Comp costs are out of control, they are. But what are the practical implications? Well, for one Central New York soccer club, the sky-high costs mean they simply cannot survive.
The Syracuse Post Standard has a fascinating, and disheartening story about how the Rochester Lancers, a professional indoor soccer club, will no longer be able to field a team after their Worker’s Comp costs ballooned from 20k per year to more than a quarter of a million dollars.
From the article: “Lancers owner Salvatore “Soccer Sam” Fantauzzo has posted a letter on his team’s website that explains his team is ceasing operations because of a hefty worker’s compensation bill.
Fantauzzo said the team’s premium rose from $20,000 to $277,000, an increase way beyond the team’s means.
The Rochester Democrat and Chronicle reported that Fantauzzo wrote a letter to the Professional Arena Soccer League that said “we allowed players to milk the system.” He told the paper that disability payments were paid to players who in some cases were still actively competing. The state neither informed the Lancers of those claims nor fought the awards, he said.”
The Business Council of New York State has repeatedly called for reform of our bloated Worker’s Comp system. You can read more about our proposed reforms and cost-saving measures by reading Fix New York: The 2015 Legislative and Regulatory Agenda.
There’s a story in today’s Times Union that should anger every taxpayer in Albany County and across the state. Unfortunately, the story won’t cause the outrage it should – and that’s because it’s become all too common. The case of former Albany County sheriff inspector John F. Burke Jr. is the direct result of a broken workers’ compensation system that leaves New York state taxpayers holding the bag.
Brendan Lyons of the Times Union does a terrific job describing the circumstances of Mr. Burke’s claim. We encourage you to read the full article here. But, we did want to highlight one section:
“The fact that the claimant voluntarily separated from employment does not preclude him from awards, provided he is able to demonstrate reattachment to the labor market,” Loughlin said in a 12-page ruling. “I find that the claimant has demonstrated that he has searched for work since his separation from employment.”
County officials said they were stunned by the decision and will suspend any payments to Burke pending an appeal to the Workers’ Compensation Board.
“I firmly think this is a disgrace and this is what’s wrong with the system,” Sheriff Craig Apple said. “They’re telling us we did everything we needed to do to prove our case, and yet they’re still going to give him $40,000 a year.”
So, what can we do to fix this systemic waste and abuse? The harsh reality is that a legislative fix is just impractical. The state Assembly is not interested in rectifying the problem. Candidly, they don’t even view it as problem. But, The Business Council is working to put real pressure on the Cuomo administration to get this right.
What can you do to help? Contact the Governor’s office, reach out to our in-house workers’ comp expert, Lev Ginsburg (email@example.com), and send us stories of similar fraud and abuse. The only way we will get the wholesale changes needed to protect New York taxpayers is by making our voices heard.
Human Resource Executive Online recently published an article highlighting a study showing little drop in workers’ comp related opiod abuse. Often prescribed by doctors for pain after an injury, long-term use can lead to addiction and result in a worker needing extended leave in addition to other medical problems.
According to the article, a new study — Longer-Term Use of Opioids, 2nd Edition — from the Workers Compensation Research Institute finds that, “so far, there appears to have been minimal reduction in the prevalence of longer-term opioid use in the 25 states that were studied.”
According to Lev Ginsburg, The Business Council’s director of government affairs, the business community has warned lawmakers that policies in the workers’ compensation system, and the health system in general, were leading to opioid addiction and other long-term health detriments among employees.
While programs like I-STOP in New York have worked to combat opioid abuse, an unforeseen consequence is that the use of heroin, which is cheaper and more readily available, has risen.
Ginsburg says, “Negative outcomes can result from some health policies. There is little debate that insurance mandates lead to the overuse of healthcare and lead to ballooning costs, but also, sometimes to unhealthy results.”
The website WorkersCompensation.com features an article on how with the increased use of social media — Facebook, Twitter, and YouTube — personal information can be used as a way to uncover the true abilities of workers’ comp claimants. The website highlights stories on how claimants who said they were not able to work were exposed engaging in other activities that illustrated they were capable to do so.
Read more on the WorkersCompensation.com website.
Today’s Buffalo News features an op-ed from Jeffrey Fenster, executive director, of the New York State Workers’ Compensation Board. In the op-ed, Fenster outlines Gov. Cuomo’s efforts to reform the state’s workers’ compensation system and highlights improvements made including high and rising cost of workers’ compensation assessments on employers.
He also highlights how the board is working on modernizing the system to upgrade outdated technology and business processes with two key initiatives.
Read the full op-ed on The Buffalo News website.
The Court of Appeals, the highest court in New York, has upheld a rule that workers’ compensation death claims cannot be apportioned.
Writing for WorkersCompensation.com, attorney Theodore Ronca says the new twist in the high court’s ruling is acknowledging the rationality of apportionment but is also saying that the state legislature should change the law.
The case itself involved an old asbestosis claim. Ronka writes, “The court seems to have realized that in the past virtually all claims for asbestosis were allowed, even though most resulted in little ‘disability’ until retirement age, at which time claims for what were actually supplements to retirement were made.
“Currently, there are tens of thousands, or more, of such old claims for chronic conditions that have been allowed, not just asbestosis, all of which can later be said to contribute to, or accelerate, death. This has been no secret to NY comp lawyers, who have been quite willing to close these claims, often with little lost time, knowing that all will eventually mature into a death claim.”
The Business Council supports statutory amendments that would allow apportionment of death benefits in cases where a non-compensable disability/injury is the basis of apportionment to guarantee more equitable outcomes for employers in such cases.
The Insurance and Financial Advisor website reports that Broome County New York has established its own informal task force to oversee workers’ compensation claims to ensure they are legitimate.
The goal will be to investigate new and ongoing claims as they can cost the county more than $2 million annually.
Governor Cuomo announced New York’s workers’ comp system would reduce assessment costs to employers by 26 percent in 2014, saving businesses and local governments $300 million in annual expenses. The Business Relief Act cuts the assessment to employers from 18.8 percent to 13.8 percent, the largest reduction since 1998, and provides a one-time workers’ compensation assessment savings to all self-insured employers of approximately $500 million.
Signed by the Governor as part of the 2013-14 budget, the Business Relief Act achieves $800 million in savings by reducing the cost to operate the workers’ compensation system, otherwise known as assessments, in two ways. Closing the Re-Opened Case Fund initially saves all New York State employers a $300 million annual assessment. In recent years, the cost of the Re-Opened Case Fund has grown exponentially while failing to serve its originally intended purpose. Closing the fund also reduces unnecessary litigation in the workers’ compensation system, another cost savings for employers.
Heather C. Briccetti, Esq., president & CEO of The Business Council of New York State, said, “The Business Council welcomes this significant reduction in Workers’ Comp Board assessments and the new simplified assessment methodology. This fulfillment of part of the Governor’s 2013 reform package is an important first step in the continuing effort to make New York’s comp system more efficient, less expensive and less of an impediment to economic growth in the State. We look forward to working with the Board in continuing to implement reforms meant to deliver care to injured workers and bend the cost curve for New York’s employers.”